Four key differences between Gold and Silver – Morgan Stanley

To varying degrees, both Gold and Silver may provide a hedge in a potential economic or market downturn, as well as during sustained periods of rising inflation. Here are four factors to consider when deciding to invest in Gold or Silver, according to economists at Morgan Stanley.

Silver may be more tied to the global economy

“Half of all Silver is used in heavy industry and high technology, according to the World Silver Survey. As a result, Silver is more sensitive to economic changes than Gold, which has limited uses beyond jewelry and investment purposes. When economies take off, demand tends to grow for Silver.”

Silver is more volatile than Gold

“The volatility in Silver prices can be two to three times greater than that of gold on a given day. While traders may benefit, such volatility can be challenging when managing portfolio risk.”

Gold has been a more powerful diversifier than Silver

“Silver can be considered a good portfolio diversifier with moderately weak positive correlation to stocks, bonds and commodities. However, Gold is considered a more powerful diversifier. It has been consistently uncorrelated to stocks and has had very low correlations with other major asset classes.  Unlike Silver, Gold is less affected by economic declines because its industrial uses are fairly limited.”

Silver is currently cheaper than Gold

“Per ounce, Silver tends to be cheaper than Gold, making it more accessible to small retail investors who wish to own the precious metals as physical assets.”


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