From the perspective of historical trends, spot gold and silver have always been sought after. Whenever stocks and currencies depreciate, precious metals will play an attractive role. Usually, whenever the economy declines and inflation is high, investors will flock to the precious metals market. Relatively cheap safe-haven assets, their outstanding performance may be late, but they will not be absent.
Take the trend in August last year as an example. Due to market concerns about the epidemic and the weakening of the U.S. dollar, the price of spot gold soared above $2,000 an ounce for the first time in history, and the price of silver also rose accordingly. $28 an ounce, a 140% rebound from the lowest point of the year!
Since they are both precious metals, gold and silver have roughly the same boom and bust cycles. As for which is better to invest in silver or gold, there are several key factors that need to be considered. For example, the price of gold is relatively high, and sometimes it is prohibitively high. At this time, investors can look at the gold-silver ratio, that is, how many ounces of silver are needed to buy one ounce of gold. For example, last March, the epidemic hit the global stock market hard When compared with the commodity market, the ratio of gold and silver once soared to a historical high of 120:1, while the average level in the past 20 years was only 60:1, which shows that the investment value of silver was very prominent at that time.
While the price movements of gold and silver tend to converge, gold is the better hedge against recession, while silver has more than half of its demand. Driven by a wide variety of industrial uses, it is now widely used in electronics, automobiles, solar panels, medicine, and manufacturing. Because silver is so vital to industrial activity, demand for silver tends to rise or fall with the ups and downs of the overall economy. Silver prices are likely to rise when production picks up, and fall if growth slows. In the long run, the rate of return of investing in silver usually exceeds that of gold, and because of the leveraged nature of spot silver, the expected level of return will be much higher than that of physical investment.