In today’s time, when both Gold and Silver are rising so much in value, which one should you invest in?
Firstly, over the past 5 years, silver has given more returns than gold... while gold has delivered a return of 14% per annum... silver has given 16% per annum.
By this account, silver has performed better lately, and this could be because of more industrial uses being discovered such as in EVs, in solar panels, and so on.
However, over a long time horizon, you would notice silver is extremely volatile. There are at times 10 years when its price would remain the same... so from a return perspective, it’s not as dependable and stable as gold.
As a thumb rule, Gold is 60X more expensive than silver... which means the value of 60 grams of silver would be the value of 1 gm of gold.
It varies, but a ratio of 60 is kind of an average unofficial benchmark.
As on date, that ratio is 85:1 ... which means you get 85 gms of silver for 1 gm of gold
This means, silver may actually be undervalued even now, and for the ratio to make sense, you could enter at the current price, and sell when the ratio corrects to closer to 60:1
However, I personally, don’t go after such short term movements and am an investor with a longer time horizon... so gold wins for me.
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Again, this is not investment advice. It’s just to educate you on how I look at their relationship to each other.
I’m personally such a safe investor that I try and balance my investments in real estate, NIFTY 50 ETFs, and gold, all for a horizon of over a decade.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.
Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.
Sarthak Ahuja