Why is Silver So Cheap?

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Contributor, Benzinga
March 1, 2023

Silver has been known as the "poor man's gold" for at least the past few centuries. This isn't entirely surprising as silver has been significantly cheaper than gold for its entire history (with perhaps one or two unusual exceptions like Mansa Musa's absurdly gold-rich Mali empire). But why is silver so cheap?

Both metals have been used as currencies for thousands of years, and their prices have fluctuated a lot over time. Sometimes silver performs better than gold at certain times like in the 1970s when silver skyrocketed from about $1.60 to a peak of almost $36 while gold rose from about $35 to $680. Both investments had an incredible decade, but even though silver was so much cheaper than gold, it still brought in a much larger return.

Why is Silver So Cheap Compared to Gold?

When it comes to precious metals, gold is often seen as the ultimate symbol of wealth and status. But why is silver so much cheaper than gold? A few major factors contribute to the price difference between silver and gold.

Gold is a rarer metal than silver. Gold deposits are much more difficult to find and extract, which makes gold more expensive to acquire than silver. Gold is also used in a variety of industries, from electronics to jewelry and coins, which further pushes up its demand and thus also its price (assuming supply doesn't increase faster).

Another factor that contributes to the price difference between gold and silver is their relative supply and demand. Gold is considered a more stable and reliable metal, and its demand is high even during periods of economic uncertainty. Because of this, gold prices tend to be more stable than other assets like silver.

On the other hand, silver is more volatile, and its prices fluctuate significantly from changes in supply and demand. Gold is useful in a variety of industries, but even more of the supply of silver is used for industrial applications, especially manufacturing. It is generally considered the best element to conduct heat and electricity. Demand is beneficial for the price of silver, but it changes how silver can be used as an investment vehicle.

Because of silver's close ties with industry, its price will likely follow the stock and bond markets. When manufacturing is booming, the demand for silver should rise. This situation doesn't necessarily mean that the price of silver will explode, however, as it will still depend on the supply of the metal.

It's difficult for silver mining companies to meet increasing demand. The global supply of silver was lower in 2021 and 2022 than it was in 2010, probably because silver is usually mined as a byproduct of mining for other metals.

Gold is more expensive than silver because of its rarity, its use as a safe-haven investment and its relative stability. Silver is cheaper because it has a lower melting point and its price is more easily manipulated. Ultimately, the price of gold and silver is determined by the supply and demand of each metal, as well as by economic conditions

When is Silver the Better Investment?

Silver is often the better investment over gold right before major industrial booms and right after the same industries reach rock bottom. Silver is a common investment, but it's mostly an ingredient for manufacturing. Unless mining companies figure out how to mine silver better, it also seems likely that the global supply of silver won't increase much in the next few years.

These factors can be useful in understanding the trends of the precious metals market and educating your investing decisions, but they shouldn't be your only resource. Make sure to do your research before investing — there are no guarantees that silver will go up or down in price.

When is Gold the Better Investment?

Gold is often considered the better investment over silver in times of global financial and political duress. The metal's status as a safe haven investment has made it a staple investment when the markets look bearish. Many of the best investors in the world like John Paulson and Stanley Druckenmiller agree that gold is a vital investment in times of crisis and as a diversification tool.

Best Gold and Silver Trading Platforms

It is easier than ever to invest in gold, silver, platinum or palladium. Some of the best platforms that offer easy gold and silver trading with low fees are Advantage Gold, Red Rock Secured, Birch Gold Group, American Hartford Gold and Lear Capital. All these platforms support precious metals IRAs too. It only takes a few minutes to set up or roll over your IRA to any of these top platforms to start buying gold or silver with tax benefits.

Is Silver a Good Buy Right Now?

It's hard to tell right now whether silver or gold is a good investment because of the cloudy future of the U.S. economy. Some experts expect a recession while others think that the bear market is over already. Silver may be a great investment if the stock market returns to normal and manufacturing goes into hyperdrive. However, other factors may keep the price of silver down, despite the trends.

About Henry Stater

Henry is an expert in all things crypto. He stays up to date with all the latest coins, platforms and technologies in the field. He has particular expertise in the burgeoning decentralized finance ecosystem and loves trying out all the new platforms. He also always follows major events in other financial markets and geopolitics as a whole, especially when an event’s effects ripple through the crypto market.