Best Investing Idea - What is a better investment Gold or Silver?
The abundance of silver has made its price to fall from very beginning and it has more industrial applications but gold from the very beginning is of limited availability and the process of extraction of silver is 10 times costlier than gold. Also, gold ornaments cannot be made of 100% purity because of gold’s malleable nature and this is reason why it has to be mixed with other metals and become alloy that has both industrial and social use comparable to silver; therefore, the prices of gold are bound to be higher making it best investing idea.
For example, today, November 10, 2010, 1 kg of silver costs rupees 42440 per kg while current 10 grams of gold price in India is 20,455 INR per gram of gold so you can have an idea which one is better investment. South Africa is already facing the heat of excess demand of gold, particularly from India and as a result prices in India are comparatively bit higher than in international market. Extinction of silver can be substituted with metals now like silicon and aluminum, which is best conductor of heat as well as electricity while gold satisfies all these conditions.
Gold is definitely a better investment and best investing idea according to me because it is the only asset with high and faster appreciation value even faster than real estate and can serve as store of value. Platinum value and diamond values are higher than gold due their values being more stable for a longer period, but any structural change in platinum and diamond loses its value because of loss of molecular affinity and also refractive index of diamond making it a disinvestment.
We agree that being less or more, does not always decide price. Utility is also a thing. Vanity is also a utility. The more gold will still be higher in demand then less silver. Moreover, there are alternatives to silver also, but by this we cannot say it’s entirely improbable. Silver will go up significantly if even one super-rich entity say a multibillionaire or a large hedge fund or one of the bailed out investment banks puts a reasonably large chunk of its net worth in silver and demands physical delivery.
However, we must be careful not to jump to the conclusion that silver will be worth about 1/7th as much as gold just because inventories of silver are much smaller than those of gold. For one thing, the inventories of gold are held largely by central banks who do not wish to part with it or if they do, there are other central banks eager to buy it all from them. So, none of that gold is going to be traded on the open market.
Secondly, the quantity of silver mined per annum is still much larger than gold and if its price rises significantly, many of the industries which use silver will be tempted to substitute it with something else for example start using copper wires instead of silver wires for industrial use.
With all being said, gold is the best investing idea in commodities and not an ultimate bubble as called by George Soros and will remain a better investment than silver.