lick here to see an enlarged chart.
An investor who has decided to invest in precious metals has four choices: gold, silver, platinum, and palladium. This article is limited to choosing between gold and silver.
There are times when gold is a better investment, and there are times when silver is a better investment. Let us start by looking at the charts.
The chart shows that from June 2006 to November 2008, gold was a better investment than silver; during this period a gold investor would have gained over 10% while a silver investor would have lost over 20%. From November 2008 to May 2011, silver was a better investment than gold; silver significantly outperformed gold as shown on the chart. From May 2011 to present, gold has been a better investment than silver; losses on gold have been considerably less than those on silver. The y-axis scale on the chart is a percentage scale starting with 0% at the beginning of the chart.
It is simply not enough to compare percentage returns. Astute investors should be interested in risk-adjusted returns. In other words, when they take higher risk, the investors should expect higher returns. For the trained eye, an easy to make observation from the chart is that silver is a lot more volatile than gold. For the entire period shown on the chart, the volatility of silver is about 70% higher than that of gold. Therefore, it stands to reason, that an investor looking for high risk-adjusted returns would demand significantly higher absolute return from silver compared to gold to compensate for the volatility…Read more at Kitco.
