Should gold investors switch to silver as the price surges?
Move over, gold. The price of silver is also surging.
Precious metal investors accustomed to a remarkable rise in the price of gold over the past 18 months may have been surprised to see silver surge as well this week. Now over $38 per ounce, the price of the precious metal is hovering around its highest point in more than a decade. Silver hasn't been this expensive since April 2011, according to historic data from . But it's now more than double the $19 per ounce it was selling for in July 2022, for example.
This recent activity may encourage gold investors to make a switch. With the price of gold per ounce around a record $3,400, after all, and a wide expectation that it could rise to $4,000 per ounce later this year, silver can be purchased for a minor fraction of that price and many of the same portfolio protections can be secured at the same time. But should gold investors really switch to silver as the price surges? Or is that a timely temptation better left ignored? Below, we'll break down what to consider before making any precious metal investment changes now.
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Should gold investors switch to silver as the price surges?
There is no uniform answer to this question nor should there be, as the benefits of precious metal investing, while broadly applicable, are also specific to the investor in question. For example, if you want a hedge against inflation and portfolio diversification but can't continue to purchase gold at today's top price, then adding a more cost-effective metal like silver may make sense, especially now with the price rising and the potential for growth high. Silver offers these same timeless protections at a fraction of the entry price point.
On the other hand, even with the price rising recently, silver's value is often considered finite. It's not the historically attractive investment that gold has been, nor is it likely to become so in the future. There's a reason why gold is priced more than 8,000% higher than silver. Switching to a silver-heavy portfolio, then, is unlikely to be a smart move, even if you can afford to buy in greater amounts at a lower cost currently.
The more applicable advice, then, is the traditional one. Precious metal investing should be limited to 10% of your overall portfolio to avoid crowding out other, reliable income-producing assets like stocks, bonds and (potentially) real estate.
How much of that 10% is made up of gold and how much it that's made up of silver, then, will vary based on the investor profile, budget and short- and long-term goals. Simply focusing on one or the other, however, especially when the price of both metals has grown so strongly recently, would be a mistake.
Consider, then, not switching completely to silver as the price surges now, and instead explore your precious metal allocations overall. You may have a timely opportunity to shake up the precious metal portion of your portfolio to better exploit rising prices in both metal categories without also having to stray into risky investing territory overall. Whether that means 5% in gold, 5% in silver or some other allocation entirely, however, will be an investor-specific call.
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The bottom line
A rising silver price can be attractive for gold investors about to be priced out of the gold market entirely. But a total switch from gold to silver is unlikely to be the right call now, even with silver at its highest price point in more than 14 years. Instead, use this rise in prices in the precious metals market overall as a catalyst for revisiting your metal allocations. You may be too heavily invested (or not invested enough) in one of these two metals. So it makes sense to explore both, now, to strategically position yourself before the price rises with either again.