This week, the gold market has caught significant attention as prices soared to over $3,700 per ounce, marking a substantial increase that is nearly double its price from two years ago. With gold on the brink of setting a record year, many collectors may find themselves feeling the pressure of FOMO, or the fear of missing out on investment opportunities. The high unit prices for gold bars and coins, such as the Golden Eagle, have become comparable to purchasing a used car, potentially sidelining those who may have been avid collectors.
However, the surge in gold prices has also drawn attention to silver, another precious metal that has seen a noteworthy increase. Analysts suggest that the rise in gold prices often leads to increased interest in silver—a trend that appears to be playing out this year. HSBC precious metals analyst James Steel noted last month that gains in gold often attract interest in silver, particularly from investors who may have missed the initial wave of the gold rally.
As of midday Friday, silver’s rally of 47% for the year outpaces gold’s 39% increase, showcasing that it has become a more accessible option for novice collectors who wish to enter the market without investing as heavily upfront. Currently priced around $43 per ounce, silver offers a lower entry point compared to gold, allowing collectors to ease into the world of physical precious metals. One enthusiastic collector mentioned shifting from silver to gold as he gained experience and insight into the market, although he noted challenges such as the logistical difficulties of storing larger quantities of silver.
While silver shares several characteristics with gold, it also presents more volatility and risk, largely due to its extensive use in industrial applications, which ties its price more closely to economic conditions. Stefan Gleason, CEO of Money Metals Exchange, cautioned potential investors that silver can be subject to more extreme price fluctuations and may not be suitable for short-term gains. He described silver as a leveraged investment in gold—gaining more value when gold rises and losing more when gold falls.
Despite current enthusiasm for silver, some analysts, including Steel, suggest that the present price of silver above $40 per ounce may not be sustainable in the long term. The market is also witnessing an uptick in selling activity, as some collectors capitalize on high prices to cash out their investments, thereby increasing market supply.
Investing in precious metals is typically viewed as a long-term strategy, which often presents new challenges for both novice and seasoned collectors. Questions surrounding secure storage, insurance for valuable assets, and optimal selling strategies are crucial considerations in this market. Ultimately, both silver and gold present unique opportunities for collectors, albeit with differing levels of risk and investment dynamics.
