Gold vs. Silver

“He brought out Israel, laden with silver and gold, and from among their tribes no one faltered.” (Psalm 105:37)

When the United States established its currency by setting a value against gold and silver it used a ratio of 15 to 1.  It took 15 ounces of silver to buy one ounce of gold.  This made sense because this had been the ratio established in the market for the 400 years prior.  Today, this ratio is nowhere near this historic level.  Today, silver tends to fluctuate in value far more than gold.

As you can see, in some ways Gold and Silver are quite similar for our practical interests, but in others they are quite different. They both have an intrinsic value that is well recognized in almost every part of the world.  And yet, there are some very fundamental differences which we should consider in order to understand the difference in holding one versus the other.


Gold is money.  Because it is a symbol of wealth it is also used in jewelry, but other than that it does not have many other uses.  Because it is primarily money, it is stored around the world to hold wealth and is the thing that most people most readily think about when trying to get wealth out of a fiat currency and into something real.

The price of gold to any currency does fluctuate depending upon demand and how safe people feel holding currencies, but it is also extremely stable when viewed over the long term.


Silver is also money.  In fact, the local word for Silver is the same word for the local currency in 51 of the world’s countries (such as in the British Pound Sterling).  An advantage that it has over gold is that a silver coin can much more easily be traded in for everyday purchases than a gold coin.  As this is being written a one ounce gold coin is worth $1,132 while a one ounce silver coin is worth $17.65.  Since most items that you buy cost far less than a thousand dollars, you would have to clip the coin to actually buy most things.  Silver comes in much smaller increments.  Of course the opposite is true if you are trying to store large amounts of savings.  A large quantity of silver takes up far more space.

Silver is not just money though.  It is also used for many industrial purposes and those uses seem to be increasing.  Hospitals use bandages that have silver in them to cover wounds and burns to fight infection.  Many new workout shirts have silver in them for similar reasons.  Silver has always been used in film, but this seems to be a dying industry.

Because of these uses, almost all of the silver ever mined in the world has been used up and is gone.  The United States used to stock pile silver just as they do gold, but began selling it off until they ran out in the year 2000.  Most other public stockpiles are also gone.  And most all of the silver being mined today is used for industrial purposes.  If demand for silver increases, it could shoot to the moon and usually does in times when people become fearful of holding fiat currencies.

For these reasons, we do believe that silver will probably outperform gold against the Dollar in the years ahead.  However, silver is far more volatile than gold.  It is a market which swings wildly, so although it could greatly increase your savings relative to those around you, it could also obliterate them quickly, so you should seek a balanced approach to holding silver.

This post is Part 8  in the series A Few Ways to Prepare. To use this as a growth tool to better understand your own calling, you might start by reading Pt 1, Pt 2, Pt 3, Pt 4, Pt 5, Pt 6 and Pt 7.

Photo credit: pbarnhart_cedarpark

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