Both Shine but Differently
When assessing long-term performance, both gold and silver have delivered remarkable returns. Over the past 35 years, they have increased by nearly 4,000% in Indian rupee terms (see image below). However, while the end results appear similar, the paths they took are quite different. Gold displays a steadier, more predictable trend, whereas silver is more volatile, characterized by sharp rallies and equally sharp declines.
Silver: High Reward, High Frustration
Silver has occasionally outperformed gold, but it is also subject to significant drawdowns. A notable example is from 2011 to 2015, when silver’s gains plummeted from 2,400% to around 1,000%, representing a decline of nearly 60–70%. In contrast, gold experienced a milder drop of about 20–25%. This volatility makes silver a challenging asset to hold through market cycles. For long-term investors who are patient and do not use leverage, silver can still be a viable option but it’s not for the faint-hearted.
Gold: Stability in Uncertain Times
Gold’s trend is smoother, making it psychologically easier to hold onto. It has consistently rebounded to its peak prices faster than silver. For example, while silver took almost 14 years to reach its 2011 highs again, gold achieved a new peak just 5–6 years after its 2013 correction. Gold’s status as a monetary metal, combined with continued accumulation by central banks, further solidifies its position as a crucial component of an investment portfolio.
The Right Choice Depends on You
Ultimately, both gold and silver can provide significant returns over the long term. What matters most is which option aligns with your temperament and investment strategy. If you prefer more stable trends and lower psychological stress, gold may be the better choice. Conversely, if you have a higher risk tolerance and can handle long periods of quietness, silver could present opportunities, particularly in short-term, high-conviction trades.
What Are You Betting On?
Considering the current macroeconomic environment and the increasing gold reserves held by central banks, gold remains firmly rooted in the global monetary framework. This alone gives it a long-term advantage. While silver may eventually catch up, it might test your patience in the meantime.
What are your thoughts on gold versus silver as long-term investments? Have you included either or both in your portfolio? Please share your views in the comments below! If you found this blog informative, don’t forget to SHARE it with your friends!
