This article explores the pros and cons of investing in silver and gold, examining recent market behaviour and what drives performance for investors.

The following article, about precious metals investing, is from Igor Isaev (pictured), who is head of the analytics centre at the European broker, Mind Money. The editors are pleased to share this content; the usual editorial disclaimers apply to views of guest writers. If you wish to comment, email tom.burroughes@wealthbriefing.com.

Gold has always been a way to stay safe during complex economic conditions. As for now, the demand for gold is hitting records, and the price of the metal is reaching all-time highs. Silver is also projected to grow by the end of the year, mainly due to its supply deficiency. 

Given these dynamics, we witness a very interesting and unusual situation: silver and gold are rising simultaneously. Thus, it raises the question of whether investors should buy the metals and which is more appropriate for investing – gold or silver.

It is safe to say that if your goal is to secure your assets, investing in precious metals should definitely be taken into account as a longer-term investment. To do this, let's examine the dynamics of yellow and white metals and see how they can help investors despite the current economic uncertainty.

Gold strengthens its positions 
Currently, gold is at its peak. The price is fluctuating from $2,400 to $2,500 per ounce. The average cost for an ounce in the first quarter of 2024 was $2,338, 18 per cent more than last year. 

Gold prices in 2024

Despite reaching record value levels, gold production and discoveries are growing annually. The total supply of gold increased by 4 per cent; meanwhile, the production at the mines increased to 929 tons. Given this increase in production and the saturation of investment portfolios in the second half of 2024, the demand for gold might decrease.

Among the main factors pushing gold prices are the depreciation of currencies and increased money supply. However, I do believe this process will end shortly, and further price growth will be relatively inert. 

Investors who actively accumulate gold may eventually start selling it and lowering the price. Consequently, the gold market will be under pressure, and its value will decline. Nevertheless, an unstable geopolitical situation may change everything and give gold room for growth and reinforcement. 

Silver deficit pushes prices
As for silver, a study by the Silver Institute shows that despite a 7 per cent drop in global demand, it is expected to grow by 2 per cent to 1,219 million ounces by the end of this year. It is also noted that the global supply of white metal is less than demand for the third year in a row, and its production is declining. In 2023, the deficit amounted to 184.3 million ounces due to the growing demand for producing batteries and electric vehicles.

Silver prices in 2024


This problem of demand for silver exceeding the supply is present for the fifth year in a row. Moreover, reducing its production volumes worsens this situation – by the end of 2024, the annual production deficit could double, reaching 265 million ounces. 

The problems do not end there; we will see further shortfall growth. If this happens, the value of silver may increase even more. Investors and consumers aware of limited reserves will probably pay higher prices for this metal, strengthening silver’s value against a reduction in supply. In this case, the white metal could rise to historical resistance levels and approach $50 per ounce.

Gold/silver ratio
Let us also look at the gold/silver ratio – the current price of an ounce of gold divided by the cost of an ounce of silver. Today, this ratio remains historically high. As the chart below shows, the last time silver was undervalued compared with gold was in 2020, at the beginning of the Covid-19 pandemic. 

Gold/Silver ratio
 

The ratio typically changes during bull markets, signifying that gold becomes less valuable than silver or vice versa. The reason is simple: silver tends to be significantly more volatile than gold, and its price fluctuates based on market conditions. 

Conclusion: What to buy in the end?
Gold and silver are appealing investments both in the long and short term. To choose wisely between them, you need to understand their pros and cons. All in all, gold is a reliable asset in an uncertain environment, providing capital protection; meanwhile, silver is an asset with significant growth potential because of the demand. 

After you thoroughly analyse current trends and statistics in the metals market, check how these investments align with your strategies and goals. Based on this, you will be able to make an informed decision for the autumn of 2024.

About the author
Igor Isaev is a financial markets analytics expert with more than 20 years' experience in the stock and commodity market analytics and trading strategies development. 

With a PhD in Technical Sciences, Isaev’s expertise extends to stock exchange analytics based on mathematical models and big data. He is renowned for the innovative approach to using data-driven insights for optimising investment strategies in Mind Money.