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Should I Buy Gold or Silver in 2022?

Last Updated: September 11, 2022 by Mitt Wilson

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six gold bars stacked in a pyramid

Gold Highlights

Historically, gold has been considered an excellent hedge against inflation. It offers a variety of investment options including Gold IRAs, ETFs, Gold Stocks, Gold Bars and Coins and more. Learn much more about gold in our article below. 

an uneven stack of six silver bars

Silver Highlights

Silver offers many of the same benefits that gold does, and can also be purchased through a precious metals IRA and via bars, coins, and more. It's a tangible asset and historically has been cheaper to purchase than gold.

Have you decided to invest in precious metals?

If so, then I think you're probably making a smart move. Precious metals have so many benefits that it's not even funny.

You can preserve wealth in a physical format that retains its value really well. It even grows in value most of the time. Precious metals anchor your wealth or portfolio in times of inflation and economic instability.

Investing in precious metals is a great decision, but it's only the first decision. Your next move might be looking for places to buy precious metals, but you'll quickly realize you have another choice to make. As you look at options for buying precious metals, you'll notice that nearly all of them deal with gold and silver.

Is it better to buy gold? Or should you get silver? They're both precious metals that offer many of the same benefits, but they're not identical by any stretch of the imagination.

I don't know if this is a decision I can make for you. However, as an analyst of the precious metal industry, I know quite a bit about both metals. I'll be happy to share that knowledge with you so you can make an informed decision about which is best for you.

six gold bars stacked in a pyramid

Gold: An Overview

When you think about precious metals, gold is always the first one to come to mind. Kings and emperors have used it for coins and wealth for thousands of years. Pirates and explorers alike sailed around the world looking for it.

For a time, gold was the standard upon which many national currencies were based. It's still an international standard for investing and maintaining wealth. I think gold should be the first precious metal you consider, but it shouldn't be the only one.

Gold Pros and Cons

Gold has many advantages for owners, but it's also got some potential downsides. Let's take a quick look at both the pros and cons to give you a better idea about the upsides of Gold, while also keeping you informed about any potential downsides.

Pros
  • Hedge against inflation
  • Preserves value
  • Diversify your portfolio
  • Simple asset
  • Wealth preservation during economic disaster
Cons
  • Storage can be risky and expensive
  • Doesn't generate passive income
  • Taxes can be high
  • Premium prices
  • Returns not guaranteed

Historical Performance

According to Statista, gold's annual average return from the start of 1971 until the end of 2019 was 10.61% per year. I urge you to remember that this is an average. The Great Recession, the recent global pandemic, and the 1970s were all booming times for gold, but the 1980s and 1990s were not.

Gold Values

Gold prices fluctuate all the time, but I can tell you that in the last few years that this metal has been floating around the $2,000 mark. According to Investopedia gold hit a then historical high of $2,075 in August of 2020 during the early pandemic. It cooled off for a while but went over the $2,000 mark again in March of 2022 due to the war in Ukraine, as investors flocked to the usual safety and comfort of gold during a geopolitical and economic crisis.

an uneven stack of six silver bars

Silver: An Overview

I've always noticed that silver seems to take second place to gold. In the Olympics, gold medalists are triumphant over silver medalists. Dealers and brokers usually refer to "gold and silver" but rarely "silver and gold". That's fueled plenty of other cultural norms and references where silver is thought of as good but gold is great, and we even instill this in our kids at a young age. 

Is it actually true? I'm not going to argue that Olympic medals should be put into a new order, but I'm also going to tell you that in precious metals that silver might not always be a second choice behind gold.

Silver Pros and Cons

Silver has many of the same benefits as gold, but it still is a unique metal all its own.

Pros
  • Tangible asset class
  • Physical wealth preservation
  • Cheaper to buy than gold
  • Growth in value
  • Easy to store
Cons
  • No dividends or yields
  • Risk of theft
  • Liquidity complications

Historical Performance

According to U.S. News, the last century of silver has seen its value go up by nearly 30-fold. It was $0.68 per ounce at one point in 1922, and $18.68 in August of 2022. Silver has done 67% better than inflation in the United States.

Silver Values

Despite an impressive century, SilverPrice.org points out that it's been quite a roller coaster. Silver hit highs in the early 1980s and then again in 2011 at almost $50 per ounce. The precious metal plummeted since then, bottoming out at around $14 per ounce in 2016. Since then, silver has fluctuated between $16 and $20 per ounce.

a large pile of gold and silver bars

How to Buy Gold and Silver

Gold and silver are both precious metals that you can buy. I'm afraid I have to tell you that you have another decision to make here. There are multiple ways to buy either one, and you'll have to choose which one is right for you.

Precious Metals IRAs

These are commonly known as gold IRAs, but you can usually invest in gold, silver, platinum, and even palladium with them. You need a broker to set one of these up. The metals you purchase are stored in a depository as long as the account is active.

You get the usual IRA benefits with these accounts. Any earnings or rise in value in the account isn't taxed while the account is active. If you wait until age 59 1/2 or later to make your withdrawals, your taxes will be reduced greatly.


Read about our list of the best precious metals IRAs here.

Coins

Many gold and silver coins are eligible for purchase in a precious metal IRA. You can buy any of them for your own private collection or personal investment outside of an IRA. The values on these coins might be higher than just the spot price of the potential scrap metal contained within.

There are two reasons for that. The first is simply collectibility, as there are many coin collectors that like having certain pieces in their personal possession. Secondly, there can be even a few art collectors that enjoy the visual aesthetics of a coin, even if they're not typically coin collectors, per se. In both cases, demand goes up, so values and prices go up.

Bars

Gold and silver bars are when each precious metal is melted and formed into a physical bar. These are usually produced by private mints instead of government facilities. They're very easy to stack for compact storage.

Their value is usually nothing more than their melt value, and they usually have the lowest premiums over spot value. Gold bars are typically 1 kilogram each. Silver bars are usually produced in 100-ounce units.

Bullion

Gold and silver can also be bullion in coin form. Not all coins are actually government tender or produced by government mints, but they might be accepted as legal tender. This is more likely if they are gold content than silver.

Gold and silver coins are usually harder to fake than bars that might be hollowed out or have non-precious metals inside. Coins are also easier to ship and transport in many cases. Their values tend to be higher than bars on average.

Jewelry

Gold and silver are both used in making jewelry. This happens in many cultures, and it does impact the prices and values of gold, at least. Gold prices are usually at their highest every October, which coincides with the wedding season in India, and demand for gold jewelry is also high.

Jewelry probably has more of an impact on gold prices than on silver, but it affects both. Buying jewelry might not be the best route for investing in either metal, however. From a precious metal value, a lot of jewelry is only worth the spot price for potential scrap without any consideration of aesthetic or collectible value, except in rare cases. Another huge risk is how much jewelry is either not pure or just fake.

Gold vs Silver: How Do You Choose?

I'd advise you to consult your financial advisor about the specific percentage of your portfolio to have in precious metals, although 5% to 15% is a common range.

If you don't have a personal financial planner, then I strongly suggest you get one before you choose between silver and gold.

How do you eventually pick between them?

You Should Choose Gold Over Silver If...

  • You want to use less physical storage
  • You want a metal that doesn't tarnish
  • You want a hedge against inflation
You Should Choose Silver Over Gold If...

  • You want the cheaper asset to buy
  • You're okay taking more risk
  • You want to see industrial applications drive up values

Mitt Wilson

About the author

Mitt Wilson has a background in journalism and has been writing about investing for more than two decades. In his free time he enjoys spending time with his wife, touring the United States, and golfing.

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