Silver is generally thought of as the little brother of gold in the precious metals market. Gold is worth a lot more money per ounce and it is the precious metal that people think of when they picture precious metals in general. Gold is the most commonly used currency over the last 5,000 years or so, and the United States has only been off the gold standard since 1971.

As a result, gold is still thought of as being synonymous with currency. The truth, though, is that silver has a similar place in the world. It has been used as a currency for just as long as gold. However, it is a lot less reactionary in relation to inflation and economic developments than gold is.

That’s not to say that silver doesn’t follow the same general trends. When the stock market is down, silver will be up just like gold. When there is inflation, silver will still make an upward movement along with gold. However, gold will move first, fastest and strongest. While this is a good thing at the beginning of a correction, it can be a negative on the tail end when you want to be able to sell off your precious metals and get back into the stock market.

As a result of its lower volatility, there is growing reason to put a larger percentage of your portfolio into silver, as opposed to other portions of the precious metals market.

The Intrinsic Value of Silver and the Precious Metals Market

Gold primarily holds its value because it always has, and people know it to be valuable. It is used in jewelry because it looks nice, and it is often used as an accessory for the wealthy. However, gold is not used all that often outside of jewelry. Its industrial uses are limited to circuitry and other conductive materials in electronics. While those uses are increasing and thus increasing the demand for gold, it still falls behind silver in the utility department.

Silver is also frequently used in electronics, perhaps even more often than gold. In addition, it is used in RFID technology, which is expected to be used even more often in the future. Radio frequency identification is a technology that enables people to tag items with it and then track it and receive data from its movement.

Silver is also used in the field of biology and for medical purposes, which are not expected to change in the future. Because it is a lot cheaper than gold, it is also used more often for food utensils, which are so common that they are known as silverware.

Since silver is a lot cheaper than gold per ounce, it is highly unlikely to be replaced by gold for all of those industrial purposes. As a result, silver has a higher intrinsic value. At its core, that is what keeps a precious metal valuable.

As a result, even though the risk of gold losing its value at some point is relatively low, the risk with silver is even lower. For hedging against economic losses or inflation, silver is certainly worthy of heavy consideration in a portfolio that is heavily invested in the precious metals market, along with gold, platinum and palladium.

Silver for Beginners

Silver can also be the better investment in the precious metals market for newcomers because its movements do occur a little bit slower. The lower price per ounce also makes it a more attainable investment for the average investor, and especially for the newcomer.

As people begin to realize the benefits of silver over other precious metals, it may even rise more in value due to the increased volume of trades.