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Silver investment is smaller and less liquid than gold investment
In 2016, the demand for silver was US$100 million and that of gold was US$100 million. Years ago, silver was traded at trillions of dollars and gold was traded at trillions. At present, industrial demand accounts for % of the total demand for gold, while for silver it is %. Industrial demand has a greater driving force on silver.
Silver investments are more volatile than gold investments
The small and illiquid market, combined with fluctuations in demand between industrial and stored-value uses, result in increased volatility in silver trading.
Silver has been significantly more volatile than gold in recent years. However, for aggressive investors, this means an opportunity to buy low and sell high. Silver has experienced double-digit growth in seven of the past ten years and outperformed the S&P in seven of the same years. Since the global financial crisis, silver investment has increased dramatically, and there are more channels for investing in silver. Silver, like gold, is used as a hedge against inflation and economic stress.
The silver bull market has lasted for ten years, and the correlation between silver and the US dollar is . During periods of dollar depreciation, silver becomes an excellent hedge. While silver's own price is volatile, it provides a hedge against overall market volatility over the long term.
Silver also helps with portfolio diversification, which means it reduces overall risk.
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