This a question that we are getting all the time. Why is the silver price so much lower than the gold price? It is both precious metal and in demand all over the world.
We are going to look at the main reasons why gold is more valuable than silver and why the silver price is increasing a lot slower than the gold price. This will make it easier to understand why gold is the preferred precious metal investment. And, it will make it easier to decide if you want to invest in gold or silver.
There is a lot less gold available in the world
The first and most important reason why silver is cheaper than gold is that there is less gold in the world than silver. There is a lot more silver already mined and still a lot that needs to be mined. With gold, it is known that the amount of gold on the earth is getting low, dangerously low.
Because silver production is higher, fewer people are looking for it as an investment. Making the value cheaper. People are also using silver in everyday uses like utensils, computers, etc.
The costs of mining the precious metal differ
Did you know that it cost a lot more to mine gold than to mine silver? It is a long process to get a lot less gold from the ground than silver. This is due to the chemical extraction needed for gold.
Because it cost more to mine gold, it will automatically have a higher price to sell. Not many people realize that there is a different process between mining silver and gold. And, that gold is more expensive and takes a lot longer to mine.
Silver has a higher maintenance cost
Silver has higher maintenance costs. This might let you think that it means that silver is higher in value, but it doesn’t. When you are storing silver for years, you will see that the silver can tarnish and even corrode. Meaning that you can’t actually invest in silver for a long time like gold.
You will need to clean the silver on a regular basis and this can cost money. Costs that you will not have when investing in gold. And, people prefer gold that doesn’t need maintenance like silver. Decreasing the demand for silver bullion, decreasing the price of silver. It actually means that it is a higher risk to store silver for long periods than gold.
It can be confusing to understand why there is such a huge price gap between silver and gold. And, why the silver price is more affordable when people rather want to invest in gold? Because silver is more available and gold scares, the demand for gold is higher. And, the price increase if demand is more than supply. Adding things like higher mining prices, and the silver needs frequent maintenance, will automatically make gold more valuable and more expensive than silver.