Willing to invest in Gold or Silver? Here are 4 differences that matter most | EXPLAINER

During periods of economic uncertainty, market volatility and high inflation, investments in gold and silver have been considered safe-haven assets for investors. Both precious metals, gold and silver, can help diversify an investor's portfolio. However, they differ in terms of price, risk, returns and demand. According to a Morgan Stanley report, understanding the differences and the unique characteristics of each metal can help investors decide which one is better suited to their investment goals.

So if you are planning to invest in precious metals but are confused between gold and silver. Here are 4 differences that matter most.

Willing to invest in Gold or Silver? Here are 4 differences that matter most

1. Gold offers better diversification benefits than silver

According to a Morgan Stanley report, gold is considered a more powerful diversifier; here's why. Gold is less affected by economic declines because it has fewer industrial uses. Gold has historically not moved in line with stock markets and has maintained a low correlation with other key investments. Unlike silver and industrial base metals. Silver may diversify your portfolio with a moderately weak positive correlation to stocks, bonds and commodities.

2. Silver is more affordable than gold

When we compare gold and silver based on affordability, silver is more affordable than gold. It is cheaper than gold on a per-ounce basis, making it a more affordable option for retail investors looking to buy physical precious metals. While gold has recently touched record highs, silver offers a lower entry point. However, silver prices typically rise more slowly than gold, meaning its gains often trail those of the yellow metal.

According to Morgan Stanley's report quoting the World Silver Survey, more than half of all silver’s demand comes from heavy industry and high technology, including smartphones, tablets, automobile electrical systems, solar-panel cells and many other products and applications. As a result, silver is generally more sensitive to changes in the economy than gold. As economic activity picks up, demand for silver usually increases because it is widely used in industries such as electronics, solar panels and manufacturing.

4. Silver prices fluctuate more than gold

The fluctuation in silver prices can be two to three times greater than that of gold on a given day. While some traders see this as an opportunity, such volatility can be challenging when managing portfolio risk, says Morgan Stanley's report.

Gold and Silver Prices on July 31 (Friday)

Gold prices fell on Friday, July 31, after rising for two straight sessions. However, the precious metal was still on track to end the week and the month with gains, supported by a weaker US dollar, easing inflation and the US Federal Reserve's decision to keep interest rates unchanged.

On the MCX, gold was trading 0.58 per cent lower at Rs 1,42,401 per 10 grams, while silver was trading 0.44 per cent lower at Rs 2,18,991 per kg on July 31.

Gold prices in India on July 31 (Friday)

Gold prices remained largely stable across major Indian cities on July 31. The price of 24-carat gold stood at Rs 1,43,650 per 10 grams in Delhi and Chennai, while Mumbai, Kolkata and Hyderabad quoted Rs 1,43,500. Meanwhile, 22-carat gold was priced between Rs 1,31,540 and Rs 1,31,690 per 10 grams across these cities.

Silver prices in India on July 31 (Friday)

Silver prices varied across major Indian cities on July 31. Delhi recorded the highest rate at Rs 2,25,900 per kg, while Mumbai quoted the lowest at Rs 2,17,900 per kg. In Kolkata, Hyderabad and Chennai, silver prices stood at Rs 2,21,800, Rs 2,24,900 and Rs 2,23,900 per kg, respectively.