Gold vs silver: 4 key differences you should know

For years, investors have turned to both gold and silver because it may provide a hedge in a potential economic or market downturn, as well as during sustained periods of rising inflation. Understanding the different uses of the two metals, their economic sensitivities and technical characteristics can help you determine which metal may benefit your portfolio.

Here are four factors to consider when deciding to invest in gold or silver:

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, according to the World Silver Survey. As a result, silver tends to be more responsive to economic changes compared to gold.¹  When economies take off, demand tends to grow for silver.

The volatility 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.²

While silver may diversify your portfolio with moderately weak positive correlation to stocks, bonds, and commodities, gold is considered a more powerful diversifier.³ The yellow metal has been consistently uncorrelated to stocks, and has had very low correlations with other major asset classes—and with good reason: Unlike silver and industrial base metals, gold is less affected by economic declines because it has fewer industrial uses. 

Per ounce, silver tends to be less expensive than gold, which recently hit record highs, making silver more accessible to small retail investors who wish to own the precious metals as physical assets. Gains in silver value tend to lag those of gold.

One of the attractions of gold and silver is that there are many ways to invest in each of them:

• Physical metals: Unlike stocks and bonds, you can purchase gold and silver as physical assets, as either bars and coins. Holding bars and coins can have downside, though. For one, investors often pay a premium over the metal spot price on gold and silver coins because of manufacturing and distribution markups. You should also consider storage and even insurance costs. 
• Exchange-traded funds: ETFs have become a popular way for investors to gain exposure to gold and silver, without the responsibility of storing a physical asset. You can buy shares and keep them in a traditional brokerage account. The fund’s operator is responsible for handling the costs of holding a physical supply of gold, or silver, and charging an expense ratio. But investing in an ETF doesn’t give investors access to the underlying metals. Also, some precious-metal ETFs are taxed as collectibles and don’t benefit from lower long-term capital gains rates.
• Mining stocks and funds: Some investors see opportunity in owning shares of companies that mine for gold and silver, or mutual funds that hold portfolios of these miners.
• Futures: Gold and silver futures present a unique opportunity for investors to hedge against inflation, speculate on price movements, and gain exposure to precious metals without the need to physically hold them. Unlike exchange-traded funds (ETFs) or mutual funds, futures do not incur management fees, and their tax implications are divided between short-term and long-term capital gains. However, it’s important to note that contract and other fees may apply when trading futures.⁴ The price movements of these metals can reflect global supply and demand, economic growth, or instability, making them a valuable indicator for investors. 

When considering which of these investments may fit into your portfolio, be sure to keep in mind individual goals, timelines, and risk tolerance.

Article Footnotes

¹ Yahoo Finance, History Suggests Silver Could Follow Gold’s Rise, April 2025 – https://uk.finance.yahoo.com/news/history-suggests-silver-could-gold-133005476.html

² Bullion Vault, Gold Volatility Top Silver’s  the Most Since 9/1, May 2025 – https://www.bullionvault.com/gold-news/opinion-analysis/gold-volatility-price-silver-stocks-140520252

³ The Street, Analyst revamps gold and silver outlook ahead of 2025 - https://www.thestreet.com/investing/stocks/analyst-revamps-gold-and-silver-outlook-ahead-of-2025

⁴ Each futures trade is $1.50 (per side, per contract, plus exchange fees), excluding cryptocurrency futures trades, which are $2.50 (per side, per contract, plus exchange fees). In addition to the per contract per side commission, futures customers will be assessed certain fees, including applicable futures exchange and NFA fees, as well as floor brokerage charges for execution of non-electronically traded futures and futures options contracts. These fees are not established by E*TRADE Futures LLC and will vary by exchange. For more information about pricing, visit etrade.com/pricing.

CRC# 4879451 10/2025