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By Staff Reporters
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Commodities trading means you’re buying and selling raw materials rather than finished products (like a house) or financial assets (like stocks and bonds). Commodities are assets like corn, coffee, lumber and ore. One common form of commodities trading is investing in precious metals, namely gold and silver. As an investment asset, gold and silver have very different properties and uses in a portfolio.
CITE: https://www.r2library.com/Resource/Title/082610254
Gold vs. Silver: Utility
The biggest thing that differentiates precious metal investing from other commodity investing is utility. For most other commodities, investors judge value based on supply and consumer demand. If you want to invest in coffee beans, for example, you can judge prices by how much coffee people are currently drinking, how tastes are changing, etc.
Precious metals are different in that they have relatively low commercial utility. Compared with other metals, here are relatively few consumer or industrial uses for assets like gold and silver.
However, silver does have much more industrial and commercial use than gold. Approximately half of all silver bought and sold on the market is used commercially, with applications ranging from dentistry to electronics. (This is still quite small compared to other metals, which are almost entirely used for production.)
By contrast, gold has very few commercial applications aside from jewelry. This gives investors a basis on which to judge and predict price movements for silver, since you can make decisions based on factors such as industry need and how the global economy is moving.
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MORE: https://medicalexecutivepost.com/2022/09/22/the-gold-and-gold-miners-chart-book/
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Filed under: "Ask-an-Advisor", Alternative Investments, Investing | Tagged: commodities, COMMODITIES UTILITY: Gold V. Silver, gold, silver |
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