Gold IRAs vs. silver IRAs: Which is better with inflation rising again?
The economy is going strong right now. Employment is up and consumer spending remains high. But it's not all good news.
Inflation has recently reversed course and started rising again. As a result, the Federal Reserve has kept interest rates elevated — meaning pricier mortgages, credit cards and loans for the average consumer. The stock market has also been a bit more volatile recently.
Because of these drawbacks, many are turning to precious metals, which have long been considered safe-haven investments in times of high inflation. Which metal is best, though? Here's when experts say a gold IRA may be the best choice — and when you might want to turn to a silver IRA instead.
Find out what precious metal IRA options are available to you now.
Why a gold IRA may be better with inflation rising again
A gold IRA may be a good choice if you just want some safety and stability in the face of rising inflation.
"Though gold and silver are often spoken about together, the investor seeking an inflation hedge should generally prefer gold," says Roger Silk, CEO of wealth management firm Sterling Foundation Management. "Gold is primarily desired because it is 'real money.'"
Gold also tends to be less volatile than silver, Silk says.
"Gold may be more likely to hold its value than silver, because gold has fewer non-monetary uses than silver," Silk says. "Silver is used in a variety of manufacturing applications which make it more akin to an asset than to money."
Though not related to inflation, gold also tends to do well in times of high geopolitical tensions. For example, since Israel invaded the Gaza Strip last October, gold prices have soared, notching new record highs several times.
"Gold is a traditional hedge against inflation, economic hardship, and uncertainty and is a go-to safe-haven asset," says Bas Kooijman, CEO of investing firm DHF Capital. "The asset has strongly benefited from current geopolitical tensions."
Compare the benefits of investing in gold online now.
Why a silver IRA may be better with inflation rising again
A silver IRA may give you the chance to grow your money more than gold will. Its price tends to fluctuate more, and since it's used in various manufacturing capacities, it has the potential for much higher demand.
In fact, Kooijman says "demand for silver could outstrip supply for the third year in a row."
This would drive silver prices up, allowing investors to increase their returns — at least in the near term.
"Silver is threatening to break into the $30 range, which hasn't been a normal trading range for silver in over a decade," says Russell Shor, senior market specialist at trading platforms Tradu and FXCM Markets. "Many view silver as undervalued at the moment."
Silver is also more affordable than gold, so if you only have a small amount for your initial investment, it may be the better choice as well.
"Silver remains accessible to a wider range of investors due to its lower price," Kooijman says. Just remember, "It's a more volatile asset compared to gold and records wider price swings."
Both are smart options
Gold and silver IRAs can both be smart investment options in today's market, experts say.
"Since 1975, gold and silver prices have been highly correlated. This suggests that both could play a similar role within a portfolio," Kara Murphy, chief investment officer at Kestra Investment Management, explains.
Just be careful how much you allocate to these precious metals — whichever you choose. Most financial professionals recommend dedicating no more than 5 to 10% of your portfolio to gold or silver.
And make sure to shop around for your silver or gold IRA company. Fees can vary widely, so shopping around can help you get the best deal.
