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Inflation has been steadily rising for the past few months, hitting 3% in January — the highest it’s been since mid-2024. As such, it’s a good time to reevaluate your investment portfolio. You’ll want to ensure you’re well-diversified in case of market fluctuations and are invested in assets that can protect your wealth as the value of the U.S. dollar continues to decline.
Precious metals are often a good choice during these re-evaluation periods, as they tend to protect against inflation and hold their value for the long haul. But which type of precious metal is best during periods of high inflation — gold, silver or something else entirely?
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Investing in gold bars vs. silver bars: Which is better during inflation?
Here’s what experts recommend in terms of precious metal investing when inflation is high.
Gold is less volatile
Experts say gold is usually a better choice in inflationary times, as “it’s typically less volatile than silver,” says Stephan Shipe, a flat-fee financial advisor and owner of Scholar Financial Advising.
This is because silver has more industrial uses than gold and is utilized in things like electronics, solar panels, conductors and appliances. So, as demand for these items ebbs and flows, so will silver’s value — and vice versa.
“Gold is better than silver,” Shipe says. “Gold has traditionally been the standard bearer for inflation protection.”
Just keep in mind: As inflation sends prices of other goods and services upward, silver and gold prices will rise, too, making it more expensive to buy in.
“If you wait until inflation is here, you might have less advantage than someone who purchased a couple years earlier,” says Brett Elliott, director of content at precious metals marketplace APMEX. “It’s never too late to start, but it’s also never too early.”
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Gold has history
Gold is also just more proven than silver, experts say. It’s been used for centuries as a store of wealth, and it’s traded and valued all over the globe.
“We’ve seen that gold throughout history does an excellent job of maintaining its purchasing power,” Elliott says. “It’s both an investible hard asset and a currency.”
That longstanding global demand makes the precious metal a smart move for investors with long time horizons — those looking to safeguard their wealth for many years to come.
“Precious metals are stores of value,” Shipe says. “They should not be thought of as a ‘get-rich-quick’ strategy or as a way to amass wealth. If they are doing their job in your portfolio over the long term, they are maintaining the purchasing power of the dollars invested, not growing at a rate faster than inflation.”
There are many ways to invest in gold
Physical gold is “almost always best,” Elliott says. “Held in physical form because that is the most surefire way to safeguard wealth in the event of hyperinflation or currency failure.”
But it’s not the only way to invest in gold. And if you want to diversify your portfolio, you may want to look at some other options, like gold individual retirement accounts (IRAs), gold exchange-traded funds (ETFs) and gold stocks, too.
“I prefer a mix of gold investments for inflation protection,” Shipe says. “A combination of physical bullion, direct gold ETFs, and some gold-adjacent companies — like miners — gives you exposure to a mix of inflation protection. ETFs have the advantage of being able to exit quickly, while direct investment in bullion should be thought of as a very long-term investment because of the transaction costs of selling it in the future.”
Consider investing in both
While gold is typically the best choice during inflationary times, both silver and metal can make for good investments. So if you’re not sure what to buy, consider purchasing both.
Mark Charnet, a financial advisor and president of American Prosperity Group, actually recommends investing in a variety of precious metals — not just one or two — using mutual funds.
“You could make the purchase of these precious metals continually through mutual funds that would buy not only gold and silver, but other precious metals too, like palladium and platinum, copper and nickel, too,” Charnet says. “This way, you’re not concentrated in just one metal that may be the wrong one at that time.”
If adopting this strategy, Charnet says to invest a small amount “consistently week after week, through good times and bad, over long periods of time.”
The bottom line
Both silver and gold can be smart assets to consider during periods of high inflation, but if you can only choose one, gold is typically best, experts say. If you’re not sure of the best way to use precious metals in today’s market, it could make sense to discuss your options with a financial advisor who can help you make the right moves for your portfolio and goals.
