About this video

• Video Title: Where to invest Gold or Silver?
• Channel: Zerodha Varsity
• Speakers: None explicitly named in the transcript.
• Duration: 00:06:12

Overview

This video compares gold and silver as investment options by analyzing four key parameters: demand drivers, historical returns, volatility, and correlation with other assets. It aims to help viewers make an informed decision about whether to invest in gold or silver, or neither, and emphasizes the importance of diversification in a portfolio.

Key takeaways

• Demand Drivers: Gold's demand is driven by central banks, investors, and jewelry purchases, making it react to fear, security, and tradition. Silver's demand is split between being a store of value and industrial applications (over 50%), making it react to innovation.
• Historical Returns: Over the long term (1995-2024), gold has historically provided slightly better average annual returns (approx. 10.5% in INR) compared to silver (approx. 9.8% in INR), although both metals have performed well.
• Volatility: Silver is significantly more volatile than gold and even stocks due to its much smaller market size, making it unpredictable and unstable. Gold is generally a more stable investment.
• Correlation and Diversification: Gold and silver have a high correlation (around 0.7), meaning they tend to move together, offering little diversification benefit when held together. Gold has a lower correlation with equities than silver, making it a better diversifier in a portfolio that already holds stocks, especially during crises.
• Investment Strategy: Gold is recommended as a stable, predictable investment for protection during global meltdowns, while silver is considered a more tactical play suitable for short-term opportunities if one has the risk appetite and specific reasons. Neither metal should form the entirety of a portfolio, as they do not compound or generate income like equities.

The video doesn't specify if it's the "right time" to invest in silver. Instead, it highlights that silver is a more tactical play that can deliver strong returns due to supply crunches or spikes in demand. However, it also points out that silver is significantly more volatile and unpredictable than gold, making it difficult for most investors to capitalize on these opportunities. The video suggests that gold serves the purpose better for most investors seeking stability, especially during economic downturns.