How Rare is Silver Compared to Gold – And What That Means for You

At first glance, gold grabs all the glory when it comes to precious metals investing. But don‘t underestimate silver – it‘s actually much more abundant in nature and could potentially become the more valuable metal one day. Let‘s analyze the unique properties and outlook for both metals so you can decide on the best mix to own.

Silver is Dramatically More Plentiful in Nature

Silver is approximately 19 times more abundant than gold in the Earth‘s crust, according to geologists. This is because the physical and chemical conditions that concentrated gold in crustal rocks via geological processes were far less favorable for silver. For example, gold‘s high mass means it is easily concentrated via gravity and fluid transport. Silver‘s properties made it much harder to accumulate in large nuggets and deposits rather than diffuse broadly.

So while gold became highly concentrated into seams and veins, silver diffused widely making it much more uniformly distributed in crustal rocks. Above ground stocks of silver are actually even more scarce than gold. Keep silver‘s natural abundance factor in mind as we examine how demand and pricing compare.

But Mining Output Doesn‘t Reflect That Abundance

You might expect that with silver so much more plentiful, annual mining output would far exceed gold. But that‘s not the case currently:

Silver mine production is only about 8 times that of gold right now. Why doesn‘t mining output better reflect silver‘s much greater natural abundance? The answer lies in differences in industrial demand.

Vast Industrial Uses Impact Silver Mining

Unlike gold, silver has wide applications in technology and industry. Silver is the most electrically conductive metal, even better than copper. It also has the highest thermal conductivity of any metal and is highly reflective. This makes it an essential component in electronics like circuit boards, semiconductors, and superconductors. For example, your smartphone contains around 0.35g of silver!

Silver‘s unique properties also make it vital for solar panels, medical devices, RFID chips, electric vehicles, and 5G infrastructure. As these next-gen technologies keep expanding, industrial demand for silver will rise. Some analysts think silver mine production may fall behind in coming decades.

Could Silver Become Rarer than Gold?

We may reach a point where silver gets so scarce that it becomes even more valuable than gold! That scenario is still speculative, but illustrates a key difference between silver and gold. One metal is highly valued mainly for investment, the other also has critical (and growing) industrial uses.

For example, a surge in industrial demand in 1979-1980 saw silver gain an astonishing 379% in just 12 months. It briefly became more expensive than gold! While still unlikely, silver theoretically becoming more rare than gold can‘t be ruled out.

Historical Silver:Gold Ratio Shows Extremes

Another way to compare relative values is by looking at the silver:gold ratio. This tracks how many ounces of silver it takes to buy one ounce of gold over time. The average ratio over the last 20 years has been around 63. But historically it has reached extremes:

• Average in 18th century: 15
• All time high: 100 in 1991

Right now at around 78, silver seems expensive relative to gold based on historical norms. The ratio tends to fall when economic optimism takes hold. Could we see it drop back to 25 or 30 as industrial appetite for silver keeps rising?

Gold Seen as Ultimate Safe Haven

So why does gold still command a huge premium over silver? There are a few key factors driving investor psychology:

• Rarity – Gold‘s much higher scarcity and stock-to-flow ratio enhances its "preciousness"
• History – Gold has a 2,500+ year track record as trusted money and enduring wealth
• Inertness – Gold‘s chemical inertness makes it stable and reliable unlike reactive silver

This combination makes gold the ultimate safe haven asset during economic and geopolitical crises. Its high density means gold is easy to store and transport in high values securely.

So while silver has outperformed gold at times, gold stands alone as true financial insurance and protection against systemic risks. You can think of silver as a venture capitalist and gold as a conservative banker!

Consider a Mix of Both Precious Metals

Rather than viewing it as gold vs silver, it‘s wise to own some of both if you want precious metals exposure. Here are some portfolio allocation tips:

• If investing < $10k, favor silver for its higher upside potential

• With > $10k, allocate at least 25% to silver and majority to gold

• Rebalance annually based on performance – silver may periodically outpace

• If economic boom ahead, tilt towards silver; if crisis looms, favor gold

Owning some physical silver provides you growth potential, while gold should be your rock-solid financial fortress. Together they can help diversify and strengthen your investment portfolio as you navigate changing economic cycles and market risks ahead.