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Overview: An investor’s outlook—gold or silver

Must-know: Why silver isn't the same as gold (Part 3 of 3)

(Continued from Part 2)

Whether investors should consider exposure to silver or gold, or both, partly depends on why they are allocating to precious metals in the first place. Those investors that view their position in precious metals, primarily as an inflation hedge may want to consider gold, which, at least historically, has done a better job of hedging portfolios against rising prices.

However, investors that are looking to play a cyclical rebound in the global economy may want to consider silver because silver prices are likely to benefit more from an uptick in manufacturing.

Market Realist – For investors who want to grab exposure to both silver and gold, you could consider the PowerShares Precious Metals ETF (DBP), which holds future contracts in both silver and gold. Investors could also consider moving to exchange-traded funds (or ETFs) including the Physical Swiss Gold Shares (SGOL) because it owns the gold, unlike the iShares Silver Trust (SLV) and the SPDR Gold Shares Trust (or GLD) which lease the gold. The Central Fund of Canada (CEF), which holds both gold and silver in the Canadian mint, is another avenue for investors to access gold and silver markets. For investors wishing to enter the physical gold and silver markets , physical funds such as the silver Sprott fund (PSLV) and the gold Sprott fund (PHYS) are good options. The following graph is a performance comparison of the Physical Swiss Gold Shares (SGOL), the iShares Silver Trust (SLV), the iShares Gold Trust (IAU), and the SPDR Gold Shares Trust (or GLD).

To understand the place for gold in a long term investor’s portfolio, read our series Retirement pick: Gold and the long-term investor.

Browse this series on Market Realist:

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