Which To Buy, Gold Or Silver?

Gold and silver are on a tear, but only one can be your best option. This strategist breaks it down.

Both gold and silver have been hitting multi-month highs, but that’s about where the similarities end. Silver [SICV1 34.07 -0.568 (-1.64%) ], as both a precious metal and one with industrial uses, tends to trade more on industrial trends, while gold [GCCV1 1763.00 -12.60 (-0.71%) ], a fiat currency, trades on expectations about money printing and inflation.

Michael Dudas, a senior research analyst at Sterne Agee, favors silver over the next four to six weeks, thanks in large part to investor bullishness about the latest round of quantitative easing. “Ben Bernanke is silver’s best friend,” he says, and speculative data on silver is picking up. Also, “risk on in the marketplace, silver’s going to get a bump.”

But Rebecca Patterson, chief investment officer at Bessemer Trust, cautions that silver’s lower liquidity makes it a riskier bet. True, “when you have risk appetite improving, things that are less liquid just tend to rally faster,” which suggests silver could outperform gold for the very short term, she told CNBC’s Melissa Lee. Nonetheless, Patterson says, “I tend to be a little bit more of a wimp. I want to protect my capital,” so she favors gold. “The supply dynamics are more supportive and the central bank and sovereign wealth fund buying are more supportive medium term.” (Read More:The World’s Biggest Gold Reserves)

Patterson also worries that the upside potential for stocks may be less than investors expect, and “if it disappoints us in the next few weeks, gold’s going to outperform again.”