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Which To Buy, Gold Or Silver?

Monday, 24 Sep 2012 | 9:50 AM ET
Gold Bull and Bear
Hans Peter Merten | Photographer's Choice | Getty Images
Gold Bull and Bear

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, as both a precious metal and one with industrial uses, tends to trade more on industrial trends, while gold , a trades more 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."

Buy Gold or Silver?
As gold nears its year-to-date high, silver hits a six-month high. What the gold and silver rally mean to stocks, with Mike Dudas, Sterne Agee, CNBC's Melissa Lee and the Money In Motion traders.

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."

You can see the whole debate on the video clip.

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Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm.

Learn more: The essential vocabulary for currency trading is on Key Terms Dictionary. Top currency strategies are broken down for you in Currency Class.

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