Gold and Silver Prices Are Rising. Here's Which Precious Metal May Have More Upside

In times of uncertainty, investors often flock to safe-haven investments, including precious metals such as gold and silver. Earlier this year, both were trading at record levels and looked poised to keep going higher.

That didn't end up happening, and both would end up crashing sharply. The turning point appeared to be the announcement that Kevin Warsh was President Trump's nominee for the Fed chair position. That appeared to inject some stability into the stock market, leading to a crash in gold and silver prices. While neither metal is back to the highs it reached back in January, they've both been rising higher in recent weeks.

Which metal is the better one to invest in right now? The key could be in looking at the gold-silver ratio.

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What does the gold-silver price ratio tell investors?

Gold is typically much more expensive than silver, but the extent of this difference is evident in the gold-silver ratio. Currently, the ratio is at about 67; gold is trading around $4,400 per ounce, while silver is at $66. Thus, gold is 67 times more expensive.

If there is growing concern about the economy, however, the ratio may tip even more toward gold, which is often seen as the ultimate safe-haven asset due to its role as an excellent store of value. Back in 2020, when the market fell into a panic due to the pandemic, the gold-silver ratio spiked to over 110. And during the Great Recession, it reached a high of around 80.

Given that it's now below 70, there may be room for gold to rise far higher -- if economic conditions get worse. For investors who are worried about that possibility, tracking the price of gold through the SPDR Gold Shares (NYSEMKT: GLD) can be an attractive option. It's up just 2% this year, but as gold has been rising of late, so too has the fund.

Investing in the SPDR Gold Shares fund can be a great way to diversify a portfolio

Gold prices can be volatile, since a lot ultimately depends on market risk and how concerned investors appear to be. On its own, the SPDR Gold Shares fund may not be a safe investment given its potentially wild swings, but it can serve as a good way to hedge against market uncertainty and to help diversify a portfolio. While silver can do the same, gold's track record in economic uncertainty makes it a more compelling investment, which is why it's the asset I'd go with today.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.