Should I buy Gold or Silver?

Many investors ask us whether they should buy gold or silver when investing in precious metals. For those with a limited budget it is worth taking the time on deciding whether to buy gold or silver, but the savviest investors will usually own both. While gold can offer the ultimate insurance and protection against uncertain economic times, silver is usually a more speculative investment. Both metals are commonly invested assets, but silver is an entirely different investment which can realise substantial profits despite the initial VAT outlay. It’s because of these differences that owning both gold and silver together can be beneficial.

Gold v Silver

A speculative investment

Silver does not offer the same level of security as gold, due to its price volatility, however it
remains a physical asset that is incredibly useful. This means that like gold, silver will
always have an intrinsic value, and as a finite asset cannot simply be devalued by inflation.

One of the big differences of silver over gold is it's industrial demand. Silver is used widely in
electronics and a number of other manufacturing channels. This means that high production
output will mean higher demand for silver. The price fluctuations of silver result in more
opportunities to buy and sell at profit, making it a more speculative investment. The price
can move significantly and quickly, requiring careful monitoring of the world's financial sector,
but offers buying and selling opportunities.

Silver has proven to be a very good investment. In the three years between December 2008 and
December 2011, the silver price increased 233%, substantially outperforming many other popular
investment type such as stocks, property and even gold. 2019 saw silver gain 28.9% at its peak,
and outperformed gold in Dollars, again demonstrating its appeal as a speculative investment.

At the end of 2024 silver is up more than 100% for the past five years, and has gained over 35% in the last year alone. With gold climbing to new all-time highs in 2024, and the gold-silver ratio still historically high, it still feels like silver could be considered undervalued and has further gains to make as it catches up with gold.

UK Gold v Silver Tax Considerations

Unlike gold bullion, all silver bars and coins are taxed at a rate of 20%. Paying Value Added Tax or
VAT often encourages investors to turn to gold. However, silver is still a good option, it is simply
advised that buying silver is very much a long term investment and should be owned for at least
12 months.

Ideally, silver investments should be kept many years, however it is believed based on recent history
keeping your silver for at least a year may be long enough to recover the 20% VAT initially paid,
and to return a profit. For example, if an individual had invested £10,000 (£12,000 including VAT) in
silver in December 2008, their silver bullion would have been worth over £33,000 three years later in
December 2011.

Pre-owned silver could give investors in silver an alternative option. With lower premiums, second hand
silver bars or second hand silver coins are a great way to buy silver closer to spot price, meaning more
silver for your money.

Gold and Silver Portfolio Diversification

Owning physical silver bars and silver coins can offer an effective way of diversifying an
individual’s investment portfolio, therefore spreading risk and providing additional protection
against other investments.

Despite silver being relatively low versus the 2011 peak, it is widely thought that silver will
continue to strengthen in price and demand due to the fact that silver is still widely used in
industry despite its status as a precious metal. As one of the best electrical conductors in
the world, more and more tech is using silver in a variety of forms; in electric cars, solar
panels, and in the newest computers. Read our silver price forecast for our thoughts
on the prospects for silver.

Easy to exchange

With the world economy mired in uncertainty and slowdown, many individuals choose to buy
silver as an alternative form of currency to protect themselves against any possible situation
where money loses much or all of its value.

It's more than a bit of a stretch to say that fiat currency (Pound coins and notes) will be scrapped
by the Bank of England and the economy will collapse, but the point is that British bullion coins
DO have a face value and ARE legal tender in case some disastrous event does happen.

With this in mind, silver offers a different option to gold, as small units of silver - such as 1oz coins -
provide the ideal currency to exchange or pay for everyday items due to their relatively small value
per unit. In comparison, gold coins and bars, which are around 80 times more valuable than silver,
would be better used to exchange for much larger items or assets.

1kg Silver Bar Best Value

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from £1,067.40

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CGT Free

1oz Silver Britannia Coin Best Value

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from £38.76

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CGT Free

2024 1oz Silver Britannia Coin

Awaiting Stock

from £39.24

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Related Links: If you have any questions about gold bullion investment, please feel free to contact our knowledgeable and friendly team on
0121 634 8060 who will be happy to talk your through any queries you may have. Alternatively, you can email us at sales@bullionbypost.co.uk
and we will get back to you as soon as possible.