Historically, investors have sought out gold and silver bullion coins as safe havens during times of economic turmoil. They have been viewed as inflation hedges that protect against the rising value of paper fiat currencies.
There are many reasons to buy physical precious metals, including their collectible value and investment potential. But which type of precious metals is right for you?
Collectibles
There are a wide variety of collectibles that can be valuable investments. These items can be based on an event, a place, a culture or an aesthetic.
Collectibles are often sold at a premium price because they are rare or unique. They have the potential to rise in value and offer a higher return on investment than other types of assets, like stocks or real estate.
Some of the most common types of collectibles are numismatic coins and silver bars. These can be used as an investment because they are legal tender money and have precious metal content.
However, they also have a higher risk of losing their value because they are not backed by the government and can be harder to liquidate during times of crisis. They can also lose their precious metal content in the process of being refined and can even be stolen. Therefore, it is important to choose a trustworthy dealer for your silver bullion and storage needs.
Investments
There are many investment options for those looking to diversify their portfolio. Stocks, bonds, mutual funds and exchange-traded funds are all common types of investments.
If you are interested in adding physical precious metals to your investment portfolio, you can purchase gold and silver coins or bars. These can be held at a third-party depository or you can take delivery of physical assets yourself.
However, the price of gold and silver tends to fluctuate more than other assets. This can make it difficult to manage portfolio risk.
Historically, precious metals have outperformed other asset classes. But they also have a tendency to experience boom-and-bust cycles.
This is why it is important to talk with a financial advisor before making an investment decision. They can help you determine if investing in precious metals is a good fit for your goals and risk tolerance.
Taxes
The cost of buying and selling precious metals can be high, especially when you take into account dealer markups and storage fees. This is why many investors have opted to buy physical bullion and sell it through a gold-backed IRA or other tax-advantaged investment vehicle.
Capital Gains and Sales taxes are also a factor to consider. Unlike most paper investments, gold and silver are tangible assets, meaning they must be reported on your tax return as income.
Depending on your tax bracket, any profits made on gold and silver are taxed at your marginal rate up to 28%. This is significantly higher than the long-term capital gains rates that apply to most stocks, bonds and other forms of paper investment.
In addition to the sales and capital gains taxes, you can also be subject to state-specific tax laws when buying or selling gold and silver. This can vary widely from state to state, and even between different types of gold products such as coins and bars.
Storage
Storage can be difficult, especially if you have large amounts of gold and silver. Often, collectors choose one of three options: keeping their bullion at home, in a safe deposit box at a bank, or with a third-party storage firm.
Whether you store your coins or bars at home, in a safety deposit box, or with a third-party firm, your storage decisions should be based on comfort and safety. This depends on the type of precious metals you own, where you live and your risk in terms of theft.
If you decide to keep your coins or bars at home, ensure they are kept in airtight containers and protected from rust and corrosion. The best options are lined wooden boxes and Mylar containers. Carbon can also be added to protect against tarnish, which is caused by hydrogen sulfides in the air.