Ask anyone which is the best coin to buy – gold or silver – and you’re likely to get into a lively debate. Especially when the price of silver goes up. Which is basically whenever the economy is buoyant. Because unlike gold, where the demand is driven almost entirely by investment and jewellery manufacture, silver is a vital component in many different products.
When business is booming, the demand for new motor cars, electronics, solar panels, high end batteries and other products rises. Silver is used in the manufacture of these products, and many, many more. So up goes the price of silver. And, since both gold and silver bullion coins are bought and sold based on the value of the precious metal they contain, people start debating whether there is more profit to be made on silver coins.
But these are not the best coins to buy if you are risk averse! The silver price is much more volatile than that of gold. Just as it rises steeply in good times, it slides equally dramatically when demand slows. In comparison, the price of gold is much more stable. If you are a shrewd investor with your finger on the pulse of global money markets, you can do well with silver. If not, gold is the safer coin to buy.
Best coin to buy if you want more for your money
Gold is worth much more than silver. About 70 times more. Simply compare the current price of a 1oz gold Britannia coin (£1400) to that of a 1oz silver Britannia (just over £20). So, if you are on a limited budget, silver coins are much more affordable. You can enjoy all the advantages of owning bullion coins at a fraction of the cost.
If you are a UK taxpayer, one of these advantages is that silver bullion coins are exempt from Capital Gains Tax, but you will have to pay VAT on silver coins. Gold bullion coins are exempt from both VAT and CGT.
Another big advantage of owing any type of bullion coins is that they are private and safe. You can convert your money into a solid asset that you physically own … that you can see and touch. Unlike paper assets – stocks and shares, paper money, crypto currencies and even money in the bank – your asset is not dependent on another party paying out. Stock markets can crash. Currencies can be devalued. Even banks can go out of business – who can forget the panic when Northern Rock collapsed?
More expensive to store
Going back to the example above, if you had £1 400 to invest, you would be able to buy only one 1 oz gold Britannia coin. Or you could get 70 silver Britannias. You can hold one gold coin easily in the palm of your hand. But both hands aren’t enough to carry away 70 silver coins! Especially since the silver coins are bigger, because silver is less dense than gold. One Troy oz of pure silver is greater in volume than 1 oz of pure gold. So, if you want to make a considerable investment in silver bullion coins, you are going to need a lot more storage space.
You won’t be able to get more than about £9 000 worth of silver coins into a small safe deposit box. But the same box can hold a quarter of a million pounds worth of gold! Since fees for professional transport and storage are based on volume, silver may not be the best coin to buy for large investments.
Anyone who has owned silver jewellery knows that the metal tarnishes. So will your silver bullion coins. To keep them in the best possible condition, you will need to avoid handling them unnecessarily and store them in a cool, dry place with no exposure to the elements. For most people, that rules out keeping them hidden at home. You will need to pay for professional storage at a facility like The Royal Mint.
Pure gold, on the other hand, never tarnishes or degrades. So if you plan to retain your bullion assets for many years, gold is the best coin to buy.
Best coin to sell?
How easy is it to sell gold or silver bullion coins? Both coins are easy to sell, either privately or through reputable coin dealers. The Royal Mint buys gold and silver coins – including coins not produced by the mint – at the current spot price less a small fee.
However, since the price of silver is volatile, you may have to wait for the right time to sell your silver in order to make money. The gold price is more stable, which means you don’t have to wait for demand to rise before cashing in your asset.
Best coin to buy overall?
There are advantages to owing both gold and silver bullion coins. If possible, your best bet would be to include both in your portfolio. Good advice for those with plenty to spend, you may think. But what if you have a limited budget?
Having a small budget doesn’t mean that silver coins are your only option. Fractional gold coins offer the opportunity to invest in gold at literally a fraction of the price. For example, the smallest gold Britannia – the 1/10th of an ounce coin – will cost you just over £150 at the current market price.