Should You Invest in Gold, Silver or Both?

If you’ve only recently made the decision to invest in precious metals – and it’s a good decision, by the way – then you may still be wondering whether to put your money into gold or silver.

A lot of the answer depends on how much you have to invest, how much time you have spare and what your aims are. If you’re already working full-time, bringing up kids and running a home, then a longer-term investment like gold might be better for you.

On the other hand, as a (probably) fairly young investor with maybe not so much spare cash, silver might be more attractive simply because its unit price is cheaper. You can start off your silver stash with as little as $10 if you visit here, for example.

You need to know how to work with silver

Silver isn’t as valuable as gold and its value also fluctuates much more widely than gold’s. This can be used to your advantage, though, especially if you’re prepared to do your homework.

Silver’s volatility means more chances for profit

The very fact that silver dips and rises more than gold means that you have more chances to sell at a profit over the time you hold it. Of course, a 2% rise in the price of silver won’t net you as much as if it were gold, but it’s still a profit and if you can do this regularly, you’ll be laughing. Silver is known for its sudden upticks so if you buy at the bottom and get lucky, well, you’re in clover!

In the long term

If you’re planning a long-term investment in silver, then the IRS sees precious metals as a collectible. This means that if you sell within 12 months of investing, any profit you make is classed as ordinary income and it’ll taxed at short-term capital gains rates. If you hold on for more than 12 months, any profit will be seen as long-term gain and you’ll only face taxes of up to 28%. This is good news of you’re in a federal tax bracket of 28% or higher because you’ll only pay that 28% and if your tax bracket is lower, you’ll only pay at your existing rate.

Silver is a great diversifier

If you’re not so new to investing and you already have the beginnings of a good portfolio then silver is a cheap and effective way to diversify it. It’s important to diversify your portfolio because you’re protected against one of your other investments making a sudden loss. Silver should continue to perform well, especially now as it’s being used more and more in industry rather than in jewelry.

Silver makes for easier trading than gold

Many people are worried about the economy crashing and the banks failing. Chances are that this won’t happen, but there’s no harm in having some security in the form of physical metals. Gold isn’t as useful as silver in these scenarios because it’s worth too much – you won’t want to waste an ounce bar on a few groceries, for example. An ounce of silver is much more appropriate here, whereas your gold bars should be saved for larger purchases.