This post contains the top 12 tips and tricks for investing in gold and silver. Tips, especially great for beginner investors, can save you from inflation and will help you decide in what shape to buy gold and silver, how to reduce the tax or where it is better to buy.
Gold and silver importance
Firstly, everyone must understand the importance of gold. Nobody wants you to know, but gold and silver should be a part of everyone’s portfolio. Most investors recommend around 10%-15% of the whole portfolio to allocate in gold and silver.
Especially gold, because only gold is real money. You can’t create it out of thin air. Nowadays, when the world is more dynamic than ever before, investment in gold and silver can be very important. You can find 7 reasons why to invest in gold and silver in this blog.
Nowadays, currencies around the world lose their purchasing power, because governments around the world print them. In the near future, real money – gold and silver, will play a crucial role before new currencies will be formed. A good example is Germany just before World War 2. You can read about it in this free PDF book written by Ray Dalio.
Invest only in physical gold and silver
The main reasons why people invest in gold and silver are to be outside of the banking system and to protect their wealth during economic and political uncertainties in the world, such as wars or financial crises.
Always invest only in physical gold and silver and do not trust anyone saying differently. Yes, you can speculate digital gold or silver digitally in the market, but real investing should be only with physical gold and silver.
Since physical gold and silver are tangible, cannot disappear, cannot be deleted or hacked, they are safe assets to protect your wealth. Most importantly, you can carry physical gold and silver in your pocket if needed in case of an emergency.
Where to buy physical gold and silver?
You can buy physical precious metals at your local dealer or online dealer. Moreover, when buying online you can choose to get your gold or silver shipped directly to you or you can store your metals in one of the vault around the world for small storage fees.
Digital gold and silver
You can buy gold and silver as physical or also as digital or so-called “paper” gold and silver. These digital gold and silver assets include Futures, ETFs, even gold mutual funds and other digital financial instruments.
Unfortunately, digital assets cannot protect you during economic uncertainties, because everything is digital. In some cases, digital markets can be even closed, so you wouldn’t be able to sell it.
It must be understood, that most of the digital gold and silver, such as ETF on gold (ticker symbol GLD), guarantees that you own gold. However, it is digital and I wouldn’t trust it as a long-term investment. In a very tough times, instead of getting your gold you could get only worthless cash.
Digital gold and silver might not protect you
While theoretically digital gold and silver are backed by gold or silver, however, in reality, I wouldn’t think so, because the combined value of these digital assets is much higher than the value of existing gold or silver above the ground.
That’s why there is a huge probability that by investing in digital gold and silver you accept some rules written in the small font. These rules, in case of any financial disaster, would allow companies where you digitally invested to pay you back with the currency.
Don’t get me wrong, digital gold and silver might be perfect for speculating purposes. However, gold and silver should be used as long-term investment tools and physical investing in those metals should be the only option.
Only physical gold and silver
It is possible to invest in mining company stocks. In fact, you can buy shares of a single company or the whole mining sector.
However, if you will invest in the mining sector it doesn’t mean that you invest in gold or silver. The stock price of mining companies does not always follow gold or silver market prices.
Investing in mining stocks is more suitable for bigger investors who want to invest huge amounts of money into precious metals for very long periods of time. However, it is not easy to find good investments.
I know a company called Capitalist Exploits, which educates about investing in the mining sector and offers exclusive investing deals to invest in alongside the owners of Capitalist Exploits. Check out their Resource Insider product by yourself.
Buying online vs buying at the dealer
Exist many people who afraid to buy gold and silver online. They prefer simply to visit a local dealer and purchase some precious metals there.
However, in most cases, buying gold or silver directly at the local dealer can cost you more instead of buying metals online and get them shipped directly to your home. The point is the dealers usually do not store any gold or silver in their stores because of security reasons.
If you want to visit your local dealer and buy some gold or silver, you have to tell them in advance how much you are willing to buy. After a few days, they will bring it to the shop for you. Moreover, depending on the supplier, they can charge you around 3% of the price of gold or silver you ordered as commissions.
In most cases, 3% of the price of metals is much more than you would pay for insured shipping!
Gold and silver dealers are smart and all packages they ship do not have any signs of what is inside. Moreover, they are always insured.
Selling your gold and silver
You can sell gold and silver back to your dealer where you bought it at any time. Moreover, you can sell it to another dealer or simply to another person. The best way is to sell gold and silver back to your dealer where you bought it from.
Before investing in gold and silver, search around for available domestic dealers to sell your gold or silver. Find out how much each dealer will pay for your metals to decide which one is the best for you.
When selling your gold or silver back to your dealer, you will always get less for the same weight of gold or silver than you paid when buying. This is because the dealers live from the spread between sale and purchase prices. Furthermore, they will purchase your gold or silver, even if they will know that the price of them will drop.
Take a look at the picture below where you can see the difference between a sale and purchase prices. This is a screenshot from a precious metals dealer. Below sales price is purchase price written in smaller font.
Moreover, you can notice that the price per gram differs for each coin. The most liquid coins (see chapter below) are the cheapest and thus the best for long-term investing.
Taxes on gold and silver when buying or importing
In most countries around the world, investment-grade gold has no VAT tax. On the other hand, silver is mostly subjected to standard VAT tax, because governments treat it as a normal, consumable material.
In some countries, lower VAT tax applies to silver, for example, in Germany, Switzerland or New Zealand.
Exist a few countries, where are no VAT tax on investment-grade gold or silver at all – Hong Kong, Singapore or Australia. In most states of the US, gold and silver products are without any tax as well.
Anyway, before investing in gold and silver you should do your own research about the taxes on gold and silver in your country.
How to buy silver without VAT tax
One option is to buy and store silver as coins in a country, where it is VAT free, like the US, Canada or Singapore. However, only silver as coins is VAT-free. The option to store your metals in the vault is better when investing big.
Almost each silver dealer offers you a service to buy and store your silver in one of the vaults around the world. However, keep in mind that this service costs a percent from your investment and you should find out how much it costs before using this service.
The second option is to buy in a country, where it is VAT free and bring it with you into your own country of residence. In this case, there might be some limitations, how much silver you can carry over the border.
I wouldn’t recommend, but theoretically, you can buy silver in a VAT-free country and get it delivered as a simple package to your country by a third-party courier, such as DHL. This option might work in Europe.
However, officially, when you buy silver in a VAT-free country and you want to ship it to your country through your silver dealer, you will have to pay a VAT tax of the destination country.
In conclusion, it is very hard to avoid paying VAT on silver.
Taxes on gold and silver when selling
When you sell your gold and silver for a profit, you have to report your capital gains to the government and pay capital gains tax. Of course, there are differences between countries and you should do your own research on your local requirements.
In some countries, capital losses can be offset against capital gains. Thus, the net capital losses may be carried forward indefinitely.
As an example, in Germany, if you hold gold and silver at least for one full year, then there is no capital gains tax.
Otherwise, if you hold it for less than one full year, and want to sell it, then you have to pay capital gains tax. However, it is allowed to earn around EUR 700 (each year this amount changes) from precious metals each year. From earnings above this amount, the capital gain tax must be paid.
Taxes on gold and silver
Before investing in gold and silver, check your local laws on capital gains tax.
Start investing in gold and silver low
Nowadays, investing in gold and silver is easier than ever because it is possible to buy gold and silver as coins or bars whose price starts just at a few dollars.
Many people somehow think that gold and silver are expensive. Probably because they saw only those big gold bullion on the TV or on the internet. However, you can buy gold or silver almost in any shape or weight, thus investing only as much as you want.
In particular, the coins are easy to store and transport. You can even carry them with you if needed without anybody noticing it.
Don't invest more than you can afford
Never invest more than you can afford. You should always invest your additional money and not the money you need for living.
Investing in gold and silver more than you can afford will make you observe the performance of your investments too often and this is bad. As a consequence, you will constantly monitor the price of your investments and then various thoughts will come that maybe today is the best day to sell or why I didn’t sell it yesterday when the price was high and so on.
The gold and silver must be used only as long-term investments, for wealth preservation purposes.
The point is that the prices of precious metals will always fluctuate. When investing in gold and silver you should never care about short-term market fluctuations.
If you will observe them too often, fluctuations in the market will stress you and will create bad emotions. These both are enemies for an investor.
Never take credit to invest
If you think that you can take credit to invest in gold and silver – it is a bad idea. While you can take the credit and invest, you shouldn’t.
Credit should be used for only one reason – to increase your productivity. Gold and silver preserve the wealth and they will not increase your productivity.
Moreover, if you think to take credit to buy gold and silver for speculation purposes, don’t do it! There is an extremely high risk to lose everything.
Diversify your investment
Especially when investing bigger amounts, consider diversifying your portfolio by investing in both gold and silver.
While the price of gold and silver mostly goes in the same direction, keep in mind that silver is widely used in manufacturing. For this reason, silver prices can increase when the economy recovers and needs silver. In fact, silver is widely used in most high value applications.
Another reason to diversify your portfolio is the cheap silver price. Currently, silver is extremely undervalued and is very cheap relative to gold. Look at the gold to silver ratio graph below.
In fact, the ratio was only two times in history at such highs and both times the gold to silver ratio decreased sharply. That in turn means that silver price increased much more than the price of gold.
Be sure that you are the owner of gold and silver if you store it abroad
When storing bigger amounts of gold or silver in any of the available vaults around the world, be sure that you are the owner of them. When buying your precious metals read the contract carefully and be sure that the company cannot lease, hedge or pledge your gold and silver.
I would suggest using a vault or store your precious metals abroad only when investing big in gold and silver. By storing your metals in the vault, usually, you have to pay a few percent from the price of your metals stored in the vault. So it doesn’t make sense to use vault for small investments.
You should also check the policies of the country where you store your precious metals. In short, aim at the countries with strong private property rights, so that the government wouldn’t be able to confiscate your gold or silver in any case.
Usually, countries with strong historical private property rights, such as Switzerland or Lichtenstein, are a good choice, while nowadays the vault in Singapore becomes a quite popular option.
Buy only liquid coins and bars
Liquidity is very important in case of an emergency or financial crisis if you would like to exchange your precious metals into cash or directly into goods. The most liquid are coins of gold and silver that are made by stable governments.
The most popular and the most liquid gold and silver coins include American Eagle, British Britannia, South African Krugerrand, Canadian Maple Leaf and Austrian Philharmonic.
Moreover, there are some other liquid coins, but these above-mentioned ones will never disappoint you.
When investing bigger, gold or silver bars are a better option, because heavier pieces of precious metals are always cheaper. Since silver is quite cheap, in many cases silver coins start to take too much place and investors look at the silver bars.
In this case, buy silver bars with a stamped coin sign on it, so-called coin-bars. In some countries (like Germany), buying and selling of such silver coin-bars are subjected to lower VAT tax. An example of such a silver coin-bar can be found here.
Avoid numismatic coins or bars
You can buy physical gold and silver both as simple coins or bars or as numismatic (collectible) coins, for example. In this case, the coins will be more expensive because the value of them is determined not only by the weight of the metal but also by the rarity of it or other factors.
If you are not collector, just avoid numismatic coins. Always aim to get as much metal weight as possible for the money you pay!
While numismatic coins worth more, most of the dealers care only about metal weight and not the coin itself. You will overpay while buying such coins and it will be hard to find someone who will buy them from you later for real collectible coin price.
Be smart and care only about the weight of the metal, not how it looks.
Avoid buying from eBay or Amazon
eBay or Amazon are not the right places to get gold or silver, especially for beginners. Also, avoid TV dealers or coin shows, because the products there will be almost always more expensive.
Firstly, the prices on eBay and Amazon do not change with the market each minute. Many official gold and silver dealers change their product prices automatically every 5 minutes (some dealers even change every 30 seconds) to reflect real gold and silver market prices.
Secondly, there might be some individuals who are willing to cheat you.
Thirdly, in the case of any doubts on your purchase, most probably, there would be no customer service that could help you if any problems with your shipment would arise.
Nonetheless, it is possible to find some good deals on eBay, but you should know what you do.
Tips for investing in gold and silver
The tips in this post are essential for smart investing in gold and silver. Always consider investing only in physical gold and silver. Moreover, check your local tax laws on buying and selling of precious metals.
Nowadays, buying online is the cheapest and safest method to invest in gold and silver for most individuals. However, avoid eBay or Amazon and buy from your domestic gold and silver suppliers online.
If you can, invest in coins or coin bars. These gold and silver products are usually subjected to lower taxes (country dependent). Moreover, coins and coin bars are quite liquid and it is a huge advantage when you will want to sell them. Furthermore, avoid numismatic coins because the price per gram is usually higher when buying.
After all, never use credit for investing. You can start investing in gold and silver with a few hundred.
Investing in gold and silver is much easier than it might look like. By knowing and using the tips, your investments will be probably cheaper and for sure wiser.
How can I invest in gold and silver?
Gold and Silver can be bought both as a physical asset (e.g. gold and silver bars or coins) and as Futures, ETFs, or other digital financial instruments.
However, it is always advised to have some physical gold and silver instead of “paper” metals, because physical metals are real and cannot be hacked or erased.
Buying gold and silver
Nowadays, physical gold and silver can be bought online just like anything else. On the other hand, you can visit any local gold or silver dealer.
However, from my experience I know, that local dealers usually take around 3% of the price you pay for your metals. Depending on the size of your purchase, simple shipping can be cheaper in most cases.
You can find more tips in this article: 12 Tips and Tricks for Investing in Gold and Silver.
Nowadays it is also possible to buy physical gold and silver and store it insured in one of many vaults around the world.
My researched dealers
I researched for my self and found great physical gold and silver brokers around the world, that have the best price and customer satisfaction ratio.
Go check the current gold and silver price by yourself. Click the broker name below to open their websites.
Want to learn more about gold and silver?
I know a perfect book for you which will present in detail more than 100 years of history. You will clearly understand our current economic situation.
Moreover, from history, you can understand the importance of gold and silver nowadays.
The book written by Michael Maloney: Guide To Investing in Gold & Silver: Protect Your Financial Future (<- Amazon link) is one of the best sources to understand our current economic situation. I highly recommend this book.