What Are The Benefits of Investing in Silver?

So you’ve decided to start investing in stocks, real estate, or precious metals. If so, have you considered investing in silver? While not as prominent or popular as it’s contemporary, gold, silver offers plenty of benefits to the wise investor. In this article, we’ll talk about a few of them and outline why investing in silver might be a good idea for you going into the future.

Inflation Hedge

You’ve undoubtedly heard that gold, silver, and other precious metals are typically considered to be inflation hedges. But what does that even mean? It means it holds value due to its inherent worth as a precious metal. When the dollar is falling, inflation is rising, and interest rates are low, silver is right there retaining its value. Right now, gold isn’t actually keeping up with rising inflation—but silver is still going strong. So, if you’re looking for a steady inflation hedge, for the time being, silver is the best bet right now. 

Less Costly

Investing in precious metals can start getting a little pricey after a while. Silver is typically less costly than any of the other metals such as gold or platinum. However, silver prices tend to fluctuate over time. For the period between the past six months, prices have only gone up. They continue to climb but might fluctuate a bit. Between 1979 and 2019, silver experienced several downturns that tarnished the metal in investors’ eyes, but it steadily climbed back up to become a popular choice to add to a portfolio.

Unique Investment Options

Compared to gold, silver doesn’t have the same level of liquidity. But that doesn’t mean it’s a bad thing. In fact, there are plenty of unique ways to invest in silver. There’s the popular, enduring favorite of the exchange-traded fund which can be a low barrier to entry for silver investing. Other forms of investing in Precious Metals might include futures contracts or mining stocks that require some level of prediction and attention to the future. There are also stocks, retirement accounts backed by precious metals, and certificates. But if “paper” isn’t your thing, you might want to get into the physical side of investing. In this manner, you can acquire valuable silver coins or bullion as well as silver bars, such as one Troy ounce or a 10 oz silver bar that can be stored safely and bought or sold at your whim.

High Demand

Silver is sometimes seen as a “runner-up” to gold, so it isn’t traded as much or as often. That makes it a bit less liquid than gold. But liquidity aside, the metal is in exceptionally high demand. Demand generated from its use in many electronics—one of the many thriving industries that use the metal in a wide array of products/devices—means it’s growing more than usual. The metal is up over 70% and is facing less market volatility these days.  

No Tax On Purchasing Metal In Certain States

Buying precious metals in some states will require you to pay sales tax on the purchase of the metals. This does not apply to all states, so be sure to understand your local state requirements/laws before making purchases. Arizona, for example, doesn’t tax the purchase of physical silver such as coins, bullion, bars, or jewelry. Your mileage may vary. It’s when you sell and obtain returns on your precious metals that you pay a little more attention. That doesn’t mean you won’t be responsible for a capital gains tax on certain investments—because you definitely will be subject to such things on your federal taxes. Physical metals are taxed at a capital gains rate up to 28%. The lower the tax bracket, the lower the rate. But that’s only for long-term gains. Short-term gains are taxed at the normal rate. Any Returns on physical precious metal Investments do need to be reported on your taxes, so be sure to follow the appropriate tax laws as you go on your investing journey. You’ll need to use Form 1099-B. Taxes owed on the cost of metals is determined by the cost basis of the metal itself. Your accountant or financial advisor can help you navigate the strange world of taxes so you can enjoy your precious metal investments without worrying about taxes as much.

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