--- title: "Should You Invest in Gold or Silver?" description: "" canonical_url: https://trendshare.org/how-to-invest/should-you-invest-in-gold-or-silver markdown_url: https://trendshare.org/ai/should-you-invest-in-gold-or-silver.md published: 2012-09-27 last_updated: 2026-02-15 content_license: https://trendshare.org/about/disclaimer --- # Should You Invest in Gold or Silver? Source: https://trendshare.org/how-to-invest/should-you-invest-in-gold-or-silver Updated: 2026-02-15 # Gold vs Silver Investing in 2026: Pros, Cons, Taxes Gold prices—the price per ounce of bullion or coin, such as [Kruggerand](https://en.wikipedia.org/wiki/Krugerrand) or [American Eagle](https://en.wikipedia.org/wiki/American_Gold_Eagle) gold coins—have shot up in the past several years. Silver prices have followed suit (see [the current price of silver](https://trendshare.org/how-to-invest/the-current-price-of-silver-today), for example). If you listen to commercials or read advertisements, prices can only go up. For a full map of precious metals topics, see [precious metals for value investors](https://trendshare.org/how-to-invest/precious-metals-for-value-investors). Should you invest in precious metals in 2026? Not necessarily. These money metals seem alluring, but they're not always as shiny as they appear! ## Gold and Silver Data Sources Use these authoritative sources to verify spot prices, historical returns, and market structure before making any allocation decisions: - [LBMA precious metal prices](https://www.lbma.org.uk/prices-and-data/precious-metal-prices) for reference rates and fixing data. - [World Gold Council](https://www.worldgoldcouncil.com/) for gold market research, demand trends, and pricing context. - [CME Group COMEX gold](https://www.cmegroup.com/trading/metals/precious/gold.html) and [silver](https://www.cmegroup.com/trading/metals/precious/silver.html) for futures pricing and contract specs. - [USGS Mineral Resources](https://www.usgs.gov/centers/national-minerals-information-center) for production, reserves, and commodity statistics. - [IRS collectibles guidance](https://www.irs.gov/taxtopics/tc409) for U.S. tax treatment of precious metals. ## Is Gold or Silver a Good Investment in 2026? Why buy gold or silver? From a purely economic perspective, without any aesthetic or sentimental factors, you have two reasons: either to make money or not to lose money. Neither reason is satisfying, if you believe prices are rational. Why would gold prices go up? What makes a precious metal a hedge against insflation? That's an interesting question, based on the characteristics of the precious metals themselves! Gold, silver, palladium, and platinum all have practical uses. You can admire a pretty lump of precious metal. You can make it into jewelry or coins. You can use it as a component in industrial processes. Gold is useful for electronics, dentistry, and aerospace applications. Silver is used in photography, solar panels, and batteries. Platinum shows up in catalytic converters. For a portfolio perspective, compare metals with more traditional choices like [safer investment options](https://trendshare.org/how-to-invest/what-is-a-safe-investment) and review the tradeoffs of [target return expectations](https://trendshare.org/how-to-invest/what-is-a-good-annual-rate-of-return) before committing meaningful capital. Beyond that, a physical gold coin or bar of silver bullion sits on your shelf and collects dust. Any value it gains is independent of its existence. It's just a lump of metal. It can gain or lose value due to circumstances outside of your control. Year after year, a gold or silver coin keeps sitting around, and there's nothing you can do to it itself to affect its price. What about factors outside of your control? Precious metal prices tend to move in directions opposite of the market. If there's a market drop (like in 2008), gold prices tend to rise. You can't count on that happening, but diversifying your investments into classes like stocks, bonds, and commodities can help you keep from losing your entire investment. Gold and silver prices *can* rise. They may get more valuable because they get more scarce—mining and refining might produce far less gold or silver one year—but by the same token, they might lose value because the get more common, too. Can you predict that? Gold and silver prices might increase because demand increases. More people want to buy them. (That's probably why there are so many advertisements to buy gold or silver!) Then again, demand might *decrease*. Can you predict that? Maybe they'll do neither. Maybe they'll hold their value. Maybe $1000 in gold bullion today will be worth about $1000 in gold bullion in five years, and you'll only have lost inflation. That's better than losing everything, right? ## Precious Metals versus Stock Investments Compare the uncertainty of gold as an investment to a good business—one that makes money. Even a lemonade stand that costs $100 to start and makes $125 every summer produces $25 in profit the first year. Every year, the business produces more money. [The money a business produces is the most important metric of success](https://trendshare.org/how-to-invest/earnings-matter-most). What money does bullion make on its own? None! You can do a lot with the cash that business generates. At any point you can take your profit as the owner of that lemonade stand. You can [pay yourself a dividend](https://trendshare.org/how-to-invest/why-do-companies-pay-dividends). You can invest back in the business, to serve more customers or build more stands. Every great business worth owning makes real money every year. This profit gets returns to investors as dividends or [stock buybacks](https://trendshare.org/how-to-invest/why-do-companies-perform-stock-buybacks) or other investments to make even more money in the future. Meanwhile, what's the market for your Kruggerand? It's not as [easy to sell](https://trendshare.org/how-to-invest/what-is-liquidity) as a share of [Coca-Cola](/stocks/KO/view). You need to have someone evaluate its condition and then find a buyer willing to negotiate with you for some fraction of what it might be worth. You *could* melt it down for its value as a fixed amount of gold, but that's illegal for many currencies and you won't necessarily get the full value of the coin. The investor implication is important! Liquidity can be a problem, and there's no historical way to predict whether you'll earn a 10 per cent return every year or see countercyclical drops due to circumstances outside of your control. ### Tax Implications of Investing in Precious Metals Also be aware of the tax implications of investing in precious metals. In the United States, for example, [the IRS classifies precious metals as collectibles](https://www.investopedia.com/articles/personal-finance/081616/understanding-taxes-physical-goldsilver-investments.asp). This means that if you sell your gold or silver for a profit, you may be subject to a higher capital gains tax rate than you would for other investments, such as stocks or bonds. 28% versus 20% long term capital gains rate will eat into your returns pretty quickly—that's a 40% higher tax rate! ## Do Precious Metal ETFs Make Sense? Ah, but you don't have to buy physical gold or silver, right? You can buy an ETF. That takes care of storage and liquidity issues right? That's true, and that in and of itself is a good reason to consider an ETF over physical precious metals. But what does the ETF own? If you buy an ETF that owns physical gold or silver, you're still subject to the same market forces that affect the price of gold. If you buy an ETF that owns shares of mining companies, you're subject to the same market forces that affect those companies, including their operational costs, management decisions, and the overall demand for the metals they produce. In both cases, you still have exposure to the same market forces pricing the volatility of the underlying commodities themselves! ## Buy and Sell Gold, Silver, Platinum, and Palladium If you *do* own gold and want to turn it into cash, how can you do that? How easy is that? You can buy and sell gold and silver coins at a coin shop, but then you're paying for the collectible value of the coin as well and *that* fluctuates based on perceived scarcity of the coin and the quality of the minting. Unlike stocks which get traded in shares, precious metals trade in [troy ounces](https://en.wikipedia.org/wiki/Troy_weight), also abbreviated as oz. (What you probably think of as an ounce is an [avoirdupois](https://www.govmint.com/coin-authority/post/troy-ounces-vs-avoirdupois-ounces/) ounce.) A troy ounce is slightly heavier than an avoirdupois ounce. A troy pound contains twelve troy ounces. Traders trade precious metals in troy ounces. The *current price of gold* (or *spot price for gold*) is always the cost of a single troy ounce. You can't really buy precious metals like gold or silver on the open stock market. There's no single stock symbol for gold, for example, though the pseudo-stock `GOLD` or `GLD` tracks its price. There *are* specialty funds you can buy which track precious metal prices or any other investment, but keep in mind that the underlying commodity—the lump of metal someone dug out of the ground—still has all of the advantages and disadvantages of a lump of inert metal someone dug out of the ground. Two other metals are classified as "precious": palladium and platinum, and they're rarer than gold. As rare as gold is,there's even less platinum in the world. You won't find platinum or palladium coins to trade and you're unlikely to buy a bar of bullion. To invest in Palladium, purchase a physical-metal backed ETF called NYSE:PALL. To invest in Platinum, buy the ETF called NYSE:PPLT. If you're curious about jewelry applications, you might wonder how to invest in diamonds. Again, you should think about whether buying physical diamonds which sit in your drawer is the best option or if diamond stocks are better for you. Be cautious; the Diamonds ETF (NYSEARCA:DIA) tracks the [Dow Jones Industrial Average](https://trendshare.org/how-to-invest/dow-sandp-nasdaq); to buy diamond stocks, track individual mining companies such as Anglo American (LSE:AAL), the mining conglomerate which owns De Beers, or Rio Tinto ([NYSE:RIO](/stocks/RIO/view)), which owns mines in Canada and Australia. ## How Much is a Gold Bar Worth? Gold bars are often sold in two forms, both measured by weight: - A standard gold bar weighs 400 troy ounces. You will usually see this traded by bullion dealers and held in reserve by central banks. If you're watching a heist movie, they're moving 27 pound (12.4 kilogram) bars. - A kilobar is a lot smaller, weighing one kilogram: 32.15 troy ounces. If the current spot price of gold is $1500/troy ounce, a standard gold bar is worth $600,000. A kilobar is worth $48,225. Silver bars are sold in the same fashion, with standard bars (400 troy ounces) and kilobars (32.15 troy ounces). A silver bar then sells for the current silver spot price times the number of troy ounces in the bar. ## What's a Precious Metal Worth after a Market Crash? What if there's no cash available? How are you going to trade a bar of bullion for a deer carcass and some hunting rifle ammunition? Is that a fair trade? Sure, that sounds like a wild example, but the [goldbugs](https://www.investopedia.com/terms/g/goldbug.asp) pushing their investment schemes seem to think that in an apocalyptic setting where there are no stocks, bonds, investments, markets, dollars, or governments, bartering bars and coins and nuggets will be more useful than bartering water purification tablets. Suppose instead you buy gold coins or silver or platinum at a coin shop. You can sell them back there too, but you'll be trading on the collectable value of the coin, which fluctuates based on the price of the metal and the scarcity and quality of your coin.

Even if you buy gold coins, you're not necessarily better off. In that post-apocalyptic world, owning a chicken which can lay eggs every day and make more chickens is more valuable than owning a shiny handful of metal that can't make anything else. ## Investing in Coins versus Bullion As you can tell, there's an important difference between buying a lump of a precious metal and buying a pretty, shiny coin! Think of it this way. Some scribbles on canvas could be the work of a third grader, an elephant, a robot, or Pablo Picasso. The cost of materials might be the same, but people are willing to pay millions for the Picasso because of the quality and rarity. The same goes for coins. The Canadian government, for example, can mint [Canadian Silver Maple Leaf coins](http://www.mint.ca/store/content/bullionProductDetails.jsp?itemId=prod1630032&cat=Products&nodeGroup=About+the+Mint) all year, and people will buy them for the silver spot price if it's higher than the face value of $5. (Of course, if the spot price were lower than $5, it'd be a huge bargain.) Similarly, a Morgan Silver Dollar from 1904 could be worth thousands ($3000? $8000?) in good condition. In this case, you're going to have to do your research to figure out rarity and even *find* these coins... but the thrill of the hunt can be similar to the thrill of finding a good business. Many countries promote their mints as tourist attractions and investments. For example, Australia's [Perth Mint](https://www.perthmint.com/) produces beautiful gold, silver, and platinum coins *and* offers government-guaranteed storage of investment metals without you having to take possession of the metals. If you're interested in coin investment, start with [A Guide Book of United States Coins 2021](https://www.amazon.com/gp/product/079484796X/ref=as_li_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=079484796X&linkCode=as2&tag=trendshare0c-20&linkId=aba09f970b0566da62955a66cd0444a2). This is the well-loved guide to coin collecting. You'll find that the best silver coins to invest in are American Eagles or Morgan Silver Dollars, for example. Remember that you're looking for rarity and quality beyond the spot price for the underlying precious metal. ## Precious Metal Returns versus the S&P 500 How do precious metals compare to stocks? Over the long term, stocks have outperformed precious metals. The S&P 500 has returned about 10% per year over the long term, while gold has returned about 1.5% per year and silver has returned about 2.5% per year. (These are average returns; actual returns can vary significantly from year to year.) Here's a chart comparing the annual percentage change in the price of gold, silver, and the S&P 500 from 2015 to 2024: For more details, see [a backtest comparing gold bullion to the S&P 500](https://curvo.eu/backtest/en/compare-indexes/gold-bullion-vs-sp-500?currency=usd) and [another backtest comparing silver bullion to the S&P 500](https://curvo.eu/backtest/en/compare-indexes/silver-bullion-vs-sp-500?currency=usd). ## Should You Buy Precious Metals? Why invest in gold? Why invest in silver? When you understand this, you'll know whether precious metals make sense as an investment. In summary: - Precious metals like gold and silver *can* help your portfolio diversification, but they come with risks and uncertainties. - Precious metal prices are volatile and influenced by factors more difficult to predict than good businesses. - Precious metals have tax and liquidity implications that can affect your returns. - Some people consider gold and silver a hedge against inflation. Great returns are a better hedge! Does it matter whether it's gold coins, silver certificates, or platinum bullion? Not really; the flaws of one are the flaws of the other. If you've already figured out why not to invest in silver, the same arguments suggest why not to invest in gold, platinum, diamonds, or whatever! These investments are unpredictable and risky, just as if you'd invested in precious art or other commodities which don't themselves inherently make money. If you're looking for a safe, conservative investment, don't try to outsmart other investors. Buy pieces of companies that produce real value. ([Buy the S&P 500 Index Fund](https://trendshare.org/how-to-invest/buy-the-s&p-index-fund) to start!) If you want a few gold coins or silver bars around for their aesthetic value, they have their uses—but you can find much better options for most of your portfolio.