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Investors often turn to silver when making an entry into the precious metals market. Well, one of the reasons that many people prefer silver at the start of their investment journey, is simply because of the gap in gold and silver prices. This is officially known as the silver-gold ratio. Of course, gold has always been more expensive than silver and in recent years, silver was 85 times cheaper than gold. This makes buying gold bars such a 1 kilo gold bar unaffordable for many investors, although smaller sizes such as 1oz and 100g are still within reach.
Now, in 2020, we are on the brink of another global financial crisis. Over the last few years, several geopolitical factors have pushed the global economy to the edge. As a result, investors have turned to gold to hedge their risks and the spot price of gold has risen to more than US$ 1700 per ounce. Therefore, in March 2020, silver became 125 times cheaper than gold. The ratio has now fallen slightly to 113:1. This is quite literally a ‘silver lining’ for investors who want to buy the white metal.
The primary benefit of buying silver bars is the lower cost per gram when compared to smaller silver coins. Silver bars can be bought in large sizes such as 5kg, and yet still be affordable due to silver’s low price. Silver bars have lower production costs, which results in cheaper prices per gram. When buying a bar, you can, therefore, acquire a larger volume of silver for the money you invest. Silver bars are abundantly available in the market and the common denominations are 1 kg and 5 kg. The silver market is eventually expected to rise due to escalating industrial demand. So, investing in bars provides you with an opportunity to lock in great value and book profits in the future.
Storage of silver bars is also easier due to their convenient size they can be stacked. If you buy silver bars from a reputed dealer, in all probability, you can also opt for a storage solution. Many dealers will store your silver for you in secure vaults. If you choose to receive your purchase at your own home, storing bars inside your home vault is easy as the bars are rectangular and occupies less space.
Many investors prefer to purchase coins since UK silver coins (such as silver Britannias) have a face value, which makes them legal tender. Therefore, they are Capital Gains Tax (CGT) exempt. Silver bars are not legal tender, which implies that CGT would apply to profits that you make at the time of selling. Selling some before the tax year end and some after, can ensure that the annual CGT allowance isn’t breached, so no tax applies.
Physical Gold is a highly reputed precious metals broker with a team of silver experts. You can call physical gold on (020) 7060 9992 to discuss the most appropriate buying opportunities in silver bars. Likewise, you can also contact the team online and discuss everything related to your silver purchases and build a strong and robust portfolio.
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Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.