Invest Silver from Home
There are two methods to procure silver from your own home.
Both methods have their own advantages and disadvantages, and each
will require some very important planning. While many believe that
all silver is the same, this isn't the case. In fact, some silver
is a great
investment, some other silver is a very poor investment. The
distinction, though, isn't always clear, and there are always
exceptions to every rule. We'll start first with silver bullion,
and then market traded silver to understand the pros and cons of
Physical silver bullion has an attraction that is unmatched by
most other metals. It is shiny, brilliant, and best of all, you
can hold it in your own hand. These properties are what have made
it such a popular metal in industry, jewelry, and now as an
investment. Physical bullion's biggest advantage is that it is in
your possession at any time. While that may seem like a hard to
spot advantage right now, we'll discuss later other purchasing
options where silver you own isn't actually in your possession
Another benefit to silver bullion is that it is fun to own.
Silver bars look great stocked away in a safe, and many collectors
and investors alike enjoy the brilliance of one ounce silver
coins. To many, having fun with their investments isn't a feeling
they've experienced before. Where stocks and
bonds are digits on a computer screen, your physical silver
bullion holdings might be relics of centuries ago!
Taxation and Silver
But we also have to consider Uncle Sam. To the government, any
silver bullion is considered to be a collectable, whether
purchased for the purpose of collectors' value or for the simple
metal content. As you may or may not be aware, earnings on
collectors' items are taxed differently than earnings on an
A collectors' item, regardless of when it is bought or sold, is
always taxed at your income tax rate. This rate ranges anywhere
from 10% up into 30%, depending on your income and other
variables. The capital gains tax rate, however, has never extended
past 20%, and rests now at a low 15% of gains. So, if you were to
buy bullion as a member of the 35% tax bracket, expect to pay more
than twice as much on your gains as someone who purchased silver
via other methods.
ETFs and Trusts
Exchange-traded funds and holding trusts are the only two ways
that individuals can purchase silver without paying the income tax
rate on gains. Exchange-traded funds are very similar to
mutual funds, except that they trade on the open stock
exchange, just like stocks. Thus, for a small commission and
annual fee, you can buy part of a silver trust that stores silver
on your behalf. Trusts, as they are defined in the physical metals
markets, are formed by companies to sell silver to their clients.
Since the IRS considers trusts to be inherently different from
plain bullion, then they also earn the same low tax rate of only
15% on long-term capital gains.
Steps for Purchase
ETF shares or buying into a Trust does take a little more work
than buying silver through a coin dealer or bullion vendor.
Exchange-traded fund shares, as mentioned above, are purchased on
stock market. Thus, to buy into silver ETFs, expect to pay
$5-20 per trade (buy or sell) plus an annual fee of roughly .5-1%.
This requires an investor to open a brokerage account, as well.
Buying directly into a trust can be done through a number of
different companies, and is considered to be the best deal for the
passive investor. Via a credit or debit card, or even a routine or
one-off bank transfer, you can buy allocated silver to be stored
in a trust on your behalf. One of the largest companies in this
segment is the Perth Mint, a company that buys silver, stores it
in a trust, and sells it onto its clients for a tiny fee.
Buying physical silver is the easiest method, and can be done
online through bullion brokers or even on Ebay. Alternatively,
many local coin shops would happily welcome your business. Take
into consideration the overhead of the coin shop, as well as the
shipping costs. It is not unheard of for investors to pay as much
as 5% over spot for their metals. Thus, if silver were $30 per
ounce, an investor would pay the coin shop or broker $31.50 per
ounce; however, as the silver remains in the hands of the
investor, there is no annual fee as is assessed on both ETFs and