The Best Time to Start a Financial Plan is Now
by Tricia Bush, CPA, CFP®, Partner, Bestgate Advisors
Investing in Gold and Silver Bars or Coins
Submitted question: “Is investing in gold and silver bars or coins a good investment?”
There’s something timeless about holding a solid bar of gold or a gleaming silver coin in your hand. For centuries, precious metals have symbolized wealth and security. But are gold and silver smart investments today—especially in physical form like bars or coins? Let’s break down the facts so you can decide what role, if any, they should play in your financial strategy.
Historical Returns: How Have Gold and Silver Performed?
Over the long run, gold and silver have had moments of spectacular growth—but they’ve also lagged behind other investments like stocks.
Gold: From 1974 to 2023, gold returned an average of about 7.8% per year.¹ Its value surged in the 1970s, stabilized in the 1980s and 1990s, and climbed again during the 2008 financial crisis and COVID-19 era.
Silver: Silver’s long-term annual return has been closer to 5.5% to 6.0%, but its price tends to swing more dramatically due to both investment demand and industrial use.²
By comparison, the S&P 500, including dividends, has averaged 10% to 11% annually over the last 50 years.³ That seemingly small difference in return can add up to a massive gap in wealth over time.
What About Recent Stock Market Drops?
If you’re staring at red numbers in your retirement account, you’re not alone. The market has been turbulent recently, and it’s natural to wonder if gold or silver might feel safer. But here’s the key: those long-term averages include bear markets, recessions, and financial crises.
The S&P 500 doesn’t go up 10% every year. Some years it drops 20%; others, it jumps 30%. What matters is the trend over time.
Gold can offer short-term comfort during market downturns, but stocks have historically built more wealth over decades. If you’re investing for retirement 10, 20, or 30 years away, the long-term trajectory matters more than short-term headlines.
Liquidity: How Easy Is It to Get Your Money Back Out?
This is one of the downsides of owning physical precious metals. Stocks, mutual funds, and ETFs can usually be sold with a few clicks, and your cash arrives in a couple of days. But with gold or silver coins or bars:
You’ll need to locate a reputable buyer or dealer.
Most buyers won’t pay you the full market (“spot”) price. Expect to sell at a discount due to dealer markups and fees.⁴
Tax rules treat gold and silver as collectibles, meaning gains can be taxed at a higher rate—up to 28%.⁵
What About Safety and Diversification?
Gold and silver are often promoted as safe havens and inflation hedges—but the evidence is mixed.
In the high-inflation 1970s, gold performed well.
In lower-inflation decades like the 1980s and 1990s, precious metals underperformed stocks.
They can offer diversification, but they don’t consistently move opposite of the stock market.⁶
Also important: precious metals don’t generate income. You don’t earn dividends or interest while you hold them.
Think of gold like an emergency supply kit. You might not need it often, and it won’t grow on its own—but it could bring peace of mind if things get shaky. Stocks, meanwhile, are like planting a garden. You need to water and wait, but over time, they tend to yield more fruit.
Storage Tip: Where Do You Put Gold Bars?
If you’re thinking of buying physical gold or silver, storage isn’t just a detail—it’s a critical part of the plan. Bars and coins are heavy, valuable, and not covered by standard homeowners insurance. If you keep them at home, consider a fireproof safe—and alert your insurance company. Many investors choose offsite vault storage (offered by bullion dealers) for better security and coverage.
So, Are Gold and Silver Good Investments?
Here’s the bottom line:
Physical gold and silver can serve a role in a diversified portfolio—often 5% to 10% at most.
For long-term growth, equities have outperformed precious metals over nearly every time frame.
Physical metals are harder to buy, sell, and store than digital investments.
For some investors, owning something tangible brings peace of mind. Just be sure you understand the costs and limitations.
If you’re interested, start small, buy from a reputable source, and know that premiums over the market price can eat into your returns.
Disclosure: This article is for general informational purposes only and does not constitute investment advice. Please consult your own financial advisor before making any investment decisions.
Footnotes:
1 MacroTrends. “Gold Prices – 100 Year Historical Chart.”
2 London Bullion Market Association (LBMA). “Silver Historical Prices.”
3 NYU Stern School of Business. “Annual Returns on Stock, Treasury Bills, and Bonds: 1928–Current,” Prof. Aswath Damodaran.
4 Kitco Metals. “Buy & Sell Spreads for Precious Metals.”
5 Internal Revenue Service (IRS). “Topic No. 409 – Capital Gains and Losses” and “Collectibles Tax Rate Rules.”
6 World Gold Council. “Gold as a Strategic Asset: Historical Correlation and Portfolio Impact.”
