Silver Bars vs Silver Coins: Which is a Better Investment Option?

The Difference Between Silver Bars & Coins

Here are some crucial points of differences between silver bars and silver coins.

Silver coins get recognised as legal tender, whereas bars only classify as silver bullion
Silver bars come in various sizes, whereas silver coins come in some standard sizes
Silver coins have a higher collectable significance than silver bars
Silver bars generally have a higher level of purity as compared to silver coins

Advantages of Investing in Silver Bars

Investing in silver bars can be a beneficial decision due to several advantages you get. For starters, it is a tangible asset recognised worldwide. It also has a higher degree of liquidity as compared to silver coins because the buyer effort is minimal.

Silver bars are also more cost-effective than coins. For instance, a 1-kilo silver bar may be cheaper than buying the same quantity in coins. This is because bars are easier to produce than coins. Although the difference may be marginal, its cost increases as the value increases.

Moreover, you can also purchase silver bars online from your preferred dealer. Here is an overview of the benefits of investing in silver bars.

Silver bars are tangible assets
Serves as a hedge against inflation
Efficient in storing and transportation
Possesses a high degree of liquidity
Diversification of investment portfolio
Recognised as a store of value
Cost-effective

Disadvantages of Investing in Silver Bars

While there are several benefits of silver bars, there are some disadvantages. Here is an overview of these drawbacks:

A lower resale value
Difficult to sell smaller quantities
Risk of counterfeit items
Possesses a high degree of volatility
Storage and transportation can be expensive

Advantages of Investing in Silver Coins

Silver coins are also a great option for financial growth and security. This form of silver is commonly used and therefore holds a higher resale value. This means that the 50-gram silver coin price may be more if compared to a bar of the same quantity.

Therefore, investing in silver coins is a great financial decision, and you can easily purchase silver coins online, just like you can buy silver bars online.

Here are some more advantages of investing in silver coins:

Possess a high resale value
Easier to sell smaller quantities
Lower chances of counterfeit items
Rare coins have additional value

Disadvantages of Investing in Silver Coins

Here are some disadvantages that you should know:

More expensive as compared to silver bars
Storage and transportation difficulties for large quantities
Possesses a lower liquidity value

Tax Implications for Both Investment Options

Every investment comes with tax implications. As such, investing in silver items also comes with a tax obligation that you have to pay. One of these is the capital gains tax that you pay when you sell your investments.

Capital gains tax (CGT) is applicable when you sell your silver items and earn a profit on them. For instance, if the 1 kg silver bar price when you purchased it was ₹75,000 and the reselling price is ₹77,000, you are required to pay the CGT since there is a profit of ₹2,000.

There are two types of capital gains tax – short and long-term. The type depends on when you sell the investment. If it is less than three years, it is short term capital gain (STCG) tax, and if it is more than that, it is long term capital gains (LTCG) tax. The amount depends on your tax slab.

For STCG, the taxation is the rate applicable as per your income. However, for LTCG, it is 20.8% with indexation.

Conclusion

The choice between these silver investment avenues depends on your goals, requirements, preferences, as well as risk appetite. It is essential to remember that silver prices and other factors are subject to regular movements.

For example, the price of a 20g silver coin might change in the next few days since the rates keep on fluctuating. Therefore, researching and comparing the benefits that you get from various forms of silver can help you make the right choice.

Additionally, before deciding between these, you need to compare the 100-gram silver coin price and the 100-gm silver bar price. This will help you understand where you can maximise your gains.

Adequate knowledge regarding these factors can help you make informed decisions in the ever-evolving silver market.