Is It Better to Buy Silver Coins or Bars?
Why should you buy silver coins and bars?
Silver is a precious metal with a long history of being used as currency, jewellery, and a store of value. Today, it also plays a significant role in industries such as electronics, artificial intelligence (AI), solar panels, and manufacturing, which can influence its market price.
Buying physical silver coins and bars allows you to own the precious metal directly, and both options are available in a range of sizes, weights, and designs to suit different requirements and budgets.
However, like gold, the price of silver does fluctuate, meaning the value of your coins and bars can rise or fall over time. Many buyers view precious metals as a long-term investment, and if the price of silver does go up in this time, you may be able to sell your silver items off for a profit. Before buying silver, it is worth understanding the costs involved, including premiums, VAT, and any expenses that may be associated with storage.
Things to consider before buying silver coins or bars
Before deciding to buy silver coins or bars, there are a few things worth considering. Both have their own benefits, so understanding the differences can help you make a more informed decision.
One of the first things to look at is the silver spot price and premium. The spot price is the current market price of silver, while the premium is the additional amount you pay above that price when purchasing physical bullion. Premiums on gold and silver can vary depending on the product and are added for a variety of reasons including manufacturing costs, labour, shipping, profit, and other costs.
VAT is another consideration when buying silver in the UK. Unlike investment gold, silver bullion is generally subject to 20% VAT. However, many pre-owned silver coins may be sold under the second-hand margin scheme, which means there is no VAT for the customer to pay on the full purchase price of these items.
Another thing to look at is storage. Physical silver needs to be kept somewhere safe and secure to protect it from theft or damage. You may decide to store your silver at home in a safe, away from home in a safety deposit box, or using an allocated storage solution such as Vaultor.
Finally, it is always important to buy from a reputable dealer. Checking a company’s reputation and looking at their genuine reviews can help you ensure that the silver you purchase is genuine and that you understand the price you are paying.
The pros of buying silver coins
Silver coins are a popular choice for people looking to own physical silver. They are available in a wide range of designs and weights, making them a convenient option for those who wish to buy or sell smaller quantities at a time, or who may wish to buy something a little more attractive than a bar.
Smaller and more affordable to buy
One of the main benefits of silver coins is that they can be purchased individually, without needing to spend a large amount on a single product. This can make them a convenient starting point for people who want to buy silver gradually.
Rather than buying a larger silver bar, you can buy small individual coins as your budget allows, giving you flexibility over how much silver you own and how often you choose to buy.
More flexibility when selling
Silver coins can offer greater flexibility when you decide to sell your silver. If you own several coins, you can choose to sell a small number while keeping the rest of your collection.
This can be particularly useful if you decide you do not want to sell all your silver at once. With a large silver bar, you may need to sell the entire bar to release its full value, whereas individual coins allow you to sell smaller quantities as needed.
Attractive designs and collectable appeal
Unlike most silver bars, silver coins often feature detailed designs, historic figures, or national symbols. Some people enjoy owning coins for their appearance as well as their precious metal content. Many coins are also stamped with a year date, often making them a popular choice to mark an important date such as a birthday or anniversary.
However, not every silver coin has significant collectable value, so it is important to understand the difference between bullion coins purchased mainly for their silver content and numismatic coins valued also for their rarity or historical significance.
Recognisable and widely traded
Popular bullion coins, such as the Silver Britannia, are produced by renowned established mints and are widely recognised in the precious metals market, making them easy for dealers to identify and value when you decide to sell.
Choosing well-known bullion coins can also make it easier to compare prices between dealers, particularly if you are new to buying physical silver.
Many silver coins have tax benefits
One of the advantages of buying silver coins is that they may be exempt from Capital Gains Tax (CGT). Many UK coins manufactured by The Royal Mint such as Britannias, Queen’s Beasts, Tudor Beasts, and others have the benefit of being CGT-exempt meaning you can make unlimited Capital Gains Tax-free profit on these coins when you decide to sell them.
Many pre-owned silver coins can also be sold under the government’s second-hand margin scheme. This allows eligible dealers to account for VAT on their profit margin rather than the full selling price of the coin, and as a result, eligible pre-owned silver coins can be sold without VAT being charged separately on the full purchase price. Pre-owned silver coins are therefore often an attractive option for those looking to own physical silver while keeping the purchase cost down.
Pre-owned silver bars are generally subject to the standard 20% VAT rate in the UK, meaning there can often be a noticeable difference in the overall price of pre-owned silver coins and bars.
The pros of buying silver bars
If silver coins are not what you are looking for, silver bars can offer an alternative way to own physical silver. They are available in a range of sizes and can often be particularly appealing to people purchasing larger quantities of silver.
Silver bars often have lower premiums
One of the main advantages of buying silver bars is that they can carry lower premiums than coins, particularly when purchasing larger bars. Silver coins will often have higher production costs due to their detailed designs and minting processes, which can be reflected in their selling prices. Silver bars generally have simpler designs and manufacturing processes, allowing them to be sold at a lower premium over the silver spot price.
It is also worth noting, however, that silver bars will also usually attract a lower premium than coins when you decide to sell.
Available in a range of sizes
Silver bars are available in a variety of weights, from smaller 1oz bars suitable for entry-level buyers, to much larger bars containing substantial amounts of the precious metal.
This variety makes it easy to choose a size that suits your budget and the amount of silver you wish to own. You can choose to purchase a larger bar as a single investment or buy smaller bars periodically to build your silver collection over time.
Easy to stack and store
Silver bars can be a practical way to hold large quantities of silver, thanks to their regular shape. This makes them easy to stack and organise, which can be useful if you own several bars.
However, silver is relatively bulky compared with gold for the same monetary value. If you own a substantial quantity of silver, you will need to consider how much secure storage space you have available or look at alternative storage methods outside of the home.
Straightforward and focused on silver content
Most silver bullion bars are valued primarily according to their weight, purity, and the current silver price. This can make them a straightforward option for those who are interested in owning silver rather than collecting coins for their designs or historical significance.
Bars from recognised manufacturers can be easier for bullion dealers to identify and assess when you decide to sell – keeping any relevant packaging, certification, or documentation may also help with this process.
Silver coins vs silver bars at a glance
| Category | Silver Coins | Silver Bars |
|---|---|---|
| Size | Available in a variety of sizes and weights, usually in smaller individual units. | Available in a wide range of weights, from small bars to larger bars. |
| Price and premiums | Can carry higher premiums due to production costs and design. | Often have lower premiums, particularly on larger bars. |
| VAT | Certain eligible pre-owned coins may be sold under the second-hand margin scheme, potentially offering a price advantage. | Generally subject to 20% VAT in the UK, including pre-owned bars. |
| Capital Gains Tax (CGT) | Certain eligible coins may be exempt from Capital Gains Tax upon selling. | Subject to Capital Gains Tax upon selling. |
| Flexibility | Individual coins can be sold separately. | Smaller bars can be sold individually, while larger bars may offer less flexibility. |
| Collectable value | Some coins may appeal to collectors, potentially adding value beyond their silver content. | Generally valued mainly for their silver content. |
| Best suited to | People who prefer smaller purchases, flexibility, and attractive designs. | People looking to own larger quantities of silver, often with lower premiums. |
Is it better to buy silver coins or bars?
If you are looking for a convenient way to own physical silver in smaller quantities, silver coins could be the best choice for you.
Their smaller size, recognisable designs, and potential collectable appeal make them popular with people who enjoy flexibility when buying or selling.
In the UK, many silver coins also boast tax benefits. Most silver UK coins minted by The Royal Mint are exempt from any Capital Gains Tax. Also, certain pre-owned silver coins can be sold under the second-hand margin scheme, meaning there is no VAT for the client to pay on the full purchase price of these items.
On the other hand, if you want to own larger quantities of silver and pay a lower premium, silver bars may be worth considering. These can offer a straightforward way to hold physical silver in a range of different sizes.
Ultimately, the choice between silver coins and bars comes down to your budget, personal preferences, and the reasons you want to own silver. Some people choose a mixture of both, combining the flexibility of coins with the potential cost savings offered by bars.
Whichever option you choose, it is always worth comparing prices, understanding the costs involved, and choosing a reputable dealer. If you are unsure about whether you wish to buy silver coins or silver bars, our experienced team is on hand to explain the available options and answer any questions you may have.
This blog represents one person’s opinion only. Please note, gold and silver prices may go down as well as up. Atkinsons Bullion & Coins accepts no responsibility for any losses based on information we have provided. We do not offer investment advice. Please carry out your own research before making an investment decision.
