Gold IRA vs. silver IRA: Which is better?
Issues like inflation and high interest rates were on many investors' minds throughout 2023, which, in turn, led many people to turn to precious metals such as gold and silver. Investors typically put money into gold or silver to try and achieve goals like increasing portfolio diversification, hedging against inflation and maintaining a store of value.
That's not to say that gold and silver investing always achieves these goals. However, the precious metals tend to be used for these types of purposes in the investment world.
With that in mind, some retirees or those planning for retirement will decide to invest in gold or invest in silver within their retirement accounts. However, individual retirement account (IRA) funds can not be used to invest in collectibles like gold and silver coins, with some exceptions like for certain coins minted by the Treasury Department, according to the IRS.
Instead, if you want to invest in physical gold or silver in a retirement account, you may need to open what's called a self-directed IRA. These accounts can be more nuanced than traditional IRAs, and there could be additional fees such as by investing in physical gold or silver that carries storage fees.
Learn more about your gold investing options online here.
Gold IRA vs. silver IRA: Which is better?
Technically, a self-directed IRA can include a combination of gold and silver investments, among others. But these are often marketed as either gold IRAs or silver IRAs, depending on what you're primarily looking to invest in.
"There are two factors to consider when deciding between a gold IRA and silver IRA: the investment objective and overall investment amount. Knowing these will help a person decide between the two," says Alex Ebkarian, COO and co-founder of Allegiance Gold.
Here, we'll take a closer look at what that entails.
When a gold IRA may be better for investors
If you're debating whether to open a gold IRA or silver IRA to invest in physical gold or silver, you may lean toward gold if your objective is to obtain a store of value and you can afford the higher cost of gold on an ounce-for-ounce basis.
"Typically, if one is looking for preservation and protection as an objective, and more of a defensive position against economic uncertainties, they tend to favor investing more in gold," says Ebkarian.
Gold can also be less volatile than silver.
"The market cap of gold is 10 times larger than that of silver and as a result, the market movements in gold are generally not as extreme in either direction," says Jonathan Rose, co-founder of Genesis Gold Group.
Find out more about how gold investing could benefit you here.
When a silver IRA may be better for investors
While silver has some similarities to gold as an investment, there are differences that can affect why people choose to invest in a silver IRA over gold.
In general, silver has more industrial uses than gold. As such, silver could potentially be used by investors looking for more growth, although that can come with more risk.
"A person who favors having profit potential via a more offensive position tends to invest more in silver," says Ebkarian.
"If you compare the historical performance of silver post-2008 recession or during Covid, silver's performance in terms of percentage growth was higher than gold. However, on the flip side, when precious metals retracted between 2011 to 2015, silver dropped at a faster and larger pace than gold," he adds.
Plus, gold costs more per ounce than silver. So if you're simply trying to buy a certain amount of physical bullion, you might prefer to buy a larger quantity of silver given the price.
Investing in both gold and silver
While you might find self-directed IRA providers marketing either gold or silver IRAs, the reality is that you typically don't have to just pick one. If you open a self-directed IRA, you can invest in both, along with other types of alternative investments.
"The logistics of a retirement account backed by gold or silver are essentially the same, and many of our clients hold a combination of both metals in the same account," says Rose.
So, while you might prefer one metal over the other, you don't have to feel locked into just one if you decide to open a self-directed IRA.
Plus, investors should keep in mind that there can be differences in terms of how you invest in gold and silver. For one, you could gain exposure to gold and silver within traditional retirement accounts through assets like exchange-traded funds (ETFs). Or, you might prefer to hold physical gold or silver in a self-directed IRA.
The bottom line
If you do want to invest in physical gold or silver via a self-directed IRA, it's important to compare providers.
"Know your dealer and depository by asking yourself what type of relationship you want to have with a precious metals dealer or custodian, and in which depository you want to store the metals," says Ebkarian.
