Gold and Silver – Safe Havens in Times of Uncertainty, but Not Without Challenges
The year 2025 has been marked by sharp increases in precious metals prices against the backdrop of global geopolitical and economic tensions. In this reality, investing in gold and silver is once again perceived as a “safe haven” – a relatively stable asset that provides investors with a sense of security. Holding physical bullion or investing through other channels has historically proven its value in times of uncertainty.
However, it is important to examine this type of investment with open eyes and to recognize the drawbacks and challenges it entails. Below are several key points:
- Premiums on Coins and Bars
Purchasing coins or bars involves a premium that includes manufacturing costs. In most cases, when you later sell the metal, you will not recover this premium.
- Additional Costs
Beyond the spot price of the metal, the final cost to the buyer also includes import charges, shipping, insurance, and the dealer’s margin. These costs increase the overall purchase price, often in ways not immediately transparent to investors.
- Taxation
In some countries – including Israel – private buyers must pay Value Added Tax (VAT) on bullion purchases (coins or bars). This significantly raises the cost of physical ownership.
- Storage Risks at Home
Storing precious metals at home carries the risk of theft. Even home safes cannot fully mitigate this risk.
- Third-Party Storage
An alternative is storing bullion in external vaults with specialized companies (e.g., Brinks). This solution involves ongoing fees for storage and insurance, and the metal is ultimately in the custody of a third party – requiring full trust in the provider.
Long-Term Comparison
Looking at average returns over the past 50 years, gold and silver have underperformed compared to the S&P 500 or Private Equity funds. This shows that precious metals are not always the most attractive long-term investments. Instead, they serve mainly as safe havens during crises.
Of course, there have been periods when gold and silver significantly outperformed the stock market – as well as times when they lagged behind. Those who understand these cycles can seize the right opportunities. The key is to invest wisely, remain alert to risks and hidden costs, and remember that a good purchase price is one that is as close as possible to the global spot price.
Comparative Performance (Illustration)
The chart below illustrates how a $100 investment over 50 years could have performed in Gold, Silver, the S&P 500, and Private Equity – based on long-term average returns.
⚠️ Note: This chart shows average compounded growth and does not reflect real market volatility. In reality, there have been periods when precious metals outperformed both equities and private equity, as well as times when they underperformed.
Conclusion
Gold and silver remain important alternatives in times of global uncertainty, offering financial resilience and protection during crises. Still, no investment comes without risks or costs. Investors who choose to hold precious metals must account for premiums, taxation, storage challenges, and additional expenses – and plan accordingly.
