Gold vs Silver Investment UK: Which Precious Metal Should You Buy in 2025?
Complete comparison of gold and silver investments for UK investors. Check today's gold prices, understand the tax implications, historical performance, and explore our investment guides to find the right precious metal for your portfolio.
Important: This article is for informational purposes only and does not constitute financial advice. Precious metal investments can go down as well as up. Past performance is not indicative of future results. Consider seeking independent financial advice before investing.
Current Precious Metal Prices
Gold (per oz)
£3,632.41
Silver (per oz)
£29.50
Gold/Silver Ratio
123:1
Historical avg: 60:1
Both gold and silver have been used as stores of value for thousands of years. For UK investors, choosing between them involves understanding key differences in tax treatment, volatility, storage costs, and growth potential.
This guide provides a comprehensive comparison to help you make an informed investment decision.
Gold vs Silver: Quick Comparison
| Factor | Gold | Silver | Winner |
|---|---|---|---|
| VAT (UK) | 0% on investment gold | 20% on all silver | Gold |
| Capital Gains Tax | CGT-exempt (UK coins) | Subject to CGT | Gold |
| Price Volatility | Lower (10-15% annual) | Higher (20-30% annual) | Gold |
| Growth Potential | Steady, moderate | Higher potential | Silver |
| Storage Costs | Lower (more value per volume) | Higher (bulkier) | Gold |
| Liquidity | Excellent | Good | Gold |
| Industrial Demand | ~10% of demand | ~50% of demand | Silver |
| Entry Price | Higher barrier | More accessible | Silver |
| Wealth Preservation | Excellent | Good | Gold |
Gold wins on 6/9 factors, but the best choice depends on your investment goals
UK Tax Implications: The Critical Difference
The 20% VAT Advantage for Gold
This is the single most important factor for UK investors. Investment gold is VAT-free, while silver carries 20% VAT. This means:
£10,000 Gold Investment
- You pay: £10,000
- You receive: £10,000 of gold
- VAT paid: £0
£10,000 Silver Investment
- You pay: £10,000
- You receive: £8,333 of silver
- VAT paid: £1,667
Silver needs to rise 20% just to break even on the VAT!
- ✓VAT-Free
Investment gold (bars 99.5%+, coins 90%+) exempt from VAT
- ✓CGT-Exempt Coins
UK legal tender coins (Britannias, Sovereigns) exempt from CGT1
- !Bars Subject to CGT
Gold bars are subject to Capital Gains Tax on profits
- ✗20% VAT
All physical silver purchases subject to full VAT
- ✗Subject to CGT
All silver (coins and bars) subject to Capital Gains Tax
- !Workaround: ETFs
Silver ETFs avoid VAT but are subject to CGT
Historical Performance
10-Year Performance (2015-2025)
Gold
- 2015 price: ~£730/oz
- 2025 price: ~£2,450/oz
- Total return: ~235%
- Average annual: ~12.8%
Silver
- 2015 price: ~£10/oz
- 2025 price: ~£29.50/oz
- Total return: ~195%
- Average annual: ~11.4%
*Past performance does not guarantee future results. Prices are approximate.
Silver is significantly more volatile than gold, with price swings 2-3 times larger:
2020 COVID Crash & Recovery
- • Gold fell 8% then rose 40% to all-time highs
- • Silver fell 35% then rose 140% to multi-year highs
- • Silver's swings were ~3x larger
2008 Financial Crisis
- • Gold fell 25%, recovered within months
- • Silver fell 55%, took years to recover
- • Gold proved more resilient in crisis
Storage and Practical Considerations
Gold
£100,000 of gold = approximately 1.3kg. Fits in a small safe deposit box. Storage costs typically 0.1-0.5% annually.
Silver
£100,000 of silver = approximately 110kg. Requires significant storage space. Storage costs typically 0.5-1.5% annually due to bulk.
Gold
Extremely liquid. Easy to sell anywhere in the world. Tight bid-ask spreads (1-3%). The Royal Mint, banks, and dealers all buy.
Silver
Good liquidity but wider spreads (3-8%). Fewer buyers for large quantities. May need to sell to specialist dealers.
Understanding the Gold-Silver Ratio
The gold-silver ratio shows how many ounces of silver it takes to buy one ounce of gold. Currently at 123:1, this is above the historical average of ~60:1.
- •High ratio (80+)
Silver may be undervalued relative to gold. Some investors favour silver.
- •Low ratio (below 50)
Gold may be better value. Some rotate into gold.
- •Historical range
Has varied from 15:1 (1980) to 125:1 (2020).
Current Gold/Silver Ratio
At 123:1, the ratio is above the historical average. This suggests silver may be relatively undervalued compared to gold.
The ratio alone shouldn't drive investment decisions. Consider taxes, storage, and goals.
Industrial Demand: Silver's Unique Factor
~50% of silver demand comes from industrial applications:
- • Solar Panels - Fastest growing use
- • Electronics - Best conductor
- • Medical - Antimicrobial properties
- • Photography - Declining but still significant
- • Batteries - Electric vehicles
Green Energy Tailwind: Solar panel demand could significantly increase silver consumption.
~10% of gold demand comes from industrial applications:
- • Electronics - Connectors, circuits
- • Dentistry - Declining
- • Aerospace - Specialized applications
- • Medical - Limited uses
Primary Drivers: Investment demand and jewelry account for ~90% of gold demand.
Which Metal is Right for You?
- ✓Want tax-efficient investment (UK CGT-exempt coins)
- ✓Prioritise wealth preservation over growth
- ✓Want lower volatility and steadier returns
- ✓Have limited storage space
- ✓Need high liquidity for quick sales
- ✓Are investing for long-term security
- ✓Have a smaller budget to start investing
- ✓Believe in industrial demand growth (solar, EVs)
- ✓Can tolerate higher volatility for higher potential gains
- ✓Think the gold-silver ratio will narrow
- ✓Are willing to use ETFs to avoid VAT
- ✓Have adequate storage for bulky metal
The Balanced Approach
Many investors hold both metals. A common allocation is 80% gold, 20% silver - capturing gold's stability while maintaining some exposure to silver's growth potential. Adjust based on your risk tolerance and investment goals. For those building a portfolio towards financial independence, see our FIRE resources UK guide for retirement calculators and strategies.
How to Start Investing in Precious Metals
- 1Choose CGT-exempt coins
Britannias and Sovereigns are VAT and CGT-free
- 2Buy from reputable dealers
The Royal Mint, Baird & Co, Sharps Pixley
- 3Arrange secure storage
Home safe, bank deposit box, or allocated storage
- 4Insure your holdings
Standard home insurance may not cover gold
- 1Consider Silver ETFs
iShares Physical Silver (SSLN) - no VAT, easy trading
- 2Buy abroad (VAT-free)
Some EU countries have lower/no VAT on silver
- 3Allocated storage abroad
Buy VAT-free and store in Switzerland/Singapore
- 4Accept VAT for physical
If you want physical possession, factor in 20% VAT
What Is the Best Way to Invest in Silver in the UK?
The best silver investment method for UK residents depends on whether you prioritise tax efficiency, physical ownership, or low costs. Silver ETFs avoid the 20% VAT but are subject to CGT. Physical Silver Britannia coins carry VAT but are CGT exempt. Bonded warehouse storage defers VAT until you take delivery.
| Method | VAT | CGT | ISA Eligible | Best For |
|---|---|---|---|---|
| Silver ETF (e.g., SSLN) | None | Yes | Yes | Tax-efficient investing via ISA |
| Silver Britannia Coins | 20% | Exempt | No | Long-term holds with large gains |
| Silver Bars (UK delivery) | 20% | Yes | No | Physical ownership, lowest premiums |
| Bonded Warehouse Storage | Deferred | Yes | No | Large holdings without immediate VAT |
For detailed silver coin analysis, see our Silver Britannia guide. For current silver pricing, check today's silver prices.
Frequently Asked Questions
Is gold or silver a better investment in the UK?
For most UK investors, gold is the better choice due to significant tax advantages. UK gold coins are both VAT-free and CGT-exempt. Silver carries 20% VAT and is subject to CGT. However, silver may offer higher growth potential for those willing to accept more risk.
Do I pay VAT on gold in the UK?
Investment gold is VAT-free in the UK. This includes gold bars of 99.5% purity or higher, and gold coins of 90% purity or higher that were minted after 1800 and are/were legal tender. Britannias, Sovereigns, and foreign investment coins like Krugerrands qualify.
Are Britannias tax-free?
Yes! Gold Britannias are completely tax-free for UK residents. They are:
- • VAT-free (investment gold)
- • CGT-exempt (UK legal tender)
This makes them the most tax-efficient way to invest in gold in the UK.
What is the gold-silver ratio?
The gold-silver ratio shows how many ounces of silver it takes to buy one ounce of gold. Currently at 123:1, the historical average is around 60:1. Some investors use the ratio to decide when to favour gold vs silver - a high ratio suggests silver may be undervalued.
How do I avoid VAT on silver?
Options to avoid the 20% VAT on silver:
- • Silver ETFs (iShares Physical Silver) - no VAT
- • Buy and store abroad in VAT-free jurisdictions
- • Allocated silver storage in Switzerland or Singapore
How much gold and silver should I own?
Most financial advisers suggest precious metals as 5-15% of a diversified portfolio. Within that allocation, a common split is 80% gold/20% silver. Conservative investors may prefer 100% gold for its stability and tax benefits.
Can I hold gold in my pension?
Yes, through a SIPP (Self-Invested Personal Pension) you can hold certain gold coins and bars. The gold must meet HMRC-approved standards. Gold ETFs are also allowed in SIPPs. Consult a financial adviser for pension investment decisions.
What is the best way to invest in silver in the UK?
The most tax-efficient route is a silver ETF inside an ISA — no VAT and no CGT within the ISA wrapper. For physical silver, Silver Britannia coins carry 20% VAT but are CGT exempt, making them ideal for long-term holds. Bonded warehouse storage lets you defer VAT until delivery. See our Silver Britannia guide and live silver prices for more detail.
Ready to Invest in Gold?
Calculate the value of your gold or find verified UK gold dealers
Related Guides
Complete guide to gold investment options in the UK, including coins, bars, ETFs, and mining stocks.
Read Guide →CGT-exempt Silver Britannia coins — live value, tax benefits, and where to buy in the UK.
Read Guide →Live silver prices, historical charts, and per-gram rates for all purities.
View Prices →Compare ISA-eligible silver ETCs — tax-free silver investing via iShares SSLN and alternatives.
Read Guide →Sources and References
1 UK gold coins that are legal tender are exempt from Capital Gains Tax. Source:HMRC Capital Gains Tax guidance
VAT treatment of investment gold defined by Value Added Tax Act 1994. Source:legislation.gov.uk
Price data and historical performance figures are approximate. Last updated: December 2025.
Founder & Market Researcher
Taro has been actively investing in precious metals and financial markets for over 15 years. Frustrated by the lack of transparent, accurate gold pricing information in the UK, he built London Gold Exchange as a data-driven resource for fellow investors. The site combines real-time market data, verified dealer information from 242+ UK businesses, and insights drawn from years of hands-on experience in the gold market.
- ✓15+ years investing in precious metals & equities
- ✓Built verified database of 242+ UK gold dealers
- ✓Daily market data analysis and price tracking
Important Information
This content is for informational and educational purposes only and does not constitute financial advice, a personal recommendation, or an endorsement of any product or service. The value of gold and other investments can fall as well as rise, and you may get back less than you invest. Past performance is not a reliable indicator of future results.
London Gold Exchange is not authorised or regulated by the Financial Conduct Authority (FCA) and does not provide regulated investment advice. Before making any investment decisions, consider seeking advice from an independent financial adviser who is authorised by the FCA.