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If you wish you were doing better financially, you might be tempted to sink some money into silver and gold. The precious metals have long appealed to many types of investors.
Alas, the track record of gold and silver has not been great historically, at least in comparison to returns in the stock market. Still, these metals might have a place in many investors' portfolios.
If you buy gold and silver, will you pay taxes on the purchase? The answer partly depends on where you live.
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Precious metals vs. the stock market
Precious metals such as silver and gold have appealed to investors for thousands of years. And yet, in the modern era, their returns have been subpar compared to long-term gains in the stock market.
For example, for the 30 years ending in September 2025, gold had an annualized return of 7.96%. By contrast, the S&P 500 returned 10.67% annually over the same period.
That means a $10,000 investment in gold 30 years ago would have resulted in a nest egg of just under $100,000. The same amount of money invested in the S&P 500 would have swelled to around $209,000, more than twice that amount.
The appeal of precious metals
So, why would anyone want to buy silver and gold? Because these metals tend to perform well when there is an economic crisis or when inflation rises.
Silver and gold are viewed as safe, stable investments. Investors turn to them as a "safe haven" when the world starts to fall apart.
As things get worse in the economy and a larger number of investors seek the safety of silver and gold, the value of the precious metals can rise substantially, at least until things calm down and return to normal.
Some states have no sales tax — period
If you decide to purchase precious metals such as silver and gold, you may lose some of your return to taxes. Dozens of states tax the purchase of silver and gold. However, the majority do not.
For starters, five states do not have any sales tax at all. In these states, you will not pay state sales taxes on the purchase of silver and gold — or on anything else, for that matter.
The states without sales taxes are:
- Alaska
- Delaware
- Montana
- New Hampshire
- Oregon
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Which states have no sales tax on silver or gold?
In addition, a majority of states — 29 — have specific rules barring sales tax on silver and gold. The lack of taxation applies to investment-grade precious metals such as gold and silver bullion.
They states that do not tax silver and gold are:
- Alabama
- Alaska (no sales tax)
- Arizona
- Arkansas
- Florida
- Idaho
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Mississippi
- Missouri
- Nebraska
- New Hampshire (no sales tax)
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Virginia
- West Virginia
- Wisconsin
- Wyoming
Other exceptions
States such as California and New Jersey apply sales tax when you purchase precious metals. However, the tax might not apply in all circumstances.
For example, in California, you only pay taxes if you make a purchase of less than $2,000 in precious metals, such as gold, silver, or platinum, that is at least 90% pure.
Some states also apply different tax rules depending on whether you purchase bullion or collectible coins.
In short, it is important to learn your state's rules so you know whether your purchase will be subject to sales taxes.
Why it matters
Paying sales taxes on silver and gold purchases essentially reduces your return. In some cases, the resulting loss is significant.
For example, if you purchase $50,000 worth of gold and have to pay a 7% sales tax, you will lose $3,500 right off the top.
The impact of taxes
The wealth-destroying nature of taxes applies to all types of investments, not just silver and gold.
One of the reasons so many people become "401(k) millionaires" is the fact that taxes are deferred on gains in the account for years, and often decades. This means there is more money in the account available to compound year after year.
Paying little or no tax can make a huge difference in how wealthy you become over time. Although the sales tax on the purchase of silver and gold is a one-time event, it is still likely to leave you a little poorer over the long haul.
Should you buy silver and gold?
Opinions vary when it comes to the wisdom of investing in silver and gold. Some investors love precious metals, while others loathe it.
The latter camp includes legendary investor Warren Buffett, who once said gold was "just about the last thing I'd want to own."
If you believe gold and silver have a place in your portfolio, consider meeting with a financial advisor or another money expert who can help you learn more about the pros and cons of investing in silver and gold.
Bottom line
Many people turn to investing in gold and silver. While there may be better ways to build wealth, the precious metals do tend to perform well when the economy encounters stormy seas.
If you are thinking about investing in silver and gold, know that where you live might determine whether you will pay taxes on your purchase.
If you are unsure of whether to press ahead with your plan to buy silver and gold, consult a financial advisor who can offer professional guidance.
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