It’s not unusual for family heirlooms to hold significant sentimental value. If you’re lucky, they might have a lot of monetary value, too.
If you own a bunch of gold jewelry and silver flatware or other pieces that were passed down to you from older generations, you may be eager to sell them sooner rather than later, especially if you’re not particularly attached to them. Despite a recent dip in gold and silver prices, both metals have seen their value increase substantially through the years.
Selling your gold and silver could help fund other goals or investments. Plus, it might free up physical space in your home.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
On the other hand, you may be inclined to hold on to your gold and silver and pass them down to your children. If you hold those assets for another decade or longer, their value could increase even more. And that way, you’ll be giving your children a nice inheritance or gift that might benefit them tremendously.
It’s not an easy call. But here are some things to know as you navigate the “hold versus sell” debate.
You may not get as much money as expected
Although gold and silver prices are still generally strong despite a recent decline, Ian Ross, vice president of operations at Ross Metals, warns that you may not be able to command the price you expect.
“Getting a refinery, jewelry store, or pawn shop to pay spot price is where you will have issues,” he says. “If you can get someone that’ll pay close to market price, it certainly could be wise to sell everything you have, as long as liquidating makes sense for you. However, most places who purchase will offer much less, especially on silver.”
If you’re going to try selling your gold and silver, it’s important to do your research and find a reputable dealer. If you’re selling a large quantity, it’s a good idea to shop around and consider breaking up your collection to see if some dealers might offer a higher price on certain pieces than others.
Know what you own
Sheffield silver hallmark, 1897, James Deakin silversmith. The lion mark indicates sterling silver.
(Image credit: Getty Images)
Before you consider selling your silver or gold, take time to research what you own. In some cases, the piece may be worth more due to its history and craftsmanship than the metal’s market price. The hallmark and maker’s mark on antique English silver, for example, provide the year, purity, location and the company or craftsman who made the silver.
If your grandparent purchased the piece years ago, try to obtain the bill of sale or other documentation to establish its provenance.
You will want to understand whether your piece was handmade or manufactured, whether it’s solid or plated and its purity. You can check eBay or antique auction sites, or try the reverse lookup tool to get a sense of your item’s market value. You can also contact auction houses and appraisers for assistance. If you want to sell a set that is missing one or two pieces, try searching for one at Replacements, Ltd.
Here’s an example of how easy it may be to reverse-image a manufactured piece of silverware.
(Image credit: Ellen Kennedy, with edit by Gemini.)
From this picture alone, with no search words, results include an entry from Replacements, Ltd., indicating that the pattern is from a 1937 set called “Duke of Windsor,” manufactured by the Manchester Silver Company. Bingo. From there, you can research what others are paying for pieces from that set.
If you have a pressing need for money — say, debts that are piling up or bills to pay in the wake of a layoff — then it could make sense to convert your gold and silver into cash. Otherwise, Ross thinks it makes sense for most people to have some gold and silver in their portfolios.
“Both metals have retained their value for thousands of years,” Ross says. “They are a good investment to hold and to pass down to the next generation.”
Michael Meechan, director of investments, Hollow Brook Wealth Management, agrees.
“If liquidity is not required, we generally would not recommend selling gold today,” he says.
“While prices are near record highs, the fundamental reasons for owning gold remain intact — persistent inflation, growing fiscal imbalances, negative real interest rates in real terms, and elevated geopolitical uncertainty.”
Gold has long served as a hedge against inflation.
As Meechan explains, “Gold has performed best during periods of high inflation, negative real interest rates, and elevated market volatility. The common denominator across these environments is a decline in the purchasing power of paper currencies. When bond yields and cash returns fail to keep pace with inflation, investors tend to seek assets with constrained supply. Gold fits that profile.”
Meechan cautions that, in his view, silver fits a bit differently. “Silver,” he says, “has a more complex demand profile due to its significant industrial uses… As a result, silver tends to be more cyclical and volatile.”
However, Meechan says that if you’re willing to tolerate price fluctuations, holding silver as part of your portfolio’s precious metals allocation could make sense, as it provides added diversification.
There are benefits to passing gold and silver down to heirs
Not only can hanging onto gold and silver allow you to benefit from asset appreciation, but, as Meechan explains, from an estate planning standpoint, holding these metals through inheritance can also be tax efficient.
Gold and silver held until death are generally eligible for a step-up in cost basis, he explains, allowing heirs to reset the asset’s value to its fair market price at the date of passing.
“This can materially reduce or eliminate capital gains taxes if the asset is later sold,” Meechan says.
Either way, familiarize yourself with how the IRS taxes capital gains from collectibles, as the rate may be as high as 28%.
While gold and silver heirlooms make wonderful wedding gifts, keep in mind that the beneficiary gets no step-up in the basis value.
It could pay to think long term
(Image credit: Getty Images)
While there are plenty of benefits to selling your gold and silver now, the reality is that if you don’t have a pressing need for money, holding them could be more advantageous to you and your children in the long run.
As of this writing, gold is trading at about $4,911 per ounce, according to GoldPrice.org. But Wells Fargo recently raised its year-end gold price target to $6,100–$6,300 an ounce, according to Reuters. The bank had previously projected year-end prices in the $4,500–$4,700 range.
The takeaway? As with quality stocks, it often pays to hold precious metals over the long term.
You may, however, want to invest in a formal appraisal to determine the value of your items. If the number is significant, ensure your gold and silver are stored securely. Whenever you use or display the pieces (especially silver), treat them gently, wear gloves, and learn how to clean and store them properly. Never put real silverware in the dishwasher; especially knives, as the plaster in their handles may shrink and come loose.
At a minimum, invest in a fireproof home safe and discuss how best to insure your pieces with your home insurance company. You may also consider opening a safe deposit box at a nearby bank if you don’t intend to use the pieces often. Finally, you may want to look into a precious metals depository if there’s truly a large amount of money on the line.