Is gold storage something you’re thinking about? Are you interested in purchasing physical Gold or silver, but concerned about where you’ll store it? Our infographic highlights the various options available; to help put your mind at rest.
The main advantage of owning physical gold is that it’s the real thing! There’s no counterparty risk, as there’s no electronic trading or paper involved. It’s as real and solid as can be and something that you have the pleasure of holding in your hand.
But how do you keep a precious metal safe and secure?
Insured delivery direct to your door
Delivered to you fully insured, our delivery is discreet, so the whole neighbourhood won’t know what you’re taking delivery of. It’s packaged in plain, padded envelopes, safely and securely. We also track every package that we post, which allows us to follow up on any queries and provide reassurance on when you should expect your delivery. If your gold or silver is in stock, and you place your order before 2pm, then we should be able to get it to you by the next working day. Before 1pm to be precise. Should your order be out of stock then we’ll aim to deliver it within 2 – 3 days – depending on the stock availability. From 2018 all gold orders benefit from free UK delivery.
Once you’ve received your package and signed for it, there are several options for you to consider regarding storage:
Many people choose to keep their gold stored safely at home and there are many options available for home storage. A steel safe is the most obvious choice for safety and security – preferable bolted down to the floor. But if bolting the safe isn’t an option, then try to keep them safe somewhere out of sight, like in a cupboard, hidden by other items.
You can also use everyday household cupboard items, like tins, packets of cereal, boxes of tea bags etc. to hide and conceal your gold, but it’s important that you remember where you’ve stored it so it doesn’t accidentally get thrown away. There are many different steel safes available for home use. These include fireproof and waterproof ones. There are even models that can be unlocked by using your fingerprints. They can also be installed inside the flooring, underneath the carpet.
There are a number of ingenious secret storage items that you can purchase from PhysicalGold.com, such as clocks or wall sockets, to help you conceal & store your precious metals.
Hiding things under the mattress is also more common than you might think, but whichever home storage option you choose, you must ensure your home insurance covers the total value of the gold. The advantage of keeping your gold at home is that you know exactly where it is, you can keep it close and touch it, as often as you wish.
Bank Deposit Box
Safety deposit boxes at banks are considered to be extremely safe and secure, so it’s worth visiting your bank to ask about the availability of one if this is of interest to you. Many banks have been withdrawing these facilities over the past few years though, so there may be a waiting list or a box may be quite difficult to acquire.
Safety Deposit Facility
A third-party safety deposit facility offers boxes for you to rent to keep your small, personal household items safe. These facilities are usually open 9 – 5pm for you to visit and generally cost between £100 – £1000 per year to rent.
Since tariffs are expensive, it could work well as a short-term arrangement. The benefits of using a safety deposit facility are that your valuable assets are stored away from your home.
Additionally, these boxes are available in various sizes and you can choose one according to your requirements. Of course, one of the disadvantages of this arrangement is that you cannot access the box at any time of your choice. You can only do so when the facility is open. Also, there could be a natural disaster like a flood that could damage your belongings stored inside the box. In many cases, the operator may refuse to re-compensate you for your damages when this happens, simply because their insurance may not cover it
Professional Vault Storage
The most common (and safest) gold storage option is to arrange for the secure storage of your gold with your chosen dealer, as they have access to secure vaults. These professional vaults offer 24hr safety and security, giving you reassurance and peace of mind. The vaults are highly secure and generally don’t allow public visits, but rest assured your gold will be personally allocated and stored separately in a fully segregated account, within your own little section in the vault.
At PhysicalGold.com, pension gold, silver coins and gold coins are stored at Loomis International, UK – one of the UK’s most secure gold storage facilities. Silver Bars are stored at Network Securities in the Channel Islands – a specialist vault facility that has dual controlled security systems and a direct connection to the local police station.
So if you choose to store your precious metals with us, we can reassure you that all of our stored gold and silver is fully insured, segregated and completely ring-fenced and you can request home delivery of your gold at any time. However, given the high levels of security involved, it’s often not possible for the public to request to view their gold, but we can assure you that it is there – safe and secure.
With the tax year end upon us, now’s the time that many take a hard look at their finances and make investment decisions for the following year. But if you’re one of the savvy investors already owning physical gold, then you’ll know buying gold and silver aren’t affected by the tax deadline.
Tax year-end brings a fresh start
If your money is currently in an ISA or savings account, then the tax year end might have you rethinking your investments and considering gold (or silver).
If you’re one of the thousands of investors wanting to move your money around, to reduce your tax exposure and maximise your gains, this article will provide insight into some important tax considerations, which every investor should know about.
Many investors just think of ISAs as tax-free investments, when in reality, they’re limited tax-free investments – meaning there’s an upper limit to how much you can save. The ISA limit for 2019/2020 remains at £20,000 maximum, but you can’t roll over any unused portion to the next year, so you have to use it or lose it.
Regular savings accounts are taxed
If your money is in an old fashioned, regular savings account, you’ll be charged a tax on any interest it generates. This makes a savings account quite unappealing for those who’ve already maxed out their ISAs. Especially with the highest available rates being around 1.5% and the majority of interest rates currently yielding sub-1% even before tax!
Capital Gains Taxes on assets you sell
If you’re looking into selling an asset or Buy-to-Let property that you own, you’ll likely end up paying Capital Gains Tax on the profits of that sale. This is especially true for those who’ve already reached their CGT allowance for the year. Many forms of Gold, on the other hand, are actually CGT free.
The lifetime allowance could affect your pension
The lifetime allowance, which was previously reduced from £1.25 million to £1 million, is a limit on the value of payments on your pension and could affect many people who’ve already reached this new allowance total. If you’ve saved into your pension throughout your working life, you could already be at this limit and you’ll be taxed heavier than in previous years. Check the Money Advice Service dedicated page for the latest allowance rates and related information.
UK Gold Coins have no Capital Gains Tax and no VAT
Physical gold has always been a worthy investment and gold investments make a great addition to any portfolio. Due to there being no upper limit on how much you can purchase in a year and certain forms of gold falling into the bracket for CGT and VAT free investments, it is looked on favourably by many investors. Currently, all bullion coins that are classed as legal tender in the UK which includes coins such as gold Sovereigns and gold Britannias, are CGT exempt. They are also VAT free providing the coins were minted after 1800 and classified as legal tender.
Coins to buy from Physical Gold
If you want to consider an investment that will appreciate tax-free, then take a look at our tax free-gold coins (including the 2019 Gold Sovereign and the Dragon Queen’s Beast) or our CGT free Silver. PhysicalGold.com even offers the opportunity to add gold to your Self Invested Personal Pension (SIPP) to achieve a balanced portfolio. Currently, the UK Government are willing to pay up to 45% towards the cost of your gold if you invest through a SIPP. This is applicable to all investment-grade gold bars or wafer that are professionally stored and have a purity of at least 99.5%.
Contact Physical Gold for 2019/2020 Financial Planning
Providing you’re looking for an investment that will help you diversify and protect your assets, whilst avoiding CGT and VAT (for gold), you can’t go wrong with Physical Gold. Call us without delay on 020 7060 9992 to speak to us or complete our contact form. We can provide guidance on how gold can comfortably fit into a wider investment portfolio for the financial year ahead.
The decision of where best to invest your money is an important one. Buying property has been a favoured choice for UK investors for years. Returns have been excellent and the physical nature of bricks and mortar has appealed in its simplicity.
But choosing the right property and managing it isn’t straight forward and now investing in real estate in the UK is less lucrative due to legislative and market evolutions.
Over the past decade, the very same investors who feel comfort in property’s simplicity, are starting to turn their attention increasingly towards another unfussy tangible asset – gold.
Physical Gold Investment and property are good places to start
As keen investors know, there are two key rules to adhere to when investing:
Only invest in things you understand
You have to be lucky with timing.
Certainly, I stick with the first rule religiously, which is why I’m a big fan of both physical gold investment and property. They’re both simple, tangible assets, with an intrinsic value.
And whilst I agree with the second rule – that there’s always an element of luck involved, I also believe intelligent, strategic thinking can vastly improve your chances of great timing. Trying to predict the market and repeated switch from one asset class to another requires extraordinary luck, which soon runs out.
6 crucial comparison points
1) Recent property v gold performance
Let’s start by comparing the performance of these two asset classes, in the UK over the past 3 years.
The UK House price index shows a 14.2% increase in average UK house prices in the period from June 2015 to June 2018. Just under 5% per annum capital growth in a low-interest-rate environment sounds pretty good. Add in rental income and it’s easy to understand why property is such a popular UK investment. However, when you drill into the figures, returns vary considerably from region to region which adds a layer of complication to the investment. Buying in the next ‘up and coming area’ can be down to as much fortune as expert insight.
How about the bigger picture?
Go back further to 2008 and average house prices have risen from £181,000 to today’s £224,000, an annual increase of 4.2%. This encompasses the period of super low-interest rates.
However, when we look at figures for the past 12 months, average UK house prices have risen a mere £3,000 or 1.3%. Even more significantly, key areas such as the usually thriving London market are now starting to see monthly falls in prices.
Speak to an estate agent and they’ll tell you that the current market seems to be softening month on month. Rather than houses selling above the asking price, vendors are being forced to offload properties at discounts due to flailing liquidity.
The below chart from www.home.co.uk demonstrates the fact that housing inventory is lingering on estate agents’ book for around 15% longer than a year ago.
For simplicity and better comparison, let’s just focus on the gold price in Sterling terms.
In the past 3 years, the UK gold price has risen 25.9% from around £770/oz to £970/oz. That marks an impressive 8.5% annual return. This outperforms UK property prices in the recent past.
How much is a gold bar worth? – Watch this video to find out!
Volatility plays a role
However, it’s important to note that while house prices tend to rise or fall steadily in one direction, the short term gold price is far more volatile. Returns over the past 3 years are very strong. But looking at the 6months from June 2015 to December 2015, the gold price fell around 7% in the UK. This makes the overall 25.9% increase even more incredible, but also clarifies that gold should be deemed a medium to long term buy and hold rather than short term speculation.
…and longer-term performance?
Taking a further step back and analysing gold’s returns over the past decade as even more remarkable. The spot gold price has risen from around £450/oz (June 2008) to the current £970/oz (June 2018). That’s an astonishing 115% increase or nearly 12% per annum.
If you’re a property fan, considering adding to your investment portfolio in the next year, you may instead wish to consider investing in Tax-Free Gold.
2. Market accessibility
Property entry point
Clearly, purchasing an investment property outright requires a large amount of capital. With average property prices above £224,000 in the UK, many people will find the market inaccessible.
Focussing on more modest properties such as studio flats, perhaps in less salubrious areas will certainly bring that figure down. But even small apartments in less desirable locations will require substantial investment figures.
Mortgages can bridge the funding gap
Most real estate investors will seek a mortgage to bridge the funding gap. However, obtaining mortgages is becoming increasingly difficult. Since the 2008 credit crunch, lending rules have tightened alarmingly with many buyers being with high credit ratings being turned down. The desire of lenders to seek new business is being crimped by their fear of defaults which has led to a far more strenuous lending process.
Even more significantly, the deposit required to obtain a buy-to-let mortgage has risen dramatically from a common area of 5% a decade ago to a more usual 25-30% nowadays, which instantly eliminates those with more modest means. Major estate agents Savills predict mortgaged property investments to fall a staggering 27% in the next 5 years.
Schemes to buy fractional ownership of property is available for those unable to afford a whole property, but this now enters a different realm, introducing a raft of other risks.
Gold starting amount
While the perception of gold investment is that it’s just for the rich and famous, gold is relevant to all of us regardless of wealth. Over the past decade, an increasing number of gold dealers have developed online platforms to purchase physical gold coins and bars with free insured delivery or convenient storage.
Increased competition, live pricing technology and transparency have made the gold investment market very accessible to everyone. While loans and leverage aren’t provided for physical gold investment, investors can pay by debit or credit card, as well as online transfer.
Low entry point
With many of the world’s major manufacturers such as The Royal Mint now producing favourite coins such as the Britannia and Sovereign in small fractional sizes, starting points for investors is around £100. With such low possible investment, gold investment is affordable to everyone.
Rewarded for quantity
A big difference between property and gold investment is that the latter offers discounts for larger quantity investments. So the price per gram when investing £100,000 is far lower than for £10,000, which in turn represents better value than buying £1,000. With that in mind, while the £100 starting point is possible, it doesn’t necessarily provide good value investment. Once investors buy a few thousand pounds worth of physical gold, decent discounts begin to kick in.
3. Type of returns
Property investment returns
One of the major appeals of investing in the housing market is the double whammy of possible capital appreciation and rental income. While capital appreciation is unpredictable, many property investors have made vast sums of profit simply from buying and selling at the right time. We all know that when the UK property market is on fire, prices can be like a steam train.
Rental income is more predictable, especially if you can agree to longer-term agreements with tenants. With high property prices excluding many UK residents from affording to own their own property, demand for rental property is high. The prospect of passive income is one of the main attractions of building a property portfolio, especially for those more mature in years, who still require an income.
Rental sector prospects for 2018 and beyond
Leading estate agent Knight Frank believes overall UK rental values will rise by 1.2% in 2018, but warn that London and the surrounding areas will see falls of 0.7% or more.
The risk of rental income is that tenants can default on payments, especially with wages stagnant or negative, but living costs rising. There’s also the prospect of having certain periods with the property unoccupied and receiving no rental income. This can represent a cashflow challenge as buy-to-let mortgages still need to be paid during such times.
Types of gold returns
Gold returns depend on which type of gold investment you own. Gold funds and mining shares can appreciate along with offering dividends.
However, for the sake of this comparison, we’ll just consider physical gold, as it’s tangibility makes it the most suitable alternative to property investment.
Unlike owning and renting a property, buying physical gold as an investment will not provide an income. For this reason, mature investors in need of an income, tend to focus on bonds and properties to provide this. They tend to supplement these investments with gold as a form of portfolio insurance.
Investors own gold coins and bars in the hope that both the gold price and type of physical gold appreciate. Appreciation is calculated according to the underlying gold price multiplied by the weight in gold that an investor possesses. Gold has more than kept pace with inflation over the years and has risen in value, especially during times of economic and political instability.
Additional rises in capital value possible
In a similar way that Victorian properties can be more valuable than brand new houses of similar square footage, Victorian gold coins can be worth more than brand new coins. But while premiums on period properties are generally fixed, older gold coins can continue to rise in value quicker than just the underlying market, providing a boost to profits.
The ease with which an investor can offload a property will depend on the type of property, the state of the market, and the location.
The first element is in your control. Sticking to more modestly priced properties will increase the number of possible buyers for the property, speeding up the selling time and improving the price achieved. One and two-bedroom apartments near to major transport links tend to be the sweet spot, and most resilient to market conditions.
How does location impact liquidity?
On a macro level, trying to sell a property will be impacted by the particular region the property is located. We’ve already seen how London is currently underperforming other areas of the UK at the moment with housing stock proving stickier at current levels than cheaper areas. This can come down to timing and luck as hotspots can change regularly. London is renowned to be one of the most liquid areas usually due to the high demand to live in the capital. If your property’s location has become trendy, sales can be sped up considerably.
On a micro level, buying properties near to train stations, amenities and desirable green land, can all speed up the process when it comes to selling.
Dangers of a sticky market and the dreaded chain
If the property market is in a state of decline, selling a property can be very difficult. In these circumstances, sales can take many months or even years. With mortgages becoming increasingly difficult to obtain, being let down by another party in a long chain of buyers and sellers can be frustrating at best and a nightmare at worst.
Gold’s liquidity is one of its great appeals. Regardless of whether the gold price is busy or quiet, gold investors can achieve a sale within a day or two if needed. Rates that dealers pay for your gold will vary depending on the state of the market, but differences will be a percent or two at most.
Divisibility and type of gold play a part
Similarly to buying the right property, selecting whether to buy gold coins or gold bars, for example, can impact the ease in which it is to eventually sell.
It may sound obvious, but buying a 1 kilo gold bar (which costs around £35k) means that you cannot sell £15,000 worth of gold if you need to raise funds. Obviously the same goes with property – you can’t sell half if you need. But buying £35,000 of 1oz gold coins would enable the gold investor to sell in any increment they want.
Does the type of gold coins matter?
Buying the right type of gold coin also enhances its liquidity. Coin collectors will likely need far more time to sell their unique gold coins as they have a narrower buyer base. These numismatic coins are likely worth many times their simple gold content, so more time is needed to achieve the price.
Sticking to well-known bullion coins will enable a super-quick sale to a gold dealer at a good price.
Tax treatment of property investment
General residential buy-to-let properties are becoming less tax efficient. Unfortunately, there are tax burdens when you buy, while holding the asset and when you sell.
Tax when you buy
Stamp duty is a tax when you purchase a property, based on the purchase price of the house or flat. Each higher bracket of stamp duty only applies to the value amount within that higher bracket. Properties below £125,000 in value are rated zero percent, with 2% charged up to £250,000, 5% up to £925,000, 10% on homes up to £1.5m and a colossal 12% above that. Once you consider the conveyancing fees as well, it costs a huge sum in tax just to get started.
Even worse, in April 2016, an additional 3% stamp duty is applied to all these brackets for buy-to-let properties. (see details below in the ‘4 Major Threats to Property’ section).
Tax when you hold
If you’re renting out a property, then income tax applies to the rental income. The ability to offset this with your mortgage costs is also disappearing (detailed in ‘4 Major Threats to Property’ below).
Tax when you sell
With the double incentive of an income and possible capital appreciation, comes the double punishment of income and Capital Gains Tax (CGT). Selling your main UK residence at a profit is thankfully not liable for CGT. So mercifully, you can ‘invest’ in your own property without the fear of fiscal punishment.
However, CGT applies to gains made on second homes. All you need to know about CGT is that each individual has an annual tax free threshold (around £11,000 each), with any gains above that being taxable. With the scale of property values, this threshold has little chance of protecting you from up to 28% CGT, especially as you can’t sell half a house before the tax year-end a half afterwards!
How about buying within a pension
While commercial properties can be more tax-efficient as they qualify for a Self-Invested Personal Pension (SIPP), residential properties are not a permissible asset.
Gold’s tax efficiency
With buy-to-let investors to be hit hard with the fiscal stick, it could see many of them moving some money away from property and into physical gold investment – which has no such tax penalties.
As long as you buy ‘investment grade’ gold, your investment is VAT exempt. To qualify as investment grade, the gold needs to be in the form of a bar or coin and at least 22 carats in purity. So that discounts gold jewellery or low purity coins.
As we’ve already mentioned, holding physical gold produces no income so there’s no income tax to pay.
No tax on disposal
The real bonus with gold investment is that if you buy the right type of gold, there’s also no CGT to pay on any profits. For UK residents, this means buying British coins with a face value. This face value qualifies the coin as legal tender, for which tax is not applicable. Predominantly, UK gold investors focus their purchases on Sovereign or Britannia coins, which are both classed as legal tender.
Even if you wish to invest in gold bars or non-UK coins, CGT can be avoided due to the smaller divisibility of the asset compared with property. Krugerrands, for instance, are a popular coin which in theory are taxable if you sell at a profit. But due to their modest size, some can be sold before tax year-end and others afterwards to spread out any profits, thus keeping within tax-free thresholds.
6. Ongoing costs
With investment properties being occupied by tenants, wear and tear are inevitable. As a landlord, you’re obligated to provide upkeep and maintenance of the property for your tenants. Clearly, you have a vested interest to uphold your property’s condition too. The level of these ongoing costs will depend on how well your tenants look after the property, the age of the property and the value.
For larger property portfolios, it’s not uncommon for many properties needing work at once, leading to high running costs. Paying a management fee for a company to help this process is common. Ongoing fees to manage tenants and rent are also applied if you’re unable to manage the process yourself. Finally, landlord insurance is required by law, further saddling the property investor with continuing costs.
Physical gold coins or bars costs
The main ongoing fee for gold is insurance and storage. For modest amounts of gold, it’s possible to take delivery yourself, reducing ongoing fees to buying a home safe and adding the gold to your contents insurance. But for larger investments, the peace of mind of professional vault storage is comforting. However, insured storage can cost up to 1% per year of the value of the gold, which will rise as the value of gold increases.
7 major threats to property which are catalysts for gold
Any factor which is detrimental to the economy or specifically the housing market can act as a huge boost to gold investment. As the world’s safe haven asset, economic and political instability which can impact property investment negatively, will likely provide a magnet for investors to gold, as a way of seeking protection. We’ve seen this switch into precious metals throughout the history of gold investment.
Bad news for UK property can also put Sterling under pressure as a currency. This indirectly boosts gold prices in the UK, as pricing originates in Dollars and is then converted into Sterling. So a weak Pound increases the price of gold for UK investors.
1. China woes and Russian politics
The biggest overseas buyer of UK property in recent times has been the Chinese. They’ve not only been the catalyst for UK property price increases but almost single-handedly provided momentum to the global economy. It’s not uncommon to hear that an entire block of new flats has been sold within weeks, mainly to the Chinese market.
But cracks have started to appear in the world’s second-biggest economy, forcing the Chinese central bank to devalue its currency on some occasions this year. Stock markets have already reflected the growing concern and accepted that the Chinese bull-run is possibly coming to an end.
China’s size is significant
If, as expected, Chinese demand for UK properties wanes, then we’re likely to see the heat from the market dissipate. China’s size (it contributes more than 13% of global GDP), means a shrinking economy will also impact every other region around the world – further curbing demand for UK buy-to-lets.
Equally the wealthy Russian buyers have also held an obsession with buying UK properties over the past decade. With political tensions increasing with Russia, many are pulling out of the UK market, especially with visas harder to obtain.
With their focus on the high-end London market, it’s no surprise that this is now the region and sector which is most missing their enthusiasm and Ruples.
2. New legislation around greenbelt land
Supply and demand play a key role in both property and gold. With property investment, it’s reassuring that, here in the UK, we have the equation of an increasing population and very limited space to build new houses. Similarly, gold’s demand continues to increase, whilst supply is extremely limited, due to no major discoveries in the past 15 years.
However, the squeezed housing supply, currently pushing up UK prices, could be about to explode. Many affordable housing projects are already underway. But it’s the biggest shake-up of protected green belt land in 30 years that will provide the catalyst to a surge in UK housing stock.
If the proposal to build thousands of new starter homes is approved, it could play a huge role in alleviating the current supply shortage.
3. Stamp duty rise on buy-to-lets
Whilst property supply may increase, the Government is also determined to hamper demand in a desperate attempt to prevent another financial crisis. In the last few years, the budget specifically targeted UK property investors – adding a huge 3% extra stamp duty for buy-to-let investors starting in April 2016. This applies across the valuation board and will need to be paid in addition to the current stamp duty rates. This equates to an additional £15,000 stamp duty on a purchase of a £500k property. This additional upfront tax burden may put off those looking to enter the market or those wishing to add to their current property portfolio.
Difficult to raise money
Post the 2008 financial crisis, banks are now increasingly tight-fisted when it comes to giving out generous mortgages on buy to let properties. Not only is it difficult to get a buy to let mortgage, but recent budgets have also witnessed reduced tax breaks for buy to let investors, making the asset class less attractive for investors.
4. Reduced tax breaks
If that wasn’t enough, new legislation already passed,
will impact the income received for all UK buy-to-let investors. Previously investors were able to offset much of their rental income against their mortgage, meaning little or no income tax on the investment. However, this benefit is now being phased out, so anyone owning investment properties will face significant rises to their tax bill. This will not only deter new investment into the market but may also see existing owners sell to avoid the tax hike.
5. Interest-only mortgages coming to an end
The days of easy money before 2008, witnessed an epidemic of UK house buyers taking out interest-only mortgages. The idea was that the borrower could invest money in the stock market for the duration of the mortgage term and witness growth which out-paced the amount needed to pay off the loan’s notional amount. This would leave them with a bonus nest egg to do with what they liked.
But when stock markets failed to make the expected gains, many households fell short of the amount they required. The consequence was that the Financial Conduct Authority (FCA) has applied pressure to lenders to stop giving these mortgages out anymore. Nowadays, interest-only mortgages are only really available on buy-to-let properties rather than main homes.
Interest-only time bomb
However, with one in five mortgage customers having one of these deals, the next few years could see many homeowners facing eviction. A huge proportion of loans handed out in the 1990s are maturing over the next few years. And a lethal cocktail has brewed which could hit the housing market and the economy hard.
After a decade of ultra-low interest rates, many homeowners have continually re-borrowed as their homes have risen in value. This extra money has helped fuel the economy to this point, but it leaves many with very high loan-to-value (LTV) on their homes. With these loans deals about to finish, these homeowners will fail to obtain new interest-only deals. Combine this with interest rates already on the rise, and monthly mortgage commitments could increase ten-fold.
Such an impact would undoubtedly witness house prices falling with further rental demand.
6. Increased uncertainty over Brexit
The continuing uncertainty over Brexit is a cause for great concern when it comes to property market investments. As the gates close for new immigrants, property market demand is likely to be affected causing volatility in the real estate market.
It’s unclear what sort of trade deal will be achieved for the UK after its £39 billion divorce bill is paid. Either way, the uncertain journey, regardless of the quality of the final destination, is bad for property markets and supportive of a market hedge such as gold.
What’s happening in Italy?
As was suspected, Brexit isn’t an isolated incident. Not only does the UK’s withdrawal from the EU impact many other countries, but it also sets a precedent. Italy has followed suit in electing a coalition Government borne out of the desire for change.
With the far-right coalition suggesting the appointment of a eurosceptic finance minister, President Sergio Mattarella has stepped in to deny the selection. This unheard-of move has caused Italian bond yields to plunge more than at any point since the Euro’s inception in 1999.
This leaves Italy in a state of limbo with the new Government wishing to spend its way out of trouble at rates which would break EU guidelines. This demonstrates their desire to be the next to leave the single currency and return to controlling its own political destiny.
7. Equity market correction
We’re all enjoying our stocks going up in value in our pensions and ISAs. But all good things must come to an end. Analysing stock valuations over the past 150 years depicts bull runs lasting up to 6 years, immediately followed by a market correction. The Dow Jones and FTSE indices are now enjoying their 9th year of rising prices, so the law of averages tells us that the downturn is overdue.
Maybe it will keep rising indefinitely?
An analogy would be the city of San Francisco. History and science tell us that being located on the San Andreas fault guarantees future earthquakes. With many of the current residents have enjoyed years without a major quake, it’s naïve to suggest it will never happen. It will happen, we just don’t know when. What we do know is the longer it goes without a quake, the bigger the damage when it does occur. The same can be said of stocks.
Each day we read about more major brands either shutting stores, making redundancies or even going into administration. This isn’t just small independent shops in the high street, but major mega brands such as House of Fraser, BT, Sainsburys & Asda, Toys R Us and Maplin. On an evolutionary note, commerce is changing at the fastest pace for a century with online giants like Amazon squeezing profit from physical stores and automation replacing human jobs. This will only continue with technology.
Many market experts predict a major stock market correction with the Fed Reserve starting to raise interest rates in the US. Closer to home, wages are stagnant and credit bubbles are almost at bursting point with car leasing and zero percent credit card deals.
What would be the impact on gold and property?
When stock markets tumble, every investor feels the pinch, jobs are lost and day to day income is impacted. This takes any heat from the stock market as fewer borrowers can raise the funds to move house or pay high rent.
This is also the very time, that institutional and savvy retail investors switch their attention to gold. As a safe haven, it tends to receive a significant injection of investment demand during such market downturns.
Which investment should I choose?
The great thing is that you don’t need to choose between property and physical gold investment. If you’re already a keen property investor, then it may be worth taking your first steps to gold investment to hedge your portfolio. As we’ve seen, possible threats to one asset class can be a benefit to the other. That way the two investment rules are met: property & gold is simple, tangible assets and timing become less of an issue if you own both.
However, we all know that strong economic markets don’t last forever. That’s where owning some gold comes into play. Relying solely on property investment means the good years are great, but the bad years are catastrophic. Combining property and gold investment hedges the issue, so regardless of underlying conditions, you should still receive both income and portfolio growth
Do you need to be lucky with timing?
Timing and cycles can make a huge difference in your investment returns. While gold prices could rise or fall in the coming months, the odds are convincingly in favour of now being a great opportunity for physical gold investment. Rather than try to time the stock market or property sector downturn, invest in gold now while prices are relatively low. It’s better to have your portfolio insurance in place 6 months, or a year before the downturn, than one day after.
Is gold investment for you?
If you have decided gold investment is for you then look no further than Physical Gold. Why not call our experts on 020 7060 9992 today?
Here at Physical Gold, we have been looking at where the biggest gold mines are in the world which in turn led us to create or latest infographic ‘Where In The World Is The Gold?’.
We looked at how much gold is produced in mines across the world and ranked the 10 largest producing mines worldwide. With anything, you like to know where your product was originally sourced, therefore we thought we would do the same for physical gold investors much a like yourself.
The craze for gold mining has been around for thousands of years. Archaeologists have found gold artefacts in Eastern Europe dating back to somewhere around 4700 BC. This would indicate that the practice of gold mining has been around for almost 7,000 years. Infact, gold was mined across the world. Gold mining sites have been found across Europe, North Africa, and even India. In India, gold was mined as early as the 2nd century AD and gold artefacts found in the ancient Harappa and Mohenjo-Daro civilizations, now part of modern-day Pakistan, have been traced back to the minefields in Kolar, in Southern India. The size of these operations grew during the reign of the Chola kings a few centuries later.
Roman miners used two different methods to mine gold. One was called hushing, which meant that a flood of water was released to expose the gold hidden below the silt and the soil. The other was called ground sluicing, which was essentially an open pit method. In the 19th century, there were a series of gold rushes all over the world, which led to the discovery of gold mining sites across the world.
How much gold is there anyway?
So far, the amount of gold that has been mined is approximately 171,300 tonnes. While that may seem large a large amount, it is important to know that gold is one of the rarest elements. In comparison to the entire volume of the Earth’s crust, the precious metal is only 0.003 parts per million of the entire crust. In fact, the scarcity of gold is one of the factors that makes it so precious.
Gold supply running out?
It is widely believed that global gold production peaked in 2015 and since 2013, the output from almost all mines has slowed considerably. Some analysts have predicted that we have another 20 years or so of gold mining left. Of course, needless to say, once that happened it would dramatically spike the spot prices of gold.
However, new explorations continue to take place, as several countries continue to fund searches for new gold. China, the world’s largest consumer of gold is one such country. China recently discovered new precious metals deposits, valued at nearly $60bn near the shared border with its neighbour, India. However, China’s mining operations in the region could create border tensions between the two countries. On the other hand, mining company Polyus, from Russia claims that their 2018 output is likely to be at the topmost range.
Call our experts to know more about gold production
In this infographic, we have covered some of the significant gold mining projects across the world. China and Australia are the largest producers in the world, followed by the US, Russia, and Canada. Our team of experts can guide you on gold investing, how to generate good returns by investing in gold and when to buy and sell. For expert advice on gold investing, call 020 7060 9992 and speak to a member of our team, or drop us an email through the ‘contact’ section of our website.
Investing in silver is new to many. Even established gold investors may not have bought silver before. But that’s now changing, as we’re seeing just as many enquiries in silver as gold. So why are more and more people investing in silver?
Gold isn’t the only precious metal – Why you should invest in silver too
If you currently invest in a precious metal then it’s likely to be gold and with good reason. As the most popular of the precious metals, gold is recognised as a valuable commodity and is available in a range of formats and weights, which are easily tradable. Gold has historically been a reliable way to both protect and grow your wealth.
Silver’s the new kid on the block
But gold is not the only precious metal investment. Experienced investors know that, as with all types of investment, having all your eggs in one basket isn’t a good idea. It’s unlikely that all the shares in your portfolio are in one company, so why not consider diversifying your holdings in precious metals too? In fact, it’s not only us who are excited about the potential of silver. 5 years ago, 95% of our enquiries were for gold. Roll on to todsay, and our sales are now split 50/50 between the two precious metals. Metal diversification is a sound strategy for many reasons:
Silver’s historical position
Silver, like gold, has been considered a precious metal for hundreds of years and has been utilised as money throughout history. Its value is intrinsic, meaning that like gold, there’s never a shortage of buyers. As such, silver is a great vehicle for securing your wealth against threats such as volatility and for growing your portfolio.
Much of silver’s use can be roughly split three ways; between ‘silverware and jewellery’, ‘photographic’ and other ‘industrial’ uses. These are the key drivers of the worth of silver and why it has become such an attractive investment.
The use of silver, particularly in the photographic and technology fields, has been key to its rising value over time. In photographic materials, the silver can only be used once, meaning the volume of the available silver present on the planet is reducing every day. The technological uses for silver are naturally increasing, as more and more advances in technology are made every day – relying on silver for component parts.
Silver’s pivotal role in solar panels
In the manufacture of solar panels, silver plays a pivotal role. 90% of the structure of crystalline photovoltaic cells, which are widely used in the solar panels industry is made of a silver paste. When sunlight is received by the cells, a stream of electrons are generated. Silver is a metal with one of the highest conductivity ratios of both electrical and thermal energy. Therefore, silver is used to conduct the power out of the panels.
The solar industry alone uses 52.4mn ounces of silver, with each solar panel using around two-thirds of an ounce of silver, which is approximately 20gms. As the industry grows, with more and more townships across the world becoming more energy efficient and turning to green energy, the demand for silver will increase, as will its price. However, a reverse effect would also take place, as the rising price of silver is dissuading solar panel manufacturers from using too much of it in their operations.
Electronics is where silver really comes into its own
The use of silver, and its value, has changed over time but one thing is certain – the demand is growing and the stock of available silver on the planet is steadily decreasing. An increase in demand and a slowly diminishing supply, usually means one thing for prices..!
Silver, unlike gold, isn’t merely desired but essential for industry and commerce and its necessity has put considerable strain on silver’s supply thereby increasing demand for silver investments. Historically gold and silver used to trade at a ratio of 12:1 which meant it took 12 ounces of silver to buy 1 ounce of gold. Today – the ratio has widened and it takes 60 ounces of silver to buy 1 ounce of gold. Most commentators and analysts believe that as a result, silver bullion is massively undervalued with many predicting it could reach $100 an ounce in the next five years.
As silver’s use in industry increases many financial analysts, investing experts, and even geologists believe that a silver shortage is upon us. Infact the Silver Institute predicts that silver demand for industrial purposes will increase by 36% by 2016.
The demand for industrial silver went up a lot more, rising to 599mn ounces in 2017. A large portion of this increased demand came from the solar industry, as there was a 24% increase in global solar panel installations in 2017. Solar photovoltaic cells use a silver paste, thanks to the incredible electrical and thermal conductive properties of silver. Silver is also an essential ingredient for the manufacture of electronics, including electronics used in the automotive industry. The industrial demand for silver from the electronics industry alone consumed around 249.9mn ounces.
Here’s the best bit….
Silver-zinc batteries are increasingly being used by the electric car industry, which is also growing in leaps and bounds. Experts believe that by 2030, 25% of the global automobile industry will be electric. So, on the one side, we have increased industrial demand that seems to be increasing steadily over the years, clearly outpacing the production volumes. The leading countries across the world for silver production are Mexico, China, Peru, and Russia. Sadly, production volumes have been plummeting globally. Recently, the Peruvian government released a statement that declared a significant fall in silver production from mines in the country. In fact, the fall in production volumes is as much as 12%. So, you can see where this is headed. A scarcity of a much in demand resource, with the demand curve rising steadily over the years would eventually lead to the spot prices of silver skyrocketing. Current spot prices are at $16.58 levels for a troy ounce. However, many investors believe that prices are likely to reach $20 an ounce in 2018. Still, others believe that in time, silver could be as dear as $130 an ounce. Obviously, as we move into the future, investors who believe in the rise of silver, need to get in early in order to stay invested long term and maximise their gains from the difference in buying and selling price.
Silver is undervalued
The historical ratio between gold and silver is currently out of sync. Throughout history, silver has, on average, been around 10-15 times cheaper than gold. Right now this gap has widened so that 1 ounce of gold, for example, will buy an astounding 75 ounces of silver. Many experts have identified this significant undervaluing as a huge opportunity to purchase silver.
Why invest in silver coins or bars?
In addition, silver has many other strengths, making it a very worthwhile choice to strengthen your portfolio. People that ask themselves, “Why consider investing in gold?” end up considering silver investment. Consider the following benefits of investing in silver:
Low entry point– because of silver’s relatively low price (when compared to gold), it’s an attractive precious metal when either first investing in metals or when adding to an existing portfolio. As silver is much cheaper than gold it only takes a small price change to effect a large percentage increase in growth. It’s fair to say that consequentially – silver is more speculative than gold but together they provide a good balance within your precious metals portfolio.
Good ‘hedge’ against other investments– Silver is typically not linked to falls in the stock market or interest rates, so when stock markets fall or interest rates are low for example, your silver investment still has the potential to rise.
Likely to yield higher returns than cash deposits– with interest rates low, your returns may well be better than cash investments such as ISAs or bank savings. Like a bank though, your investment can be securely held by us, so there’s no need to hide your silver bars under your mattress!
Contacting Physical Gold to discuss silver investments
If you are investing in bullion coins or numismatic coins, we also have some great coin accessories that would help store your collection safely, without damage, in the event you decide to take delivery of your investment at your preferred location. In terms of delivery and storage, we have some excellent options, where you can choose not to take delivery of your purchases and opt to have them stored at our LBMA approved secure storage vaults, and simply receive the paperwork that entitles you to access them at any time you want.
We here at Physical Gold have recently been focusing our efforts on informing the masses about our great silver investment opportunities. In doing so we have created a new infographic called The Wonderful Uses Of Silver which details all sorts of intriguing facts and stats. For instance, did you know that early x-ray films all had a hint of silver in them? And that silver helps to protect spacecraft against the likes of space radiation? This useful material is more important than most people know, and there is much to be learned about its uses. Why not have a read to see what you can discover…
Silver basics one should know
With an atomic number of 47, the precious metal is instantly recognisable by its atomic symbol – Ag, which was historically adapted from the word ‘Argentums’, which is its Latin name. Silver has amazing conductive properties and has a moderate melting point. Infact, believe it or not, silver has a melting point of 961.8, placing the element right between Germanium and Berkelium. The metal has an atomic weight of 107.86. The discovery of silver was an important step for mankind and it was one of the early metals to be discovered, probably around 5000 B.C. Interestingly, the metal can be found in nature in its elemental form, as nuggets or sometimes as crystals. Electrum, a natural alloy found in the world, is actually an alloy of gold and silver.
Interestingly, the quantity of silver on Earth, when compared to gold is 17 times more and the precious metal is also a rare bird in the English language, as it appears that there are no words in the dictionary that rhyme with the word, silver.
Solar panels are constructed using crystalline silicon photovoltaic cells. Silver paste contacts are used by manufacturers, which are printed on these cells. Over 100 million ounces of silver are used each year by the solar energy industry. The semi-conducting layers of these cells use the energy from the sun to produce power. The industry uses another way to produce power, by using the reflective property of silver to reflect the solar energy. Collectors capture this energy and use salts for power generation.
Use of silver in electrical components
Silver is a metal with a very high rate of conductivity,
and this property is used by the industry to manufacture every kind of electrical component. From electrical switches to modern gadgets in the kitchen, almost all electronic devices are made using silver in one way or another.
Even mirrors are made of silver
The reflective properties of silver make it perfect for use in manufacturing mirrors. Many years ago, mercury was used to create a reflective backing on glass. However, due to the toxic properties of this element, it has long been replaced with silver by the industry.
The use of silver in photography
Traditional photography used silver halide crystals to create images. When these crystals were exposed to light, their patterns would register a change, which could then be used to develop a photograph. Of course, with the advent of digital cameras, this practice is now prevalent only in special situations where traditional photography is still in use.
Uses in the automotive industry
The super conductive properties of silver were put to use by automotive manufacturers in keeping our cars heated to a comfortable temperature. Silver is introduced inside the glass used for the windows in cars, which in turn ensures that heat remains inside the vehicle, keeping us warm during winters. Due to its high melting point, silver is also used to lubricate bearings inside the car engine.
Other interesting uses
The reflective property of silver is also used to shield spacecraft against harmful solar radiation. Silver is also combined with aluminium to form a very strong alloy that is used extensively by the air force.
Is the time right for gold and silver investing? It’s true that, at first glance, when looking at the historical price charts for gold and silver, they can look like a bit of a rollercoaster. This might lead you to believe that gold will never reach the dizzying heights it once did.
The price of gold reached its highest point in 2012 when it soared to a record high of £1,200 per ounce. The picture for silver investing is similar to current prices much lower than at its peak. This means the current levels of both metals offers great value. No-one should want to buy at or even close to the all-time high. Current prices for gold are around 20% better value than at its height, with silver an astonishing 60% cheaper.
You can view graphs illustrating past performance over various timescales, by clicking here. They make fascinating reading, though we would always stress that they should be considered in context and not in isolation.
2016 saw both the gold and silver prices record around 30% gains by year-end. And although it might not yet have reached the heights of 2012, gold enjoyed a continuous upwards trend, hitting a top point of £1,050 per ounce in July of that year. In Q1, The World Gold Council reported gold demand was up 21% to 1289.8 tonnes – the second strongest quarter on record. First-half gold demand was up 18% – the second strongest on record – with gold investment accounting for almost half of that demand.
Silver also went from strength to strength, reaching its highest price since January 2015. The US Federal Reserve’s decision not to change interest rates, together with no indication as to when they might raise them, encouraged people towards investing in gold and silver.
More subdued gains in 2017
Precious metals enthusiasts saw more modest gains the following year. Starting the year at £935/oz gold finished the year around 2.5% up at £960. During those two points, it spends 3 periods north of the £1,000 mark, peaking in September at £1,030. This coincided with a strong performance in the stock markets with the FTSE 100 rising 7.5% and the Dow Jones an incredible 24%. Generally, when stock markets perform so well, gold has the least interest and its price suffers the most. So it’s encouraging in the grand scheme of a balanced portfolio that gold still returned around the inflation rate during such a period.
What can we learn from that?
This demonstrates that while gold can act as portfolio insurance during economic downturns (usually appreciating by double digits), it still can act as a store of wealth in other years too. With cash deposits still paying well below the inflation rate in 2018, this simple achievement for gold shouldn’t be sniffed at. Essentially owning gold should be a long term strategy, as returns (and potential losses) can vary greatly from year to year. Trying to second guess the market and predict the performance is futile and relying on extreme luck at best. It’s always tempting to sell everything and only buy the investment that is performing the best at that time, in a hope to ride the gravy train. However, this strategy leaves you vulnerable to being hopelessly exposed to market corrections and change. Owning some gold along with stocks, bonds, cash and property, enables balance and more predictability.
….and silver? Has Bitcoin taken its mantle?
Silver experienced a poor year in 2017 with losses of around 3.5%. Some feel the price is being manipulated downwards by the huge banks which are looking to load up on the metal. If so, the price will inevitably bounce back with a vengeance when the banks want their holdings to increase in value. An alternative is that with stocks performing well under the new Trump administration and cryptocurrencies making millionaires seemingly overnight, silver simply hasn’t had a look in. Many have switched their attention from bullion to bitcoin. With the silver price so low and its huge potential for quick gains, it’s certainly been viewed as the exciting and go-to investment for those seeking significant price rises. With the likes of Bitcoin achieving this on a steroid level, the short term greed has switched all the attention away from silver.
Will silver regain its shine instead of Cryptocurrencies?
However, as we now know in 2018, cryptocurrencies are incredibly volatile, on the downside as well as the upside. For the novice investor whose head has been turned by tales of instant wealth, there are now almost as many stories of overnight bankruptcy caused by incredible price drops for bitcoin. This period (after their initial glamorous price growth) will likely sort the wheat from the chaff. Naive investors will perhaps start to reconsider the value of cryptos, deciding either that they’ve now missed the boat, or that the risk of complete loss is too great. For the more travelled investor, they already know that investing in cryptocurrencies is similar to betting red or black in the casino. There is simply nothing tangible behind their value, and while the blockchain technology has its merits and will no doubt perform a critical role in our futures, getting rich overnight from Bitcoin could be over.
For savvy investors seeking large gains, they’ll know that while silver and cryptos can be grouped as higher risk, higher gain asset classes, they are almost opposites. While the likes of Bitcoin may have no tangible or intrinsic value, silver is a physical precious metal. Its value can never fall to zero like Bitcoin and its value is backed by something tangible that not only can be used as currency but also has vast industrial uses especially in the technology sector. For this reason, the investors left standing after the inevitable Bitcoin massacre will no doubt seek out silver once again as the go-to sexy investment.
Current silver and gold value represent a great opportunity and potential
2018 has started in a rather dull fashion for precious metals. Prices are still around 20% below their historical peak, so it’s still a very good time to invest in both gold and silver. It just goes to underline that it’s a lucrative opportunity, with room for growth and the possibility of sharp spikes. As of March, returns for the year have been virtually flat for gold and 7% down for silver. Combined with last year’s silver price squeeze, it’s now looking like incredible value. It’s the ratio to gold, which averages 47:1 over the past century, now stands at a staggering 80:1. Surely silver investing offers vast upside potential.
Crucially, the influential factors which tend to increase the demand for precious metals, are still very much in place. Global markets continue to be unstable, rumours of another banking crisis persist and a housing market slowdown has already started. Combine this with heightened terror threats and rising demand from Central Banks for gold, and it’s easy to understand why the precious metals market still has plenty of wind in its sails.
The calm before the stock market storm
Stock markets have now enjoyed nearly a decade of
uninterrupted growth since the 2008 credit crisis. Recently the Dow Jones has received further boosts from the Trump administration. It’s tempting to leave as much money in stocks while they’re doing well as possible. Especially while precious metals are taking a breather. However, every market analyst will agree that a simple glance at historical performance will tell us that equity market bull runs cannot and do not continue forever. More pertinently, the most severe market crashes come after the longest a strongest bull runs, which inevitably fuel an inflating bubble. This is similar to the fact that San Francisco sits plumb on the San Andreas fault line. A glance at historical earthquakes will tell us that with the constant movement of the earth’s crust, further events are not only likely but guaranteed. It’s a case of when not if there will be another huge earthquake. Not only that, but when San Francisco is overdue a quake, just like the stock markets are now overdue a correction, then the expected magnitude of that impact is far greater.
Maybe I can simply leave all my cash in stocks and switch to gold when that happens?
The best policy is not to try and predict the future, as that’s just witchcraft! Instead, we should learn from the past and understand that just like the earth, the markets are constantly moving and predicting the moment of a big eruption is impossible. We’d suggest leaving money in stocks (even after they do fall dramatically as you won’t want to miss out on the recovery, however long that takes). However, we’d also insist on owning some physical gold and silver too. The most prudent strategy with timing when to buy precious metals is simply to buy now and wait. As long as you allocate a healthy percentage of your assets into the likes of gold, then you’ll be protected when the markets do crash. My little saying is that I’d rather own gold 6 months, or even 2 years before the market crash, than a day after. Because then it would be too late.
What else could push gold and silver up this year and next?
It’s not only the stock market which is vulnerable. There’s plenty of other elements in the mix which are either brushed under the carpet by authorities or simply under-estimated.
Interest rates and housing market
After an extended period of record low-interest rates
in most of the globe’s major economies, we’re now starting to emerge into a new phase. Base rates have already risen in the UK and are predicted to continue rising in 2018 from May onwards. Rates in the US have also been rising, at a slightly faster rate. Rhetoric from central banks is that increases will be modest. However, the huge danger is the impact even small increases could have on the average man in the street. In a period of incredibly low or even negative wage growth, one of the few areas that have papered over the cracks has been property. With house prices seemingly on an unstoppable journey to the stars, the property-obsessed UK public felt comfort knowing their prize asset was at least rising in value. With interest rates near to zero, borrowing has been super cheap. So most of us have re-mortgaged, unlocking vast fortunes to fuel either extravagant lifestyles, or at least pay for the bills during lean periods. This increased leverage now leaves us vulnerable to the very interest rate rises we’re seeing now. When the starting point is as low as its been (0.25%), it only takes modest base rate increases to have a huge impact on our monthly mortgage cost, especially when cushy fixed intro rate mortgages periods come to an end. Check out our investigation into the relationship between interest rates and the price of gold and silver.
…and the housing market has softened
Not only are our monthly mortgage costs increasing, but the value of our property has stopped rising, and started to fall. This is a consequence not only of the international market struggling, with wealthy Chinese and Russians previously fuelling UK price growth, but also over the swingeing tax increases brought in by the current Government which has increased stamp duty so dramatically. We expect that firstly, more house owners will fail to pay their mortgages as interest rates rise, leading to more downward pressure on house values. For those who do manage to survive as costs increase, they will have less disposable income (with wage predictions stagnant), which will impact the high street and service sector, further crimping stock markets. Higher interest rates also mean higher new borrowing costs, which deters investment in corporate growth. All this will put even more pressure on the already unaffordable rental market. It’s common to compare gold investment versus property, but both should play crucial roles in a balanced portfolio.
UK consumer credit bubble
With the pressures of interest rate and mortgage rises, the public’s other debts will also come under pressure. Two particular concerns are the car market and credit card sectors. Both industries are enjoying record high borrowing. However, as lenders feel the squeeze from higher rates and more defaults, we’re likely to see stricter borrowing requirements and higher rate deals. A record number of UK borrowers are currently on zero per cent credit card deals which are likely to begin to reduce in availability. People will then struggle to refinance their debt at anywhere near the levels they’ve been used to. In the automotive industry, a growing trend has been for leasing cars. Whether on outright monthly lease deals or borrowing with a balloon payment at the end, many drivers will struggle to continue financing their car. Certainly, the hunger for new cars every 2 to 3 years will likely diminish.
The technological age is slowing crushing the high street
Early 2018 has brought with it fresh casualties of the ever-growing high street demise. Toys R Us and Maplin have both gone into administration, while seemingly popular food chains, Prezzo and Jamie’s Diners are closing a large number of restaurants. Perhaps this doesn’t come as a surprise. You could argue that Maplin has always been incongruous and never really had mass appeal. While kids love the experience of Toys R Us, adults who buy the games are now far more likely to order from Amazon and benefit from lower prices and next day delivery. Either way, this trend of weeding out the weak, however large the company, is likely to continue as the public turn their back on the high street and embrace online shopping. The frightening consequence is the sheer loss of long term jobs. Automation is filling the role of so many which will have a long term negative impact on an already growing population. Read our blog on the future of gold in a cashless society.
Brexit, Trump and Russia
There isn’t enough time to cover every simmering possible global issue which could push gold and silver prices skywards. But certainly, a handful of other significant issues would be the ongoing threat to the UK from Brexit. Whether this has a direct impact on our economy, a slower longer-term influence or is simply negative to Sterling, this is one which will stay on the radar for a while to come.
Donald Trump hasn’t blown up the world yet, but who knows about tomorrow! None of us would be shocked if he develops his trade war with China, instigates a war with the likes of North Korea, or simply makes some terrible domestic decisions in the world’s biggest economy. Either way, in today’s ultra globalised economy, foreign issues have more impact on the UK than ever.
The recent tensions between Russia and the UK after the poisoning accusations could be a storm in a teacup. However, the Government’s strong condemnation of Russia suggests there could be a hidden agenda. With Putin now flexing his muscles, I’d rather own gold right now to provide diversification, just in case this escalates (especially as Russia have been stockpiling gold aggressively themselves over the past few years).
Long term view for gold and silver investing
The value of gold and silver may be volatile, but owning them as part of a portfolio reduces your overall personal volatility. They tend to act as a balance to the traditional paper assets (like stocks and shares), so when those markets fall, physical gold and silver have historically risen. The motivation for many gold & silver investors aren’t necessarily to time the market perfectly; instead, it’s to take a long term view to provide balance and protection to their overall wealth. This way, exact timing isn’t important, as the long-term hold should outperform any short-term price drops and still deliver portfolio insurance.
If you’re still unsure and concerned about timing, then our ‘Monthly Saver’ enables you to purchase regularly. You can set up to automatically buy a small quantity of gold or silver every month. This means that if the price does decrease from one month to the next, it benefits you, as your next purchase would be at a lower rate.
Over time, you buy each month at the various underlying prices, therefore averaging out the cost of your precious metals. It’s a great way to get started in gold and silver investing.
The main message is that it’s necessary to take the long-term view. As with any investment, prices will go up and down, but as these graphs illustrate, the rewards can be well worth it. If you’d like to find out more about this type of investment, why not Download our free guide to investing in gold and silver. We maintain gold and silver are still very good value and worth their weight in, well… gold and silver!
First of all, we’ll briefly explain what VAT is and when it applies. We then quickly move onto how this applies to purchases of precious metals, and then finally reveal some powerful methods of buying gold in the UK without paying any VAT at all!
What is VAT?
Value Added Tax (VAT) is added on to most consumer goods and services in the UK. The current general rate of VAT is 20% with some items being at a reduced or zero rate. This is added at the point of sale and the consumer will bear the charge.
Many food and drinks are zero-rated except alcohol, confectionery and hot food. Most cultural and leisure activities are exempt as are some health, education and charity goods and services.
VAT rules on silver purchases
If you buy any form of silver in the UK, your purchase is
subject to 20% VAT, regardless of purity and whether it’s a coin or bar. Despite this cost, physical silver investment in the UK has continued to grow in popularity, as analysts believe the silver price is severely undervalued.
Brexit caused the end of VAT-free silver in the UK
Prior to Brexit (31/12/2020), Physical Gold Limited were able to provide silver coins and bars without VAT. Sadly, the UK’s departure from the EU meant that the treaty which brought VAT-free silver ended.
Whilst we can’t provide silver VAT-free anymore we are still able to sell popular silver coins and bars at similar all-inclusive prices. We have made a number of changes to our silver business, which benefit the final price to our customers, these are:
Silver delivery – we now provide silver with no delivery charge. This is because silver is now delivered from the UK. Postal savings have been passed directly to customer’s
Reduced product range – we decided to reduce the number of silver products we sell. This means we buy fewer products, but more of them. In negotiations, we can bulk-buy these products, which means we pay less and pass this benefit on to the customer
Overall, these savings negate a lot of the increased price for VAT, so much so that the overall increase price caused by having to pay VAT is negligible. Additionally, we can say we are competitive with other UK dealers and our silver still represents great value for money.
Another benefit is that we can now accept mixed orders for gold and silver. You can now pay for your silver purchases by credit card up to £10,000 and mix gold and silver in the same order – offering you more flexibility.
Buying silver coins
We offer a range of bullion coins from 1oz Britannias and 2oz Queen’s Beasts coins to the most popular foreign silver coins. If you’re buying a large number of silver coins or looking to build a substantial holding over time, then don’t forget that any UK silver coins are also Capital Gains Tax-free to UK residents.
Buying silver bars
We are at able to deliver pure silver bars to UK addresses. You can benefit from the lower premiums of the larger silver bars, and buy silver bars delivered directly to your door.
3. VAT-Free Silver Bars (For Storage)
For some, while silver investment is a great idea, they don’t want to store the metal themselves. In this case, we provide an alternative solution for those wishing to buy VAT-Free silver bars for storage. Our silver bars are stored, on your behalf, in the Channel Islands. Keeping them offshore means your purchase is exempt from VAT as they fall outside of UK tax. With large bars available, you’re able to obtain tighter margins on your silver, while still being tax efficient
VAT on gold
This depends on what type of gold you buy. Since the 1st January 2000, the VAT Act 1994 exempts Investment Grade Gold from Value Added Tax. So as long as your purchased gold qualifies as Investment Grade, then no VAT will be charged.
There are a few requirements for gold to qualify for an exemption:
Firstly, it has to be in the form of a coin or a bar. For this reason, VAT is still added to gold jewellery. You should also avoid gold dust, gold ore and gold watches if you want to be tax efficient.
If you opt for a gold bar, the purity needs to be at least 995 thousandths. The good news is that a majority of gold bars on the market exceed this, at 999 thousandths gold, with the rest generally meeting the minimum requirement.
..and how about coins?
For gold coins, the purity target is lowered to 900 thousandths, meaning that any coin of 22 carats or higher will qualify. There are a few extra guidelines for coins – they must be minted after 1800, have been legal tender in its country of origin and not usually sell at more than 180% of the market value of its gold content. Essentially these additional rules exclude very old, obscure numismatic coins.
6 Hacks to buying the best value gold sovereign coins – Watch our video now!!!
If all this sounds complicated, don’t worry. We only sell gold coins and bars that meet these requirements and qualify as Investment Grade, so you’ll never pay Value Added Tax when buying gold through Physical Gold.
How can you take this a step further?
If you want your gold investment to be completely tax-efficient, then buying UK gold coins also benefits from being Capital Gains Tax-free. They already meet the VAT exempt criteria but are also tax-free upon sale due to their legal tender status. With each Sovereign, Britannia, special edition UK coins and variants of these, each coin possesses an actual face value. The Government can’t tax you on the movement of legal currency, so buying and selling UK gold coins is completely tax-free!
Here at Physical Gold weve introduced an incredibly simple product, specifically designed to help you, by taking the stress out of choosing the right coins.
If youve ever thought about investing in physical gold or buying gold online, you might have some questions, or you might be apprehensive because you dont quite know what to buy. If so, youre not alone.
Enhanced performance UK Tax-free coins
Called The Directors Pick, we scour the market to source Royal Mint issued, pre-owned, UK tax-free coins, and carefully hand pick a mixed portfolio of these Enhanced Performance coins especially for you. With our extensive network and buying power we can secure coins from sellers, auctions and the intermediary market. So you benefit from our years of specialist experience and expertise, at absolutely no extra cost.
These pre-owned Enhanced Performance coins have an additional intrinsic value, over and above that of their gold content; reflecting their added desirability and scarcity. This added value enhances the coins market value when the gold market rises and offers added protection when the market falls – providing the best overall value and reassurance if youre just starting out or if youre looking to own a collection of tax-efficient gold coins.
Why is our Directors Pick so popular with physical gold investors?
This is a popular product because we specialise and focus on UK gold coins that are
VAT-exempt and Capital Gains Tax free. This is due to their legal tender status, which means theres no tax due on any gains made. We select high performing gold coins that offer diversity as well as security on your other assets.
Hand picked, guaranteed by our experts and tailored to your needs, the Directors Pick is designed to help you get started with your gold coin collection. Were also happy to explain the gold buying process, the economics behind the price of gold and even help you open a Monthly Saver account, if youre interested in regular monthly savings.
So, whether you want your gold delivered right to your door, or stored in one of our secure storage vaults, our Directors Pick gold product provides you with high quality gold coins and specialist expertise, all focused on helping you build your gold coin portfolio quickly, easily and stress free.
With prices starting as low as 2,000 for the Directors Pick, we can create a package to suit your needs and budget.
Visit us at www.physicalgold.com/shop/tax-free-gold/directors-pick to see how easy buying gold online can be!
What are the best investments of the past decade? We wanted to compare annual returns of the major asset classes over the past 10 years and then declare the top performing asset over the entire decade. What better way to illustrate this than the asset class decathlon! Each decathlon event represents returns over each of the previous 10 years.
Best Investments overall
Over the 10 year period, UK gold prices rose more than any of the other major assets classes. Its total cumulative was a whopping 132.91% significantly higher than the runner up – Bonds (62.27%) and third-placed shares with a reasonable 56.14% rise. This doesn’t necessarily mean that every decade will produce the same results, and macro factors will always have an influence on results. As a safe haven investment, gold is generally bought in times of unrest. It’s no surprise then that it was the best investment during the period which witnessed the invasions of Iraq and Afghanistan and the downgrading of the US Dollar after the Global credit crunch.
Gold’s overall victory is also reflected in its consistency. Our infographic illustrates the fact that gold was the best performing asset class in four of the ten years, equalled by Shares. The remaining 2 years were won by Bonds’ performance. Gold only experienced a loss during one of the ten years, again the best of all the investment classes.
As expected, cash remained in the middle of the pack throughout the decade when interest rates remained very low. This also reflects that cash represents a low risk/low reward store of wealth. In other words, you may not get huge returns but you won’t suffer losses either.
How can this help us invest
The research demonstrates that over the length of a decade, the various asset classes each have their moment. By sticking to just one or two assets, you risk missing out on some potential significant gains. As any decent IFA will tell you, diversification is the key to protecting your portfolio from large losses, maximizing returns over the long term and providing a more predictable return.
Unless you have a crystal ball, you have to be incredibly lucky to pick each asset class at exactly the right time to buy low and sell high. This risky strategy tends to mix some good years with catastrophic losses. Not the best ingredients for a balanced portfolio.
What does it tell us about gold investment
The infographic and results supports our view of gold investment. Firstly, it plays an essential and unique role in anyone’s overall investment strategy. After all, if you’d invested in a mix of shares, bonds, property and cash, not only would you have missed out on gold’s huge gains, but some years may well have wiped you out.
Of course, analysis of other decades may show a different overall winner of investment returns, with gold performing far less favourably. But, this only goes to demonstrate the need for a balanced investment strategy. Gold plays a unique role because it tends to perform particularly well during times of political and economic turmoil. Crucially, the other asset classes all seem to do their best during stable times. But if an event causes disruption, whether it’s an economic downturn, an act of terrorism, banking crisis, currency devaluation or war, then all these assets fall in value together. Leaving the investor with a major headache. By owning some gold as part of an overall strategy, your wealth is protected from this volatility. Rather than taking risks, owning gold actually reduced the overall risk and volatility of your portfolio.
If you have a large appetite for risk, it’s possible
you’ll be attracted to ‘get rich quick’ offers. Timing has to be perfect with these and you have to get lucky. Generally, you can lose all your money, but in the same respect, you can also double or triple your money in a very short period of time.
Gold should always be viewed as a medium to long term investment. The infographic supports this. While it performed impressively, it did fall significantly in 2013 after offering almost no return in 2012. It may not make you rich overnight, but investing in gold is a prudent investment, which can offer some balance with riskier short term opportunities.
Another important takeaway from this research is that gold beat the rate of inflation on eight of the ten years analysed. The best of any of the major asset classes. This supports the notion of gold investment as a store of wealth. It maintains your purchasing power over time and protects from the erosive qualities of inflation.
The final bonus which makes gold the best investment of the past decade is its possible tax efficiency.
Not only did it rise in value more than any other major investment, but it also did it tax efficiently. Tax free gold coins for example are VAT-exempt and Capital Gains Tax free. Outside of an ISA or Pension, the other investments struggle to be as tax efficient. And who wants to share their gains with the Treasury!?
Did you know that not all gold and silver performs the same? Your choice of dealer can directly impact the returns on your investment. So, what should you look for in a gold or silver dealer? In this short video, we explain why we’re one of the UK’s leading precious metal dealers and how we’re uniquely suited to help with your requirements, whether you’re an experienced investor, or just starting out.
Gold & Silver Dealer
Choosing the right gold or silver dealer can make all the difference, both when it comes to credibility & reassurance and also when assessing vital elements that can affect your investment return, such as coin selection & tax.
As industry leading, BNTA accredited gold-investment professionals, we specialise in helping both experienced investors – looking for gold and silver diversification, as well as those looking for the very first time, to own some gold of their own
We offer access to unique gold investment solutions, some of which are not available anywhere else, such as:
With a dedicated consultant to discuss your aims and objectives for your wealth and future, we’ll suggest the most appropriate options for you, bearing in mind the all important considerations around tax-efficiency.
Because of our industry reputation & size, we have significant buying power, which enables us to negotiate the best prices for you as an individual, before organising the purchase on your behalf.
We can then either securely store and insure the gold for you or simply send the gold, safely insured, directly to your door.
When the time comes to sell your gold, we even guarantee that we will buy it back from you, meaning you never have to worry about how liquid your investment is.
As an accredited business, with unique investment solutions, offering dedicated consultants and a buy back guarantee, investing in gold & silver has never been easier, more secure or more suited to you than with Physical Gold.
Intrigued about who is most interested in gold prices worldwide, we sought to find out which country is tracking the price of gold the most. To do this, we analysed search data to find out how many times the phrases ‘gold price’ and ‘price of gold’ were searched per month in 155 countries before exploring these search results per 1,000 active internet users in each nation*.
To make the data as reliable as possible, we explored each of the phrases related to gold prices both in English and the specific country’s primary language. This created a clear picture of which countries are tracking gold prices the most around the world.
The top 20 countries tracking gold prices
Country most interested in price of gold
Taking the top spot for the country tracking gold prices the most is the United Arab Emirates, with a staggering 521,000 average monthly online searches, or 58.45 online searches a month for gold price per 1,000 active internet users, either looking to invest in solid gold bars or being interested in the current value of the metal.
Singapore, self-titled ‘Garden City’, comes in second place. According to our research, Singaporean’s search for the price of gold 184,500 times a month on average, which equates to 38.27 searches per 1,000 active internet users.
Third places goes to Qatar – one of the world’s richest countries – where residents make 76,800 searches per month on average. Despite having fewer searches than UAE and Singapore, when compared to the number of internet users in the country, this means there are 30.33 searches per 1,000 active internet users.
Even though New Zealanders make just 39,000 searches for ‘gold price’ on average each month, this equates to 9.12 searches a month per 1,000 active internet users in the country, ranking in eighth place.
UK and US in top 10
The United States and the United Kingdom follow closely behind each other in places nine and ten, respectively. The USA makes a total of 2,506,000 searches each month, which is equivalent to 8.02 searches per 1,000 internet users in the country. Comparatively, the UK falls short of this figure with 7.98 searches for ‘gold price’ for every 1,000 active internet users, after making 519,300 searches overall each month on average.
Despite having the highest number of searches for ‘gold price’ on average each month (3,720,600), India comes in fifteenth place when compared to searches made by web users in the country. In fact, there are 4.92 average monthly searches per 1,000 internet users in the Asian nation, which is 53.53 less searches than the United Arab Emirates in first place.
This low ranking is a surprise as it’s common knowledge that gold has a central role in the country’s culture. The precious metal is considered a store of value, a symbol of wealth and status, and a fundamental part of many rituals, which explains why up to 25,000 tonnes of gold is accumulated in Indian households.
Lastly, rounding off the top 20 countries most interested in tracking the price of gold are Austria and Nepal. According to our research, both countries have 2.21 average monthly searches per 1,000 active internet users.
Continents most interested in tracking gold prices
To identify which continents are most interested in tracking the price of gold, we calculated which continents each of the top 20 countries originate from.
Our analysis found that Asia is home to the most countries interested in tracking gold prices, as we found 13 Asian countries featured in the top 20. Europe comes next with four entries, including the UK, Ireland, Croatia, and Austria. Trailing behind with just two countries each are the continents of North America and Australia.
The full results
For each country in the top 50, com gathered data for the number of overall active internet users in each of the respective countries.
To get the results for online searches for gold price per 1,000 active internet users – PhysicalGold.com divided the overall figure for the number of active internet users in each country by thousand.
Thereafter, the average monthly online searches for gold price for each country figure was then divided by the answer from the calculation that was made in stage two for each respective country to establish the average monthly online searches for gold price per 1,000 internet users in each of the countries in the top 50.
There wasn’t enough data to include China in our results.
Please note: When analysing the data, the two key search terms/phrases related to gold prices were explored in English as well as each country’s respective primary language (where applicable) to increase the reliability of results.
Property ownership has always been the holy grail of most UK residents. As a country, we are seen as a nation of property owners. In many ways, this makes sense. After all, why should you rent a property to provide an income for a landlord, if you can acquire your own? Over the last three decades, this sentiment has been targeted by mortgage providers and banks.
Easy property acquisition
The late 80s, 90s and early 2000s were a time when mortgages could be acquired for next to nothing. Banks were willing to fund up to 95% of the value of the property, with easy terms of payback. Many people re-mortgaged their properties after paying back the loan, to simply acquire capital based on the equity value that the property had accrued. However, the 2008 financial crisis and the decade that followed has made property acquisition more difficult. Now, the property that you bought and you’re living in cannot be considered an investment. An investment property is usually a second property that you have purchased to rent out and make profits on its equity value, as property prices rise. Of course, the increments in value would vary on the location and size of the property.
Comparing gold investments with properties
Both are asset classes worth considering when constructing a portfolio. Due to the physical nature of the assets, both are tangible investments that do not carry counterparty risks. However, the two asset classes behave quite differently. Property markets are subject to volatility depending on the economic situation in the country. The 2008 financial crisis was triggered off in the US when large numbers of people defaulted on their sub-prime mortgages. Banks and mortgage providers are not in the core business of buying and selling property. Therefore, when a large number of foreclosures happen, the bank is stuck with all these properties and the value plummets fast.
Property investments also carry additional costs like council tax, if not rented and maintenance costs. However, gold investments do not have any counterparty risks or maintenance costs. Also, the sale of a property may take a substantial amount of time, while gold enjoys far greater liquidity and the returns are immediate. Both investments tend to appeal to the same people as they share their tangible nature and appeal to those worried about the true value of paper assets. Both perform extremely well over the long term but can be volatile. This volatility can provide buying opportunities in both gold and property investment. The UK property market has taken a significant hit recently.
Property markets react adversely to an economic crisis
Property markets are prone to devaluation when the country’s economy is plunged into crisis. Gold, on the other hand, has an inverse relationship with poorly performing stock markets, money markets and the economy. When the world goes into crisis, investors move to gold. This is evident from the gold peaks that we witnessed during 2011 and 2020. Therefore, we can surmise that investments in an immovable asset class like real estate carry greater disadvantages than gold investments.
Discuss your investment strategy with Physical Gold
Physical Gold is one of the most reputed UK gold dealers, and the company’s investment team offers free advice to investors on the right asset classes to invest in. Call us today on (020) 7060 9992. Alternatively, you can also reach our investment team by getting in touch online via our website. We look forward to hearing from you.
While some investors prefer gold coins, others prefer gold bars. Gold bars can be a great repository of value and they are a vehicle for investors who believe in owning a tangible asset like a chunk of gold, in the form of a gold bar. Let us now explore why gold bars can be a great addition to your portfolio and where to buy them.
Advantages of investing in a gold bar
Gold bars present an attractive value proposition for investors because they provide an opportunity to buy gold at a lower price per gram. This is possible because the manufacturing costs of producing a gold bar is lesser than minting a coin. Gold bars do not carry an intricate design element.
The bars are produced by pouring liquid gold into a mould, and the purity value and the refiner stamp is engraved on the bar. Gold bars also come in a variety of sizes and weights. There are large gold bars that can weigh a kilo. However, if you are buying gold bars to strengthen your portfolio, it is better to invest in smaller bars than larger ones. This creates divisibility, variety, and liquidity for your portfolio.
This approach can provide advantages when selling. Investing in a large gold bar like a kilo simply means that you have to let go of a large quantity of gold at a single price point in the market. However, selling smaller bars allows you to take advantage of the price movements and generate better profits.
Avoid premium brands
Premium brands like PAMP or Metalor can be attractive to investors, however, remember that you are paying a premium simply for the brand name. When buying a gold bar, the only things you need to check are the refiner stamp, serial number, weight, and purity value. It’s often a good idea to invest in pre-owned bars, as they provide better value for money with the same gold content.
Where should you go to buy a gold bar?
There are many options available to investors if they wish to purchase a gold bar. There are high-street gold dealers or jewellers who can sell you a gold bar. Alternatively, you can also find gold bars on auction sites like eBay. But, should you buy an important and valuable investment product from these sources?
Gold investment bars should be bought from a professional dealer only. If you want to buy gold bullion bars, then they should also come with a serial number, be certified and have a purity of 999.9 at least. Don’t be tempted to buy lower grade bars or from eBay. Finding a reputed UK gold dealer is the first step you should take when buying a gold bar for investment.
How can you identify a reputed UK gold dealer??
Most reputed gold dealers in the UK will be registered with the British Numismatic Trade Association (BNTA). So, by visiting their website, you can easily shortlist several reputed gold dealers near you. The next step is to call them and find out if they provide a certificate of authenticity and a buyback scheme. Most reputed dealers will also offer free advice for you to buy the best gold bars.
Talk to Physical Gold about buying your gold bars
Physical Gold is a highly reputed UK gold dealer and the company’s investment team offers free advice on buying gold bars to investors like you. Call us on (020) 7060 9992 or reach out to us online via our website. Our investment team will be happy to answer your queries and advise you on buying the right gold bars for your portfolio.
Gold coins have been a source of great attraction for many individuals over centuries. Numismatists who collect gold coins are thrilled with the idea of acquiring a precious and rare gold coin. Investors choose to buy gold bullion coins due to the returns they can make on their investment. Of course, there are certain compelling advantages to buying gold coins.
They are easy to store and often come packaged in monster boxes. They provide divisibility to an investor’s gold portfolio. Also, they have a certain aesthetic value, which many investors prefer over gold bars. However, if you’re thinking of investing in gold coins, there are certain parameters to be aware of.
Checking gold coin authenticity
How will you know that the gold coins, you have just invested in are authentic? You will need the services of a gold expert who can certify the authenticity of the coins. But, there are certain checks you can do at home that can help you decide whether the coins are genuine or not. Gold, like other precious metals, has a high density. Therefore, the size of the coin would depend on its weight.
If the gold content of the coin has been tampered with and a certain percentage of base metals introduced into the coin, it will be lighter than it should be. Therefore, you can measure the diameter, thickness, and weight of the coin. To do this test at home, you will require a set of Vernier callipers and a weighing scale used by jewellers. You can also use a magnet to detect the purity of gold in the coin. Since gold is non-magnetic, a pure gold coin will not be attracted by a magnet. There is also a device called the Fisch Tester that allows you to test popular gold coins like the Krugerrand or the Gold Britannia.
Apps to test your gold coins
Yes, in 2021, there is an app to test gold coins as well. These apps emit a sound and generate a ‘ping test’ by measuring the echo your coin produces. One of these apps is called Coin Trust and there is a drop-down menu that allows you to select the particular coin you’re testing and proceed from there.
Buy your gold coins from a reputed coin dealer
If you know which coins to buy, then simply purchase them online from a trustworthy broker. If you need guidance as to which gold investment coins to buy, then any good dealer will be able to advise you. Generally, stick to bullion finish coins, rather than proof finish, and only buy really well-known coins. In the UK, Sovereigns and Britannias are best as they’re also tax-free.
The simplest way to buy authentic and genuine gold coins, without going through the hassle of testing them at home is to buy your gold from a reputed UK dealer. Most reputed dealers will provide you with a certificate of authenticity, which is stamped by a coin certification agency like the PCGS or NGC. Storing the gold coin is important and you should never remove the coin from its original packaging so that there are no doubts regarding genuineness when you want to sell the coin.
Call Physical Gold to find out more about buying gold coins
Physical Gold is one of the U.K.’s most reputed gold dealers and has a team at your service that can guide you on how to buy gold coins and advise you on the authenticity of the coins you own. Please reach out to us on (020) 7060 9992, or simply send us an email and our team will connect with you to help you purchase the right gold coins.
Managing a good personal portfolio can allow you to retire peacefully, knowing that you have a nest egg to fall back upon. Diversifying an investment portfolio is always a good practice. But, asset allocation is the most important thing. Identifying the right asset classes that will bring good returns to your portfolio can be tricky. Gold has always been an asset class that has attracted investors due to the stable returns generated by the precious metal. It is also a great store of wealth and provides investors with an opportunity to hedge their risks. In this article, we will explore the pros and cons of putting your money into fixed deposits and how this asset class compares to gold.
Why invest in fixed deposits?
Most UK high street banks have different fixed deposit schemes that generate steady returns over time. If you already hold an account with a high-street bank, applying for a fixed-term deposit is easy. So, the three main conditions that you need to fulfil when applying for a fixed deposit is that you must be over 18 years of age, have an account with the bank and be a UK resident.
You can invest your money with the bank for a fixed term, which is usually six, nine or 12 months. Another feature of these schemes is that the interest rate is also fixed. So, if the Bank of England base rate changes during the term of your fixed deposit, there will be no change in the interest rates provided to you. A popular fixed deposit scheme is the ISA.
What are the other features of fixed deposits?
There are a few other features of fixed deposits that we need to be aware of. Most high-street banks have a minimum deposit that you must make. For example, NatWest asks for a minimum deposit of £5,000. Also, once you start the deposit scheme, you cannot add or withdraw money from that account. You have to invest your money for the entire term period.
Cash ISA accounts
A cash ISA is a popular scheme because you can take advantage of the tax-free allowance every year. The current tax-free allowance for an ISA is £20,000 during the financial year 2021/2022. A cash ISA can also be opened with only £1. However, fixed-rate ISAs are a different product available from many high-street banks. The minimum deposit amount is lower than other fixed-term deposit schemes. For example, to open a fixed rate ISA with NatWest, you need to invest £1000.
Gold versus fixed deposits
Overall gold is better than cash in the bank. Fixed deposits such as cash ISAs and bank deposits promise an explicit and predictable return. Gold investment, on the other hand, can go down or up in value and at various rates. The current low-interest-rate environment means that fixed deposits offer 1% or lower returns. This can even be taxed if outside of an ISA, reducing the yield still further. These rates are well below inflation which means the value of your money is diminishing in real terms. Gold is riskier in the short term but has the ability for high returns and at a minimum, has proved to beat inflation, successfully acting as a store of wealth. Buying UK gold coins is also tax-free.
Importantly, the returns generated by gold over the short term is far greater than investing in a high-street bank deposit. Bank deposits also carry counterparty risks. If the bank goes out of business, it may be difficult for you to recover your money. If we examine gold price charts over 20 years, it becomes clear that gold has always generated steady returns over decades. However, interest rates in the UK have fallen abysmally over the last 20 years and were only 0.5% during the 2008 financial crisis.
Discuss your investment plans with Physical Gold
If you are building a portfolio that can bring you peace of mind during your retirement years, talk to our investment experts. At Physical Gold, we are happy to offer free advice to investors and explain how you can maximise your returns by investing in precious metals. Call us on (020) 7060 9992 or simply drop us an email via our website.
Over centuries, gold has remained an asset class that investors can trust. Investors have repeatedly turned to gold during periods of economic uncertainty. Gold is generally seen as a precious metal that generates steady returns over the short term. In recent years, the world has been plagued by economic crisis and investors have always turned to gold. A glaring example from the recent past is the highest peak price ever achieved by gold in August 2020, when it touched close to $2,000 per ounce. However, with all the interest in gold, it is pertinent to find out about the safety of gold investments.
Gold as insurance for investors
In 2011, during the peak of the 2008 financial crisis, gold breached the $1,900 barrier for the first time. The collapse of Lehman Bros was quickly followed by the downfall of many UK banks and investors lost their confidence in the global economy and capital markets. Clearly, they decided to move their investments to gold as a safe haven. The partial recovery that the global capital markets made since those years was nipped in the bud by renewed economic uncertainty from many factors.
Brexit created uncertainty across the European economies, while the US-China trade war and a host of other geopolitical factors ensured that the global economy never made a full recovery. This phase was followed by the global pandemic, which came upon us in 2020. By August 2020, gold had once again breached price barriers to reach a new high. Looking back at these events, we can conclude that investors frequently move to gold, due to the safety and security it provides.
Physical gold investments are also free from counterparty risks. These are risks associated with investments that are dependent on their fulfilment by a third party. If the market fails to perform, the stocks you buy or the mutual funds you invest in may shrink in value. However, gold investments are devoid of such risks, because it is a tangible asset that you own.
The rise and fall of gold prices
The gold price can go down as well as up, depending on supply and demand. Over the short term, there’s the risk that your investment could fall in value. Over the medium to long term, gold has proven to increase in value quicker than the inflation rate, proving to be a reliable store of wealth. Buying in paper form, like ETFs, gold futures or gold shares, poses further risks with leverage and counterparty exposure. Owning gold investment coins and bars negates both these risks.
Over the last 10 years, gold prices have never sunk below the $1,000 price point. While equity and debt investments, mutual funds, debentures or derivatives can all be devalued to a point where they are worth next to nothing, gold continues to have an intrinsic value that provides safety. If we look at price charts of gold during the mid-1990s, we can see that the price of gold was $400 an ounce in 1996. The value of gold quadrupled over 20 years and never looked back.
Get in touch with Physical Gold to discuss your gold investments
Physical Gold is one of the U.K.’s most reputed gold dealers. We provide free investment advice about any precious metal investments that you choose to make. We are always happy to discuss your investment plans and identify the best options that can generate optimal returns. Please call us on (020) 7060 9992 or contact us online and our investment team will be in touch with you right away.
Most investors prefer to invest in both gold coins and bars when building their portfolio. Gold coins are preferred by investors who have a numismatic interest. However, many investors prefer to buy bars. So, we need to understand the advantages and disadvantages of investing in coins or bars.
What are the important factors to consider when deciding to buy coins or bars?
Flexibility is an important attribute when building a strong portfolio. Due to this, coins scored higher than bars, due to their variety of issues, sizes, and denominations. For most, buying coins is better than bars for gold investment. Coins provide more flexibility to sell small parts of the holding and can fetch higher prices when you wish to sell. In the same way that larger bars are cheaper per gram than small ones, buying gold coins in bulk (such as Buying gold Sovereigns) will also achieve price discounts. UK investors also benefit from legal tender coins being tax-exempt, whereas gold bars are not. Owning part of a very large portfolio in 1kg gold bars can achieve modest price savings.
Gold bars have advantages too
Due to their lower production costs, some investors may find bars attractive. Moreover, it is not necessary to invest in large bars like a kilo. There are ample variety and different sizes amongst gold bars as well. Different refiners produce gold bars of various weights that can go all the way up to a kilo. There are 1-ounce bars in the market, as well as bars that weigh 10 g, 20 g, 50 g, 100 g, 250 g and 500 g. There are even smaller bars that weigh 5 g. So, as we can see there is sufficient diversity when investing in bars as well. One of the key considerations for investors when buying a gold bar is the cost of production. Gold bars often provide investors with the opportunity of acquiring gold at a cheaper price per gram.
Your objectives can help you decide
Building a gold portfolio is a task that requires proper planning. So, setting your objectives is an important step before planning your purchases. It all depends on your investment timeframe and how quickly you want to make profits.
If your objective is to amass quick returns from price rises in the short term, investing in coins can help you achieve this. However, many investors have longer time horizons for their investments and are interested in acquiring a larger volume of gold at the cheapest possible price. Such investors would be better off acquiring gold bars. However, as discussed earlier, it is possible to preserve the liquidity and divisibility of your portfolio, even when investing in gold bars. Investing in smaller bars like 5 or 10 g gives you the added advantage of being able to sell small amounts of your gold holdings at different price points in the market, whenever you need to raise capital.
Tax efficiency is another important consideration and both coins and bars offer excellent choices. You can avoid paying VAT when you buy either. However, investments in gold bars may be subject to Capital Gains Tax (CGT). On the other hand, investments in UK legal tender gold coins like the Sovereign or the Britannia can help you stay tax efficient.
Another important point to think about is storage. Gold coins have a distinct advantage in this respect. When you order a large number of gold coins, they will arrive in monster boxes that can be easily stored.
Call us at Physical Gold to know more about buying coins or bars
At Physical Gold, we offer impartial and free advice to investors who wish to build their gold portfolio. Call us on (020) 7060 9992 or get in touch with us by email and we will be happy to help you make the right choices for your investments.
Building a robust portfolio involves spreading your risk over different asset classes. However, as an investor, you need to consider the dynamics of each asset class that you invest in. Diversification can be an excellent initiative for shaping your portfolio, which will likely continue to evolve. This reorganisation is often due to prevailing market conditions at different points in time and the risks faced by equity and debt markets around the world. Many investors believe that gold should be an integral part of their portfolio, as it provides insurance against market risks. But, how can we compare gold investments against equities?
The uncertainty faced by the global capital markets
Over the last two decades, the global capital markets have witnessed large degrees of turmoil. The fall of Lehman Bros kicked off the recession in 2008, which resulted in a debt crisis that affected financial institutions and countries all over the world. In 2019, debt levels in China were 300% of the country’s GDP. Australia was also mired in a debt crisis that saw individuals raking up debts up to 200% of their income levels.
Uncertainty was looming over the US and European capital markets. Then, in 2020, the global pandemic hit the world. As global economies were affected by the impact of the crisis, companies started shutting down due to lockdown measures implemented in several countries across the world. By December 2020, government debt in Australia had almost doubled over four years. COVID-19 pushed the U.K.’s debt levels to £1.125 trillion with a debt to GDP ratio of 97.5%. Naturally, these are legitimate causes for concern when investing in stock markets, particularly at this point.
Gold and the equity markets have an inverse relationship
A mixture of gold and stocks is ideal. Both investments can rise or fall in value. However, while stocks can fall to zero (if a company goes bankrupt), physical gold will always have its intrinsic value. The equity and gold market have track records for recording great returns over the medium and long term. While stocks can pay a dividend as well as an increase in value, those partaking in gold investing are looking purely for capital gain. Gold tends to rise when stocks fall, so the two have an inverse relationship.
Gold provides insurance for your portfolio
Therefore, it was no surprise that gold touched its highest ever level in August 2020. Over the last eight months, gold has climbed down from its $2,000 peak and is currently hovering around $1,745 per ounce. It is important to note that the price of gold has never fallen below the $1,000 mark in the last 10 years. It has continued to rise steadily and created value for investors over a 5 to 6 year period. Gold can also offset market forces like inflation and currency devaluation. In a debt crisis, investors often lose their confidence in hard currency is like the US dollar or GBP and move to gold. Since they are confident that gold will not devalue suddenly, it is a choice worth making.
Tax benefits of gold
Gold investors in the UK have certain advantages when investing in gold. Firstly, all investment-grade gold is exempt from VAT in the UK. Therefore, this knocks off 20% of your purchasing price. This is one of the reasons why gold is extremely attractive to investors. Secondly, investing in gold coins that are considered to be legal tender and have a face value can have even greater advantages. Gold coins that are legal tender are exempt from Capital Gains Tax (CGT). This means that you do not have to pay taxes on the profits you make from selling your gold up to a threshold of £12,000 in a single tax year.
Discuss your gold investments with Physical Gold
Physical Gold has an investment team that can help you compare the advantages and disadvantages of investing in global stock markets or gold. Please call us on (020) 7060 9992 and speak to a member of our team. You can also reach out to us online via our website and we will be happy to help you make the right investments to build a strong portfolio.
For the longest time, gold has been the investment class of choice for investors who wish to hedge their risks and build wealth. Gold is an asset class that does not suffer from the volatility of other asset classes like equities. Gold can deliver steady returns over the short term and provide insurance for an investor’s portfolio. The yellow metal also beats other market forces like inflation and currency devaluation. Therefore, many investors are keen to move their money to gold, especially during times of economic uncertainty.
The economic impact of the pandemic
The global pandemic caused by COVID-19 has affected capital markets around the world since 2020. Of course, the price of gold rose to its highest ever point in August 2020, as investors started to move their investments to gold. This crisis is not over yet, and many countries around the world are grappling with the public health crisis and economies around the world continue to suffer due to restrictions and lockdown.
Buying investment-grade gold
As an investor, if you are thinking of purchasing gold to strengthen your portfolio, you need to be able to identify the right places to buy gold. There are many options, including high-street dealers, private auctions and online gold dealerships. However, many of these are fraught with risk, and it’s important to identify the safest avenues for your gold purchases.
Needless to say, high-street dealerships do not provide you with a wide range of gold products. Also, many would not give you a certificate of authenticity and there is no way for you to tell whether the gold you are buying is genuine or not. Similar risks would be encountered when buying gold from a private auction on sites like eBay.
If you’re wondering where to buy gold for investment, then the best bet is to focus on specialist dealers. These brokers should be a member of the British Numismatic Trade Association (BNTA), have a track record and positive customer reviews. Many of these dealers will have an online shop with live pricing and offer quantity discounts on investments. The best ones will also provide free advice and guidance as to which are the most suitable coins and bars.
The Royal Mint
One other option is the Royal Mint. The mint has been the torchbearer of British coinage for centuries. So, the gold coins that you buy from the mint can be trusted and they would also be immaculate in quality and condition. However, there are certain drawbacks to buying gold from the Royal Mint. They only sell new coins, avoiding circulated coins or bullion. The gold coins are sold at a premium and the mint does not offer a buyback scheme. Therefore, you can procure beautiful coins that come with great packaging from the mint. But, you would receive far less gold for your money, when compared to buying gold elsewhere.
Looking for a reliable gold dealer
The best place to buy investment-grade gold is from a UK gold dealer. The British Numismatic Trade Association (BNTA) publishes a list of gold dealers were registered with them on their website. This is the best place to start. Once you identify a few dealers, it is important to establish a relationship with them and explain your investment objectives. This can help the dealer identify the best deals for you and notify you when these come on the market. You need to ensure that the dealer provides a buyback scheme and a certificate of authenticity. Reliable dealers will also answer your queries and provide storage options, as well as an insured delivery service.
Talk to us before you purchase gold for investment
Physical Gold is one of the U.K.’s best-known, reliable and reputed gold dealerships. Our website can provide you with many options to build your gold portfolio and our experts are always happy to discuss your purchases and help you identify the best options. Call us today on (020) 7060 9992 or reach out to us online and we will be in touch right away.
Portfolio diversification is a key consideration for many investors. During a market downturn, like the one we witnessed throughout 2020 due to the global pandemic, many investors turned to gold. Other precious metals also witnessed healthy demand, but gold is generally seen as a safe asset class that is used to hedge market risks. The price of gold rose steadily throughout 2020 and eventually reached its highest point in August. However, many investors want to consider alternatives to buying physical gold. This can have the added advantage of further diversification for your investment portfolio.
What are gold ETFs?
A Gold ETF, otherwise known as an Exchange Traded Fund, is essentially a mutual fund that invests in gold. The fund may consider diverse routes of gold investments. These may not be limited to physical gold alone. Many ETFs invest in gold mining stocks, gold manufacturing companies and other gold-related investments. Of course, the fund would also invest in gold bars, coins and other types of physical gold. The fund can also invest in other forms of paper gold, like government bonds. These decisions are made by the fund manager and his team, who can acquire better margins in the market as an institutional investor. Retail investors would generally not have the opportunity to acquire gold at these prices
Advantages of investing in gold ETFs
Buying a gold ETF can be a good investment to provide a safe haven element to your overall portfolio. The value of the ETF should rise when stock markets fall, providing a sound hedge against market downturns. As an electronic investment, it benefits from efficient buying and selling margins, but also poses additional counterparty risks that coins and bars do not.
Additionally, a gold ETF may be able to provide you with some additional benefits, listed below:
The fund provides a hedge against other market forces like inflation, currency devaluation and fluctuation in the currency markets.
Since gold ETFs are part of a regulated marketplace, you need not worry about local price fluctuations.
Anybody can invest in the fund during the operating hours of the stock exchanges. One need not worry about bargaining with gold dealers about premiums and price differences.
As an investor, you can use your gold ETFs as security collateral for obtaining loans from financial institutions.
Investments are simpler to make, and you need not worry about the risk of theft, paying locker charges, insurance costs or the costs associated with storing your gold securely.
Since the price of gold is not subject to large market fluctuations, investments in gold ETFs can stabilise your returns, even if equity investments are performing poorly.
Counterparty risks – these are risks generally associated with any paper investments. If the fund or the company performs poorly, the value of your investments can erode quickly. So, it is a third party risk associated with your investments. When you buy gold in its physical form, you take control of the asset and these risks are non-existent
Your gold ETF investments can attract long-term Capital Gains Tax (CGT). After a year, you may be liable for paying certain taxes, however, in the UK, most investment-grade gold can be bought CGT free.
When investing in a gold ETF, you may need to pay certain brokerage charges. It’s important to shop around and find a good fund that levies minimal charges
Call us to find out more about gold investments
Physical Gold is one of the most reputed gold dealers in the country and our advisory team can assist you in making the best gold investments. Call us today on (020) 7060 9992 or reach out to us online via our website.
Gold has historically been the precious metal of choice for most investors. During upheaval in the market, gold can provide safety and security for your investment portfolio. If we look back at every financial crisis, it is glaringly obvious that gold has risen to new heights during these times of uncertainty.
During the 2008 market crisis, gold reached its highest point in 2011. Similarly, at the height of the economic crisis created by the global pandemic last year, gold once again touched historical highs in August 2020. Even during a normal period in the market, gold performs steadily. Although the yellow metal may rise or fall in the course of market transactions, it does not suffer from extreme volatility. This makes it a fairly safe bet for most investors.
Silver investments can also be attractive for investors
But, does it make sense to invest in silver? The white metal is a lot cheaper than gold and provides investors with affordable and easy access to the precious metals markets. Due to the widening gold-silver ratio, an entry-level investor may find it more attractive to buy silver.
For the amount of money that one may spend on buying gold, a substantial amount of silver can be acquired. Additionally, silver has suffered from production shortages in the last few years, while demand has risen substantially. As a metal, silver has certain sterling properties. It is one of the most conductive metals and also very ductile. Due to this, it is in demand across several industries like solar, electronics, electric vehicles, etc. Silver investors believe that the price of the white metal may escalate significantly in the years to come, and it may be prudent to lock in investments at low prices now. This may create a wonderful opportunity to reap profits when prices start to rise.
Should an investor buy both precious metals?
It’s actually most prudent to own a mix of both gold and silver. Gold is a more established safe-haven asset, so tends to gain more from market downturns and volatility. Silver can also perform well in these circumstances but also benefits when industrial demand for silver increases as it’s used so widely in electronics. While silver certainly has more opportunity for huge growth, gold is the steadier of the two.
Of course, there are certain advantages and disadvantages of buying silver. For example, an investor may need to pay VAT on most silver investments. This can escalate the buying price by 20%. Silver coins that are legal tender in the UK can qualify for Capital Gains Tax (CGT) exemption. However, other silver investments may not.
Silver investments can be more volatile when compared to gold. So, if you are focused on building a strong portfolio and hedging risks, gold may be a natural choice. However, if long-term profits attract you, silver investments may fulfil this objective. Gold offers better returns in the short-term and silver can provide you with an opportunity to capitalise over the longer term.
Historical price charts show us that silver tracks gold in terms of growth. So, many investors believe that the rise of gold will be followed by silver and the gap in their ratio will eventually close to around 25:1. Also, the production prices of silver are higher when compared to gold. This is simply due to the price difference. Production price margins are calculated in percentage terms and due to the low price of silver, this can be a lot higher. When it comes to gold, due to its much higher prices, the production costs become negligible.
Call our investment team for advice on all your precious metal investments
Physical Gold is one of the largest gold dealers in the UK, with an impeccable reputation for providing great value and services to investors. If you are thinking of investing your money in precious metals, please call us on (020) 7060 9992 or drop us an email via our website.
The gold Sovereign is the pride and joy of British coinage and has been around for a very long time. The modern gold Sovereign was launched in 1817, however, the Sovereign has a history that dates back even longer. The 1817 coin was part of the great British Re-coinage of 1816. The original 1817 gold Sovereign was designed by the Italian designer, Benedetto Pistrucci, who created the classic image of St George slaying the dragon. This is the image that appears on the gold Sovereign. At the time, the brother of the Duke of Wellington, William Wesley Pole commissioned the Italian designer to create the new coin for the re-coinage. Thereafter, the Sovereign was created to replace an older British coin called Guinea.
The early history of the Gold Sovereign
The gold Sovereign is based on an even older British coin called the English Sovereign. This was issued in 1489 by King Henry VII. The English Sovereign weighed of 15.55 g in gold. It was the first coin with a value of 1 pound, and its size and fineness of gold changed over the years. In 1603, when King James I acceded to the throne of England, a Sovereign was released to commemorate the occasion. After that, the Sovereign was withdrawn from circulation and did not resurface until 1817.
How much gold did the 1817 Sovereign contain?
Under the proclamation of King George IV in 1817, the weight of the gold Sovereign was set at 5 pennyweights, three grains, Troy weight of standard gold. When we calculate this amount in grams, it becomes clear that the 1817 gold Sovereign contained approximately 7.942 g of gold. According to the proclamation, the 1817 gold Sovereign would also be known as the 20 shilling coin. It was this occasion that heralded the birth of the modern Sovereign, as we know it.
The changing Sovereign
Over the years, the design of the Sovereign was modified with the reign of each British monarch. For example, the Sovereign of King George IV features a laureate head of the King. Once again, when King William IV took over the throne in 1830, a new makeover of the sovereign was created.
By the reign of Queen Victoria, the full Sovereign contained 7.98 g of gold, with a purity of 91.7%. The coin, popularly known as the Young Head, had a diameter of 22.05 mm and a thickness of 1.56 mm. However, the gold content of the Sovereign was eventually brought down to 7.32 grams of gold. This weight continued through the reigns of King Edward VII, George V, right up to the 2021 gold Sovereign of Queen Elizabeth II. Currently, the half Sovereign of Queen Elizabeth II (2021) contains 3.66 g of gold.
Both coins are tax-free when bought and sold in the UK. A full Sovereign contains 7.32g of gold, with the smaller coin containing exactly half that amount. Half Sovereigns tend to cost more per gram to buy but provide more divisibility to a coin portfolio. A mix of both types of Sovereign is preferable for a balanced collection.
A bullion coin
Both the full Sovereign and the half Sovereign are now released by the Royal Mint as a bullion coin. Since 1932, the Sovereign has been withdrawn from circulation. However, it continues to enjoy its status as a legal tender coin. In the UK. However, its gold value makes it unfit for use in the economy as a payment method.
Talk to the gold experts to know more about the British Sovereign
Physical Gold is proud to be one of the largest and most reputed gold dealers in the UK. If you wish to invest in gold Sovereigns, please speak to our investment team, who can guide you on getting the best deals for this coin. Call us on (020) 7060 9992 or drop us an email via our website.
When making a decision regarding gold coins for our investment portfolio, we have to probe into the history of the coins, find out more about their investment potential and assess their availability. We can make an educated decision based on certain factors that most investors would consider when choosing a gold coin for their portfolio. In this article, the two coins that we shall discuss are the famous British Gold Sovereign and the South African Gold Krugerrand.
History of the coins
The Gold Sovereign
The iconic gold Sovereign has been an integral part of British coinage for more than a couple of centuries. Modern gold Sovereigns have been issued since 1817. However, it ceased to be in circulation since 1932. Gold sovereigns are now minted by the Royal Mint as a bullion coin. This amazing British coin has been minted throughout the reigns of several British monarchs. During the reign of Queen Victoria, the Sovereign witnessed three different issues, better known as the Young Head, the Jubilee Head and the Old Head. The coin is instantly recognisable due to the famous design of St George and the Dragon, which was initially created by the Italian designer, Benedetto Pistrucci. It is a coin that is loved by many investors and numismatists and worth including in your investment portfolio.
The Gold Krugerrand
The gold Krugerrand is a more recent coin. It was first issued by the South African Mint in 1967 and produced with gold provided by the Rand Refinery. The Krugerrand gets its name from the former president of South Africa, Paul Kruger. Of course, the country’s currency is called the Rand. Hence, the coin is named Krugerrand. The obverse of the coin has an image of President Paul Kruger, while the reverse features a Springbok, which is the country’s national animal. By 1980, the Krugerrand was the leading choice for investors, who wanted to buy gold coins. Due to its popularity, the coin prospered and represented 90% of the international gold coin market at one time.
Comparing the two coins
Gold Sovereigns can be a better purchase for UK investors than a Krugerrand as any profits are tax-free. While a Krugerrand can provide a cheaper overall purchase cost per gram due to its larger size, dealers may pay less for them and any profits are taxable. Sovereigns have been around for far longer so provide the possibility of owning more historical coins.
Liquidity and value
In terms of liquidity, both coins are well-placed. Both the Sovereign and the Krugerrand are globally renowned coins and sell quickly. Both coins feature 22-carat gold, which is a fineness of 91.7%. However, it must be noted that the older Sovereigns can fetch better value due to their age. The Krugerrand is a more recent coin and does not command premiums based on rarity and age.
If we were to consider diversity, the gold Sovereign is a better choice. Having been around for centuries, the coin is available in a variety of issues and sizes. The gold Sovereign has many different sizes. Like the quarter Sovereign, the half Sovereign and even a double Sovereign. Investing in these coins can create flexibility for your portfolio, allowing you to sell different amounts of gold at different price points in the market.
Call Physical Gold to get the best advice on buying gold coins
Physical Gold is one of the most reputed gold dealers in the country and our investment team can advise you on making the best purchases in gold coins. Call us on (020) 7060 9992 or reach out to us via our website and a member of our team will contact you right away.
There are many gold coins in the market and an investor needs to decide which ones to add to his portfolio. Undoubtedly, two of the best British coins that are attractive to investors are the Gold Britannia and the Gold Sovereign. In this article, we will explore the merits and demerits of both these coins and assess them based on key attributes and fundamentals required for building a strong portfolio.
Variety is the spice of life
A key consideration when choosing any gold coin for your portfolio is variety. As an investor, you need to have a good distribution of popular gold coins in different sizes and dimensions. There can also be variations based on the year of issue. The Gold Sovereign is an excellent choice when it comes to variety. The coin has been around for more than two centuries and several issues over the years are available from the reigns of different British Kings and Queens. In terms of size, there is also a wide choice that’s available.
The Sovereign comes in different denominations such as the half, double and quintuple Sovereigns. Within the reign of just one British monarch – Queen Victoria, there are three available variations of the Sovereign. These are well-known as the Young Head, the Jubilee Head and the Old Head. When one takes into consideration all the attributes of the Gold Sovereign, it can be called an excellent choice that adds divisibility, variety and balance to your investment portfolio. When we compare the Britannia to the Sovereign, it’s worth noting that the Britannia only carries the portrait of our current Queen, Elizabeth II. On the other hand, the modern Sovereign carries the images of eight British monarchs.
Value for money
Gold Sovereigns are around one quarter the size of Britannias (1oz), making them slightly more expensive per gram due to the higher relative production cost. However, their smaller size provides more flexibility for gold investors. A mix of both is preferable in a portfolio, especially as both coins are tax-free in the UK due to their legal tender status.
Some Sovereigns may carry premiums based on their rarity and historical value, however, Sovereigns that were minted as a bullion coin are easily available at low premiums. By this comparison, the Gold Britannia is also a bullion coin that has been around since 1987. Since it is a recent coin, Gold Britannias do not carry any historical premiums. The coin is easily available from most gold dealers with greater discounts on larger volume purchases. However, the Britannia is four times larger than the Sovereign in size, making it a more expensive coin.
The Sovereign provides a greater variety and choice when compared to the Gold Britannia. Due to its smaller sizes, the Sovereign provides investors with the freedom and flexibility to sell the coin at various price points in the market by trading in different sizes and denominations.
Liquidity is an important consideration
In terms of liquidity, both coins are evenly poised, since they enjoy a strong secondary market. For investors, liquidity is a very important factor as investing in obscure coins defeats the objective of investment. The coin should be saleable at any given point in time for an investor to redeem its value. The Gold Britannia and the Sovereign are both excellent coins in this respect.
Which is the right coin for you?
The gold experts at Physical Gold can answer this question, based on the fundamentals and objectives of your investment. They can offer you free advice on whether you should buy, the Gold Britannia or the Gold Sovereign. Two find out more, call us on (020) 7060 9992 or drop us an email and a member of our team will be happy to get in touch with you.
Many gold and silver coins are considered legal tender in the UK. When a coin becomes legal tender, it implies that you can purchase goods and pay for the same, using the coin. Therefore, it is mandatory for any business within the economy to accept this coin as currency.
The Gold Sovereign
The Sovereign has a long history that makes it one of the most iconic coins in British coinage. During the reign of King Henry VII, an English coin called the Sovereign was brought into circulation in 1489. Subsequently, King James I acceded to the English throne by 1603. He also issued a Sovereign to commemorate the year of his coronation. However, by 1660, King Charles II had come into power and the Royal Mint went through a period of reorganisation. During this time, the Sovereign faded away and was replaced by the Guinea.
The modern Sovereigns
By 1816, a new coinage act was instituted across Great Britain, and the gold standard was implemented. It was around this time that the Italian designer, Benedetto Pistrucci arrived in London and was commissioned to design a new coin. He created the design of St George slaying the dragon, and a new gold coin christened the Sovereign was released depicting the head of King George III. Since then, the Gold Sovereign was used throughout the reigns of different monarchs. King George III was succeeded by King George IV and later by his third son, King William IV, whose short reign lasted from 1830 to 1837. Upon his death in 1837, Queen Victoria inherited the throne.
Through the reign of monarchs
The reign of Queen Victoria saw the issuance of three Sovereigns, which are now popularly known as the Young Head, the Jubilee Head and the Old Head. The Sovereign continued to be in circulation throughout the reigns of the Queen’s successors, namely, King Edward VII and King George V. Although the coin was withdrawn from circulation during the earlier part of the 20th century, it continued to be struck as a bullion coin and continued to be recognised as legal tender in the UK.
Old Sovereigns are legal tender in the UK due to their £1 face value. In theory, you can use the Sovereign to purchase goods up to £1 in value, but the gold content of the coin is worth far more. Its legal tender status is important for gold investors as it deems any profits made from Sovereigns as tax-free.
A timeless classic
The Sovereign’s long history through the centuries has made it a timeless coin that is extremely attractive to collectors and investors alike. Of course, there are other iconic British coins like the Gold Britannia. However, the Britannia was only issued in 1987. The prestige and status enjoyed by the Gold Sovereign lasted throughout the glorious years of the British Empire.
It became synonymous with the status of the British Monarch and propaganda posters were printed during the First World War, depicting a Gold Sovereign, with the head of King George V. The poster carried the tagline, “The British Sovereign will win.” The poster was used to encourage citizens of the Empire to invest money in a government scheme, designed to raise funds for the war.
Talk to us before you buy a gold Sovereign
Physical Gold is one of the nation’s most reputed precious metal dealers. We have a team of experts and researchers who can assist you in getting a great deal on Gold Sovereigns. Please call us on (020) 7060 9992 or get in touch with us online.