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 is 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 gold bars (with small sizes such as 1oz and 100g available) 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 point 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 cash flow 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 its 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 (typically up to 1kg) 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 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 in which 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 gold Sovereign or gold 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 Rubles.
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 that 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 having 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 (such as silver Britannias) 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 (such as 100g, 1oz or 1 kilo), 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 their 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.
Investors have always turned to precious metals like gold and silver when building their investment portfolios, which is why we have created this “How to Buy Gold and Silver” guide. Gold has always remained a popular asset class for many investors, due to its reliability as a store of wealth. Gold has performed well over the last 20 years and the spot price of gold has risen steadily, providing great returns in the short term.
Additionally, the yellow metal has provided an avenue for investors to hedge their risks during times of economic turmoil. Last year, we witnessed the price of gold reaching its highest ever peak due to the economic crisis across the world, triggered by the global pandemic. Silver has also risen steadily over the years, due to high industrial demand. Many investors invest in silver with the expectation that the white metal will generate higher returns in the future.
Deciding your objectives
When deciding how to buy gold and silver, it’s important to understand that both gold and silver are available as bars and coins. The choice of precious metal depends on your investment horizon and objectives.
Investors who are looking for steady returns in both the short and long term are better off investing in gold. Silver, on the other hand, has a volatile market that is suited for speculative investments. The price of silver is quite low when compared to gold. Therefore, it provides an easy entry for investors into the precious metals market and allows them to book their purchases at current price points in the hope of making quick profits in future.
The divisibility factor
Divisibility is an essential factor when it comes to investing in precious metals. The logic behind this is quite simple. Assuming that the price point is right, and it meets your objectives, you will want to make a sale.
Owning a large bar of gold (such as 1KG) and silver (1KG) will provide you that one chance and the sale is over. However, owning several gold and silver coins of different dimensions give you multiple opportunities to cash in at different price points in the market.
A question of balance
Divisibility and liquidity are, of course, important aspects of your portfolio. But we need to think ahead. Spreading your investments between gold and silver can provide much-needed balance to your portfolio. The current gold-silver ratio is 72:1, which simply means that silver is 72 times cheaper than gold. Therefore, you can buy large amounts of silver and wait for the price to rise in the future, providing your portfolio with balance and meeting your long-term investment objectives.
Ensuring the safety of your investments
You must be certain that the gold and silver products you are investing in are authentic, high-quality and carry the right price tag. Always buy your precious metals from a reputed online gold dealer. This is the only way that you can be sure about the authenticity and quality of your purchases. Moreover, an online gold dealer will normally ensure that your precious metals are sent to you through an insured delivery service.
Most reputed gold dealers will also provide you with an option for storage. If you select this option, your gold and silver purchases will be stored in a secure, LBMA approved vault. All of these are great reasons why you should buy your gold and silver from a reputed online dealer. Going down this route will also ensure that there is no risk of theft or robbery.
Connecting with a reliable broker
Any investor who is serious about buying gold and silver needs to get connected with a reliable broker. But who is a reliable broker and how can you find one An online broker usually has a far greater variety of bars and coins for sale. But it’s important to ascertain that the business is legitimate and has a transparent and reliable track record.
You can check if the broker is registered with an industry body like the BNTA or LBMA. Also, find out if they offer a guaranteed buyback scheme and check their reputation online. Once you have identified the broker of your choice, the next obvious step would be to discuss your investment objectives with them and draw up a plan.
Gold and silver can be sourced through online precious metals dealers, at auction or from areas specialising in precious metals. Hatton Garden in London features dozens of shops that sell gold and silver bars and coins. However, the choice of coins may be limited. The Jewellery Quarter in Birmingham offers similar services.
Know your gold and silver products
There are a few steps you can take to ensure that the gold and silver products you buy are genuine. Gold bars that contain investment-grade gold will always have a refinery stamp engraved on the face of the bar. It will also carry a number that denotes its purity. So, if the bar contains 24-carat gold with 99.9% purity, the bar will typically have a purity number of 999.9 on its face.
Turning to gold and silver has been a tried and tested vehicle for investors in the precious metals category. While gold has remained a popular and preferred asset class for most investors, silver has steadily risen in popularity in recent years. Most investors prefer to hold these precious metals in their physical form. So, let’s explore how to buy gold and silver UK-wide.
Once you’ve decided to put your money in the market, it’s important not to get swayed by irrelevant offers. You should always evaluate your purchases by calculating how they can contribute to the balance, liquidity, and divisibility of your portfolio.
Don’t ignore tax considerations, as this will ultimately impact your profits. Remember, if you’re seeking to buy gold and silver as an investment, then it’s best to stick to well-known UK silver and gold coins (such as Britannias). These have the advantage of being Capital Gains Tax free, but also offer flexibility to sell small parts of your holding.
Ensure you get good discounts from your broker and keep buying gold and silver coins and bars with low premiums. If you’re investing in a coin, make sure that it has a strong secondary market. The Britannia (such as Silver Britannias) and the Sovereign could be your top choices. If you are interested in buying numismatic coins, avoid buying obscure ones and ensure that there is scope to make profits in the long run.
Discuss your gold and silver investments with our experts
Physical Gold, one of the U.K.’s most reputed online gold dealers have an investment advisory team, who can assist you with learning how to buy gold and silver in the UK. Call us on (020) 7060 9992 or drop us an email by visiting our website.
Gold Britannia coins are popular with numismatists and investors alike. We frequently receive questions about these popular coins, so have prepared this page of gold Britannia coins FAQs with answers, which we hope helps you with your research.
Please read our detailed answer to this question at this link.
Was Britannia on Roman coins?
Britannia has actually appeared on Roman coins since 119 AD. The practice of using the persona of an authoritative female to portray a nation has existed for hundreds of years. When the Romans invaded Britain, they used the depiction of Britannia to signify the colonised country on their coins.
There is no pattern to which way Britannia faces on the reverse of UK coins and this adds to the collectability. Examples of Britannia facing to the left include the 2001 ‘Una & The Lion’ Britannia and the 2005 Philip Nathan designed coin which features a seated Britannia.
The best place to buy Gold Britannias is directly from a reputable bullion dealer. Most will have online stores where Britannias can be bought with a variety of payment methods and delivery is usually free, insured, and quick. These sites usually feature live pricing which updates with the spot price every 60 seconds. Bullion dealers should be members of the BNTA to ensure trustworthiness.
Do you have any more questions?
No worries, if you need any further support, please contact us at:
We receive a lot of questions about gold bars. For convenience, we have summarised some of the most popular questions we receive in this handy gold bars FAQs with answers guide, which we hope helps with your investment questions.
Are gold bars a good investment?
Bars of gold are a good long term investment to provide balance and protection from economic downturns. The value tends to rise during times of political and economic instability and has averaged more than the inflation rate over time. Large bars offer better value than smaller ones, although divisibility should be a consideration. To be Capital Gains Tax-free, buying UK gold coins offers an alternative.
Are gold bars illegal?
Owning bars of gold is completely legal. The question arises due to a period in US history just after the great depression in 1933 when the US Government issued a decree making it illegal to hold gold in the form of gold bullion without a unique warrant. Any gold owned privately could be confiscated in an attempt to stabilise the floundering economy. This lasted until 1974, and all restrictions have been rescinded since 1 Jan 1975.
Are gold bars traceable?
Unlike financial securities such as equities and bonds, there is no requirement to formally register gold bar ownership. Electronic gold ownership such as ETFs would be more easily traceable as an ownership register exists which is why so many investors prefer the physical, tangible nature of bars of gold.
Are gold bars 24 carats?
Generally, all bars sold by gold dealers will be 24 carats in purity. However, not all sold globally are 24 carats. The term ‘bar’ really only refers to the format of the physical gold. You should not assume that purity is automatically 24 carats. Many mined on the African continent are only 22 carats, which make them difficult to sell outside of Africa. Often these bars are melted down and used for jewellery.
Are gold bars taxable?
Gold 24 carat bars are not taxable when purchased in the UK. They benefit from a VAT exemption on investment gold (gold in the form of a coin or bar with a minimum of 995/1000 parts gold). Therefore, sub-grade 22-carat versions would be taxable. When bars are sold, any gains should be declared and are applicable for Capital Gains Tax if the annual allowance is breached.
Are gold bars registered?
The production of bars of gold is registered with the relevant assayer, and a serial number recorded. However, there does not need to be a register of private buyers. Gold dealers will need to invoice buyers and keep records, but these are not publicly available.
Are gold bars soft?
They are hard to the touch. But due to their high purity (24 carats), they are relatively soft in metal terms. Pure gold is malleable, so have a major possibility of scratching due to this. This is the reason why Sovereigns coins are produced in 22 carat format, which is deemed a more robust alloy.
Are gold bars tax free?
They are VAT free if they are 24 carats in purity due to the VAT exemption on investment-grade gold. There is no income tax when holding them, and Capital Gains tax will only be applied on any gains in value upon sale that surpass your annual allowance. Investors should sell bars strategically that have increased in value, i.e., some either side of tax year end will deem the bars tax free.
Are gold bars worth buying?
They are worth buying if you seek a tangible asset with no counterparty risk. Physical ownership is beneficial to provide balance to a portfolio consisting of mainly paper assets. The value can go up and down and is related to the underlying gold price. The gold price generally moves up in times of uncertainty so is desirable for those seeking a hedge against unstable markets.
Are gold bars pure gold?
Most bars are 24 carat gold which is the highest carat possible. Some bars on the African continent are a lower purity of 22 carats. The 24 carat bars are referred to as pure gold, but technically they are not 100% pure. Purity can be anywhere from 995 parts per 1,000 upwards, but most reputable bar producers make bars of 999.9 purity.
Gold bars vs bullion
The terms gold bullion and bars are somewhat interchangeable. Both generally refer to 24 carat gold in the form of a rectangular bar. However, bullion is also a term used to describe the ‘investment finish’ of certain coins. Bullion coins are minted for value purposes as opposed to proof finish coins which are more expensive collector’s items.
Are gold bars real?
It is easier for fraudsters to fake or add non-gold substances to bars than coins. This is because the design of a coin is far more complex and difficult to copy. The best place to buy is from a trusted gold dealer, where they tightly control their supply network. All genuine bars should also come with serial numbers and many with a certificate from the mint.
Are gold bars heavy?
This all depends on the size of the gold bar. Due to its high value, most people are surprised by quite how small and light a bar £1,000 will buy you. However, as a dense metal, the larger buys can be very heavy. For instance, the largest is 400 ounces or 12.5kg but are smaller than a standard brick which weighs a mere 3.5kg.
Gold coins or bars for investment?
Gold coins are generally deemed to be a better investment than gold bars, as long as you buy the right ones. Buying gold coins offers more divisibility than bars, benefit from quantity discounts, can be easier to sell, and be Capital Gains Tax-free. Of course, the investment objectives and investment amount will also determine which is best.
How are gold bars made?
They can be made in 2 distinct ways. Generally smaller bars tend to be minted, whereby a sheet of gold is stamped and cut into the required size, shape, and weights. These minted bars tend to be exceptionally clean looking with a smooth precise finish. For larger bars, a second method is used to create what is known as cast bars. Molten gold is poured into set size moulds to produce ingots. The finish of these tends to be more natural and rougher.
How do I buy gold bars?
It is best to buy directly from a precious metals dealer. Prices will be transparent and based on the live market. Usually, discounts are offered for purchasing bars in quantity. You benefit from the peace of mind knowing your investment is genuine and high quality and you will have a place to sell the bars when the time comes.
How do I sell gold bars?
It is best to sell bars through a reputable gold dealer. In the UK, stick to a gold broker who is a member of the British Numismatic Trade Association (BNTA). Try to ensure you have the bar certificate if it is loose. It is possible to take bars into jewellers, but they will likely pay a lower price as they will simply melt down the bar.
Gold bars versus ETF
Both Gold ETFs and bars have their value linked to the underlying gold price, so they both provide a degree of balance to mainstream assets. Bars benefit from having no counterparty risk whereas gold ETFs can be leveraged and there are additional risks associated with the provider. Buy/sell margins are tighter with ETFs due to their electronic efficiency. Fees may exist with both investments, ETF management fees, and gold bar storage costs.
How much are gold bars worth?
The value of a gold bar depends on the underlying gold price and the weight of the bar. The approximate value of the bar can be calculated by multiplying the current gold price in grams by the weight in grams in the bar. As most bars are 24 carats, pure gold), no other sums are needed. The actual price will likely be slightly lower by a couple of percent depending on supply and demand in the market.
Should I buy gold bars without a certificate?
We would recommend that all bars of gold should have an accompanying certificate. This certificate will come from the refiner and will prove that strict quality control standards set by the LBMA have been met. The certificate will provide a serial number, proof of authenticity and will have the place of origin on it.
Gold bars vs coins
Unless buying a substantial quantity of gold, choosing the right gold coins can be a better investment than bars. Bars can command lower premiums when large in size, but coins benefit from being more divisible. UK coins have the added advantage of being free from Capital Gains Tax for UK residents, and older coins provide more historical interest than bars.
When to buy gold bars?
As an investment, buy bars when the gold price is low to enjoy capital appreciation when the gold price rises. Prices tend to rise during times of Dollar weakness and general economic instability. So, do not wait for the economy to slump as the gold price would already have risen. Buying gold in good times and selling in bad times will reap the biggest profits.
When to sell gold bars?
It is best to sell bars in the middle of an economic crisis as the price will likely be the highest. Gold is sought as a safe haven in these times, so demand goes up and the price of gold follows. This directly impacts the price you can fetch for your gold bar.
Gold bars versus Krugerrands
Bars of gold can be cheaper per gram to buy than Krugerrands if bought in a large size like 1kg. However, Krugerrands are a good value coin, so the gain is minimal. An advantage of Krugerrands is that you can sell one coin or a handful whenever you need to. Owning one large gold bar does not allow this. Buying lots of smaller bars is expensive.
What gold bars should I buy?
If you are seeking investment, then try to buy the cheapest 24 carat bar possible. Premiums are paid for certain brands, especially from Switzerland, or enhanced packaging, but these premiums may not be recouped upon sale. Pre-owned gold bars can be bought cheaply, just ensure they have a certificate and buy from a reputable gold dealer.
Can gold bars be confiscated?
In the UK, bars can only be confiscated if they are linked to money laundering or crime. In the US, under current federal laws, gold bullion can technically be confiscated in times of crisis, but rare coins do not fall into the confiscation category. All privately-held bullion could be confiscated during the Executive order 6102 after 1933, but that expired by 1975.
Can I buy gold bars at my bank?
Very few banks sell gold these days as they have many other revenue streams and gold is deemed to be a specialist area. To purchase bars, it would probably be best to go to a reputable gold dealer to benefit from extensive choice, guidance, and general good advice about the timing of purchasing and selling.
Do all bars of gold have serial numbers?
All bars over 250g should have a serial number on them. This serial number helps an assay office authenticate the gold bullion. Generally, this serial number will be on your invoice, so it can be traced back to your dealer.
Gold versus silver bars
Silver bars are clearly far more affordable than bars of gold due to the price differential of around 80:1. This means that buying a bar for £3,000 can be underwhelming for those expecting a large brick-like bar. In contrast, a huge 5kg silver bar cost less than £2,500. Due to the low silver price, the relative production cost is higher than for gold, so bid/offer spreads are wider. Both bars can be held as safe havens, but the value of silver can also go up with industrial demand.
Talk to Physical Gold
If you have any further questions we are only a phone call away when you call us on 020 7060 9992. We can also be contacted via webform, so please contact us and we will do our best to help with all your gold bar-related enquiries.
Silver Britannia coins have become a popular investment vehicle for investment in silver. Regularly we are asked questions about these coins, so have summarised some of the most popular questions and provided answers in this silver Britannia coins FAQs guide.
As a popular investment coin, the easiest and safest way to sell them is to a reputable precious metals dealer. This enables you to agree on a competitive price with the dealer, send them your coins, and receive payment quickly. An alternative is to sell privately where collectors may pay a premium. However, this can be fraught with danger.
Are Britannia silver coins legal tender?
Absolutely, they are legal tender within the UK. They possess the requirements of featuring the monarch’s bust and a face value, £2 in the case of the 1oz version. In theory, you could use it to buy goods up to the value of £2 in a UK shop, however, the silver content alone, makes the coin worth many times that. In practice, the legal tender status increases the coins’ appeal as an investment as this qualifies it as tax-free.
Any more questions? Speak to us at Physical Gold Limited
We always welcome enquiries, so if you have any further questions about silver coins, including Britannias then please do not hesitate to get in touch. Call Physical Gold Limited on 020 7060 9992 or complete our contact form to start discussions.
We are frequently asked questions about silver coins. This is why we have created this silver coins FAQs page, which is full of questions with model answers.
Are silver coins a good investment?
We have prepared a detailed article to answer this question, please visit by clicking here to learn more.
Is silver coinage magnetic?
Genuine coins made from silver are not magnetic. With purity of popular silver investment coins such as Britannias close to 100%, only replica (fake!) coins will be magnetic. Coins made with far lower purities of silver, mainly mixing in steel or iron will show signs of magnetism, so should be avoided. Non-magnetism does not guarantee that the coin is silver though. Metals filled with a core of non-silver will likely not be magnetic either.
Are silver coins worth anything?
Yes, their value is a combination of the underlying silver price, their weight, and the coin’s rarity and desirability. Generally, a silver coin will sell for around 96-98% of the current silver value for its weight. So, a 1oz coin may fetch around £11 or so. If the coin is part of a limited issue and demand is higher, the value is likely to be 5-10% higher.
When to sell silver coins?
It is advised to hold coins for the long term and always hold a portion of your wealth in silver as a balance and hedge against market downturns. Having said that, the amount you hold can vary according to market conditions and the silver price. Timing will depend on the price and time you bought them (was the market high or low), your need to liquidate and the current silver price. Buying low and selling high is the ideal scenario!
Are silver coins legal tender?
Yes, they are legal tender in their country of issue if they possess a face value. In the UK, Silver Britannias and other Royal Mint issued coins have face values and can, in theory, be used in shops. But this would be an uneconomical choice. With a face value of 2 Pounds, the silver content alone is worth at least five times that. Instead, the legal tender status helps silver investors as any capital gains made upon selling the coins are free from tax.
Will silver coins go up in value?
We have provided a detailed answer to this question, at this separate page.
Silver rounds vs coins
Choosing silver coins vs silver rounds will depend (ultimately) upon your objectives. Silver rounds can generally be bought at lower prices for their weight as they are produced by private companies rather than national mints. With less liquidity, rounds are likely to be sold as scrap in the future. Certain legal tender coins are also CGT free, so any profits are tax exempt.
How to store silver coins?
The best way is first to keep them in the plastic capsules or tunes they arrived in. If they came loose, then purchase some coin tubes. Large orders of 250 coins or more can come in monster boxes of 20 tubes or more and can help with neat stacking. Try to handle your coins as little as possible. Placing carbon pieces from a pet shop in the box can help prevent the hydrogen sulphide from tarnishing the coins.
Will a silver coin purify water?
Silver acts as a preserver for many substances. As a colloidal metal, it can help prevent diseases and be anti-bacterial. Certainly, adding a clean silver coin to some water will help with its purity. However, simply dropping a silver coin into a glass of dirty water will not rid it of all its nasty elements.
Read our detailed article, where we explore this topic here.
Are silver bullion coins worth buying?
Currently, they are incredibly cheap relative to their historical ratio to gold. This would suggest that their value is set to rise in the future. Coins offer superb divisibility rather than buying silver bars but still offer quantity discounts. UK coins can be CGT free, which foreign silver bars and coins cannot. With industrial demand for silver in computers on the rise, the future looks bright for silver.
The number of banks offering a retail service is dwindling. It is now only possible to buy from certain banks such as Scotiabank in some countries, but not in the UK. This is because the banks do not want to commit the necessary resource for dealing in precious metals. For this reason, many banks who can source your silver coins from, will not buyback. The price they sell at will be relatively high, reflecting their lack of appetite for the business.
Why do silver coins tarnish?
A natural by-product of silver is its reaction to chemicals and humidity in the air. Tarnishing occurs when the silver atoms encounter oxygen, forming a silver oxide. Unlike rust, this protective layer does not infiltrate into the silver. Tarnishing, also known as toning, can be removed by using a coin cleaning solution and minimised by keeping coins in airtight containers.
We have provided a detailed answer to this question, at this separate page.
Will a silver coin keep milk from spoiling?
Placing a silver coin into milk will delay the time it takes to go off. The coin has to be 99.9% pure rather than a lower mix alloy to work. The natural anti-bacterial qualities of colloidal silver will not prevent the milk from spoiling entirely but can prolong its life for 5-10 days. Infact, before refrigeration, silver was used regularly to achieve longer life milk and keep water pure.
Silver is far cheaper than gold, making it more accessible to the modest investor. The current price ratio between the two metals is at its widest point in history, suggesting silver has far more potential upside. Gold acts more like a classic safe haven to protect investors in economic downturns. While silver also acts in a similar way it also benefits from industrial demand due to its conductive qualities. Silver can be more volatile and dealer spreads are slightly wider than the gold market.
Are silver coins in circulation?
Our 50p and 5p coins are known as silver. However, they no longer contain any silver at all. Instead, they consist of cupronickel, a mix of nickel and copper. This is far cheaper and more resilient than using silver. Silver investment coins like the Britannia consist of 99.99% pure silver. While they have a face value, they are not actively in circulation. In theory, you can legally spend this coin in the shops, but its £2 face value is less than a fifth of its silver value.
Will vinegar clean silver coins?
Vinegar can be used to clean non-valuable coins but is not recommended for pure silver coinage. The use of vinegar could lower the value of the coin. The best bet to clean is with warm soapy water. Avoid using a brush as silver can be soft and scratch. Instead, use a cloth and fingers to rub any dirt away after soaking.
What are silver coins made of?
Silver investment coins are made from pure silver (99.99% purity usually). Silver currency coins such as the fifty pence piece or 5p are made from a mixture of nickel and copper. The alloy consists of 75% copper and 25% nickel, which when combined form a resilient metal known as cupronickel. UK coins were made from 92.5% sterling silver until 1920 and then this reduced to around 50% purity until 1947. Cupronickel was introduced in 1971.
The best coins to invest in for UK investors are the Royal Mint produced coins. The silver Britannia should form the backbone of the investment as the standard coin is cheap but very liquid. Combining this with some more limited issue coins such as the Queen’s Beasts and Lunar series will provide portfolio balance and create the chance to benefit from these coins rising in value quicker due to limited issue. All UK Silver manufactured coins have the advantage of being Capital Gains Tax-free.
Will banks buy silver coins?
Your average high street bank will not buy them from you. It is possible they would exchange the coins for their face value but that would be a foolish strategy as these values fall well short of the actual value. It is far better to seek the help of a reputable silver dealer who specialises in precious metals and will pay well for them as they can sell them on to other customers.
Can silver coins conduct electricity?
In theory, yes, they can conduct electricity. But we are only talking about the pure silver investment coins that contain 99.9% silver. Silver is by far the most conductive of all elements, to the point, where all other metals are benchmarked against silver to gauge conductivity. Silver currency coins that contain no silver at all will conduct electricity at a far lower level.
Where to sell silver coins?
If you have old coins with a value far greater than their simple silver weight, then sell them through an auction of a specialist dealer. Silver dealers will provide the best price and trustworthy service. If you have time on your hands, then you can try selling privately through portals such as eBay, but this poses risks. For scrap coins, local jewellers are easy to sell to but be prepared for low prices.
Silver coins proof vs uncirculated
Silver uncirculated coins are recommended for investors. They are far cheaper than proof coins so you can get more silver for your money. Silver dealers will not pay much more for silver proof coins when you come to sell. If you are a coin collector, then proof coins can add a higher sense of finish and exclusivity to the coin.
How do I clean silver metal coins?
The best way to clean valuable coins made from silver is with warm soapy water. Soak the coins for 10 to 15 minutes turning them occasionally. The coins can then be rubbed dry with a cloth, paying attention to removing any surface dirt. Avoid using a brush that could scratch the silver or chemicals like vinegar that could detract from the coin’s lustre.
When to buy silver coins?
Silver coins should ideally be bought when the economy is quiet, and the stock markets are doing well. This usually means a low silver price so you can secure coins at this level. The value of coins rises with the underlying silver price and should be considered a medium to long term hold due to short term volatility. Buying silver regularly is another strategy to gradually accumulate a substantial holding by averaging out buy prices.
Can I buy silver coins directly from the US mint?
Yes, they can be bought directly from the US Mint’s website. In a similar way to the Royal Mint, you are restricted to buying coins only produced by the mint. They will not sell 3rd party coins. Due to their reputation, the mint does not need to be super competitive on prices and will not generally offer quantity discounts. There is a focus on boxed proof coins rather than bullion coins. Better deals will be had from buying from a silver dealer, who will offer to buy back the coins, provide lower prices and more choice.
Where to store silver coins?
If you want hassle-free storage, it is best to store coins with the silver dealer from whom you bought. This usually entails storage in a specialist warehouse to maintain the silver’s integrity and includes insurance. If you want to store yourself, then the coins should be kept somewhere secure and be insured against theft. Reducing the amount of handling and oxygen to the coins will help prevent tarnishing. Keep the coins in their tube and keep them airtight if possible. If bought in large quantities, silver coin tubes can be stored in monster boxes (of 20-25 tubes), and the boxes conveniently stacked.
A very quick way to test silver coins is to place an ice cube on top of the coin. As the world’s best conductor of electricity, the ice cube should start to melt immediately compared to one placed on a wooden surface. Testing the silver coin for magnetism cannot prove it is genuine, but any sign of sticking to the magnet will prove it is a fake. When looking at well-known silver coins, careful visual comparisons with a real silver coin will usually unearth some straightforward differences with finish, detail, and edging.
Which silver investment coins are the best to buy?
Silver Britannias are the best silver-based coins to buy for investment. They are mass-produced bullion coins so offer a high degree of value. Limited issue coins tend to command a premium. Britannias are 1oz in weight so provide divisibility. Any profits made on selling silver Britannia coins are CGT exempt as the coins are legal tender in the UK. There is a strong second-hand demand for the coins so selling prices are high.
Are silver Britannia coins a good investment?
Britannia coins are an excellent investment for the medium to long term. Silver is currently unbelievably cheap compared to historical values. Industrial demand for silver is rising with advances in technology as silver is used for its conductive qualities. Silver Britannias are an excellent option is they are highly liquid, world-renowned, and tax-free for UK investors.
Why buy silver investment coins?
Buying silver coins is an excellent option for those seeking a tangible asset with no counterparty risks. The value of silver can rise with industrial and investment demand, but supply is limited due to its precious metals status. Coins can be a better option to buy than silver bars as they can be tax-free and can be sold in small sizes. Discounts are available for buying in larger quantities of coins.
Where to buy silver coins online UK?
Do not be tempted to buy coins from online shops like eBay and Craigslist. Authenticity can be a huge problem if you buy privately. Stick to buying from prominent silver dealers so you can rest assured that the silver is real. They will also provide the facility to store the silver if you wish, deliver it to your door, and buy it back in the future.
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Gold has always been one of the most attractive asset classes pursued by investors. Throughout history, gold has been viewed as a great store of value and has delivered good returns for investors over the short and long term. Gold is today sold in a regulated market, based on a dynamically changing spot price, which is applicable across the world. Yet, when we buy gold and look at the spot price, this applies to pure gold, which is considered to be 99.9% pure or 24-carat gold. However, it is useful to understand the different types of carats that are available in the marketplace.
Origin of the term “carat”
It is believed that the term ‘carat’ dates back to mediaeval times. The use of carob seeds was associated with the system of weighing things thousands of years ago. It is not known whether these seeds were used to measure the gold and other precious metals at the time. A weight of 200 mg was derived as the specific weight of a carat.
However, there is historical evidence of its use during the Greek and Roman periods. There are a total of 24 carats that make up pure gold. Numismatic research about the coinage used by the Romans has proved that these subdivisions were associated with the Roman Libra. Historians believe that the Libra was used to measure gold at the time and that it was equal to 24 silver coins, which the Romans called a ‘siliqua’. It is possible that the number 24 has been handed down from these ancient times.
During the 19th century, the German ‘Mark’ had a weight of 24 carats, equivalent to 4.8g.
How many carats are there in pure gold?
There is a total of 24 carats that make up pure gold. Each is of equal value and so is 1/24th pure gold by weight. Investment-grade gold is either 22 carat (most common amongst Sovereigns and other popular bullion coins) or 24 carats (now used for some 1oz bullion coins like the Britannia and most gold bars). Even 24-carat gold isn’t completely pure but instead will be somewhere in the region of 99.9% gold.
Pure gold is therefore represented by the number 24 in carats. Each is of equal value and so is 1/24th pure gold by weight. So, 18-carat gold is 18 parts pure gold, with the balance of six parts constituting other alloys and base metals. In reality, it is difficult to measure the actual purity of gold, using scientific methods. One way that has been used in modern times is the use of XRF (X-ray fluorescence). This scientific development analyses the purity of metals, based on the light reflected off them. However, only a surface evaluation is possible. Consequently, the industry still relies on reputed and reliable dealers for the supply of pure gold.
Investment-grade gold is either 22 carat (most common amongst Sovereigns and other popular bullion coins) or 24 carats (now used for some 1oz bullion coins like the Britannia and most gold bars). Even 24-carat gold isn’t completely pure but instead will be somewhere in the region of 99.9% gold. Jewellery can commonly be made of lower carat gold such as 9 carats and 18 carats which are more resilient than higher purities, cheaper and more suited to clasping precious stones.
Increased resilience with lower purity levels
Jewellery can commonly be made of lower carat gold such as 9 carats and 18 carats which are more resilient than higher purities, cheaper and more suited to clasping precious stones.
So, we can see that pure gold is often blended into an alloy with different base metals to make the gold harder. Pure gold is malleable and difficult to shape into jewellery. This is probably how alchemists started creating gold with varying degrees of purity over centuries.
A similar concept was used when minting coinage, as the metal needed to be resilient for public circulation. The higher the carat of gold, the greater is its purity. However, as we can see, this creates a practical problem when the metal is moulded into coins, bars, or jewellery.
Why is 24-carat gold the purest?
Refiners must declare the purity number of gold, in addition to its carat value. 24-carat gold is simply considered to be the purest since it has a negligible percentage of other metals. In the UK, this is considered to be investment-grade gold with a purity of 999.9. The metal is distinctive due to its bright yellow colour and buyers will pay the highest price for this purity of gold. But, its density is also lower and due to its softness. 24-carat gold is unsuitable for manufacturing jewellery. Its use is most prevalent in manufacturing gold bars. When minting coins, a tiny amount of base metals is introduced in the mix to make the coins durable. Pure gold is in great demand for industrial uses, like the manufacture of electronics and medical devices.
Normally 22-carat gold will have a purity of 91.67%. This leaves 8.33% of other metals, which can be silver, zinc, copper, nickel, or other base metals. Jewellery manufacturers may not use it for making jewellery that holds precious stones. This is because 22-carat gold is still too soft to hold the stones in place.
The percentage of gold is much lower in this form. 18-carat gold will usually have 75% pure gold mixed with 25% of base metals. It’s a lot less expensive than buying 22 or 24-carat gold. This is the preferred purity of gold used by jewellers, as it can withstand daily wear and tear. It has a warm yellow shine, which is great for manufacturing wedding bands and other ornamental jewellery.
This is a number that represents gold which is only 58.3% pure. The balance 41.7% in this form gold, comprises other metals like nickel or zinc. This form of gold is durable and sturdy and preferred by many to make jewellery. It is also more affordable and ideal for people with skin metal allergies.
It is the cheapest form of gold and has a pale tone due to the presence of base metals. Usually 10-carat gold will have at least 41.7% of gold. Since it has a gold level of 10 parts out of 24, it is called 10 carats. While it is more affordable, it also tarnishes easily.
It is widely used in the jewellery industry due to its affordability. When you purchase jewellery, the carat value will be clearly demarcated. Interestingly, US laws state that jewellery made from gold below 10 carats cannot be labelled as gold.
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Gold is an interesting metal. It is a metal as well as an element. It also comes in different forms. There are many types of gold that are distinguishable by their colour and properties. Gold is visible in different forms like gold coins, bars and jewellery. Within these, gold can be differentiated by its purity or carat value. Let us explore the different types of gold and how we can identify them.
The most common distinctions
The most common distinction between gold types is their carat or purity. This can be difficult to simply detect with the naked eye. 24-carat gold is virtually 100% pure, while 9-carat purity is as low as 37.5% purity. In its purest state, the gold will be relatively soft, while it tends to feel harder to the touch when mixed with more alloys. The colour can also vary, with pure gold displaying a distinct yellow-orange.
When mixed more with silver, the white gold effect is present, while red gold contains a higher amount of copper. Assay marks on the gold will display the purity but not all gold will be hallmarked. Other than that, it’s best to take it to a jeweller to safely perform a test and determine if it’s real in the first place!
The concept of carat value comes from 24 parts of gold. So, if the gold is 18 parts pure gold it is considered to be 18 carats. Similarly, if it is 22 parts pure, it is known as 22-carat gold. But, this is only one way to differentiate one type of gold from another. Gold is often available in a variety of colours and this can be another way of distinguishing its types.
The colours of gold
Different colours can be achieved by introducing other precious metals or base metals into the gold mix. Blue gold is a popular type of gold that is created by adding indium or gallium. These are rare metals that create a bluish hue to the gold when added. Another colour of gold is green. Green gold is also known as Electrum and can be manufactured through the introduction of silver and copper. Colours of gold like blue and green are often used by jewellers, due to their aesthetic appeal.
Purple and rose gold
Gold is also available in the colour purple and this is done by introducing 79% pure gold and 21% aluminium. Purple gold is also a type of 18-carat gold, also known as amethyst gold. However, purple gold is more brittle than other gold alloys and is unsuitable for the electronics industry. It can, however, be used to decorate gold jewellery.
Rose gold gets its colour from being mixed with copper. There are different types of rose gold. 18-carat red gold is created by mixing 75% gold with 25% copper. But, another type of 18 carats rose gold contains 75% gold with 22.25% copper and 2.75% silver. Also, included in the 18-carat category is pink gold. Pink gold contains 75% gold with 20% copper, while the amount of silver in the mix is increased to 5%. The last category, which is also the cheapest is 12-carat red gold, where the gold is only 50% and the rest is copper.
White and yellow gold
White gold has gained popularity over the years and the hardness of the mix is achieved by introducing Palladium, which is another precious metal. However, in some cases, silver may also be added along with Palladium and nickel. A popular formulation of white gold contains 90% gold with 10% nickel. Many jewellers also plate the white gold with a coating of rhodium, which gives its steely look and shine. The industry typically uses Palladium and nickel as bleaching agents to change the colour of gold to white.
Yellow gold is a derivative of the normal colour of gold. 18-carat yellow gold is created with 75% gold, 12.5% copper and 12.5% silver. However, it darker shade of yellow can be achieved by increasing the percentage of copper. Here, the proportions change to 75% gold, 15% copper and 10% silver.
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Gold is a much sought after metal with very interesting properties. We often think of gold as being primarily attractive to investors and collectors of gold coins. Gold jewellery is extremely popular across the world, especially in Asia. However, the largest demand for gold comes from the industry.
While a variety of industries use gold for their manufacturing operations, gold has certain properties that make it very attractive to the electronics industry in particular. Gold is one of the most conductive metals on the planet. It is also highly malleable, which means that it can be sheathed onto surfaces. Gold is also very ductile and a small amount of gold can be stretched into wires that run into metres. Therefore the electronics industry has a large appetite for gold.
Why is gold used in the electronics industry?
With a conductivity score of 70%, gold is a popular choice for use in electronics. Most commonly, gold is used as an electroplated coating on contacts and connectors. It shines as the superior choice due to its high conductivity, corrosive resistance, and resilience (especially when mixed with nickel). Copper and silver are both cheaper and more conductive than gold, so tend to be used in a far wider array of electronic applications. Encasing electronics in gold is increasing in popularity to appeal to the luxury market such as the Gold Apple watch.
A deeper look at the use of gold in the electronics industry tells us that gold is a far superior conductor of electricity when compared to copper, silver and aluminium. This simply means that gold offers minimal resistance to the electricity flowing to and fro. However, its properties like ductility and malleability create a tipping point for its use in the electronics industry. Due to these properties, gold is very user friendly and easy to work with. It is easy and convenient to introduce the yellow metal into miniature electronic circuits, which are often found in mobile phones, gaming devices and other electronic accessories. Gold is also resistant to tarnishing, a property that ensures longer life of the devices and circuit boards in which the metal is used.
Electronics processes, where gold is used
Perhaps one of the largest users of gold in the electronics industry is in plating connectors and contacts. Semiconductor packages also use gold bonding wires, while a wide array of other processes also use gold. These include hybrid circuits, printed circuit boards and their coatings and soldering, contact points for electronic components and metal layers on semiconductors, which can be frequently used as conductor tracks and contacts points.
Due to its corrosion resistance properties and high electrical conductivity, gold has become the metal of choice for use in connectors and contacts. It is most preferred for low voltage, low current and contact force applications. Gold is often electroplated onto nickel and if the device or circuitry needs to function in hostile environments, the thickness of the gold is often increased. This may be true for its use in the electronic car industry, where the e-vehicles need to be driven throughout the year across a range of seasons.
Wire bonding is another area of use in the electronics industry, where the demand for gold had already doubled in six years from 1994 to 2000. In the last 20 years, the demand for gold for these processes has skyrocketed. Wire bonding is usually found in many electronic devices, for example – computer motherboards and their components.
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Gold has fascinated humans throughout history and the yellow metal has always been preferred by institutions, investors and governments as a great repository of value. Today, gold is bought and sold in a regulated marketplace, and the spot price of gold has been standardised and can rise or fall depending on economic and political factors.
At the practical level, gold has certain special properties like malleability, conductivity and ductility that make it invaluable for use in industry, especially the manufacture of electronics. However, at the economic level, gold delivers steady returns for investors over both the short term and the long term. Gold is also seen as a ‘safe haven’ for investors and individuals and institutions who moved their money to gold, did so during periods of economic uncertainty. Gold is a scarce metal that is mined out of the ground.
History of gold mining
It is uncertain exactly when human beings started mining gold, but archaeological evidence tells us that it could possibly have been around 4,200 to 4,700 BC. Historians agree that the world’s oldest known gold mine has been found on an archaeological site in southern Georgia. It is now thought that gold mining was popular at the time of the Roman Empire.
The Romans frequently used methods such as hushing and ground sluicing to extract gold from mines that contained loose alluvial deposits. These hydraulic mining methods were later used across Europe. Many Roman gold mines have been unearthed today and one has even been found in the UK, in West Wales. Gold was mined in different regions, which formed parts of the Roman Empire. These were spread across the Balkans, Armenia, Egypt and Nubia.
At the same time, gold was also being mined in other parts of the world. The Kolar gold fields in Karnataka, India has been active since the second century A.D. Later, during the 19th century, there were many gold rushes in different parts of the world. Some of the most famous ones that we would have heard of are the California Gold Rush of 1849 and the Klondike Gold Rush. Statisticians estimate that all the gold that has been mined throughout human civilisation could be close to 6,109 million ounces.
Different types of gold mining
Today, due to the advent of technology, mining, metals have become more sophisticated. Gold mining is a large commercial operation undertaken by mining companies who fund their operations through the sale of gold as well, as money raised from the stock markets. Investors often invest in gold mining companies, as a form of paper gold investment. Let us take a quick look at the four main types of gold mining methods.
There are four main types of gold mining, varying according to the country of production and their method of extraction – placer mining, hard rock mining, by-product mining and processing of gold ore. Gold which has accumulated as a placer deposit (naturally separated from rock through gravity) is extracted through placer mining which uses water as the loose material is unsuitable for tunnelling. This is the type recognised by many as typical gold prospecting, where manual panning can be used, although not commercially.
The most recognised gold mining is hard rock retrieval which uses tunnels underground and machinery in open pits to extract gold. The larger scale enables far greater quantities to be mined.
Of course, mining for other minerals can sometimes provide the added bonus of accumulating gold in small quantities. Typically, mining for copper and gravel can end up discovering deposits of gold as a by-product. Due to the scale of the operations, some mines subsequently find large quantities of gold this way.
Gold ore describes rock and earth with fine traces of gold which are extracted through the addition of chemicals. The use of chemicals (namely cyanide), is expensive for the small yield of gold achieved, so this method is shrinking in popularity.
One of the old mining methods which have now been replaced is dredging. This operation is carried out through the use of suction dredges. There are small floating machines on the water operated by the miners, which consists of a sluice box attached to a suction hose that pulls out the gold.
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Selling silver coins can be more difficult than you think. When someone goes to the high street to sell silver, it’s difficult to get the real value that the silver may be worth. Generally, when selling silver coins, you should receive a price below the spot price of silver on that day. However, the price you get will largely depend on how you have stored your silver coins and the condition they are in. In this article, we will explore the best ways to sell your silver coins and receive the best price.
Identifying an online broker
The best way to sell your silver coins is to identify a reliable broker. A list of reputed and reliable precious metal dealers can be found on the website of the British Numismatic Trade Association (BNTA). Once you have identified a broker near you, it’s important to establish a good working relationship with the company. If you regularly buy and sell silver coins, you should be able to quickly establish a good relationship that can ensure the best prices for your coins. Remember, most reliable brokers will already have a buyback guarantee, so if you buy coins from them, selling these should not be a problem.
They can be sold in various ways. Many silver dealers can be found online who will pay you according to the weight of silver, and potentially extra if the coins have a historical or scarcity premium. They will be able to explain the process, but generally, you will need to send the coins to them after agreeing on a price. These coins can also be sold at auctions (for highly valuable coins or large collections), at a local jeweller if convenience is a higher priority than price, or privately.
Online auctions posted by sites like eBay, may look like a good place to sell your silver coins, however, you may not get the best possible price. Your coins may mostly be purchased by dealers who will try to pay the least possible price to get a bargain.
Taking care of your silver coins
You are likely to receive a higher price if the silver coins are in good shape. When you purchase your silver coins, ensure that they remain intact inside the sealed packaging. This proves that the coin has not been tampered with and usually, the sealed packaging also comes with a certificate of authenticity. This can ensure better prices for your silver coins. If you buy your silver coins from another collector, and they arrived without packaging, please ensure that you store your coins in a dry environment, so that they do not tarnish. When polishing your silver coins, make sure you do not use chemicals or abrasives that are likely to damage the coins.
Buying the right coins
When you purchase your silver coins, it’s important to ensure that you do not end up buying obscure coins that are unknown. Buying well-known silver coins like the silver Britannia ensures liquidity and these well-known coins are more likely to fetch you the best prices and sell quickly. If you do invest in rare and collectable coins, research them thoroughly before you purchase. If the coin commands a rarity premium, then you are likely to attract interest from collectors. In such cases, the value of the coin will be much more than its weight in silver and depending on the demand of the coin, you should receive a good price.
Before selling silver coins, speak to our experts
Physical Gold is one of the country’s best-known precious metal dealers. Our coin experts can advise you on the best way to sell your silver coins and the prices you could receive. Please call us on (020) 7060 9992 or get in touch with us online before you make a sale.
The American Silver Eagle is one of the most prestigious coins to be minted in the US. The coin is a relatively new one, having been released in 1986. This makes the first edition of the coin only a year older than the gold Britannia. The US Mint released the silver Eagle with one Troy ounce of silver that has a purity of 999.9. The coin was released with a face value of one dollar.
Interestingly, ever since the American silver Eagle has been released, the designs have never changed. Unlike the silver Britannia, the coin is presented in the same style, look and feel and the only difference from one coin to the other is the respective mint mark, which is found on the reverse of the proof coins. Well, the coin enjoys healthy interest from investors, and we want to find out whether the silver Eagle is worth its salt as an investable coin.
Divisibility and liquidity
In terms of divisibility, the silver Eagle does not offer much choice. As discussed above, the coin has always been available in the same size, shape, and design. However, there are some variations in its design that can add to the variety of an investor’s silver portfolio. The obverse of the coin features an image of Lady Liberty, created by the designer Adolph A. Weinman. Apart from the famous image of Lady Liberty, the obverse of the coin also features the American national motto – “In God we trust”.
The reverse of the coin carries the image of the Heraldic Eagle. Right above the head of the bald eagle, there is a cluster of 13 stars, each of which represents one of the original colonies of America, at the time of its founding. The only design change for the American Silver Eagle was in 2021. In the new 2021 design, the bald eagle on the reverse of the coin is featured flying back with its wings spread out. So, this is perhaps the only element of variety that an investor can hope for when investing in the American Eagle. The 2021 design commemorates the 35th anniversary of the coin, and the US Mint has taken this opportunity to refurbish the design of the coin.
The American Silver Eagle is a famous and well-known coin across the world. This ensures the liquidity of the coin and the coin can be easily cashed in at any point in time, bringing in cash as you need it. Previous editions may command a premium due to increased numismatic interest. American Eagle coins are available in uncirculated, proof, and burnished versions, giving a certain amount of choice to investors. Being a well-known coin, the coin has a good chance of being sold for its value in a short period.
Silver Eagles can provide a good medium to long term investment and balance to other assets. The 1oz coins afford high flexibility to sell small parts of the silver holding compared to owning huge silver bars. The mass-produced coins are relatively cheap compared to collectors’ coins and their value can rise along with the underlying silver price and age of the coin. Many analysts feel the silver price is very undervalued, suggesting holding silver Eagles will benefit the investor in the long run.
Talk to the coin experts at Physical Gold
One of the country’s most reputed and well-known precious metal dealers is Physical Gold. Our advisors are always happy to discuss your silver coin purchases with you and can offer valuable advice. Get in touch with us on (020) 7060 9992 or simply drop us an email by visiting our website.
As the demand for silver has risen over the years, primarily due to industrial requirements, the price of silver has seen some volatility. Investors want to get into the silver market because of two reasons – they believe that the price of silver will rise significantly in the future and offer them the opportunity to book lucrative profits. Silver also allows investors access to the precious metals market at a fraction of the price of gold.
The popularity of silver coins
Many investors prefer silver coins since the coins allow them to add divisibility and liquidity to their portfolios. Investing in different sizes and denominations of silver coins has its advantages. One can use a variety of coins to sell the silver at various price points in the market and book profits.
Collectable silver coins
Silver coins are also attractive to investors for their collectable value. Silver has been in circulation as a precious metal for minting coins over several centuries. As a result, there are plenty of historical silver coins that command hefty premiums based on their rarity value. These premiums are payable due to the historical value of the coin and its demand. Therefore, such coins are worth a lot more than their silver content or their face value.
They are worth significantly more than their face value. A £2 silver Britannia has a melt value more than 5 times its face value. Also, they can possess a degree of numismatic value, which reflects their rarity, age and desirability. Limited issue coins may be worth more again. The face value benefits the buyer by qualifying the coin as capital gains tax-free
Limited edition silver coins and proof coins
For example, in 2013, the Royal Mint released a £20 coin minted with silver that carries a fineness of 999.9. Despite the coin having a face value of £20, it is worth much more and is viewed as a collector’s item, by numismatists. The coin is considered to be legal tender, with a face value of £20. Similarly, the 2018 five-ounce silver Britannia proof coin has a face value of £10 but is listed on the Royal Mint site for £455. The coin is minted with 99.9% pure silver and enjoys great demand as a proof coin, leading to the high value of the coin.
Silver Britannia coins and their face values
The current year silver Britannia (2021) carries a face value of £2. This is a 1-ounce coin, manufactured with fine silver (999.9). Although it is a bullion coin, its face value has nothing to do with the market price. The 2021 silver Britannia 1 ounce coin is priced at approximately £31.
Some coins achieve their rarity status by default. A good example of this would be a batch of silver Britannias struck by the Royal Mint in 2014. 17,000 of these coins were erroneously struck with the obverse used in the lunar series. So, you had a silver Britannia with the “year of the horse” image on the obverse. These coins were later called the Mule Britannia and attracted large premiums due to their rarity. These are often sold at prices close to $700, as collectors are willing to pay lucrative amounts to secure a coin for their collection.
Our coin experts at Physical Gold can help you make the right purchases
Physical Gold is one of the U.K.’s most reputed precious metals dealers and coin specialists. Get in touch with our team by dialling (020) 7060 9992 or send us an email via our website. We are always happy to speak to customers like you and offer advice on buying the right silver coins.
Silver is gaining in popularity due to its investment potential that has grown over the years. Due to the rising industrial demand for silver, many investors envision making windfall gains in the future, on the rising price of silver. However, silver has a long history of usage in British coinage and coinage across the world.
Most precious metal investors will insist on finding out the purity of the coin before investing. This may not be entirely true for collectors, who wish to acquire a coin, based on its rarity and numismatic value. However, many collectors have also moved to become investors and want to build a strong portfolio of coins that are both collectable and deliver good value for money. Therefore, in this article, we will explore the purity of silver coins across continents.
The purity of investment-grade coins
Investment coins are as near to pure as possible. Popular bullion coins such as the Britannia are struck to 99.99% purity. None are 100% pure silver. Silver currency coins such as the 50 pence piece are not made from silver at all despite their colour. Their alloy is 75% copper and 25% nickel, a mix known as cupronickel.
Similarly, in the United States, most silver coins in circulation contained 90% silver. It was only in 1986, when the American Eagle bullion silver coin was introduced, that the purity of silver was raised to 99.9%, to qualify the coin for investors.
Purity of silver coins across the world
The silver used for coinage in Britain has a minimum purity of 95.8%. Typically, this implies that the silver used for coinage will be an alloy of pure silver, copper and other base metals. The percentage of pure silver in this alloy is 95.84%. Likewise, the alloy would contain 4.16% of copper and other base metals, if any. This standard was developed in Britain as early as 1697. However, we have seen that in recent years, most silver bullion coins minted by the Royal Mint have a purity of 99.9%.
Similarly, France also follows a standard known as the ‘French first standard’. According to this, the alloy contains 95% pure silver and 5% of other base metals, including copper. Russians, on the other hand, use their own standard, known as “91 Zolotnik Russian Silver”. In this, the proportion of pure silver is 94.79%, while 5.21% represents copper and other base metals.
Britain also used “Sterling Silver”, as early as the 12th century. Sterling silver was used for coinage across the British Empire, and many commonwealth countries continued this tradition after the end of colonial rule. Sterling Silver uses 92.5% of pure silver and 7.5% of copper and other non-precious metals.
Other nations may use different standards. For example, Scandinavian silver uses the number 830 to denote its fineness. This simply means that the silver alloy contains 83% pure silver and 17% base metals. In the same way, German silver is denoted with the number 800/835. German silver typically uses 80% to 83.5% of pure silver. However, the term “German silver”, also popularly called nickel silver or alpaca, may contain no silver at all. It is an alloy constructed out of different metals. So, it’s helpful to know and understand these details as an investor, which may help us to ascertain the value of the silver products we are buying.
Talk to our precious metal experts at Physical Gold
At Physical Gold, we have a team of precious metals experts who can advise investors, just like you on making the best investments. Call us today on (020) 7060 9992 or get in touch with us by email regarding your silver investments.
Investors often buy silver coins expecting the prices of silver to rise in the future. The other reason that investors are often interested in buying the white metal, is that it provides them with an easy route to enter the precious metals market. This is because silver is a lot cheaper than purchasing gold and large quantities of silver can be bought at the same price that one would pay when buying a small amount of gold. However, the silver market is not limited to only those coins whose value is decided by the spot price of silver. There are plenty of rare and old silver coins that command large premiums based on their scarcity and history. Today, we will explore some of the best and rarest silver coins in the market
Rare coins with history are always worth more than coins based on weight alone. Collectors are willing to pay huge premiums for scarcity. Some Morgan Silver Dollar coins worth 1$ Face value and £8 melt value, are actually worth over £300k due to their scarcity. Based on weight alone, the popular 1kilo coins such as the Perth Mint Koalas and Kookaburra coins are worth around £500 each.
The American Flowing Hair Dollar 1794
The coin was the first dollar coin to be minted by the US Mint. In the US, the coinage act of 1792, paved the way for the establishment of a new Mint. At the time, the Spanish silver dollars were already being used in the US. The Flowing Hair Dollar contained 0.773 ounces of 90% silver. The coin is valuable due to its rarity and one of these coins fetched $10 million at an auction in 2013.
The American Half Dollar (1797)
Popularly known as the Draped Bust Half Dollar, the coin was minted by the US Mint as a replacement for the flowing hair dollar, due to its unpopularity. The Draped Bust Half Dollars were minted in 1796 and 1797. These coins featured a new design, called the ‘Small Eagle’. Since the coins were minted in two subsequent years, most collectors prefer to complete their set by acquiring the half dollars, with the Small Eagle from both years. It must be noted that the scarcity of this coin is because very limited numbers were ever minted. 1796 witnessed only 934 of these coins being made, while a further 3,000 were minted in the next year. A 1797 Draped Bust Half Dollar fetched US$1,527,500 in an auction in 2015.
The 1870 Seated Liberty Dollar
This historic coin became a part of US coinage for a little more than 30 years from 1840 to 1873. It is considered historic since it was the last silver dollar minted by the US Mint prior to the coinage act of 1873. The coinage act was an important milestone for the United States, as it would put the country on the gold standard. Well, by 1870, the production of these coins had been moved to other cities like San Francisco. These are very rare and an 1870 Seated Liberty Dollar produced in San Francisco was priced at US$1,092,500 in 2003.
1889 Morgan Silver Dollar
Despite the nation being on a gold standard, a financial crisis prompted the US Mint to produce the Morgan silver dollars. These were minted from 1878 to 1904. It was named after the design of the coin, George T Morgan. Due to the limited numbers of production, the coin is considered to be very rare and one of these was sold for $ 881,250 in 2013.
Talk to our silver experts to buy the best silver coins
Physical Gold is a highly reputed precious metals dealer in the country. Our advisors are best placed to discuss your silver investments and identify the best silver coins for you to buy. Please call us today on (020) 7060 9992 or get in touch with us online, via our website.
Over the years, investor interest in silver has increased manifold, with the expectation of rich dividends when silver prices skyrocket in the years to come. While gold has been consistent in delivering steady returns to investors, silver has had a more volatile ride. Although silver prices fluctuated in the short term, the high industrial demand for the white metal has ensured healthy interest from investors.
The industrial use of silver
Silver is used in industry, across many applications. As the electronics industry has grown, so has the demand for silver. Silver has certain unique properties like conductivity and ductility that makes it perfect for use in electric cars, computers, mobile phones and solar panels. Most of the components under the hood of these devices use silver extensively.
Due to the advancement of technology in the world, these industries have flourished and are likely to continue growing at an unprecedented pace. Therefore, large volumes of silver will be required to fuel the growth of these industries. However, the production of silver has also dropped over the years. Silver is mined in a select few countries across the world and its production has been continuously falling. The easy inference that one can draw from this situation is that the prices of silver will eventually go up. Silver has also been attractive for precious metal investors since it offers an easy entry into the precious metals market. It is much cheaper than gold and many investors prefer to buy the white metal.
Why buy silver coins?
The two obvious routes for silver investors to take is to buy coins and bars. UK silver coins are preferred by many investors, since they qualify for Capital Gains Tax benefits, as they are considered to be legal tender in the UK. All investment-grade gold is VAT free in the UK, however, in most cases, silver purchases would be subject to VAT. Silver coins are also available in various denominations. Investors who are building a precious metals portfolio will follow their investment objectives, and decide to maximise the liquidity and divisibility of their portfolios. Investing in prestigious silver coins like the silver Britannia, or the silver Maple leaf can increase the value of the portfolio.
Where can you buy silver coins?
The best place to buy all precious metals is from a reputable dealer. They will likely have a wide choice and stock which can be delivered to you with insured delivery, saving you the time and security of having to pick them up in person. A good dealer will be able to offer guidance and a buyback guarantee. Some silver brokers can sell coins without charging VAT.
Reputed silver dealers can be identified by visiting the website of the British Numismatic Trade Association (BNTA). Most reputed dealers are listed on this website, and once you have identified the right ones for you, it’s down to shortlisting them by making contact. If you prefer to invest in silver coins, it is best to identify a good dealer who specialises in this area. Discussing your investment objectives with the dealer may be an excellent idea, as the dealer then becomes aware of what you want from the market and will give you a heads up when the right products become available. When identifying a reputed dealer, always ensure that they provide the certificates of purchase, and have a buyback scheme. Most reputed dealers will also have storage options for you and will deliver your silver purchases through a secure, insured parcel service.
Speak to the silver experts at Physical Gold
At Physical Gold, we pride ourselves on being one of the country’s most reputed silver dealers. We are fully registered with the BNTA and offer free advice to investors on their silver purchases. Please call us today on (020) 7060 9992, or get in touch with us online and a member of our team will contact you very shortly.