Silver is the new Gold, or is it?

Silver or gold?

One of the keys to great investment is timing and staying ahead of the pack. I receive many enquiries from keen investors asking about the prospects for silver.  Everyone has seen how well gold has performed over the years and many commentators feel that silver has huge upside potential.

As a purely speculative punt, buying silver may be worth a bet but only as part of a well balanced portfolio. You’d certainly need nerves of steel to put significant funds into silver.  However, dig a little deeper and silver may not live up to being the new gold investment at all.

Here are 7 reasons why buying physical gold is still the best precious metals investment;

  1. There is much less research and analysis available on the silver market as it’s  less developed as an investment market. The more research available, the better chance you have of assessing an asset’s prospect
  2. If you buy gold there is no VAT to pay on the purchase. However, silver is not VAT exempt so you’re 20% down before you’ve even started
  3. The gold market has evolved into a highly competitive and efficient arena. So the bid/offer spread (or difference where a dealer will buy and sell a piece of gold) is relatively tight (perhaps 5-10%). However, with less competition silver spreads can be 3 or 4 times those of gold, so silver needs to rise significantly in price before you break even
  4. When you do come to sell your silver you may find it more difficult than it is to sell gold as the market is less liquid (there are fewer buyers)
  5. Silver is less ’precious’ than gold as there’s more of it in existence! The lack of supply and difficulty in extracting gold provides a huge support to its price. If you have an asset who’s supply could increase significantly, the price of that asset is always exposed to a sharp fall
  6. Due to silver’s lower price per kilo you will literally get more product for your money than with gold. This means that a £50k gold investment can be shipped cheaply and discreetly whereas the equivalent in silver would be heavy and expensive to deliver
  7. With the global economy at its most unstable in history, political unrest in North Africa and continued terror threats from the Middle East – the Safe Haven tag of gold provides one of the most compelling reasons to buy gold. Silver quite simply is not known as the ultimate safe haven so is less relevant as a portfolio insurance in today’s climate.

So if you want exposure to the silver market it may be better seeking a more efficient method such as mining shares or ETCs. If you still seek the comfort of owning the physical metal itself, then buy gold coins or bullion.



7 reasons Sovereign coins are a great place to start when looking to buy gold

You can’t go wrong with Sovereign coins

While most UK investors have owned property, shares, bonds and ISAs at some point, gold investment is still pretty new. If you’re a novice, what’s the best place to start a physical gold portfolio? In our opinion Gold Sovereigns provide a perfect starting point for the new gold investor!

1. Great value – Sovereign coins have existed for hundreds of years so there’s a very deep second hand market. This means that older Sovereigns provide a lower price per ounce as than any other gold coin – perhaps along with Krugerrands. Buying any asset at a low price is a great starting point!

2. Further discounts with volume – Specialist dealers like Physical Gold will generally  be able to offer even lower prices if you buy 50 Sovereigns or more

3. Easy to sell – Sovereign Gold Coins are arguably the most established bullion coin in the market so you’ll always be able to sell the coins at a great price. If you try to sell an obscure coin, the reduced number of buyers will be reflected in a lower price per ounce for that piece of gold

4. Affordable – While 1oz gold coins are now trading around the £1,000 mark, Sovereign coins are around a quarter of the size and price. This provides a great opportunity to dip your toe in the market or even set up a regular gold savings scheme, whereby you receive a Sovereign coin every monthPHYS01_Animated_Gif_2_MPU

5. Tax free – Sovereigns are VAT exempt like all other forms of investment grade gold. However, they have the huge added benefit of also being Capital Gains Tax free due to their status as legal tender in the UK. For a novice seeking to buy gold, this provides peace of mind that you’ll never be hit with a tax bill

6. Flexible – Due to their small size, even a modest investment of say £2,000 will provide 8-9 Sovereign coins. This provides versatility that you can sell as little as one coin at any time of you need to realise some cash. Larger coins or bars do not offer this flexibility

7. Talking Point –   The sheer variety of issue dates and Sovereign heads available means that a novice investor can own a piece of history as well as a superb investment

So if you want get started in the world of gold, buy Gold Sovereigns and you won’t go far wrong.


What’s the best physical gold investment gold coins or gold bars?

Youre already sold on the benefits of buying some physical gold to hedge yourself against market turbulence and hopefully receive some great profits. But should you invest in gold coins or bars?

Best physical gold investment channel?

Firstly, its important to realise that there are two channels to the best physical gold investment. One is through your UK pension and if this is the route youre considering, then the gold choice is already answered for you. HMRC regulations stipulate that all pension gold has to be in the form of gold bars. The added benefits are that you will receive a discount off the gold price when buying pension gold through tax relief. So that could be a massive 40% off the gold price depending on your tax level. Additionally, we store your gold in a specialist facility which ensures the gold remains in perfect condition.

Thinking of investing in gold? Download our free Insiders Guide to gold investment here

But what if you want to simply invest in physical gold outside of your pension? In this instance, gold coins are the best physical gold investment. This is for several reasons;

  1. Economies of scale the more gold coins you buy, the better price per coin you should receive. This is not the same with gold bars. You have to actually buy much larger bars to start receiving discounts.
  2. Divisibility Whether you buy 1 coin or 1,000 coins, you have the flexibility to sell any part of that portfolio at any time. Conversely, if youve bought gold bars they may well be larger than a coin and you cant break the bar in half if you need some money but dont wish to sell all your holdings!
  3. Liquidity As long as you stick with well-recognised coins (something we ate Physical Gold can help you with), you will always be able to sell them at any time. If you want to sell 100 gold coins to a dealer, that dealer will be able to sell various amounts of that batch to different customers. If you look to sell a 1KG gold bar, for example, the dealer may have fewer buyers and may reflect that in their price if they bid at all. This may sound obvious, but one of the most important aspects when investing in a physical asset (like a house) is that you know youll be able to sell that asset easily.
  4. Tax-efficient While both gold coins and gold bars are VAT exempt, UK gold coins have the added benefit of being Capital Gains Tax-free. After all, who wants to pay nearly a third of your profits back to the Treasury in tax.
  5. Interest and satisfaction Unless youre buying a gold bar of 5oz or 250g or more, most new investors can be disappointed with quite how small a gold bar within their means can be. Visions of James Bond-style gold bricks somewhat raise expectations of what youll receive for your money but a 1oz gold bar could more closely be compared to the size of your little finger! A 1oz gold coin such as a Krugerrand or Britannia is far more satisfying as they will generally be larger and heavier than any other coin youve held. Additionally, the design of the coins are beautiful – The Chinese Panda, for instance, is famous for featuring a new design each year. If older Sovereigns interest you, then the different Sovereign heads and designs can provide a great talking point and historical interest, while not compromising value and liquidity.

So if youre looking to invest in gold then bars are the only option for a pension, and coins provide more benefits if you buy gold with cash.