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7 crucial considerations before you buy gold or silver (Infographic)

Considerations Before You Buy Gold

  1. Should you buy physical, electronic or paper gold?

This very much depends on your own personal, financial objectives and your own desired level of risk and returns.  Each option comes with its own level of risk, some higher than others.  Read about the Risk Pyramid below, where the highest risk options sit at the top, with the lower risk gold options at the bottom of the risk pyramid.

Derivatives (CFD, futures, spread betting) These suit short-term speculation but they can be very complicated and very high risk.   These sit at the top of the risk pyramid, as they are considered to be the highest risk.

Mining Co shares – These have the potential for higher returns if the mining company does well. Though they very high counterparty risk and any returns on the investment may take years

Precious metals fund – Well regulated and generally invested into a mix of mining shares. Annual management charges do apply and these funds tend to be mid-risk on the pyramid, as there’s no investment into physical metals

Fully Allocated ETFs – Slightly lower risk are ETFs. These are cheap, fast and easy to buy and sell, but they do come with counterparty risk.  It’s possible to leverage ETFs, but then the risks become higher.  Because there’s no actual gold, you cannot take delivery of these plus annual management charges will apply.

Physical coins and bars – These are the lowest risks on the pyramid because you buy and receive your own physical gold.  There’s no counterparty risk involved, as they’re solid, tangible assets, which you personally and fully own. You can store your gold at home and it can also be TAX-FREE if you purchase UK gold coins. Depending on which type of gold you buy, the costs can vary, but you can take delivery of any type of gold.

For more information on this please visit our page ‘Physical Gold versus Paper Gold.

 

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  1. Which type of physical coins or bars should you buy?

Within a UK pension fund, only gold bars are permissible.

If you buy with non-pension funds, then almost always UK legal tender coins will provide the best option.  Their advantages are;

  • Tax efficiency; Legal tender coins have no Capital Gains Tax to pay if you earn a profit. Bars and foreign coins are taxable.
  • Liquidity; Gold is easy to buy and sell due to its desirability and track record. Don’t buy obscure precious metals, as your sale price will reflect their limited appeal.
  • Divisibility; Owning one huge bar may appeal to your ego but it means that you have to sell all, or none, of your holding. Opting for coins means you have the flexibility to sell as little or much as you like when you like.
  • Value; You can benefit from economies of scale without compromising on your divisibility. When the time comes for you to sell, UK legal tender coins can fetch amongst some of the best prices in the market.

 

  1. Where should you buy from?

  • A Jeweller; This may be convenient for you to get to & pick up from, but they usually have a very limited supply of coins or bars. There should be no paperwork involved but they will pay you a vastly lower price when you wish to sell back to them.
  • eBay; You can browse from home and you may pick up a bargain if the seller has no reserve. This is a very high-risk option as the coins or bars may not be authentic and there’s no paperwork or recourse.
  • Auction; You may find some auctions have decent quantities, but these are few and far between. It’s quite a time consuming to attend an auction and can be more expensive, in the end, than you anticipate. There is also a high risk of buying illiquid gold, especially if you’re not experienced in this area.
  • Gold Dealer; More choice and higher quantities are available through a reputable dealer. They can provide expertise and guidance if required. And because they regularly buy and sell, dealers are in a position to offer good prices and should also offer a buyback guarantee. You should always receive certificates of authenticity, & the correct paperwork, to ensure you are in the best position to sell when the time comes.

Do your research when selecting a Dealer as not all are equal. Ensure they are members of The British Numismatic Trade Association (BNTA), do your research and read the customer reviews.
10 commandments

  1. How do you know it’s real and of high quality?

  • Buy from a reliable source
  • Obtain a certificate of authenticity
  • Only buy from BNTA members who must adhere to a code of ethics and standards
  • Otherwise, have it tested

 

  1. Is the timing right?

Gold is still 30% lower than its peak so offers value and experts are predicting a massive dollar crash is imminent!

The Global economic outlook is bleak, suggesting mainstream markets may suffer and gold thrive.

Terrorism and political turmoil is continuing, which generally affects the price of gold, as investors turn to the yellow metal as a safe haven.

Gold is a medium to long term investment, so exact timing isn’t crucial

You can cost average your buying, with a Monthly Saver account

 

  1. Where can you keep it?

Hide it at home, in a safe, under the bed or in some cleverly disguised secret storage; like a clock, or plug socket. But do ensure your home insurers will cover the value of your gold.

Keep it at your bank in a deposit box. But if you haven’t already got one, they’re extremely difficult to get these days as many facilities are closing down.

In a 3rd party safe deposit facility. This may cost around £150/year but you will be able to access it 24/7.

Use your gold dealer’s professional vaulting facility. This is the best option for peace of mind as it will be fully insured and kept in pristine condition. However, you can’t touch it (and fondly run it through your fingers)!

 

  1. How will you sell it?

To obtain the highest possible price for yourself, you can sell your coins one at a time to collectors, as and when there is a demand for them. But this may take time, so you’ll need to be patient.

You can sell to a jeweller for ease, but you might not receive the best value, as they are likely to melt down the gold.

Sell on eBay to potentially secure a very high price. But beware of additional Paypal charges and unscrupulous buyers. Don’t forget your reserve price!

Sell back to your dealer for an optimum mix of convenience, instant liquidity and the best price. You should ask if they offer a Buyback Guarantee when you originally purchase from them.

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How does the Budget affect investments in gold?

Investments in gold

Investments in gold are closely linked to the economy (usually inversely) and legislation changes brought about by the Budget. The Chancellor, George Osborne, delivered his Budget statement on Wednesday 16th March, following up his one hour-plus statement with the publication of a one-hundred and forty-eight page document. The Budget is not noted for its direct references to precious metals and this document was no exception. But what is always of interest, especially to those of us who hold gold and silver, is the big impact his announcements can have on our other assets, especially stocks and shares…

Since the Budget announcement, precious metals continue largely unchanged, reflecting the solid position of gold and silver as a balance to any portfolio.

Related – does your portfolio need gold?

Insider's Guide to gold and silver

This budget speech was no exception to previous Budgets. In 2014, a total of 3bn was wiped off the value of insurers, after a drastic change to annuity purchases. Partnership Assurance lost 55% of its value in a single day, whilst Just Retirement fell 42%.

This year the impact was less drastic, yet they still reflected the power of a speech made by one man; eroding value from stocks and shares that many of us hold in our pensions and ISAs. The Chancellors surprise adoption of the so-called sugar tax was bad news for many large companies. In particular, AG Barr and Britvic (perceived as solid shares held in many pensions and popular funds), were down 2.4% and 1.3%.

Related – strong gold prices for 2016.

In general terms, the Chancellor warned of a rocky road ahead. UK growth for this year was pegged at 2% – lower than some had predicted in the build up to the announcement. And Britains potential exit from the EU was a main theme of the speech, with the Chancellor highlighting that a Brexit could usher in a prolonged period of uncertainty.

The EU referendum on 23rd June looks likely to be a central battleground, around which stocks and shares will face added volatility. Whilst the equity markets face an uncertain year ahead, gold and silver have risen more than 15% this year alone.

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Related – is property losing its shine?

If you currently have a portfolio with exposure to mainstream assets, including property, then it may be worth considering adding investments in gold and silver to add balance and prepare for that referendum and of course, future Budget announcements!

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Looking to buy coins at the March London Coins Auction? Here’s what to look out for

Buy coins

With several auctions throughout the year, London Coins hold some of the most noticeable events of the coin-buying calendar. Attended by both professional coin investors and amateur enthusiasts, the auctions are often not to be missed, as you can often buy coins which are rarely seen and certainly very rarely available for purchase.
The next London Coins event runs over two days on March 5th and March 6th 2016. To help those of you who may be attending or considering a purchase for the first time, weve taken a look at the catalogue and chosen some highlights, as well as looking back at some of the notable sales made at the December 2015 auctions.
Potential bidders should be aware that the price of auctioned coin lots can vary wildly. They often finish far above the estimate, as serious collectors speculate on pricing, or show willingness to pay more than the accepted market value for a lot they have been searching for for some time.


Find out the secrets to selling your gold coins at the maximum price. Download the FREE cheatsheet


For those of you wishing to buy coins as a numismatic investment, a safer bet can be semi-numismatic coins, which carry a premium due to their rarity and desirability, but can be purchased outside of auction, directly from Physical Gold.
These coins bridge the gap between brand new bullion coins and very rare collectors coins. For those seeking a gold investment but lacking the knowledge to buy numismatic coins, attending the sale can offer the perfect solution. Simply contact us here if youd like to find out more.

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December Auction sales highlights

Half Pound Elizabeth I Sold for 11,000
One of the highlights of Decembers auction (and one of the most expensive sales made), was lot 2065. A Half Pound Elizabeth I gold coin, marked as only the third time London Coins had ever sold this type of coin. Carrying Standard Reference S.2543, the last sale of this sort of coin was completed in 2013, for a price of 17,000.
Mixed Florins Sold for 380
A mixed lot can be a good way to enter into numismatic investments. Lot 1581 from Decembers auction featured 16 assorted florins in their holders, and sold for 380. Whilst lot 1582 featured 18 florins, and sold for 480. The quality of mixed lots can obviously vary, so careful inspection is required before taking the plunge.

March 2016 Highlights

Half Pound Elizabeth I Estimate 10,000 12,500
Like London buses, theres another chance to own a Elizabeth I Half Pound for those who missed out on the one offered in December. The estimate places the coin at a similar value to the December sale, but its worth remembering that the 2013 sale was for significantly more than this (albeit that coin did have a more detailed history).
8 Escudos 1724 Estimate 18,000 20,000
The highest estimate in the March auction goes not to the Elizabeth I coin, but to this Portuguese gold 8 Escudos, which is considered extremely rare, to the point of being unpriced by the Krause coin catalogue. Considering the rarity, this could be a case where the estimate proves to be just that. With lots like this very rarely making it to auction, a determined collector may well pay above the suggested price.
The Finchampstead Collection Estimates vary by lot
Broken down into individual lots, this collection is noted by London Coins as carrying particularly coveted examples of Victorian copper coins. Indeed, the auctioneers note that at least half the collection is comprised of the finest known examples of the respective coins. Collected over 10 years, this perhaps demonstrates what a budding coin collector can aspire to!
Sixpences, threepences and small silver Estimate 500 600
As usual, there are a number of large bulk lots, but lot 1871 is one of the largest by volume, which has a reasonably well-priced estimate. As mentioned above, bulk lots can vary in quality, which will no doubt be the case here, but for speculative or new collectors, these can be an attractive way to buy coins.
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Market watch: Strong gold price rises for February 2016

Gold Price Rise

There has been great news for holders of gold in early trading this year, with the gold price rise of over 15% since the start of the year. February has proven to be a bumper month for investors, with gold finishing strongly to post the highest gains across a single month for over four years, at a little over 10%. To put this into perspective: gold has been amongst the strongest asset classes in 2016, outperforming oil, emerging markets, the S&P 500, the US dollar and the bond market.

One American analyst has even gone as far as to say that buying gold today may be comparable to ‘buying stocks in April 2009.’ The same analyst, predicting further positive future returns for gold, noted that between April 2009 and November 2015, the S&P 500 Index charted a 145% rise.

Insider's Guide to gold and silverProtection

Whatever the future holds, the gold price rise to  $1,230 per ounce by the end of February (up from $1,050 shortly before Christmas) has shown once again that it’s the ‘go to’ option for the protection of wealth. Gold has historically risen during periods of economic uncertainty and, so far this year, it is showing that it still possesses those desirable qualities for investors. With concerns around China, the wider world economy and Britain’s potential exit from the EU, it’s little surprise that gold has created both potential buying and selling opportunities for those who do and do not currently hold the metal as part of their portfolio.

In fact, gold holders are benefitting in two distinct ways from the discussion of Britain’s potential ‘Brexit’. With business leaders and markets worried about the impact on the economy, should Britain turn its back on the EU, it’s fair to say that gold’s price has been buoyed. Whilst this has been happening, however, sterling has also fallen against the dollar, further boosting the sterling price of gold for UK investors. In Sterling terms, gold has risen a massive 22% this year, with 14% of that coming in February alone.

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On a day to day level, we’ve seen a huge spike in enquiries with investors moving quicker to complete a purchase than at any time since 2008. In contrast, there have been few sellers, with most wishing to hold their position with more price rises predicted on the horizon.

With so much demand, supply of the right type of gold is starting to become squeezed – another sign that prices will continue to rise and possibly also increase premiums in the near future.

These factors, combined with the prevailing economic winds and the ongoing political climate, look likely to mean one thing: it’s going to be a very interesting year for those of us who hold gold!