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.
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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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As a precious metal, gold has very little competition. Its amazing chemical properties make it invaluable in the industry. Gold is used to manufacture jewellery, as a conductor in electronic components and even pulled out into wires. More importantly, gold is purchased by investors as coins and bars. Due to its price stability, investors often convert their money into gold during times of economic crisis. Investment-grade gold will normally be 22 carats or higher, with a fineness of 99.9%. All investment-grade gold bought in the UK is VAT exempt and CGT (Capital Gains Tax) exempt up to a limit.
However, when gold is used in industry, it needs to be melted down, according to the requirements of certain applications. Gold is often melted and then merged with other base metals like copper to achieve a certain level of hardness. Since gold is a soft metal, jewellery and other items cannot be formed when the metal is in its purest form. Gold is also alloyed with certain metals to obtain specific colours, which are popular amongst customers. The formation of gold bars also requires the metal to be melted and poured into casts.
The melting point of gold
Gold changes its form, i.e. melts from its solid-state into a liquid at 1064°C. Its boiling point can also be obtained at 2856°C. As we can see, these are extremely high temperatures and the gold melting point is usually achieved in specialised industrial facilities. If other metals are already present in the gold, then the temperature required to achieve the melting point of gold will vary. Therefore, 18-carat or 14-carat gold will typically contain a larger percentage of other base metals, causing a variance in the melting point of gold.
The process to arrive at the gold melting point
As discussed above, this industrial process usually requires a furnace to apply the heat in order to execute the process efficiently. The extremely high temperature at which the gold melting point is reached can be generated by a high power furnace. It is important to understand the difference between the words ‘melting point of gold’ and smelting. The process of melting simply converts the metal into a liquid state. In this case, the chemical qualities of the metal remain unchanged. There is simply a change of state. Smelting, on the other hand, is a different process in which impurities contained within the gold are burned off. Therefore, the temperature required to do this may vary from the gold melting point. Once these impurities have been burnt off, the remainder in most cases is almost pure gold.
Other processes that can achieve the melting point of gold
The process of melting gold has been around for thousands of years, long before the invention of high-powered furnaces. How did we melt gold through these years? Well, did you know that the ancient Egyptians used a combination of charcoal along with blowpipes to hit the gold melting point? They were also able to remove impurities from the gold by using this process. For jewellery craftsmen or individuals who want to melt their own gold at home, or operate a small-scale industry, there are propane-powered gold melting kilns available today. Flux can be used in these devices to extract impurities. However, only small amounts of gold can be processed by using these kits.
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Gold is considered to be the most popular precious metal, due to its repository of value. Over thousands of years, nations across the world, kings and queens, governments and their banks have all accepted gold as the principal precious metal. There are other precious metals that exist, a couple of which are more expensive than gold. However, gold continues to enjoy unfettered liquidity across the world.
Gold is widely traded as a commodity and the COMEX gold prices decide the rate at which gold is bought or sold at any given point in time. This is known as the spot price of gold and it is calculated in US dollars per Troy ounce. But, have you ever wondered how is gold formed? Many of us know that it is mined in a few countries across the world. But, more importantly, where does it come from?
Where does gold come from?
It is common knowledge that gold can be obtained from gold mines. However, gold flakes are also available in rivers and streams and certain parts of the sea. It has a yellow metallic colour, which has led to many people calling it the yellow metal. Gold has certain rare properties which include malleability, conductivity, and ductility. It is known as an element with its symbol represented by ‘AU’. Its properties of ductility and conductivity make it attractive to the industry as an electrical conductor. How is gold formed? It is interesting to know that the formation of gold took place long before our planet was formed.
Many scientists believe that the element was formed during collisions between supernovae and neutron stars even before the birth of our solar system. However, during the formation of our planet, gold was deposited in the core of the Earth. Cosmic events that took place over millions of years on Earth, such as the Earth’s collision with asteroids made some of this gold available to us.
Is it possible to synthesise gold?
Yes, in theory, scientists can create gold by bombarding Mercury with radiation. As the decay of mercury takes place, the formation of gold can take place. However, in reality, it is difficult to produce gold through this route. The finite amount of gold available on the Earth needs to be mined and extracted.
Where can we find gold inside the Earth?
As explained earlier, when our planet was formed, heavy elements such as iron, and gold made their way to the core of the planet. However, when the asteroid collisions took place billions of years ago, the layers of our planet were churned. This resulted in large amounts of gold being deposited into the upper layers.
How much gold is there on Earth?
Well, it is difficult to calculate exactly how much gold could be found inside the Earth’s crust and mantle. However, a 2016 survey conducted in the United States revealed that approximately 196,320 tons of gold have been extracted and produced ever since human civilisation started. Gold is an extremely dense metal (19.32 g/cm³) and does not occupy a lot of space. It is estimated that there may be 1,000,000 tons of gold embedded within a kilometre of the Earth’s surface. Of course, the volume of the precious metal inside the mantle and the core of the Earth is unknown but could be a lot more. With advancements in technology, it may be eventually possible to access these deposits of gold as well.
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Gold and silver are often referred to as the ‘go-to’ precious metals for any investor. The yellow metal is revered around the world for its value and has many different uses. Gold has historically been one of the precious metals of choice for minting coins. Of course, it has numerous other industrial uses. Have you ever wondered why gold is used widely? Gold has certain properties that ensure its usefulness across industries. In this article, we will briefly overview some of these properties, and also focus on gold density.
Useful properties of gold
Gold is a highly malleable and ductile metal. The yellow metal is so malleable that 1 ounce can be pressed and spread over an area of 300 square feet. As a ductile metal, it can also be pulled out into wires. Gold has another property that makes it ideal for several industrial uses. It is a very good conductor of heat, as well, as electricity. This combination of ductility and conductivity make it invaluable in the electronics industry. Another great property of gold is that it does not corrode easily. Gold remains unaffected when exposed to air, or most other reagents.
The density of gold
Although gold is a malleable metal, the density is fairly high. Gold density is 19.3 g/cm³. When we refer to a metal density chart, we realise that the density of gold is much higher than most base metals. For example, lead has a density of only 11.3 g/cm³. Similarly, this number stands at 7.87 for iron, 8.90 for nickel and 7.7 for bronze. When compared to other precious metals, the density of gold is still higher than metals like rhodium or ruthenium, which are 12.4 and 12.1, respectively. However, platinum is higher than gold density and stands at 21.5. Similarly, the density of iridium is also higher than the density of gold at 22.5. Silver, on the other hand, is nearly half the density of gold at only 10.5.
So, we can see from the above comparisons that gold density is generally higher than most other metals. Despite this, it enjoys the properties of malleability and ductility, which is unique.
How can we calculate the density of gold?
Well, the classical definition of the density of an object. Is the ratio of its mass to its volume. This is the reason why density is represented by grams per cubic centimetre – unit mass per unit volume. Now, mass is pretty much the same concept as weight. So, all we have to do is to weigh a bar of gold and divide this number by its volume. Therefore, one cubic centimetre of gold will weigh 19.3 g. Similarly, a cubic centimetre of silver will weigh 10.5 g
If the density of gold is higher than other metals, why is it softer?
The softness of a metal is its ability to easily change shape when pressure or stress is applied. The key to our answer lies deep in physics, where we analyse the structure of gold. Like all other metals, gold has a crystalline structure. This structure is essentially an arrangement of different planes of crystals. Metals which have a higher density like gold are more likely to have defects within these planes. These are called slip planes, and they allow the metal to bend easily. Gold and silver have more of these planes, making them extremely malleable. On the other hand, base metals like iron are more rigid and cannot be bent easily.
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When you call Physical Gold, your queries need not necessarily be about investments. We pride ourselves on being recognised as one of the most reputed precious metal dealers in the country. Our experts are extremely knowledgeable about gold and can answer all your questions related to the yellow metal. Call us on (020) 7060 9992. You can also visit our website and get in touch with us online and a member of our team will revert to you at the earliest regarding your queries.
Gold coins are extremely popular amongst investors and collectors. However, coins, bars and other articles cannot be manufactured using gold in its purest form. This is because gold is a soft and malleable metal and may bend easily during the manufacturing process. So, it needs to be mixed with other metals to achieve a certain level of hardness. Other metals are also mixed with gold to create colours which are popular among buyers.
But how do we know the extent to which other metals have been introduced into the gold? It would reduce the purity of the gold to something like 18 carats. But, it is impossible to ascertain the purity with the naked eye. Therefore, gold hallmarks are required to inform the buyer about the purity of the gold. These gold markings are engraved on the gold by the manufacturer.
What products need to carry gold hallmarks?
In the UK, it is mandatory to have gold markings on all gold products – jewellery, artefacts, etc., that are sold in the country. Sometimes, these gold markings may also carry the date on which the gold hallmarks were created. If the gold hallmarks are approved by the assaying office, this information should be included. Of course, the gold hallmarks would also contain information regarding the purity of the gold.
Standard gold hallmarks will carry a number. For example, 18-carat gold is 750 parts out of 1000 in weight. So, the gold markings will carry the number 750.
History of gold hallmarking
Gold hallmarks were introduced in the UK as early as 1300. At the time, a law was passed regarding the purity of gold items. By this law, gold had to be 80% pure, which meant that it must be 19.2 carats. Under the act of gold hallmarks, gold products were tested by the guardians of the craft, who used a stamp with the leopards head, as a symbol in their gold markings. Later, the task of testing and adding gold hallmarks was assigned to assayers, based in Goldsmiths Hall, London. Currently, assaying offices can be found in London, Sheffield, Birmingham and Edinburgh.
By 1972, the UK joined the International Convention of Hallmarks as a signatory. This convention introduced new gold markings, commonly referred to as CCM (Common Control Mark). The fineness of gold is therefore represented in gold hallmarks as a weighing balance with the purity number written in between. In 1999, the European Court of Justice ruled that dealers in the UK would have to recognise and accept the gold hallmarks of other European countries. These gold markings must carry the maker’s symbol, purity information and the stamp of an assaying office. Currently, the UK recognises the gold hallmarks of Switzerland, Finland, Denmark, Ireland and Portugal.
What should we look for in gold hallmark identification?
Gold hallmark identification is an essential step in ensuring that the gold you purchase is genuine and contains the purity of gold that you are paying for. If we go back in time, gold hallmark identification had five separate elements. These included the mark of the maker, information related to fineness, millesimal fineness, the mark of the assaying office and the date.
However, there were discrepancies in the dates across these gold markings. For example, the initial issuers of gold hallmarks – the ‘Worshipful Company of Goldsmiths’ started each year on St Dunstan’s Day, which is 19th May. During the reign of Charles II, this was changed to the King’s birthday. In more recent years, the different assaying offices used the start of their financial year. In 1975, the start dates for all gold hallmark identification were brought to the beginning of the calendar year. Today, the date stamp may be omitted altogether from gold markings.
So, when studying gold hallmark identification, we would find three essential identifiers – the mark of the maker, the standards/fineness mark and the mark indicating the assaying office. The assaying office in Birmingham is considered to be the largest and its symbol is a ship’s anchor on its side.
Gold markings on coins
Gold coins come under the category of investment-grade gold in the UK. This category of gold is exempt from the law of displaying gold hallmarks. This is simply because the purity of investment-grade gold is guaranteed by the London bullion market Association (LBMA). No gold hallmark identification is required. The assaying office in London has also published its guidelines regarding gold hallmark identification, which states that gold coins are exempt. However, refiners will often stamp their gold bars with their mark and purity information. Likewise, mints may also stamp their gold coins with identification marks.
For example, the Royal Mint issues a gold coin set known as the Tower of London collection. This set of coins carries a special mint mark. These gold markings can be used to identify the coin over the years to come, tracing it back to its origins and the mint that has struck the coin. Similarly, US gold coins also carry mint marks. These mint marks are engraved to identify where the coin was made and hold the manufacturer accountable for the purity of the coin. In 1835, mint marks were introduced in the United States by law. In 1838, the first mint marks appeared on US coins from the newly opened branches of the US Mint in Charlotte, Dahlonega and New Orleans. Similarly, gold sovereigns were produced across the British Empire. These coins have a mint mark with a letter, indicating the city or country where the coin had been minted. However, gold markings such as mint marks should not be confused with gold hallmarks.
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At Physical Gold, our gold experts can help you find out more about gold hallmark identification for gold products. We can advise you and guide you on your purchase of coins and bars, including the process of finding out about the purity of articles you buy. Call us today on (020) 7060 9992 or get in touch with us online and we would be happy to help you out.
For several centuries, gold has been considered the definitive precious metal in the world. It acts as a great repository of value even today and has been used in jewellery making, coinage, investments, and several industrial applications. Its industrial users are many, owing to certain great properties that the yellow metal has.
Gold is well-known for its malleability, making it a versatile metal to use for industrial applications. At the same time, gold is also well-known for its tensile strength. This property coupled with its conductivity allows it to be used in industry for specialist wiring applications. However, the question we want to address today is “Is gold magnetic?”
Gold and the property of magnetism
Gold does not automatically fall into the category of magnetic metals. For example, if we have a large electromagnet that emits a strong magnetic field, gold is unlikely to be drawn by it. Other metals like iron will be immediately attracted by the magnetic field and will attach itself to the magnet. However, gold does not behave in this manner.
The magnetic attraction of gold jewellery
Often people are surprised when certain types of gold jewellery may suddenly behave magnetically. A dealer may have sold a large ring to you, claiming that its pure gold. However, if it is attracted by a magnet, you may be wondering is gold magnetic? No, it is a certainty that the gold is not pure. There could be iron or nickel mixed into the metal, which causes this phenomenon.
This is one of the ways in which people try to detect the purity of the gold they possess. However, we must bear in mind that even if the item of jewellery is not attracted by a magnet, it doesn’t automatically imply that there are no base metals mixed into it. Base metals such as aluminium, copper, and lead, which are frequently mixed with gold do not have any magnetic properties.
Often metals like copper and nickel are mixed into gold to create colours, which are popular amongst buyers. Also, precious metals like platinum, silver and rhodium are frequently being used by the industry to make the surface of the gold harder and scratchproof. These metals do not have any magnetic attraction properties.
Recent scientific developments
Although gold had always been considered a non-magnetic metal, a recent scientific discovery has put forth the possibility that gold can be magnetised through heating. But is gold magnetic? Researchers at Tohoku University in Japan discovered that by spinning the electrons and inducing heats at the same time, a small degree of magnetisation can be achieved in gold. In the experiment, a thin film of gold was used, and a magnetic field was applied in parallel with the flow of heat. Researchers believe that such discoveries can reveal the unknown properties of matter that may have useful industrial applications. It could be useful for innovative and new areas of science such as thermoelectric uses and energy harvesting.
Talk to the gold experts at Physical Gold
Our gold experts can assist you in identifying and assessing the purity of the gold you possess. Besides, they can help you identify the right opportunities to purchase gold for your investment portfolio. We conduct regular research on the international gold markets and can advise you on the purchase of your gold at the right time and price.
As one of the nation’s most reputed online dealers, we are also able to offer you great deals on a variety of gold products. We stock bars of different sizes and our numismatic experts can also help you with the purchase of excellent gold coins. Call us on (020) 7060 9992 or simply drop us an email and one of our investment experts will be happy to get in touch with you.
Investors are always keen to build a portfolio of precious metals. Throughout history, this is typically meant the acquisition of gold and silver. Traditionally accepted as precious metals all over the world, these metals enjoy great liquidity – irrespective of whether they are available in bars or coins.
Gold and silver also enjoy vibrant global markets, due to the internationally regulated exchanges that they are traded in. This creates transparency and dependability for investors, making these precious metals a popular choice for commodity investments.
Of course, gold and silver are also used in the making of jewellery and are greatly valued as ornaments across different cultures. Many countries in Asia have the tradition of gifting gold at the time of a child’s christening ceremony or marriage. In many countries around the world, the purchase of gold is also considered to be auspicious and gold is often bought during times of religious events in the year. However, are we restricted to only gold and silver when it comes to precious metals investing? Which is the most expensive metal? How do we know which is the most valuable metal?
We ask and answer the question – “What are 8 of the World’s Most Expensive Metals?”
Close on the heels of gold and silver comes Platinum, a popular precious metal, partially due to its durability and versatility. Platinum enjoys demand from consumers and several companies manufacture jewellery and ornaments using the precious metal. Platinum is unique in the fact that its weight is close to double that of a gold carat.
This means that in terms of its density and weight, it is the heaviest in the list of precious metals. Apart from the jewellery industry, Platinum is in great demand in many other industrial fields such as aeronautics and dental implements. The metals name is derived from Platino, a word in the Spanish-language, meaning ‘little silver’.
Interestingly, Rhodium is as rare as it is expensive. In fact, it is considered to be the most expensive metal in the world. Deposits of rhodium are scarce, adding to its rarity. The metal has a very high melting point and does not corrode easily. This is why it is greatly in demand across several industries. Of late, a popular precious metal is known as white gold. This is an alloy that uses rhodium, the most expensive metal as a plating medium to achieve the white colour and create a non-corrosive, scratch-resistant, reflective surface. Rhodium is scarce in supply however, countries like South Africa, Canada and Russia are well-known for its manufacture.
Of course, gold is a time-tested precious metal, well-known as a repository of value. It is considered to be the classic precious metal across all countries in the world. Throughout history, gold has considered to be the most expensive metal. It is commonly used for a variety of uses, of which the most popular ones that we know of are jewellery making, coinage and investment. However, gold is also considered the most valuable metal across several industries as well, due to its unique properties of malleability and conductivity. For example, the audio industry uses gold frequently in the manufacture of cables and audio contact terminals.
The precious metal enjoys high demand from the industry, particularly in the manufacture of electronic goods. This is primarily due to its property of extreme hardness and it is often used to reinforce other metals. It is well-known across the world as one of the most valuable metals within the Platinum category. It is possible to use the metal for the manufacture of jewellery, however, the incidence of this use is rare.
The white metal has always been a close runner-up to gold. However, like gold, silver is also in great demand across the world for a variety of uses. Historically, it has been used for coinage, manufacture of utensils and jewellery. Due to its high industrial demand, silver is much sought after today. Therefore, silver investments have risen substantially, and investors often invest in silver bars and coins.
It is a rare metal to find, which makes it feature on the list of most expensive metals. Like Rhodium, it also has an extremely high melting point and does not corrode easily. Its use is primarily industrial, ranging from the electronics industry to its use in the automobile industry, particularly electric cars. Iridium has also been used widely as one of the most valuable metals for the manufacture of watches and South Africa remains the largest producer of this metal.
It is a bluish, silver metal that also has a super high melting point. However, it does not enjoy the other properties, found in most precious metals. Unlike gold and silver, which are extremely malleable, Osmium is hard and brittle. It is primarily used in the industry for the manufacture of electrical components and electric bulb filaments.
This precious metal is greyish white and also enjoys the properties of malleability and stability. It is rare, one of the most valuable metals, and has the unique property of being able to absorb large amounts of hydrogen, even at room temperature. The jewellery industry also uses this metal to create their alloys of white gold, while it is popular in the automobile industry as an emission reduction agent. Recently, there has been a fall in both supply and demand for this precious metal.
Call us for advice on your precious metal purchases
Physical Gold is one of the country’s most reputable precious metal dealers. Our team can advise you on the purchase of the most valuable metal products. Call us today on (020) 7060 9992 or get in touch with us by email.
Bullion is a term that is often misunderstood or misinterpreted. It is a broad term used to describe precious metal bars and coins that have been mass-produced for investors.
A bullion coin is also a numismatic term that refers to production standards used to manufacture coins that were mass-produced after the 1930s.
These are quite different from coins with a ‘proof finish’ which means a lot of detail has been brought out due to the higher quality of finishing. Therefore, bullion coins are often the cheapest way of investing in the precious metals market. The value of the coins you buy will be more or less dependent on their silver or gold content. Bullion coins attractive lower premiums and does not have higher prices due to packaging, exclusivity or quality of finish.
The Royal Mint Bullion coins
The Royal Mint is one of the world’s oldest producer of coins. With a history spanning more than 1100 years, the Royal Mint was originally created to produce coins for the Kingdom of England, and in time minted coins for the entire British Empire. The original mint was housed in the Tower of London and was established in 886 A.D. Currently, the Royal Mint is a limited company and a part of her Majesty’s Treasury.
The Royal Mint bullion coins were first introduced in 1957. At the time, there was a rising demand for gold sovereign coins and the mint started production of these bullion coins to protect British coinage from counterfeiting. Since then, the Royal Mint bullion coins have continued to satisfy demand from numismatists and investors alike.
Royal Mint bullion coins – the Sovereign
The sovereign is a flagship British coin with a gold content of 22 carats released by the Royal Mint since 1817. The Sovereign with a face value of 1 pound was a popular coin in circulation. It was later withdrawn from circulation and produced as a bullion coin for investors and collectors. It enjoys the reputation of being one of the most liquid coins on the planet. Since the coin has been around for more than 200 years, there is ample supply of this iconic British coin for investors to include within their portfolio.
The coin has witnessed the reigns of many British monarchs and the version released from 1817 onwards saw these coins in circulation until 1932. The Royal Mint bullion coins like the Sovereign are extremely attractive for investors, due to their low premiums, authenticity and gold content. Divisibility is an important consideration for many investors and the sovereign is available in different sizes and denominations.
Royal Mint bullion coins – the Britannia
The Britannia is yet another flagship British coin that enjoys great liquidity across the coin markets in the world. The original gold version was introduced as a bullion coin, in 1987. The Royal Mint subsequently issued a silver Britannia in 1997. The gold Britannia is an extremely collectable coin, and contains one Troy ounce of gold, while the coin denotes a face value of £100. The silver Britannia, on the other hand, contains one Troy ounce of silver but has a face value of 2 pounds. The purity of the silver Britannia has changed since 2013, and now has a purity of 999.9.
The silver Britannia – limits on mintage
When the silver Britannia was released in 1997, it had an initial mintage limit on the 1-ounce proof orders up to 16,005. The limit for proof sets of the coin was also set at 11,832. However, by 1998, one year from the initial release, the Royal Mint increased the mintage limit to 88,909. This action was taken to meet the escalating demand for the silver bullion coin. Going forward, the mintage limits were adjusted according to demand and by 2004, this limit was brought up to 100,000 and by 2016, this figure was raised to 200,000. The Gold Britannia bullion coins do not have mintage limits, but the proof coin sets do. As of 2020, only 150 sets were issued.
The Queen’s Beast series
Apart from the Britannia and the sovereign, the Royal Mint bullion coins also include others like the Queen’s Beast and the Lunar series. The Queen’s Beast series of coins was launched in 2016 and features statues of the Queen’s Beasts at the historic coronation of Queen Elizabeth II. The coins were designed by Jody Clark and the series also includes a 2-ounce silver coin, which is a first for the Royal Mint. The series has 10 planned coins, each featuring a stylised image of a Queen’s Beast.
The Lunar series
The Lunar series of gold coins is yet another edition of the Royal Mint bullion coins. Introduced in 2014, the series launches a new coin every year, featuring an animal from the Chinese Zodiac. These are animals that are used to denote and celebrate each lunar year.
There are 12 issues planned throughout the series and several have already been launched, including the dog, monkey, sheep, horse and the rooster. The lunar gold coins are highly collectable and enjoy popularity amongst people collecting the Royal Mint bullion coins.
Interestingly, these coins are also very popular with Chinese investors and enjoy healthy demand from Asia’s gold loving markets. There are still several issues of the lunar gold coins in the pipeline and most collectors wait eagerly for new editions to be launched so that they can complete the entire set.
Call our coin experts at Physical Gold for advice relating to Royal Mint bullion coins
If you are a numismatist or an investor who wants to include Royal Mint bullion coins as a part of your portfolio, call our coin experts on (020) 7060 9992. You can also reach us via our website and a member of the Physical Gold team will contact you to discuss your purchases and provide you with the right advice for investing in Royal Mint bullion coins. Our advisors can help you achieve your goals and ensure you buy the right coins at the right time and price.
Having stood the test of time over the years, the yellow metal has turned into an asset class that investors frequently depend on during times of economic turmoil. Gold has historically been seen as a safe haven and an investment vehicle that generates steady returns.
While the appetite for gold has risen and fallen over the years, it is obvious that gold demand skyrockets during times of crisis. The world has seen much of this in the last couple of decades. The demand for gold feeds on the fear of investors and looking back to 2011, we can see that the spot price of gold reached its highest point in August of that year. The all-time high, which crossed $1900, was at the height of the global economic crisis at the time.
Economic fears and social collapse
Most researchers study the anatomy of an economic crisis by measuring the financial impact, supply and demand issues and political ramifications. However, one of the largest problems that follow a global crisis is social impact. Epidemic diseases create the fear of death, which in turn breaks down society. Standard economic measures taken by governments can only soften the blow to an extent. In reality, there would still be people who cannot pay their bills, housing foreclosures and a growing banking crisis.
Currently, we are in the middle of what could be the largest global pandemic the world has ever seen. At the time of writing this article, the US has approximately 6.1 million confirmed cases of COVID-19, with 186,000 deaths. Likewise, the UK has over 335,000 cases and more than 41,000 deaths. The numbers are staggering and continue to grow every day. Unemployment in the United States reached an all-time high of 14.70% in April 2020. Needless to say, these economic pressures have penetrated deep into the heart of American society, destroying any semblance of economic stability that was previously there.
One of the key barometers of Britain’s economy is its housing market. These figures show a drop in demand of around 40% at the end of March 2020, according to Zoopla, a well-known property-related website. The drop in demand isn’t linked to the availability of housing. Importantly, it is the outcome of a shrinking economy, where the lack of job security has resulted in an exodus of buyers. Many businesses have become bankrupt during the lockdown and this has also had a huge impact on commercial properties. Moreover, the post-pandemic era is likely to see a greater number of people moving to homeworking. Prime commercial property, for example in Central London, will lose its lustre due to reduced demand.
Other areas of the economy have also taken a significant hit. A report by the Financial Times indicated that automobile sales were down by 97% in May 2020 – the biggest drop in three decades. The United Nations has published a report that estimates the damage to the global economy to be US$1 trillion. In fact, the UN has requested countries all over the world to spend now, in order to avoid a long period of economic uncertainty. The economic think tank of the UN has advised that a lot more needs to be done, rather than reducing interest rates and cutting taxes. In March 2020, the US government released a stimulus package designed to help businesses across the country. The package included payroll tax cuts and certain emergency measures to reduce job losses across businesses.
The UK government was pro-active in the creation of an employee welfare scheme called the ‘furlough scheme’. This scheme was designed to help UK employers retain employees during crisis periods when employees could lose their jobs, the company ‘furloughs’ the worker, i.e. puts them on the scheme. The government pays 80% of the wages, up to £2,500 a month, while he/she is laid off. Two out of three British employers have used the scheme in the past. However, this scheme is likely to be pulled to reduce government spending. Many UK workers are likely to face tough times once the scheme is shut down.
Impact on the European economy
Closer to home, the German economy entered into a recessionary phase due to the impact of COVID-19. Germany had gone into recession in 2009, during the last global financial crisis. This time around, the country’s economy shrank by 2.2%, pushing the nation into recession.
Along with Germany, the Eurozone has also been plagued with problems of its own. Countries like Italy are reeling with high debt and zero or negative growth. During the previous financial crisis, nations like Italy, Greece and Portugal were bailed out by countries like Germany and the UK. This time around, things are looking grim. Brexit has already brought the continent under pressure throughout 2019. Now, the future of the Eurozone lies in the balance and radical economic action and fiscal measures are required by Brussels to ensure the inclusion of countries like Italy.
Impact on other asset classes
Other assets have also been impacted. De Beers, one of the world’s largest manufacturers of diamonds reported a 28% decline in sales. Leading companies have also been forced to close down their sales channels, including exhibitions. Some companies have begun exploring the option of selling online however sales volumes are yet to rise.
The price of silver had fallen to a low of $12.01 on 19th March 2020, but as the COVID-19 crisis hit the price has surged to a current $27.53. This represents a stunning 129% price rise in just five months. This topic is discussed in detail later but is largely due to silver similarly to gold being classified as a safe haven investment.
Panic and uncertainty
There is an intangible impact of the pandemic, which many people don’t realise. Yet, this impact is disastrous for financial markets. It is often said that the money runs away from where it is scared. Fuelled by speculations on social media and the media, the virus of fear has spread throughout the global economy. In countries where a strict lockdown was designed to stop the virus from spreading, an economic disaster ensued, killing off businesses and depleting jobs. On the other hand, the countries that followed a lighter approach ended up having unbridled transmission of the virus, resulting in the loss of human lives. This is the paradox that the world is dealing with. It is an unprecedented situation, to which there appears to be no immediate solution.
The global stock markets have responded similarly, with the FTSE downward slide started from March 2020. Similar crashes were recorded in the S&P index and the Dow Jones. As the markets turned bearish, investors pulled out their investments. The domino effect of the coronavirus is likely to beleaguer the economy long after the threat of the virus has passed. This is a crisis with a magnitude of epic proportions that no one could predict.
Panic buying of commodities
Another significant impact of COVID-19 has been the turmoil witnessed in consumer markets across the world. As the crisis unfolded, people rushed out to stock food, toiletries, essential items, sanitizers and other disposables. Nielsen, the market research company reported that sales of pasta increased by 168% during the pandemic, while canned pasta and canned meat were up by 148% and 147%, respectively. This kind of consumer behaviour creates a void in the economy, creating supply and demand issues.
When there is an unprecedented spike in the demand for food and other commodities, systems often struggle to respond, and shortages are created. In many developing countries, the COVID-19 crisis has resulted in speculative prices of commodities being charged by unscrupulous traders. In a situation where unemployment is on the rise and families are cash-strapped, this creates a vicious cycle that can severely impact underprivileged members of society.
2019 was Brexit, 2020 is COVID-19
At the same time last year, no one had anticipated that the pandemic would be upon us soon. 2019 was the year of Brexit. Post the general election in the UK during the previous year, Prime Minister Boris Johnson moved forward to sign the Brexit deal with the European Union. As the threat of a no-deal Brexit loomed over the country for a long time, the price of Sterling had weakened. Naturally, the gold prices went up, as investors lost confidence in the British pound. The uncertainty that the UK might leave the EU without a deal in hand, further impacted the value of the Sterling. The price of gold had shot up shortly after the Brexit vote in June 2016.
“The world economy is sleepwalking into a new financial crisis”.
Lord King was in charge of the Bank of England in Threadneedle Street during the 2008 financial crisis. He warned that a stagnating world economy was poised at the brink of yet another major financial crisis. A low growth trap, compounded by the uncertainty around Brexit, the US-China trade wars, political tensions within Europe regarding the direction of the Euro and socio-political issues in the emerging economies were all key factors for pushing the world towards another debacle.
Ironically, in hindsight, we realise that the world economy was already fraught with numerous problems. No one knew that COVID-19 would soon arrive. By August 7, 2019, the price of gold breached the $1,500 mark. It hovered at these levels through the next few months, reaching a price of $1,527 on 2nd January 2020. It reached a new high of $2,067 on 6th August 2020.
Financial markets in turmoil
Businesses in the UK were already struggling, amidst plummeting sales driven by a drop in consumer demand. For example, high-street retailer Laura Ashley was struggling by February 2020, to save the business. The company reported an 11% drop in sales through the latter half of 2019. The company’s share price went down by 38% when the media reported the news. By this time, borrowing restrictions were already in place by the major banks and struggling high-street businesses were finding it hard to stay above water.
The 2020 oil crisis
A well-known parameter used to check the health of the world economy is the oil price. During the 2008 recession, global oil prices had dropped to $33.87 a barrel in December 2008. The 2020 oil crisis, also known as the coronavirus oil crash, had very little to do with the virus. The breakdown of talks between Russia and Saudi Arabia triggered a price war in March 2020, when the OPEC failed to stabilise the market. Saudi Arabia went on to dump crude oil into the market at heavy discounts. As a result, WTI crude plunged by 24.59% to trade at $31.13 per barrel. This was a historic low since the Middle Eastern war in 1991. Goldman Sachs, the global investment bank cut back its 2nd and 3rd quarter Brent forecast for the year to $30 a barrel, indicating that prices could eventually fall as low as $20. Read our detailed article about the relationship between gold and oil prices.
Banking and the global stock markets
Sergio Ermotti, who heads the Union Bank of Switzerland (UBS), has been quoted as saying that he has never witnessed the magnitude of what he is seeing now. Banks have been saddled with a problem of epic proportions, which include weak profits, little or no dividends or bonuses. Sadly, this comes at a time when investors are already tight-fisted. After the sub-prime housing market crisis of 2008, most banks across the world took steps to protect themselves against another similar meltdown. However, the COVID-19 crisis has caught everyone off-guard. A combined sum of US$139 billion has been set aside for loan loss provisions. However, the financial experts at Accenture have predicted that the actual cost of bad debts could rise to US$880 billion by 2022.
Back home, things aren’t great either. In June 2020, Forbes magazine published a scathing article titled “The UK economy is broken”. In that article, the Bank of England chief is reported to have said that the current financial crisis is the worst in 300 years. That takes us back to an era that predates the industrial revolution. The implications of that statement are huge. It would imply that as the current crisis unfolds, it will reach a dimension never seen by anyone in their living memory.
Government debt level has crossed 101% and is headed upwards. On the other hand, the tax coffers are emptying, as overall tax collections have reduced by 28% or more. This includes VAT, down by 46% and income tax, down by 29%. In the scheme of things, the government would find it very hard to bail out the UK banks in the event of a collapse, like it had done in the case of Northern Rock and RBS, back in 2008.
The stock market crash 2020
The COVID-19 stock market crash started on 20th February 2020. By March, the global stock markets had fallen by approximately 25%. Of course, this was a case of investors turning bearish as the pandemic started spreading and the news hit the stands. It’s interesting to note that barely a few days before, on 12 February the global stock markets were at an all-time high. This included the S&P, NASDAQ and the Dow Jones. It goes to show how fragile and volatile equity markets can be. In reality, when the market free-falls, there is no safety net.
By May, there was a recovery rally and the US indices hit new highs on 17th August 2020. Interestingly, this bull-run on Wall Street was led by technology companies who operate in areas like cloud computing and machine learning. The lockdown had proved to everyone around the world that education, business and many other services were moving online in the post-pandemic phase.
Virtual events were being hosted all over the world, while consumers have moved to ‘no contact’ online shopping. Videoconferencing players like Zoom are suddenly seeing a huge surge in their businesses, as all business meetings and conferences are being conducted through remote facilities. Investors were, therefore, keen to invest early in these companies, along with the likes of the big players like Amazon, Microsoft and Apple.
It’s important to note that the current correction and buoyancy in the stock market is not reflective of the global economy at large. Stock markets have historically risen on investor sentiment. At the moment, it appears that investors have turned to the market in the hope of making quick gains, despite the fear of coronavirus. The nature of such volatility usually creates a bubble that the general public should be wary of.
The decline of other business sectors
In reality, a closer look at the high-street tells us that every sector in business is suffering. Airlines have suffered huge losses, along with the tourism and hospitality industry. The popular European airline Flybe, which had been rescued from the brink of a financial collapse last year, has gone into administration. The weakening Sterling has impacted all UK airlines, with an increase in the cost of aviation fuel and aircraft leasing. However, this added to the woes of Flybe, which had a 40% exposure to the regional UK air travel market. Once the domestic market shut down due to COVID-19, it was practically the last nail in the coffin for the airline.
In the hospitality segment, restaurants and tourism were hit hardest by reduced consumer spending and travel prohibitions. 27% of UK residents delayed their vacation plans due to the outbreak of the virus, while a further 11% were forced to cancel their existing holidays. This has had a huge impact on the entire tourism sector in the UK. The country regularly enjoys a surge of tourism during the summer months from overseas residents, which has come to a grinding halt this year.
Tourism in England alone brings £106 billion annually, supporting 2.6 million jobs in the UK. Market pundits now predict that the tourism sector in the UK is likely to shrink by 59%, leading up to 2021. It’s important to bear in mind that these figures merely represent the leisure segment. Commercial and business travel, which is a huge contributor to the UK economy has vanished completely.
Likewise, the sports and sports event sectors have also taken a hit. The revenue in these sectors come from multiple streams. Firstly, fans and audiences contribute to revenues by attending events. Then, there are revenues associated with travel and tourism-related to sports. The collection of viewership revenues from television channels is yet another big contributor. Lastly, the sector generates employment for individuals tasked with security, maintenance, ticket collection, and several other services. Sports education is also a major contributor.
In an unprecedented turn of events, the Olympics and Paralympics scheduled to be held in Tokyo, Japan were postponed till 2021. The world had geared up for this great sports extravaganza, but now all the revenues and jobs surrounding the events have been shelved temporarily. While the games are scheduled to be held in 2021, it remains to be seen how the coronavirus battle will be played out. If the pandemic is still around in 2021, the games may be further rescheduled or cancelled altogether.
Business dependencies on China
The coronavirus could not have picked a worse time to enter the world. The US-China trade war had just started easing out when the coronavirus pandemic took hold. Possibly one of the biggest fallouts has been the exposure of dependencies on China that global businesses have today. The US, Japan and France have started advising their companies to limit their reliance on Chinese manufacturing within their supply chains. In fact, when the pandemic started in China, the first thing that happened was a breakdown of the international supply chains linked to Chinese manufacture. In a globalised economy, the effects of the coronavirus disruption were felt instantly as the supply of goods simply vanished.
The pharmaceutical industry is trying to limit their reliance on Chinese drug manufacturers by initiating efforts to build a raw material supply chain within the United States and Europe. Sanofi SA, a leading French pharmaceutical company is putting an API supplier in place to reduce its dependency on China. The company management says that this development will be an important one for the pharmaceutical giant, as it will become the second-largest global producer, notching up annual sales figures of €1 billion by 2022.
In 2019, Chinese manufacturing companies had secured US$223.7 billion worth of business. Automobile parts, computer peripherals, and even plastic goods arrive in the West from China. Apart from being a base for low-cost manufacturing, China is also a lucrative market. The country has more than 1.3 billion consumers, many of whom are upwardly mobile and display healthy spending patterns. This provides much-needed relief for international companies, whose markets in the West have significantly declined due to lack of consumer liquidity.
Currency markets in turmoil
The long arm of COVID-19 has reached well beyond the global banking sector, stock markets and business sectors in countries. It’s no surprise that the global currency markets have felt a significant impact. The weakening global economy, backed by the rise of unemployment in the US and Europe has led to investors moving to the US dollar as a solid, safe currency.
Although many believe that this could be a silver lining for the US, in reality, these movements do not reflect a long-term commitment to the US economy. Government debt is at an all-time high, along with rising unemployment. The fundamentals of the US economy could be undermined by these long-term factors, and the current price of the dollar could be driven by short-term investor sentiment. A lot depends on the US elections scheduled for November 2020. Additionally, the rise of the US dollar will create inflation for other currencies around the world, impacting imports of goods and services.
The British pound, however, has declined to its lowest level in 30 years. Market experts believe that the weakness of the pound could be dependent on speculations regarding the UK government’s plans to fund emergency economic measures to weather the storm of the coronavirus pandemic in the country. The package of fiscal measures announced by the British government simply means more borrowing for the UK. Economic experts are worried that the UK may be steering headlong into a debt crisis with no immediate solution in sight.
Why has gold bucked the trend and remained up?
It is now abundantly clear from the points discussed above, that the COVID-19 pandemic has hit deep into the heart of the global economy. Gold, however, has beaten the pandemic blues and continues to climb to record levels. This is largely because gold is considered to be a safe haven for investors. During the height of the 2008 economic crisis, gold reached an all-time high, crossing the $1900 barrier. That record has now been broken and the spot price of gold crossed $2000 in August this year. Falling interest rates, lack of confidence in the world economy and the uncertainty in the currency markets have all contributed to the rise of gold. With the gold demand in focus, an unprecedented level of 734t of gold has flowed into gold-backed ETFs.
The journey to this unprecedented price point had already started in 2019. Although the world was unaware that the coronavirus pandemic would soon be coming, wary investors had already started moving to gold to strengthen their investment portfolios. There were talks of yet another global recession on its way. If we look at gold price charts from September 2017, we can see that the spot price of gold never crossed the $1,500 price point up to August, last year. On 7th August 2019, the price of gold reached $1,506 for the first time in three years, almost a year ago. In April, earlier this year, the gold price hit the $1,700 mark, subsequently reaching its highest point of $,2067 on 6th August 2020.
Supplies of gold remained strong and resilient throughout this period. In the first quarter of 2020, many refineries were shut, along with mining company operations. The travel restrictions also disrupted the supply chain. These disruptions caused market premiums to rise on the back of high demand.
The table below covers the percentage growth rates of gold from 2005 to 2011 during the bull-run. In the adjoining column, the Bank of England interest rates during these years are shown. In 2009, the UK embarked on its first quantitative easing programme, dropping interest rates to a historic 0.50% and releasing £75 billion into the economy through quantitative raising. There were no other quantitative easing programmes launched during 2005- 2011. The next one was during the Eurozone debt crisis, releasing £375 billion of relief into the UK economy. The Brexit QE program released £445 billion in 2016 and the 2020 coronavirus pandemic QE program released £745 billion.
Percentage Rise for Gold
Bank of England Base Rate
Quantitative Easing (QE)
Aug 06 – 4.75 Nov 06 – 5.00
Jan 07 – 5.25 May 07 – 5.50
Jul 07 – 5.75
Dec 07 – 5.50
Feb 08 – 5.25
Apr 08 – 5.00
Oct 08 – 4.50
Nov 08 – 3.00 Dec 08 – 2.00
Jan 09 – 1.50
Feb 09 – 1.00 Mar 09 – 0.50
UK’s first QE program reduces the base rate to 0.50 and QE of £75 billion announced to aid the economy.
Why is gold lucrative for investors?
When building a portfolio, gold is a great choice for investors since it creates insurance and balance for the portfolio. It insures against times like these when the global economy and capital markets go into a tailspin. Gold is essentially a mechanism for hedging the risks associated with other vehicles of investment. An important attribute of gold is that it is not subject to counterparty risks. These are risks that are inherent in any form of paper-based investments, such as stocks, mutual funds, bonds, etc.
Silver prices rise in 2020
Silver was at a 10-year low price of $12.01 per oz on 19th March, which was around the time that COVID-19 really started to take a grip in Europe and the US. Following this, silver prices added 25% between April to June 2020, with May alone rising from $14.94 to $18.28. The main factors causing this were:
Safe haven investments – silver’s association with gold as a safe haven investment meant that silver retained and improved its value as it was seen as a cheaper alternative to gold which was rising massively.
Retail bars and coins surge – there was a surge in silver bars and coins demand, with coin sales in particular 60% higher year on year. This at a time where transportation of products was challenging lead to supply problems, longer lead-times for delivery and product premiums.
Silver jewellery demand – the demand for jewellery has also surged, with massive demand reported in India and China, where Seeking Alpha reports a 104% increase
Silver equities – similarly there were share price increases of silver ETFs and mining companies rose sharply in the period. This was due to a surge of investments in these equities, which was against the market trend (not every sector loses with COVID-19).
There are too many factors to list all of them, but the above will give an idea. The silver price increase was in spite of a drop in industrial demand due to COVID-19 disruptions to industrial output (e.g. photovoltaic cells in solar panels).
The gold to silver ratio currently is 71.2, which suggests that silver remains an excellent investment as for much of history this has traded at only 15 oz of silver for 1 oz of gold.
Call Daniel Fisher, CEO of Physical Gold to discuss gold investments during COVID-19
To respond to the increased demand for gold, we have added some excellent bundled deals that can protect your wealth and strengthen your portfolio. We now have a bundle of 10 bars, with each bar weighing 10g. Similarly, there are 3 bar and 5 bar bundles weighing 50g and 100g, respectively.
The gold price is clearly at an all-time high, no matter which currency you want to buy gold in. In GBP terms, the price of gold has shot up by more than 35.6% in 2020 alone. Many investors are adopting a ‘wait and watch’ policy. We often receive feedback from these investors that they feel they’ve missed the price point and now need to wait for the prices to go down, for them to invest. This couldn’t be farther from reality. Gold prices rise steadily, and a gold bull-run does not necessarily end at the end of the year.
Many people think that the COVID-19 pandemic will simply end, as suddenly as it appeared, and the economy will revert to normalcy by 2021. At Physical Gold, we believe that this is likely to be a sustained run and buying gold can protect your wealth even now if you haven’t bought already. The last gold bull-run took place from 2005 to 2011. During that time, we had countless discussions with buyers about what they should do. If you’re thinking of buying gold during the current pandemic, please speak to Daniel Fisher, by calling (020) 7060 9992 or contact us online and we’ll get back to you.
Rumours of significant Capital Gains Tax increases have spooked the investment market. But gold could be the answer to shield you from imminent tax rises.
UK’s rising debt
Getting the UK’s burgeoning debt under control has been a primary focus for recent Conservative Governments. Austerity measures have aimed to reduce UK PLC’s growing debt problem, despite its impact on large swathes of the population. UK Public sector debt (excluding public sector banks) has now exceeded £2 trillion for the first time. July’s level of £2,004 billion was a staggering £227.6 billion more than at the same point the previous year.
Furlough scheme extended to March and beyond
Chancellor Rishi Sunak has been praised for his speedy and decisive response to Covid-19’s impact on individuals and companies to work. A wide-reaching Furlough scheme has targeted those unable to work due to Covid-imposed restrictions. The scheme has evolved both in breadth, to cover more sectors like the self-employed, and in duration. Initial timeframes have been extended as we’ve entered the inevitable second wave of the virus and another national lockdown.
Need to tackle growing Government debt
But for a Government so focussed on balancing the books, this vast sum of debt has put a massive spanner in the works. Debt as a percentage of GDP has now reached parity after levelling off at around 80% from 2015 to 2019. With the virus still raging and furloughing in full swing, the chancellor has already turned his attention to ways of reducing this mind-boggling national debt from next year onwards.
Experts suggest Capital Gains Tax could be key to reducing debt
Reducing or abolishing the Capital Gains Tax (CGT) tax-free allowance would increase the number of people paying the tax by up to 300%, plus the amount paid by those already affected by CGT.
The Treasury calculates that CGT could raise a whopping extra £90 billion over 5 years if aligned with income tax brackets. The tax is levied on gains made on sale of shares, second homes and the sale of businesses. But an annual tax free threshold of £12,300 means that many people escape the tax altogether due to modest profits, while shrewd investors can split sales across tax years to minimise impact.
Part of the planned changes would see this threshold reduced or even scrapped. Estimates are that reducing the allowance to £5k would double the number of people paying the tax and reducing to £1k would triple the amount.
Owning physical gold coins can reduce your tax bill to zero
As an investor or business owner, it’s important to take pro-active action to prepare for possible tax increases next year.
Whether you’re buying as an individual or from company profits, gold’s popularity as an investment has hit new heights in 2020. Primarily enticed by healthy returns in the gold price, investors are now also recognising the tax free benefits of certain gold coins.
As a UK investor, selling gold bars or non-UK gold coins at a profit, could incur CGT if you make more than your allowance. But sticking to UK legal tender gold coins will mean any profits are completely free from CGT.
That’s because HMRC cannot tax individuals for gains made from selling its own legal currency. Coins issued by Royal Mint with a face value qualify as legal tender.
These are the Royal Mint’s highest face value coin and weigh 1oz in weight. Gold purity is 999.9 / 1,000 parts gold and the most popular UK tax free coin for larger investors due to their low premiums. The 2021 version features high-tech laser produced security features, making it one of the most impressive bullion coins on the market.
Pre-owned Britannias are occasionally available and offer investors the chance of reducing premiums further. Britannias are also CGT free if bought in it’s fractional versions (half, quarter and tenth), or the silver version.
One of the world’s best known gold coins, the humble Sovereign also qualifies as tax free.
At around a quarter of the size of the Britannia, the Sovereign offers a more affordable route to gold for modest investors or more divisibility for those seeking flexible portfolios. The modern Sovereign has existed for more than 200 years, so it offers huge variety for investors and collectors alike. Best value Sovereigns offer the cheapest option, while historical editions from the Victorian era are more scarce, but expensive.
Half Sovereigns are slightly more costly per gram but appeal to those after smaller coins.
One of the most popular limited issue Royal Mint series is the Queens Beasts range of coins.
These are primarily 1oz 24 carat coins, although quarter ounce coins are also available. Limited to a series of 10, the coins’ stunning design is a major pull, but their limited issue quantity has also led to many of them increasing in value at a far quicker pace than other UK coins.
The White Greyhound of Richmond is the most recent and final issuance in the set. It currently trades at modest premiums, so could be a good bet if its value follows earlier coins upwards.
With the same £100 face value as Britannias, these coins also provide a tax free shelter.
Gold likely to offer high returns as a safe haven asset
With a lethal cocktail of high Government debt, increased taxes, high unemployment, recession, falling stock and property markets, weak currency and rock bottom confidence, 2021 and beyond looks like an economic nightmare.
But gold tends to benefit in these times, attracting investment from those seeking a safe haven. Indeed, gold has risen around 25% so far in 2020 as of mid-November. The previous gold bull run saw double digit rises every year from 2005 to 2011.
So gold isn’t just a way of shielding from capital gains tax, but also growing your savings.
It is becoming increasingly apparent that the COVID-19 crisis has caused unprecedented disruption in the markets. Accepted constants in the market have been broken, as the price of gold has skyrocketed, while other commodities have moved in different directions. For more than 2 ½ decades, the gold oil ratio has been around 15:8. In layman’s terms, this means that 15.8 barrels of crude oil are worth the same as a troy ounce of gold.
Back in 2005, this ratio dropped to 6:2 due to massive rises in the price of oil. But, apart from these periodic aberrations, the gold-oil ratio has more or less remained constant. Oil price volatility has also driven this ratio up to 47:6 in 2016. So, what happened in 2016? The price of gold rose by 6% to jump to $ 1127 per ounce. Oil prices performed poorly in that year, along with the stock markets, but the ratio was disrupted as gold prices continue to rise.
Why is the oil to gold price ratio so important?
The common umbilical cord shared by both gold and oil is the US dollar. Since both gold and crude oil are priced in the market in US dollars, there is a correlation between the two commodities. Gold is considered by many to be more than a commodity – a precious metal that locks in value provides insurance against inflation and other market forces and hedges unwanted market risks. Oil, on the other hand, is representative of the energy we use in a fossil fuels based world. This simply means that all countries in the world have to acquire monetary resources to buy oil to run their economies.
Apart from being dollar-denominated assets, the price of crude oil is an important influencer in the stipulation of gold prices, gold mining company stocks and ETFs. Due to their valuation in the same global currency, a rise in the US dollar usually means the fall of other dollar-denominated assets. In this scenario, investors are wary of purchasing these assets as they become more expensive. So, ideally, when the US dollar falls, gold falls, as it becomes more affordable due to their strong linkage.
Inflation is also linked to the price of oil and gold
Interestingly, there is another dimension to the problem. The rise of crude oil prices usually pushes up inflation. However, as we know, gold protects investors against inflation. The demand for gold, and subsequently its value also increases whenever there is a spike in inflation. So, now we can see the direct relationship between gold and oil prices. Gold does not behave like other dollar-denominated assets. The demand for these may plummet with the rise of oil prices, but gold, due to its inflationary protection attributes continues to remain attractive to investors when inflation is pushed up, due to oil prices.
Economic slowdown due to the increase in oil prices
Since all countries have to buy oil to fuel their economic growth, a rise in the price of oil slows down the economy. The domino effect that this has on industry dampens economic growth. Consequently, there is a fall in equity markets and investors move to gold. Once again, there is a direct correlation between the price of oil and that of gold. Recessionary phases like these can be lucrative for precious metal investors as they can book profits with the price of gold moving upwards. Surging oil prices can adversely impact the share price of mining companies, as well. Since oil is widely used in mining, rising oil prices squeeze the margins of these companies, resulting in a dip in their share prices.
So, what changed through 2019 and 2020?
At the beginning of 2019, the gold price ratio was 23:1, which was already high, but it rose further. Numerous factors affected the price of gold, resulting in significant increases. The world was already poised on the brink of a financial implosion that led to an avalanche.
increased government debt in most countries in the developed world
the US-China trade wars and
socio-political tensions across the Middle East and other parts of the world.
All of these factors also led to the volatility of the global stock markets, resulting in more demand for gold. The COMEX gold futures price breached the $1400 per ounce mark in June 2019.
How did the pandemic change the game?
For all practical purposes, 2020 is not a normal year. The oil crisis started with Russia and Saudi Arabia at loggerheads with each other regarding the future of oil. Russia had refused to ramp up production to keep oil prices up. The price war was eventually triggered in March 2020, when OPEC failed to stabilise the market. Saudi Arabia started dumping crude oil into the market at heavily reduced prices.
This resulted in the WTI crude going down by 24.59% and reached a price of $31.13 per barrel. These prices have never been witnessed since the Middle Eastern war, which took place in 1991. The global investment bank, Goldman Sachs cut back on its outlook on Brent oil for the second and third quarter of the year, reducing it to $30 a barrel, with indications that eventually prices are likely to be as low as $20.
Has COVID-19 changed the gold oil ratio forever?
So, here was a new trend with oil prices falling and the price of gold reaching its highest point ever to $2067 on 6th August 2020. As we have seen above, the price of gold falls along with the price of oil. However, COVID-19 was different. While oil was dumped at cheaper rates, global economic fears prompted investors to buy gold in the hope of protecting their wealth.
The 2020 fall in oil prices was not entirely linked to coronavirus, but a reduction in industrial demand for oil due to manufacturing output reduction was. As were corresponding drops in fuel usage by the public as they travelled less and also the reduction in worldwide travel also created a reduction in demand for oil.
For more advice on buying gold at the right time, call Physical Gold
Our gold researchers continuously study economic trends related to the international gold markets. Many people believe that the current price of gold isn’t viable for them to make a purchase. To get the right advice on selling and buying gold and silver, call Physical Gold Limited on (020) 7060 9992 or contact us online. We would love to speak to you and impart the right advice on buying gold.
Gold has and will remain one of the most popular investment vehicles of all-time. It provides balance, insurance and safety for most investors. Investors have always moved their money to gold during an economic crisis. It is interesting to note that the current economic debacle that was precipitated due to the COVID 19 global pandemic has pushed up the spot price of gold to more than $1800 an ounce. The historic all-time high still stands at over $1900 per ounce in August 2011. As an investor interested in gold skyrockets, it’s time to take a look at the different types of gold investments.
Gold can come in many physical forms ranging from gold dust and nuggets in their raw state, through to coins and bars for investment, and finally jewellery and ornaments at the highly refined and designed end. The purity and colour of gold can also vary greatly depending on its alloy mix. The most common gold colour types are yellow (when gold is at its 24 carat purest), white gold, when mixed heavily with silver, nickel and zinc to toughen its resilience and red gold when a higher element of copper is present. It’s also possible to create green, black and purple gold with various alloy mixes.
Paper investments in gold
There are also gold ETFs and gold company shares that provides investors with access to the gold market. However, it’s important to know that these investment vehicles carry counterparty risks. Gold mining shares are subject to the inherent risks of the global capital markets. There are also gold funds which invest specifically in gold mining companies. These coins spread the risk of owning gold company shares by investing in a variety of companies in the market. But, they too are subject to capital market risks, and also charge on-going management fees
2 kinds of Investment Gold: Gold coins and bars
Perhaps the safest and most satisfactory form of investment in gold remains the purchase of gold bars and coins. There is a wide variety of gold coins and bars available in the market. These investments are free from counterparty risks and offer investors complete control over the assets, as they are physically held. Of course, the storage of gold and its safety during transport needs to be ensured. When you buy your gold assets from a reputed gold dealer, always insisted that they are delivered to your door via an insured courier. Many well-known dealers can also make arrangements to segregate and store your gold in a commercial vault.
Investing in gold ornaments
When you buy bars or coins, you acquire investment-grade gold, which has 99.9% purity. Since gold is a malleable metal, ornaments cannot be manufactured without reducing the purity by adding base metals. So, most gold ornaments will be made out of 18-carat gold or a lower level of purity. Also, the manufacturing and designing charges cannot be recovered when selling. So, it isn’t a great investment. While red, black, purple and green gold is aesthetically attractive, one must remember that the percentage of gold is less.
Best kinds of gold for tax efficiency
All investment-grade gold in the UK is VAT free. This is a major advantage when putting your money in gold, as it reduces the purchase price by 20%. UK gold coins offer an even better avenue for investors, as the profits collected from its sales can be enjoyed without paying Capital Gains Tax. However, it’s important to know that the CGT exemption threshold is £12,000 of profits in a single tax year.
The investment team at physical gold can offer you great advice
At Physical Gold, our team of experts can help you plan your gold investments and advise you on the right bars and coins to buy. Call us today on (020) 7060 9992 or get in touch with us online via our website. We pride ourselves on good customer service and would love to speak to you.