Investing in Gold
Turning to gold investment can seem like a daunting prospect for anyone who is used to dealing with paper assets. Even experienced investors can find the markets challenging when considering the type of investments available; whether to opt for gold bullion, gold bars or gold coins. When you weigh up the changing price of gold, the options for tax free investments (Capital Gains Tax and VAT) as well as where and how to store your holding, there seems to be plenty to consider. Which is why finding a gold investment broker in whose services you can trust is important.
Gold Investment Brokers
Investors need a partner they can rely on to provide a bespoke and personal service that is suitable whether they are making their first gold investment or are an experienced investor.
We are gold investment brokers that provide clients who are looking to invest in gold with tax-efficient and secure solutions. As experienced dealers in both gold and silver, we can supply a range of options for our investors to offer diversity and balance in a portfolio as well as secure investment opportunities.
Gold is a commodity and therefore in investment terms is very similar to investing in any other valuable resource. Its price (and other commodities) is driven by supply and demand, with higher prices expected when either demand rises, or supply falls. However, the spot price of gold can be impacted by many other complex factors including geopolitical factors, global inflation, speculation and psychology.
So, what’s the spot price?
The spot price refers to the exact price of one ounce of gold at a particular point in time and dictates the price of transactions in the international market. Future prices of gold, on the other hand, are contracts that define the price of gold for future delivery of the commodity. These contracts are listed through various exchanges. Futures provide investors and producers with an avenue to mitigate price risk when investing in the commodity. However, futures do have an important impact on the spot price of gold. Infact, the spot price of gold is determined by the futures contracts of the following month. The contract with maximum volume in the next month impacts the current spot price of gold.
What about the role of COMEX?
The global discovery process of spot prices takes place around the clock, across exchanges that trade in commodities that include precious metals like silver and gold. The popular international exchanges include New York’s COMEX, the London exchange, Zurich, Shanghai, Hong Kong and the ABX global exchange in Australia. Out of these, perhaps the most significant is New York’s COMEX and spot prices of gold are derived from futures contracts that are traded on COMEX.
However, because there is a finite amount of gold on the planet there is a constant positive influence underpinning investment. Whilst the price can fluctuate at any given time, particularly if mining slows down as a result of external factors or new mining ventures start-up, the bottom line is that the demand is constant or rising. Combined with a finite supply, the price of gold is, therefore, a matter of simple market economics; static supply vs growing demand.
As the above example shows, there’s no doubt that gold can be an attractive investment opportunity for many individuals, but why do people invest in gold over other commodities, or instead of stocks or cash investments?
The reason many people invest in gold is mainly to do with the investment principle of ‘Diversification’. This is the practice of spreading your investments across different asset classes, usually to protect your assets against potential losses in any one class.
For example, many people will likely hold some cash investments, which accrue wealth based on interest rates. Interest rates have been poor in the UK since 2009, which means these cash investments may have fallen in value when inflation is factored in. Similarly, if you own stocks and shares, they’re also vulnerable to poor performance at times of market uncertainty, such as the global economic situation we’ve experienced since 2008.
Gold is seen as a savvy way to diversify from such holdings. Commonly referred to as a ‘hedge’ to these other types of investments, it has historically performed well in market downturns, providing overall portfolio balance. It’s important to liaise with the best gold dealers UK-wide to make an informed investment.
Once you’ve decided that you want to invest, we offer plenty of investment solutions from bullion and bars to rare and collectable gold coins. Your gold can then be stored in our secure storage facility (depending on the size of your holding), or shipped to your address via a secure, insured service. The option which is right for you will depend on how much gold you’re purchasing, your reasons for buying and your access to secure storage.
Like any form of investment and any commodity, investors make money from by buying and holding the metal until the point at which it reaches a favourable price. If you purchased gold in 1970, for example, then you may have been able to acquire it at around a price of £15 per ounce. If you sold that gold in 2010, then you may have been able to secure a price of £912 per ounce! And, depending on what form of gold your investment took, the profits on this may have been free from Capital Gains Tax.
Most people use gold investment brokers to help them to access tax-efficient opportunities to diversify their portfolios and good investment brokers will be able to offer further value with access to volume discounts.
When you have decided to invest, there are still some considerations you will need to make about how to invest. These will largely depend on whether you are seeking long-term financial security or a more flexible investment.
Individual purchase or sales
A lump-sum purchase of gold coins, or gold bullion, can be suitable for those wanting to add gold to their portfolio immediately. Many purchases, bought through us are completely tax-free, and you can take advantage of our 0% commission rates and Buyback Guarantee. There are also special discounted purchase rates for those buying larger volumes.
Just like saving into a cash account, such as an ISA, it’s possible to gradually build your holding over time, through regularly scheduled, gold investing with our Gold Bundle monthly saver. This makes an investment affordable for all, providing greater flexibility when it comes to growing your holding.
Like other forms of investment, such as shares, it’s also possible to hold gold as part of your Self Invested Personal Pension (SIPP). This places investment bars as part of your pension funds, locking away the value until you need it for your retirement years. Investing in gold via your pension is similar to other investment options and it can also be held in the same pension as stocks, bonds and cash.
Contacting Specialist Gold Dealers UK – Physical Gold Limited
As specialist gold dealers UK and internationally, Physical Gold Limited is well placed to discuss the best approaches for your circumstances for investment strategy. Call us today on 020 7060 9992, or view our other contact details here.