Turning to gold as an investment vehicle can seem like a daunting prospect for anyone who is used to dealing with paper assets. Even experienced gold investors can find the markets challenging when considering the type of gold 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 gold 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 experienced with buying gold.

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.

Ultimate Insider's Guide to Tax Efficient Gold and Silver

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gold investment roman coins
Gold has been a part of our economics since the Ancient World. Examples of Roman Currency via Wikimedia.

Gold is perhaps the most popular commodity of all history. Since it was used in early civilizations as a form of status and to honour the gods to being used as currency, gold has been a constant shadow of the evolution of human cultures from the ancient to modern world.

There is no culture or era where gold cannot be seen to have high value. From ancient Egypt to the Aztecs, China’s many dynasties and the Grecian and Roman treasure hoards gold is synonymous with power and wealth. Both a form of currency as well as a standard of wealth, gold was the basis upon which the global economy as we know it stands today. Without gold, a monetary standard would not have been possible and the prosperity of trade that depended upon it.

Gold and the Dollar….

The United States Congress passed the Mint and Coinage Act in 1792. This act put in place a fixed price of gold with parity to the US Dollar. The act had a far-reaching impact on the modern history of gold as a precious metal. As per the new legislation, gold and silver coins were considered legal tender in the US. Gold, which is today 75 times the price of silver, was only 15 times dearer than silver at the time. The US mint therefore bought and sold silver and gold at a ratio of 15:1. However, the coming of the American Civil War changed that ratio.  Since, the US was unable to meet its debts using gold and silver, paper currency was introduced for the first time in the US in1862. The paper currency was known as a fiat currency, or one which is not convertible on demand at the existing fixed rate. Eventually, in 1873, silver was removed altogether from the US mint’s fixed rate system and a bill called the Coinage Act of 1873 was passed to officialise the removal of silver dollars from the US monetary system.

Gold Investment
Gold is more than a word – what does it say to you?

The 1800s witnessed a spate of gold rushes, as speculative adventurers rushed off to uninhabitable areas in search of the precious metal, in the hope of becoming millionaires if they struck gold. The notable gold rushes across North America at the time were North Carolina in 1799, San Francisco in 1848 and Klondike in Canada, 1896. Australia too witnessed a number of gold rushes in the latter half of the 19th century from 1850. In fact, the gold rushes helped populate areas of the great Australian outback, which had not been occupied by humans earlier. Today, these places are burgeoning cities and they owe their existence to the coming of the speculators in the 1800s.

The important part….

Another important point in the modern history of gold is the Bretton Woods agreement. The two world wars had devastated the international financial markets and at the end of World War II, the global leaders came together to create a gold exchange standard for the world, linking it to the US Dollar. At the end of the war, the US emerged as the strongest nation, both militarily as well as economically. So, the US Dollar was chosen under the Bretton Woods agreement and this made the US extremely powerful on the international markets. The move is one of the most important points for the price of gold and for the US economy, as it paved the way for the US to become a global superpower.

As a commodity and a currency, the history of gold investment is a complex one and is relatively modern. Whilst accumulating wealth (and investing) is not a new human proclivity, the mechanisms for a standard benchmark of gold pricing relative to paper currency only emerged in the last few centuries. Europe was the first continent to implement gold standards at the end of the 19th century with the US following suit after WWII. All nations have since adopted a fiat currency system though most hold gold as central reserves or as commodity money.

investment gold rare metal invest
A rare metal, gold is a strong investment commodity influenced by many factors. Image via Flickr.

Gold is a commodity and therefore investing in gold is very similar to investing in any other valuable resource. The price of gold (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 at which gold can be transacted 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. In fact, 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 gold investment. Whist the price of gold 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 for gold 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 with the aim of protecting your assets against potential losses in any one class.

For example, it’s likely that many people will 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 actually 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.

Once you’ve decided that you want to purchase some gold, Physical Gold offer plenty of gold investment solutions from bullion and bars to rare and collectible gold coins. Your gold can then be stored in our secure storage facility (depending on the size of your gold 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 gold and your access to secure storage.

Like any form of investment, and any commodity, investors make money from gold 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 gold investment brokers will be able to offer further value with access to volume discounts.

Gold Investment
Investing in gold is a great way to make money in the medium-long term

When you have made the decision to invest in gold, 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 gold 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 gold purchases, bought through Physical Gold, 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 of gold.

Monthly Saver

Just like saving into a cash account, such as an ISA, it’s possible to gradually build your gold holding over time, through regularly scheduled, gold investment with our Gold Bundle monthly saver. This makes an investment in gold affordable for all, providing greater flexibility when it comes to growing your gold holding.

Pension gold

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 gold 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 Physical Gold

Contact Physical Gold today to discuss the best approaches for your circumstances for gold investment. Call us today on 020 7060 9992, or view our other contact details here.

Image Credits: The Digital Artist and Public Domain Pictures

gold investment tax free
Many of our gold investment products are UK tax free.