It is common knowledge that investors always turned to gold during times of economic turmoil. As a result, gold investments are perceived as a safety net to hedge risks. Our world has seen unprecedented economic adversity in the last two decades. The sub-prime housing market crisis that unfolded in the US during 2008 spiralled into a full-blown economic disaster for the world. At the peak of the crisis, in 2011 gold reached an all-time high crossing the $1900 barrier per ounce. This was clearly a result of scared investors moving their money to gold, spiking the demand for the yellow metal.
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Similarly, there have been several geopolitical factors that have created adversity in the world. Over the last decade, there has been Brexit, the fallout of the US-China trade war, as well as ballooning government debts across nations of the developed world. Now, we have the COVID 19 global pandemic, which is threatening to have long-term repercussions for the stability of the global economy. Indeed, gold prices have once again risen, crossing the $ 1800 mark. Since everyone seems to be moving towards gold, let’s figure out the essential factors that can affect gold investments.
Gold bullion bars are a great investment
Gold investment has many forms
Gold investment can take several forms. The most obvious is to purchase physical gold coins and bars. Gold investment can also be achieved through buying Gold ETFs, gold mining shares, and gold mutual funds. Generally, the aim is for capital appreciation in line with the gold price and to profit from selling the gold at a higher price than when bought. As well as outright profit, motivations for investing in gold can be to provide balance and protection to other assets, and as a store of wealth to beat inflation.
A question of balance
Gold investments, when planned properly can provide much-needed balance to your portfolio and protect you against economic adversity. The term ‘balance’ simply refers to a diversification of your investments across asset classes, resulting in a healthy spread of risks. This means that a sudden collapse of the global stock markets may impact a part of your financial portfolio that has exposure to equities. But your entire portfolio won’t take a hit, especially since precious metals like gold, do not have the same market dynamics as global equities.
Historically, gold has also beaten other monetary factors like rising inflation, which can erode the value of your investments. Volatility in the global currency markets can also impact your portfolio. Gold investments are an excellent choice, simply because you can achieve protection against these negative outcomes.
The philosophy of gold investments
To be a successful investor, you need to select the right type of gold investments, based on your personal objectives. For example, if you are looking to make quick gains by timing the market, electronic gold investments in the form of ETFs could be the right avenue for you. If you are planning to build a strong precious https://www.cialispascherfr24.com/prix-de-cialis-en-pharmacie/ metals portfolio, then you must consider attributes like liquidity, value, divisibility and variety, which can have a significant impact on your portfolio.
Authentic gold bars always have a manufacturer stamp on the face
Liquidity
This simply means being able to sell off your physical gold holdings quickly, to take advantage of market prices and bring in profits. A smart gold investor will buy popular coins and bars which are easy to sell.
Value and divisibility
These two attributes have a somewhat converse relationship. You can get better value by investing in large bars and coins, due to their lower production costs. However, when you do that you sacrifice divisibility – a term that implies dividing your physical gold holdings into smaller dimensions so that you don’t have to sell large amounts of gold at one time. Variety can play an important role when selecting gold coins, as it increases the attractiveness of your collection.
Other factors
Counterparty risk is an important consideration and you can mitigate this risk by simply investing in gold in a physical form. Tax efficiency is another important consideration when planning your portfolio. All investment-grade gold is VAT free in the UK, but you can become liable for capital gains tax if you invest in coins that are not legal tender in the UK. So, it’s important to choose carefully.
Talk to the gold experts at Physical Gold and make the right choices
Our gold investment experts at Physical Gold can offer you impartial, effective and practical advice when it comes to making the right choices for your gold investments. Call us now on (020) 7060 9992 or connect with our team online.
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As with any investment, there is a certain amount of risk to negotiate when investing in gold or silver. Here at Physical Gold we have many years of industry experience and can help you make an informed decision when purchasing precious metals. Here are some of our top tips for mitigating some of the risks involved in purchasing gold and silver:
Buy from a trusted dealer
When purchasing gold and silver in any form, whether it’s jewellery, bars or coins, it is always important to make sure you do so through a trusted dealer. There’s a huge amount of counterfeit goods out there, particularly online, so it’s always important to go to a recognised dealer and do some research on them beforehand. You also need to be aware of any hidden fees and costs when purchasing gold and silver as a lot of dealers advertise really low prices but then charge extortionate prices for handling, shipping costs etc. We’re members of various trade associations, including the BNTA and British Numismatic Society.
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Gold and silver in the form of bullion bars and coins
Understand the pros and cons of investing in different forms of gold & silver
People invest in many different types of gold and silver. Whether it’s coins, bars or jewellery, it is always important to understand your requirements and what the best options are for you. For example, many people like to invest in bullion coins because they are easily stored and have a guaranteed purity. They are also fairly liquid should you need to raise money quickly. Some forms of gold and silver, including legal tender bullion coins such as Britannia’s and Sovereigns, also come with added tax benefits and are capital gains tax-free, making them an ideal purchase for many investors.
Do some background research
If you’re thinking about investing in gold or silver, then you should always make sure you do your research first. Have a look at look at futures tables and forecasts to make sure you get a picture of how the market is shaping up and consult with an expert if you’re unsure about anything. It is also worth checking the current spot price of gold and silver as this will give you a basic idea of what people are paying.
Think about different storage options
Before investing in any form of gold and silver, it is important to think about how you are going to store the goods. If you’re planning to store your goods at home for ease of access, then you will want to think about how this may affect your insurance and whether you have a suitable and safe place to store your gold or silver. You also need to be careful about who you divulge any info to regarding where the goods are secured as you don’t want them to be stolen.
If you’re purchasing gold and silver purely as an investment, then you might want to consider whether it’s worth storing it in an allocated vault. The cost of transporting gold and silver as well as insuring the content is often very expensive. You can save considerable costs by keeping your goods stored in a secure vault and it will also give you complete peace of mind that your items are safe and protected.
Contact Physical Gold for further advice
Physical Gold are expert brokers in gold and silver and will reduce your risks when buying precious metals. If you require any advice or additional information on how to invest in precious metals, then please give us a call on 020 7060 9992.
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Gold is one of the world’s oldest asset classes that investors have always depended upon. It is seen as a generally safe asset class that acts as insurance for your investment portfolio. The yellow metal provides safety and security for investors and generates steady returns over the short term. Due to these attributes, investors have repeatedly turned to gold during times of economic uncertainty. Many investors consider gold as removing risk from their lives. The price of gold also beats inflation and protects the value of an investor’s portfolio from depleting. So, we need to understand the risks of gold investment. How do investors perceive these risks and what are they?
The risk of gold investments
While deemed as low risk, gold investment isn’t completely risk-free. The first risk is that the gold price moves lower in the time you hold the gold, known as market risk. This becomes less likely over the medium term, as any market volatility is ironed out. If buying paper gold, there are further risks such as possible leveraging of the asset and counterparty risk.
Gold investments are relatively risk-free
Counterparty risk
When you invest in physical gold bars and coins, you are free from counterparty risk. This is a risk generally associated with investments that are dependent on the fulfilment of a transaction by a third party. If there is a crisis in the market or the company that has issued you the paper gold performs poorly, the value of your investments could erode. In such cases, the value may drop to zero, in a worst-case scenario. However, the market price of gold has never fallen drastically over the last 20 years. Gold is an asset class that is free from counterparty risks and holds an intrinsic value.
Market risks of gold
The price of gold can rise or fall due to market demand. Gold is traded in the international markets at a daily price, known as the spot price. The spot price of gold is calculated in US dollars per Troy ounce. There may be price fluctuations over the short term, however, gold has always posted healthy returns over the medium to long term. The price of gold rises in value faster than the inflation rate over the medium to long-term horizon. Therefore, investors view gold as a dependable store of wealth. If we look at price charts of gold over the last 10 years, we can see that the price of gold has never gone below $1,000 per ounce during this time.
Investing in gold coins can have great tax advantages
Gold price movements
During the mid-1990s, the price of gold was quite different from what it is now. In 1996, the gold price was around $400 per ounce. Then, it rose steadily due to demand from investors. Over the next 20 years, the price of gold escalated by four times its price in the mid-90s. The price of gold started moving up around 2005. It reached the $1,000 mark in 2009. By this time, the world was in the middle of the 2008 financial crisis. Investors were moving their money to gold. In August 2011, it crossed the $1,900 mark. At the time, it was the highest peak. Then, in 2020, gold breached the $2,000 mark and is currently priced at $1,780 per ounce.
Talk to the experts at Physical Gold about gold investments
Physical Gold is one of the nation’s most trusted gold dealers. We are always proud to serve our customers and our advisors would be happy to discuss your investment plans. Call us on (020) 7060 9992 or reach out to us online via our website.
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When it comes to selling precious metals, there are several things you need to consider. We are lucky we live in an age where there are so many options available to investors and selling gold and silver at the best rate is relatively easy. However, if you’re not careful, it is very easy to get ripped off, particularly if you’re not sure what you’re doing. Here are 10 important considerations to consider when selling gold or silver.
1) Find out how much your gold/silver is worth before you sell it
Most dealers will always pay less than the spot price for your goods as they need to make money themselves. It’s always a good idea to get an idea of what your items are worth before you sell them, so you get a fair price. Try and do your own research as much as possible before selling your gold and silver, and if you need a rough idea of its value then there are gold/silver value calculators online that can give you the current value of your gold/silver per gram.
Sell your gold and silver coins at the highest possible prices. Download the FRE 10 commandments pdf
2) Take note of futures prices
Futures prices are different from the spot price and show the predicted value of gold for some time in the future rather than their current value. Futures prices can only give you an indication of how well gold and silver are expected to perform, however, it is still worth checking futures prices before deciding to sell, as it can give you an idea on how well the market’s performing.
3) Monitor exchange rates as well as gold/silver prices
Since gold and silver are priced in US dollars, it is important to look at how well your currency is performing against the dollar before deciding whether to sell. It is not enough to simply look at the current value of gold/silver because if the currency your trading in is weak against the dollar, you may find that you’re not making as much profit as you thought.
Gold and silver coins
4) Should you sell on-line?
The internet has created many opportunities for investors to buy and sell online, however, there are risks involved with trading on the web. Whilst there are a huge number of traders and dealers on-line, there are also a lot of scams and companies looking to rip you off. Make sure you do your own research before selling online and shop around for different quotes. You can sometimes get better prices for your goods online as dealers have fewer overheads to pay.
Don’t be fooled by the several ‘cash for gold/silver’ schemes out there in the market. Most of the times, these are unscrupulous brokers who will pay you far less than what your precious metals may be worth. Also, it may not be safe to put your gold in the post and send it to these traders. Always trade with a well-known dealer who has a clean track record. There are several good online traders in the market today. It’s worth doing your homework in order to identify a couple. In the same vein, it’s better to develop a relationship with two or three good brokers, rather than stick to just one. This will give you the advantage of being able to shop around and lookout for the best deal you can get.
5) How liquid are the goods?
When purchasing gold or silver to sell, it is important to think about the liquidity of the goods before you buy them. In other words, how quickly or easily can you convert them into cash. Both gold and silver are considered liquid commodities, however, depending on what form you buy it in, it can sometimes be more liquid than others. For example, bullion coins are typically much more liquid than numismatic coins as the market tends to be less volatile and it isn’t exclusively coined collectors who buy them. Silver is also more of a liquid asset than gold. This is because it is much more affordable for most people, and therefore there are more buyers out there.
6) Sending by post
If you’re planning on posting the goods to a buyer, then you should always check first to see if your courier allows the transportation of gold or silver and whether the goods are ensured in the event of loss or damage. Most couriers do not insure gold or money, this means that if there’s a problem you probably won’t get your money back. Always make sure your parcel is tracked when sending and that they are “signed for” on delivery.
Three Gold Bars
7) Capital gains tax
Capital gains tax applies to everything you sell, exchange or have made a profit on. If you make more than £12,000 profit on any items you’ve traded in the financial year, then you will be subject to pay capital gains tax on anything over that amount. Certain bullion coins are exempt from CGT tax altogether in the UK. These include any coins produced by the Royal Mint that are considered British legal currency. For example, silver Britannia coins are exempt from CGT.
8) Don’t expect to get the spot price
You will rarely be offered the spot price when selling gold or silver as dealers are looking to make as much money as possible. Normally a dealer will have a buying price and a selling price. If you’re selling goods to the dealer you will always get less than if you’re buying from them. This is known as the spread.
It’s best to shop around for the best price when selling gold bars
As a buyer or seller, it’s important to understand the role that premiums play in the price of gold and silver. The spot price is really a guide price in the market that is stated in USD per ounce. Of course, on any given day, you will need to convert this price into GBP to understand it better. The good news is that many reputed UK brokers will already have the Sterling price up on their websites. Now, when you buy precious metals, you will pay a slightly higher price margin than the spot. Likewise, when you sell, you will receive a slightly lower price than the spot price at that point in time. Of course, these premiums can vary depending on what you’re buying or selling. For example, if you are buying gold coins that are rare and have numismatic value, they would command much higher premiums due to their age and market value.
9) Avoid the spread
The difference between the price a dealer pays for your goods at and the price they sell them for is known as the spread. One way to maximise your profit when selling gold and silver is to try and reduce the size of the spread through clever investing. The size of the spread can vary dramatically from dealer to dealer so always look around before buying. The spread is also considerably lower if you hold your gold in allocated storage with a bullion dealer rather than trading in physical coins.
10) Selling overseas
Don’t forget that when you sell overseas, the laws of the country in which you sell will apply to the sale. Always remember to check any rules and regulations that may be applicable if you plan on exporting gold abroad.
Selling to Physical Gold
Here at Physical Gold, we guarantee to buy back any gold and silver we sell. You can sell gold and silver very simply through us. Depending on current stock levels, we are also happy to buy any gold or silver you’ve bought from other vendors. Please check our website for up-to-date price guides and call us on 020 7060 9992.
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Gold and Silver Investment
All fans of the old spaghetti-style western movies would remember the film – “The good, the bad, and the ugly”. Speculative investors often invest in a typical cowboy style without understanding the dynamics of the market. In a world where online gold dealers are becoming increasingly popular, savvy investors need to be aware of the pitfalls of this market. In this article, we will explore the pros and cons of gold and silver investing and also look at a few novice pitfalls which could leave your investment stranded, if you’re not careful.
The pros of investing in gold and silver (‘The Good’)
While gold and silver has been used as a medium of exchange in the past, coins and bars are now bought and sold as an investment. Buying real physical gold (as opposed to paper or electronic), offers a unique, intrinsically valued asset which can rise in value and provide balance to a portfolio.
Established market
The Internet and the information age has created transparency across the globe when it comes to gold and silver prices. It doesn’t matter whether you’re based out of Honolulu or Hokkaido, spot prices of gold and silver are easily available for all investors to browse before buying or selling. There are plenty of reputed online gold dealers who would guarantee your purchases and industry bodies like the LBMA or the BNTA are regulating the market at all times. This creates a level playing field for all investors to be able to invest their money safely.
Physical gold is an investment that stands the test of time
Verifiable assets
For investors in the UK, the London bullion market has created a system by which all gold bars in their system are verifiable, starting with the manufacturer, the assayer through to storage facilities in which the bars are held in LBMA recognised vaults. Through these best practices, the gold industry has reduced the risk of counterfeit bars entering the system. In a similar manner, the silver industry is also well regulated, providing investors with a transparent market where their money is safe as long as they’re dealing with registered, reputed brokers and dealers.
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Unique hedge against inflation and recession
Precious metals like gold and silver are an excellent hedge against economic turmoil and inflation. The prices of gold and silver have remained relatively stable over the years and are not affected by volatility in the way that other asset classes are. All of this makes investments in gold and silver worthwhile in the long run. Owning gold or silver will likely reduce your overall financial risk as their value tends to rise when mainstream assets fall. In other words, gold and silver investment thrives during times of economic turmoil.
Disadvantages of gold and silver investing (‘The Bad’)
There are possible downsides to every investment and gold and silver have their possible disadvantages too. It’s always important to assess every investment opportunity on it’s merits and judge it based on your investment objectives and priorities.
No income from owning coins or bars
Once an investor purchases gold or silver in its physical form, he/she cannot make an income out of this investment unless the asset is sold. Certain investments in gold and silver are tax-free in the UK, however the same does not apply to the rest of the world. Of course, there are ups and downs in the spot prices of gold and these asset classes cannot be used to make quick money. Investors need to remain invested over the long-term in order to reap benefits from their investments.
Don’t buy the wrong type of gold
Buying gold and silver jewellery is not ideal as making charges and wasted charges are deducted from the sale price. Since the prices of gold and silver do not rise quickly, these deductions could erode whatever returns you have made on your purchase. Only investment grade gold is VAT-exempt, so ensure you are buying bars and coins of 22 karats and higher only.
Buying gold or silver coins with huge premiums or in expensive packaging can also negatively impact your investment returns, so be sure to research the best coins for investment in your country. A good precious metals dealer should be able to provide guidance.
Costs to buying, selling and storing
The spread between the price you pay when buying and selling is higher when dealing with physical silver and gold than with electronic assets. The cost of manufacturing and distribution means that the market has to move up more with gold and silver investing to make a profit than trading stocks.
Another downside of investing in gold and silver is that you need secure storage. It may not be safe to store precious metals inside your home, especially if you have a large amount.
Professional storage solutions are available, for example, Physical Gold stores their client’s purchases in an LBMA approved vault. However, there are costs attached to this and this and needs to be factored into the overall price.
The downright ugly
Trading in the precious metals markets requires you to be a savvy investor and have good knowledge of the market, especially when it comes to identifying genuine gold and silver. While there are accessories available in the market that can help you do that, you do require experience and specialised knowledge to be able to tell whether a bar or a coin is counterfeit. There are plenty of rogue traders out there and that’s the ugly part. Many in investors often fall for the lure of advertising and end up dealing with one of these rogue traders. Needless to say, their purchases are often fake and by the time the end up realising that, the money is all gone.
As a precious metals investor, you need to deal with a reputed online broker at all times. The BNTA website has a full list of registered traders. Physical Gold is proud to be an authorised BNTA trader and has a long track record in the market, with thousands of customers who had a great experience with us.
Don’t fall for the bad and the ugly
Talk to our precious metals experts at Physical Gold today and they will advise you on the best way to invest in gold and silver. Our investment experts take into account your investment goals, your personal profile and your investable capital. They use this information to advise you on the best way to build up a precious metals portfolio at the best prices in the market. Call us today on 020 7060 9992 or get in touch with us online to speak to a member of the team.
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Economic instability
With central banks around the world still printing QE money going into 2022 to support their Covid-affected economies, the value of fiat currency is diminishing. Signs of inflation, possible interest rate increases and tax hikes, suggest to many experts that a global recession, the size of which we’ve never known, is upon us.
It’s no surprise then, that investors are increasingly turning to gold to provide some diversification and protection from the coming economic storm. But if most people are asked which gold coins to buy, they will be stumped.
The Krugerrand coin is one of those coins which most people, even my grandmother, have heard of and this is for good reason. For many, it represents one of the best choices of gold in which to invest your hard-earned money.
A South African coin first minted in 1967, the intention was to lure global investment into
buying gold coins from South Africa’s rich gold reserves. Up until recently the Republic was the number one producer of gold and has only just been overtaken by the Chinese powerhouse.
To appeal to the investment market it was the first coin to contain exactly 1oz of pure gold, ensuring a straightforward marketing proposition compared to the likes of a Sovereign which contains 0.2354oz. Interestingly this fixed gold weight rather than a fixed face value (like most other bullion coins) meant that the Krugerrand coin represented a convenient store of wealth regardless of inflationary levels.
Krugerrand coin most common globally
Despite no face value, the coin is legal tender in its home country and is therefore minted in a durable alloy mix. Its overall gold content is 22carat or 91.67% pure as the gold is alloyed with copper to provide resilience and maintain its integrity. This is one of its major selling points now. With approximately 50 million in circulation, it represents one of the most active secondary markets in gold coins and a vast majority of the Krugerrands we see of 30 or 40 years old are still in fantastic condition.
Indeed due to the huge number in circulation and its global recognition, the depth of the Krugerrand’s liquidity is only matched by that of the British Sovereign, a coin that has built up its liquidity over many more years. There are more Krugerrands in circulation than all the other gold bullion coins combined. As an investment into a physical asset, this is very important. Just like when buying and selling a house, it is not only the price you manage to purchase the property at but also the sale price which will determine your profit. If you buy a house for a great price but it’s on the main road and appeals to a very niche market, then it is more difficult to sell and the eventual sale price will inevitably be affected. The same goes for gold. Buy a Krugerrand and you’ll be able to sell the coin easily at any time, maximising your chances of securing a good price.
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Incredibly by 1980, the Krugerrand coin accounted for 90% of the gold coin market. It’s a telling recognition of its success that it has spawned so many other copycats worldwide including the Canadian Mapleleaf in 1979, the Australian Nugget in 1981, the American Eagle in 1986 and the UK Britannia in 1987.
So the Krugerrand is a very liquid coin, easy to buy and sell and it maintains its condition well. But how does it’s price compare to other 1oz bullion coins? From what we see at Physical Gold Ltd, the Krugerrand offers amongst the best value of ANY 1oz gold coin. Due to its resilience to scratches, I’d recommend buying second-hand coins rather than the most recently minted. Like a new car’s premium, it’s almost always better value to buy a ‘nearly new’ version. Brand new Krugerrands can be 3-5% more expensive. I’d also try to steer clear of the smaller half, quarter and 1/10th ounce versions as premiums rise with each smaller coin. I’d also avoid Proof versions of the coin. Although pretty, I’m not convinced you’ll receive the same premium that you paid for the coin when you come to sell. Your best bet is to stick with the better value bullion version.
The only potential drawback I see for UK investors as that of Capital Gains Tax. Like a majority of other assets, any profits on Krugerrands have to be declared and are liable for tax of up to 28% if you breach the modest thresholds. Now, this may not be an issue if you only buy a handful of Krugerrands, have no other assets to breach your tax-free threshold or, the sin of all sins, decide not to declare the sale to HMRC.
However, for those playing by the book who invest £10k or more into gold coins, the last thing you’ll want to do is give almost a third of your profits back in tax. For this reason, we always prefer mixing Krugerrands with a portfolio of coins such as the UK tax free coins – The Sovereign and Britannia. This way a shrewd investor can dispose of these assets strategically so they never pay any tax at all!
Contact Physical Gold
Is a Krugerrand a wise investment? You bet! Why not contact Physical Gold Limited to discuss Krugerrand gold coins and silver coins investment. Call us on 020 706 0 9992 to also discuss buying gold bars and silver bars too. Visit our contact page for general contact information.