Buying Gold and Silver Bullion

Gold and silver bullion commonly refer to bars rather than bullion finish coins. Precious metals merchants generally buy and sell both metals so it’s possible to buy gold and silver from the same place. There are certain distinct advantages to buying bullion. The most important advantage is the elimination of counterparty risk and taking control of one’s wealth. Counterparty risk refers to the risk associated with the promise of delivery from a third party. If you invest in gold company stocks, paper gold or other gold instruments, you open yourself up to these risks. Therefore, buying gold and silver bullion can be an excellent strategy to minimise risks and maximise returns.

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Knowing the spot price of gold and silver

The first step in purchasing gold and silver bullion is to know the spot price and how it works. Nowadays, it’s very easy to find out the prevailing spot prices of these precious metals. Most reputed online dealers and regulatory bodies like the LBMA display the spot price on their website. Since the spot price is a dynamically changing number, it will be displayed as a ticker. It’s important to understand that you will never buy gold or silver bullion at the exact spot price. When buying, you would likely pay a small premium, over and above the spot price. Similarly, when selling, the price you achieve will be slightly below the spot price. Researching the spot prices and knowing about the market is an essential first step to buy gold and silver bullion.

Getting to know a reputed dealer

Another important step in making the right investments in gold and silver is to go through a reputed dealer. Firstly, a high-street gold seller will not have a wide choice of products available to purchase. Secondly, making high-value purchases on the high street is usually a risky business. Check out the company’s track record and reviews before placing an order online. It may be worth calling them first to check their customer service. Larger bullion will be better value, but divisibility should also be a consideration.

At Physical Gold, every product we sell comes with a buyback guarantee. This assures customers that the gold bullion they buy from us is certified and genuine. This also makes a difference to buyers, as they can sell off their investments easily through the same dealer. It’s important to do your own research when selecting a dealer so that you can pick the right one.

Dangers of buying from Mints

Another way to buy gold and silver coins is to buy it directly from the Royal Mint. If you choose to buy non-UK bullion, there are other reputed mints in the world, like the Perth Mint in Australia, from where you may be able to purchase your bullion online through their websites. However, you may end up paying more for packaging and processing costs. Many reputed mints will also try to sell you proof coins. These are more polished and better looking and attract higher prices due to their finish. However, you must bear in mind that the gold and silver content remains the same. So, you are unlikely to receive a higher price at the time of selling, simply because they are proof coins. If your objective is to maximise your gains, you may be better off picking the right bargains from the secondary market through a dealer.

Get in touch with us to plan your gold and silver bullion investments

The economic crisis of the post-pandemic era has already started unfolding through the first half of 2020. Many investors are moving to precious metals in order to hedge their risks. If you are thinking of buying bullion, call us directly on (020) 7060 9992, to discuss your investments. We are certain you can benefit from the right advice. You may also reach our investment team through our website.

 

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Gold Coin Investing

In the world of precious metals investing, it is often said that there is no match for gold. Investing in gold coins can be extremely lucrative, both as a hobby and as a profit-generating investment vehicle. Many investors consider coins to be a better investment since they add liquidity and divisibility to any portfolio. However, it’s important to understand the philosophy and the rules of investing before buying gold coins.

Buying gold coins can be an excellent investment for those seeking portfolio balance. Owning gold in the form of coins, means you have the flexibility to sell small parts of your holding. Sticking to the main bullion coins such as Sovereigns, Krugerrands and Britannias, will enable you to buy at low prices and sell easily. Buying UK gold coins additionally benefits UK investors because any gains made on the sale of the coins is free from tax.

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British gold coins are both VAT and CGT exempt, offering investors a wonderful opportunity to maximise their tax savings on their investments. All investment-grade gold is VAT free in the UK and UK gold coins, being legal tender in the country, are also CGT free. That means any profits you make generate when selling is automatically tax-free.

Buy gold coins that enjoy a healthy secondary market

Several investors make the mistake of investing in obscure coins due to their collectability and rarity value. But, this is never a good strategy. Your investments in gold coins can reap great benefits if you buy liquid coins like the Britannia or the gold Sovereign. These coins are easily available in the market, without hefty premiums as they are mass-produced. Discounts can be availed on large quantity purchases. By following these simple strategies, you can achieve good returns on your gold coin investments. Liquid coins are much easier to sell at any point in time, as opposed to obscure gold coins.

Gold coin investing can be very tax-efficient

To save on taxes, it’s important to know which gold coins to buy. Well-known coins like the Krugerrand enjoy a great secondary market and possess all the attributes required to make it an attractive investment. However, only UK coins are considered to be legal tender and their sales are CGT exempt. By investing in British gold coins, you also get the double benefit of your purchases being VAT free. Needless to say, these are important considerations for any savvy gold investor whose objective is to build a strong portfolio and generate healthy returns over a period of time.

You can also combine collectability and profits when investing in gold coins

Not all gold buyers are purely investors. Many collectors acquire gold coins as a hobby, and their purchases are based on numismatic interest. Of course, one can combine both these objectives and create a portfolio that has good numismatic value, as well as potential to generate profits. So, you don’t have to stick to buying only mass-produced bullion coins. A perfect example of a diversification strategy could be the Royal Mint’s Lunar series or the Queen’s Beast coins. These are well-known coins that enjoy liquidity and divisibility while generating added value as collector’s items. These coins have generated healthy returns for investors and values have risen by as much as 40% in a single year.

Our investment advisory team can help you invest in the right gold coins

At Physical Gold, we are always keen to help investors achieve their objectives through impartial advice. Call us today on (020) 7060 9992 or get in touch with us online to find out how our investment advisory team can help you identify the right gold coins for your portfolio.

 

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Best type of gold for investment

Over the last few years, the world has witnessed unprecedented levels of adversity. Several geopolitical events like Brexit, the US-China trade war, the threat of global terrorism and rising levels of government debts have pushed the world to the brink of yet another severe financial crisis.

The final nail in the coffin has been the COVID-19 global pandemic, which has crippled the world economy. Gold prices have been soaring in the wake of these adverse events. The current spot price of gold has gone beyond $1600 per ounce and continues to rise. If you are an investor thinking of parking your money in gold, it’s important to focus on the right types of gold that can strengthen your portfolio and provide good returns.

Reasons to invest in gold

As an asset class, gold provides balance to your portfolio and insures you against any negative outcomes. Apart from providing you with the opportunity to hedge risks, gold investments also protect you against monetary factors like rising inflation and volatility in global currencies. Investing in bars and coins can have different outcomes, but at the end of the day, gold is always an excellent choice for investment.

Setting your objectives

Firstly, decide on your objectives. If you wish to trade in and out of the market and depend on timing, then electronic gold like ETFs may be the most efficient method. If you have a high-risk appetite, then buying gold mining shares could provide enhanced returns if that mining company outperforms the market. For those seeking, security and low risk, with tax-efficient returns, then buying physical gold as an investment is best, which can be achieved through a reputable gold dealer.

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Read our 7 step cheat sheet to buying the best gold bars and coins

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Achieving key objectives

Certain objectives are critical in planning your portfolio. For example, liquidity, value, divisibility and variety are key attributes that you need to focus on when investing in gold products.

Liquidity

When you invest your money in any asset class, the ability to generate funds as and when required is called liquidity. Gold bars that are manufactured by reputed companies like Metalor are very liquid. Likewise, when buying coins, you buy well-known coins like the gold Britannia or the Sovereign, which always ensures liquidity. Also, when buying your products from a reputed dealer, always check if they have a buyback scheme. This ensures that you can convert your gold to cash at any point in time.

Counterparty risk

The above term refers to the risk carried by an asset class whose performance depends on a third-party. When buying gold products is best to avoid the ones that carry counterparty risks. Any kind of paper gold products like ETFs, or mining company stocks will have exposure to such risks. It’s best to stick to physical gold investments, which are of course devoid of these risks.

Tax efficiency

In the UK, all investment-grade gold is VAT exempt. If you want to build a portfolio that maximises its tax efficiency, you should focus on gold coins that are legal tender in the UK. Such coins are CGT exempt and will provide you with much-needed tax relief. If you buy gold bars, they will be VAT exempt but you may have to cough up the capital gains tax applicable on profits above £12,000 in a tax year.

Divisibility

Investing in gold products that add divisibility to your investment makes good sense. Divisibility allows you to sell your gold investments in small denominations at various price points in the market. Gold coins are a great choice when it comes to divisibility. They are available in a variety of denominations and sizes, including fractional ones. This allows you to drip feed your investments into the market, rather than having to sell off all your gold at one time.

Call our investment team to plan your gold investments

As we can see, the key to selecting the right gold products for investment lies in meticulous planning. But, there’s nothing to worry about. Our investment experts are there to help. Call us on (020) 7060 9992 to speak to a member of our team, or simply drop us an email and we’ll get in touch with you to help you plan your investments.

 

 

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**Update 21 May 2020

The supply chain is improving each week as we see the gradual return of products into stock.

Mints are still operating on a reduced capacity basis so stock levels won’t return to normal in the immediate future.We’ll do our best to keep the availability up to date on the website.

Delivery times are longer than usual on many products, although some are available for immediate shipping. We’ve tried to indicate time estimates on the most popular products to provide a guideline. Please bear with us. Our reduced team are shipping large numbers of orders daily and expected deliveries aren’t set in stone.

Smaller gold bars (5-20g) are being delayed as Mints are prioritizing production of larger size bars due to the more intricate production requirements of the small wafers. Please be assured that you still lock your price in at the point of placing your order, regardless of delivery times.

**Update 28 Apr 2020 Deliveries Resumed

I’m writing to provide you with an update on deliveries for both outstanding orders and new ones.

We began the process of resuming deliveries on 27th April after careful restructuring to comply with Covid-19 distancing rules and to protect our staff.

We’d like to thank our customers for their incredible patience, support and understanding during this period.  We’re glad to say that if you’ve place an order, your coin or bar order will be on its way to you soon.

Our team are working tirelessly to get through the huge backlog from the past 2 months. Please bear in mind that we’re working at a reduced capacity so this process will take some time.

New supply is now starting to filter through, but at a reduced rate, so products should gradually start to come back into stock over the coming weeks. If you’re keen to buy products currently out of stock, please click into the product, click ‘Notify me when back in stock’ and enter your email. This provides the best chance of purchasing highly sought after items like silver bars.

Due to staffing levels and volume, we’re unable to confirm individually when orders will be shipped, but rest assured, you’ll receive email notification once your order has been despatched. We’ll work through orders by date received.

Please try to refrain from contacting us for despatch information as this will slow the mammoth task ahead.

– Orders placed from 20th Mar during deferred delivery period

These orders have already begun to be despatched and we expect all orders to be cleared within 4 weeks.

– New orders

We aim to despatch any new orders within 2-4 weeks. As usual, your price will be locked in at the point of ordering and honoured.

 

We’ll do our utmost to meet these time estimates, but as with all things Covid, we’re not entirely sure what the near future holds, so we’ll continue to monitor the situation.

Thank you again for your patience and support.

 

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**Update 23 Mar 2020

Any orders now placed on the site will not be despatched until we resume our regular shipping service. We cannot provide a timeframe for when this will be. Your price will be locked in and we guarantee delievry of products, but only when the system is able to restart.

As normal there is no statutory right to cancel an order once placed under the Financial Services (Distance Marketing) Regulations 2004. This is because the goods we supply are dependent on fluctuations in financial markets.

In stock items

You will be able to place an order for items classed as ‘In stock’ during this period. This will lock in your price and secure your allocation. You can select either storage or delivery, however, delivery will be on a deferred basis, once we’re able to resume normal activity.

*Certain items including gold bars will only show as in stock Mon-Fri between 8am and 5pm due to severe market volatility*

Out of stock items

Click on the button ‘Notify me when back in stock’ to receive an immediate automated email notification once stock come back in to be the first to secure your order.

16 Mar 2020

Business & Delivery Update

At this unprecedented time, we’re currently experiencing record demand for gold and silver products at Physical Gold.

Record numbers of orders are impacting our ususal business service and speed at which orders can be despatched.

Our team are working hard to manage incoming calls, orders and stocks, so we applologise for any delays in answering your queries or deliveries.

Supply

The Covid-19 virus is causing disruption and delays to our supply chain, impacting our ability to replenish stocks in a timely manner. All major mints and producers are also suffering disruption, which when combined with record demand, is leading to many products being temporarily out of stock.

We are doing everything we can to replenish stock quickly, but some items may not be supplied for an extended period.

Deliveries

Silver deliveries are currently experiencing a delay of approximately 3 weeks. Rest assured, once an order is placed, your price and supply is locked in and metals secured.

Gold deliveries are shorter, with an estime of 3-7 days.

 

We appreciate your support and custom during these testing times.

Buying gold and silver

Gold and silver are the go-to precious metals for investors building their portfolios. The two metals have different attributes and prices in the market. If you’re an investor making your initial foray into the precious metals market, silver could be an excellent choice. This is because the white metal is currently more than 85 times cheaper than gold. So, affordability becomes a key factor.

Silver – a great opportunity

It’s also important to note that silver prices have a degree of volatility. But there are speculations that silver is destined to rise over the next few years. According to the experts, this is likely to happen simply because of the growing demand for silver in numerous industries and dwindling supplies. This can eventually cause a great spike in silver prices.

Gold delivers stability and value

Gold has historically been a precious metal that has stoically delivered good returns. Of course, it is considered to be a safe haven for investors in times of economic crisis. As international capital markets implode, the price of gold has already crossed $1600 per ounce. Even at these high prices, several investors are choosing to pull their money out of capital markets and invest in gold. But, how can one buy these precious metals safely?

Safety considerations

There are 2 main safety considerations when buying gold and silver. Firstly, it’s a risk to ensure the gold and silver are authentic, of high quality and priced correctly. Buying gold and silver from a reputable precious metals dealer will safeguard against this. Next, there’s a risk that you could be targeted for robbery if you take possession of the gold or silver. Either opting for insured delivery to your home or professional vaulting services will protect from this.

Authenticity can be ascertained in many ways. If you are investing in gold bars, there are a few steps that you can take to ensure that the gold is genuine. Gold bars will always carry a stamp from the refinery, which can be found engraved on the face of the bar. All genuine bars will also carry a number that denotes its purity. For example, if the bar has been manufactured with 24-carat gold that has 99.9% purity, the bar will display the purity number as 999.9. But, many of these features can also be duplicated by criminals. So, it’s important to purchase your gold from a reputed dealer who offers documentation to prove that gold is genuine and also has a buyback scheme.

Safe storage

If you choose to accept delivery of your gold at home and intend to store it on the premises, make sure you get a purpose-built home safe. These can be installed in your home and concealed in a way that makes it difficult for robbers to find it. On the other hand, if you choose to store your gold with your dealer, always ensure that your gold is being held securely in an LBMA approved vault. The dealer should provide you certificates that name you as the owner. Additionally, your gold should be segregated and stored.

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More steps to ensure safe buying

There are a few more steps that you can take to protect yourself. Avoid buying from online auction sites like eBay. There is no way to confirm whether the precious metals being sold are genuine. Never buy your silver or gold from individuals or dealers, without checking their reputation first. A list of registered precious metal traders can be found on the BNTA website.

Call Physical Gold to buy precious metals safely

A hassle-free way to ensure that the gold and silver you’re buying is genuine is to call the Physical Gold team of investment experts. You can reach them on (020) 7060 9992 or contact us online. You can rest assured that you’re buying genuine products at all times.

 

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Various options to invest in gold

Historically gold ownership has been associated with super wealthy sheikhs and the elite. However, the financial landscape has shifted to such a degree that it is now crucial for the average man in the street to consider the best ways to invest in gold.

Gold mining shares

While gold investment may be a new concept to many, share ownership is far more commonplace. So a good place to start may be gold mining shares.  Just like other stocks, the price of these companies can go down as well as up and the shareholders will receive dividends if the company does well. A word of caution though is that your risk exposure is to one company only rather than to the gold price. This means that all your eggs are in one basket, so if that particular company has poor management or they struggle to discover new gold reserves, it can struggle or even go bust.

High risk gold mining shares

The possible rewards to the investor are high, but unfortunately so are the possible risks of total loss. The recent gold price adjustment meant that many miners were operating at a loss until the price recovered, leaving many precariously close to closure.

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Gold ETFs and gold funds

Gold funds such as the Blackrock Gold & General provide the advantage of spreading exposure amongst a basket of gold mining companies, reducing overall risk. However, as an investor, the value of the fund still doesn’t directly track the gold price. You have to pay management fees for the running of the fund and you only ever really own a piece of paper, meaning your investment is at risk from poor management and the underlying companies going bust.

Gold ETFs

A more direct relationship with the gold price would be with

an Exchange Traded Fund (ETF). This tracks gold far more closely and can be suited to those looking to trade in and out of gold and play the market, as charges and margins are low. However, these gold investments have an Achilles heel. Just like with shares and funds, the investor only owns the asset electronically or on paper. There has been much speculation recently that ETFs and ETCs only hold a fraction of actual physical gold compared to the amount of outstanding investment in their funds.

This means that if many investors chose to sell at the same time, there wouldn’t be the amount of gold behind the scenes to cope with the sell off and the whole structure would collapse – leaving many penniless. These concerns have manifested recently into a dual market – Electronic gold funds and physical gold – with a majority of investors wishing to move over to owning real gold bars and coins.

Physical Gold

The only way to invest in gold with total peace of mind is to buy gold coins and bars. These can be delivered directly to your door from reputable gold dealers so that you get direct access to your gold. This means that investors are immune to any companies going bust, poor fund managers, or even Governments collapsing!

Production cost of gold coins and bars

Margins are higher when buying physical gold as there is a cost associated with refining, producing and distributing gold bullion. Therefore it is far better suited to those seeking medium to long term security rather than active traders.

However, there are now a number of innovative physical gold products which further enhance the case for investing into solid gold. All investment grade gold is VAT exempt in the UK. Certain British coins have the added advantage of also being Capital Gains Tax free. Gold bullion now even qualifies for your pension with SIPP Gold, providing the chance to buy gold bars at up to 50% discount through tax relief. Finally, a very accessible way to invest in gold is through Gold Savings. This offers the chance to set up a monthly savings scheme whereby investors gradually build a holding in gold coins rather than save with a traditional bank.

Buying gold coins

Gold coins can be a great addition to the portfolio of any investor as they provide divisibility. But, one should know more about coins, before investing. There are three categories of gold coins. New releases are coins released by mints across the world. These are purchased by collectors and investors alike. They carry low premiums and are easily available. However, one should bear in mind that some premiums may be charged by well-known mints like the Royal Mint for packaging and presentation when these coins are purchased.

Collectable coins

The second category is collectable coins. These coins can be rare and old. Many are limited edition releases and enjoy huge interest from numismatists around the world. Due to their rarity and demand, collectable coins attract large premiums and they are unaffordable for smaller investors.

Bullion coins

Lastly, there are bullion coins. These are affordable, easily available and can be purchased in bulk with large discounts. It’s also important to focus on buying coins of different sizes, weights and dimensions as this adds flexibility and divisibility to the investment portfolio.

Gold bars are popular as well

Of course, gold bars are also a popular investment vehicle and attractive to several investors. However, one needs to bear in mind that buying a large bar implies that you can only sell it once. This is where divisibility becomes a key consideration, which we have discussed earlier. Owning smaller pieces of gold allows you to sell them off in smaller quantities when the market price is right. One can take advantage of the different price points in the market by continuously selling small quantities. But, gold bars do not support divisibility, as they are good for a single sale at one given price.

Accessible sizes

The good news is that bars are increasingly becoming available in smaller sizes. So, putting some of your investment in these can create balance for your portfolio. Another reason to invest in gold bars is lower production costs. Coins have a more intricate design element to them and higher production costs due to detailing, polishing, designing and other costs of manufacture. Gold bars are usually rectangular and simply have a purity number, serial number and refinery mark.

Always check the purity when buying a gold bar

As discussed, a gold bar will have these critical pieces of information engraved on its face. When making a purchase, it is of paramount importance that one checks these numbers. Most gold bars are produced with a purity of 99.9% and the bar will convey this information as 999.9. Never buy a bar that does not have a serial number or refinery stamp, as there is no guarantee that the gold contained within the bar is pure. Gold bars should ideally be purchased from a specialist gold dealer and one should compile a list of reputed gold dealers in the country before making a purchase.

Our specialist team of gold experts would be happy to hear from you

Physical Gold has a team of gold experts who can assist you in every step of the way when you buy gold. They can help determine the purity and advise you on what to buy and when. The advice they impart is backed by years of experience and solid research. Call our team today on (020) 7060 9992 or get in touch with us online.

 

 

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The global spread of counterparty risk

Before the demise of Lehmans, AIG and the collapse of thousands of other financial powerhouses – the words “Counterparty risk” was generally used as more of a conjectural concept. Today the phrase is used to describe both the cause and effect of our global financial status-quo. Counter-party risk reduces confidence in financial instruments. Savings accounts, government bonds and low risk equities are now seen as a matter of last resort owing to its higher risk and lower reward reputation. The literary meaning of a savings account defies the purpose in which it should be used. It’s difficult to save if the level of return is less than the rising costs of living. It’s impossible to save, if the institution responsible for holding your savings has ceased to exist. The phenomenon of counter party risk goes beyond possible and now exists in a wide and spreading sphere of probable.

People can lose money in financial instruments regardless of the vigour of their investment.

Third party ownership of assets creates counterparty risks

Owning an undervalued mining stock with great earning potential and little (perceived) downside risk still attracts the prospect of a board of directors manipulating its value. Equally, its bank’s reluctance to lend money and/or inflated borrowing rates has contributed to the demise of many companies over the last few years.  Whilst Gold ETF’s track the price of physical gold – if a large proportion of holders were to sell their holdings, there wouldn’t be enough physical gold to cover peoples’ investments.  The most prevalent example of counterparty risk is buying a low yielding government bond in Greece 7 years ago, only to discover that investors were forced to write up to 50% off their investments.

In order to save money, you need to be earning more than inflation (3.6%) in addition to any currency devaluation. In order to have themoney you need to ensure you have minimised counterparty risk by taking ownership and possession of the investment you have bought. Precious metals are an obvious example of this with the population turning to gold in times of austerity. Often the causes and effects of counter-party risk are the same:

Causes & Effects of Counterparty Risk

• 3^rd parties taking uncalculated risk’s
• Exposure to debt in weak markets (e.g. Greece)
• Cost of borrowing increased
• Overall confidence diminished – reduces amount of cash and/or investment in entity
• Legal wrangling and unfavourable settlements diminish profit (e.g Payment Protection Insurance)
• Foreign Exchange exposures prevalent in uncertain markets
• Exposure to rouge traders

How physical gold investments beat counterparty risk

Physical gold is considered to be a safe bet. Several factors in the financial markets established physical gold investments as a safe asset class. One of the prominent factors is the lack of counterparty risk. As explained earlier, counterparty risks exist when the fulfilment of an investment is dependent on a third party. Stocks and shares of listed companies depend on the performance of that company. In order to generate returns, the stock must perform well in the equity markets. However, holding gold in its physical form nullifies this risk, as the asset is owned and controlled by you. Many people enquire about the advantages of buying gold in its electronic form. This is otherwise known as a gold ETF.

Many investors do not realise that gold ETFs are equally subject to counterparty risks. In many cases, the company that issues the ETF sells large quantities of the paper investment, without ensuring that it is appropriately backed by sufficient gold holdings. As a result, if several investors wish to call back their investments, it becomes impossible for the company to fulfil the payback. In this way, almost every investment vehicle that is linked to the global capital markets carry counterparty risks. The only way to nullify these risks is to own immovable or tangible assets like gold, silver, real estate, etc.

Will counterparty risk continue to rise?

The last financial disaster of 2008 witnessed the demise of large financial institutions like Northern Rock and Lehman Bros. Once again, 12 years down the line, the world is poised to face another possible financial debacle. Government debts are on the rise in several developed economies around the world. The collapse of the Greek economy in 2008 was partially due to the country’s government debt being disproportionate to the GDP.

Currently, China’s government debt is estimated to be 300% of the country’s GDP. If we look at the world around us, we realise that increasingly, companies and financial institutions are declaring bankruptcy. In the UK, there is a real risk of a housing market collapse. Downward adjustments of credit ratings are on the rise. Additionally, there is economic uncertainty created by political events like Brexit.

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All of these factors will continue to put pressure on the global economy and create a toxic situation that could result in yet another global economic crisis. This will lead to a significant decrease in the number of counterparties that are willing and able to take on the risks of global institutional investors. Many watchful investors have already started moving their investments to gold. The current spot price of gold has risen to around $1600 and continues to rise, inching closer and closer towards the all-time market high of 2011. Clearly, investors are moving to the safe haven of gold.

Call us to discuss how you can protect your investments

At Physical Gold, the investment advice we impart to investors like yourself is backed by research on the global economy, capital markets, bond markets, commodities and precious metals. Our advisors are best placed to guide you on how to minimise your risks. In the current economic climate. Call our team on (020) 7060 9992 or get in touch with us via our website. We can help you build a safe and robust precious metals portfolio that can protect your investments.

 

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Gold Investment’s impact on risk

Most gold investors believe in buying and owning gold in its physical form. Needless to say, this has been a tried and tested strategy for thousands of years. Cities and civilisations have fallen, but the yellow metal has lasted the test of time. But, in today’s modern-day and age, there are innumerable asset classes to invest in. So, the obvious question in the minds of investors is – is it worth investing in gold?

While deemed as low risk, gold investment isn’t completely risk-free. We investigate gold investment and risk in this latest article.

Market risk

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.

Lack of counterparty risks

If buying paper gold, there are further risks such as possible leveraging of the asset and counterparty risk. Paper asset classes like equities and fixed income instruments like bonds are dependent on the performance of the global capital markets, as well as companies that issue these investment papers. This is known as counterparty risk. If the company that issued your stocks or bonds fails to perform, or there is a crash in the global capital markets, your investment can quickly erode and be rendered useless. Physical gold, on the other hand, is safe from these risks, making it an excellent investment.

A safe haven

It is a well-known fact that investors quickly turned to gold during times of financial turmoil. The spot price of gold reached its highest level at the peak of the global financial crisis in 2011. Now, more than ever, the world is once again moving towards another similar financial crisis. Therefore, the current spot price of gold has crossed the $1600 mark, inching steadily closer to the peak of 2011.

Beating the risk of inflation

Inflation is a key factor that needs to be considered when evaluating the returns on any kind of investment. When you receive returns of 6%, the actual return you make could only be 3%, if the rate of inflation at the time is 3%. The rate of inflation is a moving number, just like the capital or commodity markets. Interestingly, gold has historically beaten the rate of inflation, providing stability to investors and preserving their wealth.

 

Tax efficiency

As a UK investor, you are subject to value-added tax (VAT) and capital gains tax (CGT). Interestingly, gold investments (like gold coins and gold bars) are incredibly tax-efficient, depending on the type of investments you choose. All investment-grade gold is VAT exempt in the UK. At the same time, investing in gold coins (such as gold Sovereigns and gold Britannias) helps you avoid capital gains tax, as these coins are considered to be legal tender in the country.

Hedging against risks of currency devaluation

Over the last few years, we have seen the decline of traditionally strong currencies like the Euro and the GBP, owing to political instability caused by events like Brexit. There is still plenty of uncertainty in post-Brexit UK. Investing in gold helps you escape from the risks of falling currencies.

Get in touch with us to plan your gold investments

There are so many reasons to invest in gold in 2020, apart from the ones we have discussed above. Liquidity is another great attribute that gold enjoys, in addition to the balance, it can provide within a diversified portfolio. Our investment experts can help you plan your silver and gold investments and protect your wealth. Call the Physical Gold team on (020) 7060 9992 or get in touch with us online.

 

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Investors have always turned to gold and silver when it comes to precious metal investments, particularly in times of geo-political tension. Of course, gold has historically been the go-to asset class for precious metal investors. However, silver has become incredibly popular in recent years, in anticipation of expected price rises. But, what are the considerations that one needs to take when buying gold or silver?

Setting investment objectives

Depending on your objectives and investment amount, you’re usually best buying physical gold and silver coins as opposed to bars. These can be bought online from specialist precious metals dealers. Check out www.bnta.net for reliable brokers. Buying more coins at once will provide quantity discounts while maintaining divisibility. Infact, divisibility is one of the most important considerations when making investments in precious metals. Gold and silver bars can be great value for money, simply due to lower manufacturing costs.

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However, when selling, a large bar can prove detrimental to your investment objectives. A bar can be sold only once, at a single price point. However, coins offer the possibility of spreading your investments. So, it is important to think ahead when actually making your investments.

Identifying a reliable broker

As stated earlier, the best way to purchase gold and silver is to go through a reliable broker. An online broker would be able to give you a wider variety of choices when it comes to both bars and coins. Of course, the first step is to check whether the broker is registered with a regulatory body like the BNTA. However, there are a few more things to consider before doing business with the broker. Ideally, you should be able to get a guaranteed buyback scheme from most reliable brokers. They should also be open to discussing your investment plans and offering free advice.

Discussing your investment objectives

Once the broker has been identified, make it a point to build your investment plan, using advice from the broker. If you are keen on purchasing particular gold coins and silver coins, you should let your broker know. That way, you would have a better chance of getting to know in advance when purchasing opportunities appear in the market. Ensure that your broker adds you on their mailing list. Doing this is an essential step to becoming a smart buyer as you would benefit from advanced notification of any good investment opportunities.

Stick to your key considerations when buying

It is important to remain guided at all times by the key fundamentals of building a portfolio, such as balance, liquidity and divisibility. Tax efficiency may also be an important consideration for you. UK coins are free from Capital Gains Tax. This is because they are legal tender in the UK. When buying coins, always ensure that you buy gold and silver coins with low premiums. Most dealers will offer you good discounts when you buy in bulk. Never buy obscure coins as they are hard to sell off later on. The Britannia and the Sovereign are possibly two of your best options when it comes to buying coins. If you are interested in coins with numismatic value, you can combine collectability with profits.

Call Physical Gold to find out about the best options in buying gold and silver

Physical Gold is one of the most reputed online precious metal brokers in the UK. It would be beneficial for you to call our advisory team on (020) 7060 9992, before purchasing gold and silver. We can also be contacted online via our website. Call us today.

 

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A precious metal that has remained a great repository of value through the sands of time would surely be worth investing in. Of course, it is gold that comes immediately to mind. While gold is unlike volatile asset classes that generate quick returns, it has always been a steady investment vehicle that can deliver solid returns over the long term.

A medium to long-term investment

Gold has been considered an excellent medium to long-term investment for hundreds of years. Unlike cryptocurrencies, gold investment is a well-established two-way market. Gold investing is unique as the price tends to increase when many other asset classes fall, so it provides a balance to your wealth. Owning physical coins and bars is particularly appealing to those worried about owning paper assets like stocks or bonds.

Gold is a proven investment vehicle, as it has a demonstrable track record of beating the rate of inflation for investors who choose to remain invested over a longer period of time. The investment horizon is an important factor, as the price of gold can rise or fall as changes in demand and supply take place. So, it may not provide investors with a great value over a shorter term. However, when we look at the gold charts for the last 10 years, we can see that its value has steadily increased.

Known as a safe haven

Gold prices as the value of other investment classes, like stocks and bonds, fall. This is one of the main ways in which it adds balance to an investment portfolio. If we look back in history, we can observe that the gold price always shoots up during periods of economic adversity. For example, gold rose to its highest level in 2011, at the peak of the global economic crisis that started in 2008. As investors continue to move their money out of stocks and bonds and park it in gold, the yellow metal has developed a worldwide reputation as a safe haven.

Counterparty risk-free

Yet another attribute that makes gold attractive as an investment vehicle is the lack of counterparty risks. These risks are prevalent in many other asset classes such as stocks or bonds. Basically, it is an inherent risk faced by investors, which is linked to the performance of the particular mutual fund or stock. If the third party issuing the investment paper fails to perform, the investments can fall drastically. Counterparty risks are a part and parcel of every paper-based investment vehicle. Since investments in gold coins or bars are tangible and owned physically by the investor, it negates this risk and makes gold investments attractive.

Tax efficiency

Gold investments in the UK are virtually tax-free and this qualifies the yellow metal as an extremely desirable investment. Whether you’re buying gold bars or coins, all investment-grade gold in the UK is VAT free. This works out to a 20% rebate on the amount invested. Similarly, gold coins like the Britannia and the Queens Beast series are all considered to be UK legal tender. Therefore, they are also Capital Gains Tax (CGT) free. This dual advantage makes gold a great investment that provides balance, liquidity, stability and tax efficiency to investors

Our expert investment advisors can provide you with all the advice you need to make gold investments

Call our friendly team of investment advisors today on (020) 7060 9992 or get in touch with us online with your questions about gold investments. The advice our team can provide will always be backed by solid research and assist you in building a strong investment portfolio in the years to come.

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