Gold is an incredibly versatile precious metal. It is possibly one of the most liquid asset classes. Gold can be sold in the secondary market and converted into cash quite quickly. If you have invested wisely and distributed your investments across small sizes of gold, this can provide flexibility to your portfolio. This simply means that you can sell the required part of your holdings and raise money to fund your cash flow requirements. But a key dilemma that many investors have on their minds is – how long should the investment horizon be?

Gold investment should be for at least the medium term and act as a permanent part of an overall investment strategy. This is for two reasons. Firstly, gold performs extremely well during times of crisis and economic turbulence. By always owning some gold, you’ll be prepared for sudden market downturns. Reacting to events is too late as the gold price would likely have already risen. Secondly, the gold price can be volatile, so short-term investing can lead to losses if the timing is unlucky.

Gold – a solid and stable safety net

Most asset classes are dependent on a strong global economy to boost their performance. However, gold investing is different. Investors tend to move to gold when the global economy goes into a downward spiral. Back in 2011, the world witnessed the highest peak price of gold ever at the height of a global economic crisis that eroded currency markets and the capital markets worldwide. Have you been following the spot price of gold recently? As we brace ourselves for yet another period of economic turmoil, the gold price has been steadily rising and has reached the $1800 mark on the US exchange. Investors who built up their gold portfolio five or six years ago are ready to rake in their profits.

The multiple benefits of investing in the long-term

Gold investments aren’t just about protecting yourself from global economic woes. The yellow metal provides a healthy dose of balance, liquidity, and insurance for your investment portfolio. Gold creates balance by hedging the risks you may otherwise have faced when investing in other asset classes. Certain asset classes like real estate cannot be sold instantly. Gold is one of the most liquid forms of investment that can be sold into the secondary market at any point in time, providing much-needed liquidity for your portfolio. There are other benefits of investing in gold as well. Adverse economic forces over which you may have no control like inflation, counterparty risks and currency deflation can impact the overall value of your investments. Gold provides insurance against these risks by beating the rate of inflation and reducing volatility through predictable returns.

Tax efficiency

Tax bills play an important role in determining the total value of returns on your investments. Investments in most asset classes are taxable and the taxman axes the profits you make over time. Investments that may appear to have a strong performance can suddenly look pale when your tax bill is factored in. Gold, on the other hand, is a hugely tax-efficient investment avenue. In the UK, all investment-grade gold is VAT free. Additionally, gold coins that have a face value and are considered legal tender in the UK are exempt from Capital Gains Tax (CGT). As an investor, you can save CGT on a threshold of £12,000 in profits in a single tax year. This is a significant amount of tax relief and if you hold onto your gold investments over time and plan any sales by factoring in CGT exemptions year-on-year.

Call Physical Gold to discuss your gold investment horizons

At Physical Gold, we are continuously studying the gold market and we can advise you on the right times to buy and sell. Please call us on (020) 7060 9992 to discuss your investment objectives and horizons. You can also reach us online by visiting our website.

 

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Investing in Britannia Gold coins

The gold Britannia is perhaps the most famous UK gold coin. The coin is well-known all over the world for its popularity and liquidity. Gold experts believe that it is a flagship coin that every investor needs to start with when building a portfolio. The coin has only been around since 1987, and therefore, does not command high premiums based on age and rarity. It is available with every gold dealer as a bullion coin.

The Britannias track the gold spot price and can appreciate or depreciate with that price. It’s arguably the most popular gold investment in the UK as the coins are very good value due to mass production and their larger size. They’re completely tax-free due to their legal tender status, and their Royal Mint heritage enhances their global appeal.

The spot price plays a critical role in determining the value of a gold Britannia. Of course, supply and demand for particular coins can vary in the market. Although the coin has only been around for four decades, specific years of issue can be hard to find. These coins may carry premiums up to 5% due to their scarcity. In general, the 1-ounce gold Britannia has been known to command, approximately 98% of the current spot price of gold.

What are the factors that can affect the investment value of a gold Britannia?

Apart from the spot price, there are a few other factors that may impact the value of a gold Britannia. To start with, it is a bigger coin and provides investors with more gold content. This makes it very attractive as an investable coin. Larger gold coins provide investors with the opportunity to acquire more gold at a lesser price per gram, due to lower production costs. The gold Britannia falls under this category and is considered to be a lucrative coin to invest in. As discussed earlier, scarcity of specific issues and special commemorative issues can escalate the price of those specific coins.

Tax efficiency makes it a lucrative investment

The gold Britannia is a highly tax-efficient coin, making it attractive to investors. Since the coin is minted with investment-grade gold, it can be bought VAT free. Similarly to the Gold Sovereign, the Britannia is legal tender in the UK and therefore qualifies for CGT exemption. This is an added fillip for investors, as any profits accrued from the sale of the coin up to £12,000 per tax year can be had without paying any Capital Gains Tax.

Fineness of gold

Since 2013, the gold Britannia is being minted using 24-carat gold with a fineness of 0.999. This is a very powerful reason for investors to acquire the coin. The coins released before 2012 contained 22-carat gold with a fineness of 0.917. Since 1990, the gold alloy used to construct the coin contained silver, instead of copper.

Different dimensions

Another reason for the gold Britannia to be the backbone of every gold portfolio is the variety factor. The coin was initially released in four sizes – 1 ounce, half-ounce, quarter-ounce and one-tenth. However, since 2013, a 5-ounce coin is available, which is very lucrative for investors. Additionally, a fractional coin that is one 20^th of an ounce is also available in the market. This has improved, divisibility, as well as variety, making the gold Britannia an excellent investment.

Call Physical Gold to discuss your gold Britannia purchases

Our gold experts are adept in acquiring the best deals for the gold Britannia coin as well as the silver Britannia coin. We can advise you on the right investments in gold and silver coins to strengthen your portfolio. Call our team today on (020) 7060 9992 or drop us an email and a member of our team will reach out to you right away.

 

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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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Download the FREE Insider’s Guide to Tax Free Gold & Silver Investment. Click Here

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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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