One of the questions we hear regularly, particularly from investors who are new in the gold business is one touching on the worth of a gold bar. In a bid to answer this question comprehensively, we will explore all the factors that directly affect the value of a gold bar.

Gold bars aren’t all worth the same

Before we begin, it is worth noting that all gold bars cannot cost the same. Even those that have similar weight and size may not necessarily have the same value. Also, worth noting is that the price of gold bars keeps changing each day that markets are open in accordance with the gold spot price.

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Factors that determine the value of a gold bar

1)    The current spot price of gold

Since the gold bar is just a piece of precious metal, it makes sense for the going price of gold to determine its value. The gold spot price tells buyers about the market’s dollar value of one troy ounce of pure gold. Visitors to our site can always see the latest spot price for gold and silver at the top left-hand side of our web pages.

 

It is important to keep in mind that the gold spot price varies from minute to minute when the market is open, and also after hours in the Asian markets. After knowing the latest spot price of gold, you should then proceed with the following steps to know the value of a gold bar.

2)    Weight and purity

After knowing the current price of gold, you should proceed to know more about the

purity and weight of the gold bar. Typically, manufacturers stamp purity and weight details somewhere on the gold bar – either at the back or on the front.

For the most part, gold bars are either .9999 or .999 pure albeit some brands may be .995 pure. If a buyer comes across a gold bar devoid of this information, it might not be real gold. Copper and bronze are common alloy metals that resemble gold in appearance. On the other hand, gold bar weights vary dramatically from about one gram to 1 kilogram. So, the size may affect the pricing as well.

3)    Gold bar melt value

After obtaining the information about the purity and gold spot price, buyers should take gold bar’s weight (in troy ounces) and multiply that by the purity. The result will be the bar’s total pure-gold weight. After that, multiply the result by the gold’s spot price.

For example, if the gold bar weighs 10 grams (or 0.321507 troy ounces), and the gold spot price is $1250 with the purity of .9999, the gold bar value will be:

[0.321507 x .9999] x $1250 = $401.84

Therefore, in this case, the value of pure gold in the 10-gram gold bar is $353.62. This doesn’t include the premium, which is the cost above the melt value that the gold bar might sell for.

4)    Premium

A premium refers to the price added to the melt value of the gold bar. Calculation of the premium depends on many factors. Often, the demand and cost of production are the main reasons a gold bar may sell high and above the spot price. Premiums may vary depending on the gold bar’s weight, manufacturer or condition. It is usually indicated as a dollar value or percentage. Typically, as the gold bar’s weight increases, the premium will reduce.

So what’s the best value gold bars when buying?

The price you pay for physical gold will generally reduce as you buy more. In the case of gold bars, if you calculate the price per gram, larger bars are far better value than small gold bars. Infact any gold bars below an ounce in weight are really not of great value due to the high production cost. Most new small bars will be beautifully manufactured to include being encapsulated in a plastic cover, complete with certification. In comparison, similar size gold bullion coins such as Sovereigns (7.32g of pure gold) and Britannias, can be bought at lower premiums as they’re sold loose. 100g gold bars offer decent value, with 250g and 500g slightly better again, and 1kg trading pretty close to the underlying spot price.

Watch our related video – “How much is a gold bar worth?”

So 1kilo bars are the best for worth?

The problems with 1kg gold bars are that many people can’t afford to invest £30k+ into gold at once and secondly, it limits flexibility. After all, if you buy a 1kilo gold bar to reduce the cost as far as possible, then you can’t liquidate £10k worth of gold if you need to. You’re forced to sell the whole bar or nothing at all.

An alternative method to buy gold bullion at the best value is to approach quantity discounts in another way, depending on how much you have to spend. While 1kilo bars undoubtedly offer the best value, discounts are still available for buying a quantity of more modest-sized gold bars (e.g. 1oz).

Instead of buying one 1 kg gold bar, it could provide a good compromise to buy 10 x 100g bars instead. Buying ten 100g gold bars at once will enable you to receive a discount (although not quite as cheap as 1x1kilo bar), but still maintain a degree of divisibility so you can sell some of your holdings if needed.

 

5)    Does brand matter in worth?

When buying gold bars, then the worth absolutely varies according to which brand bars you purchase. Brands such as Umicore tend to be priced slightly lower than Swiss brands such as Pamp, which command a premium. However, the importance of brand diminishes when you look to sell. Certainly, we’d pay the same for a gold bar regardless of its brand. We simply base our price on the gold price, weight and purity. So unless you especially want a Swiss brand for ego, prestige, or as a present, buy the cheapest bar possible. Its value will be the same when it comes to selling. We sell pre-owned gold bars which are amongst our best sellers to savvy investors who realise a brand shouldn’t impact a gold bar’s worth.

6)    Value of gold bars versus coins

If you’re interested in gold as an investment, then there are two main types of physical gold to consider. Gold coins and gold bars. As long as these forms of gold are at least 22 carats in purity, then both are exempt from VAT. Other types of gold like jewellery, gold dust, lower purity coins, etc, will attract VAT and so are less attractive as effective investments. Generally speaking, your gold bar will not be worth quite the same as the equivalent weight in gold coins. The value of both tracks the factors already discussed. However, gold dealers will likely pay you very slightly more for desirable bullion coins such as Sovereigns than a gold bar. This reflects that the British coins are Capital Gains tax free and can be sold to a number of potential buyers due to their modest size. Certainly larger gold bars will usually be sold back into wholesale, so premiums are slightly lower to reflect that. We’re not talking a big difference, but perhaps a percent or so, depending on the market.

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..and how about the worth of gold bullion versus older coins?

The bigger discrepancy will be when comparing the value of a gold bar with the equivalent weight in a more numismatic coin. If you look at the value of a Victorian gold Sovereign, for example, its worth is not only based on its gold content but also its age, scarcity and desirability. For that reason, the value of a gold bar will always be lower per gram. The value of gold bars will never outpace the general gold price as they don’t contain a historical or collectable value. However, gold bars would have been cheaper to buy in the first place.

Will tax affect my gold bar’s worth?

While UK coins issued with a face value, such as Britannias and Sovereign coins, are Capital Gains tax free, gold bars are not. That means the value of your gold bar could be impacted by the tax. Obviously, if you sell your gold bar below the price you paid for it, then CGT will not have any impact on the gold bar’s worth. Similarly, if you’re gold bar has risen in value, but by not more than the annual CGT threshold (around £12k per annum), then no tax is applicable, and the bullion’s value is straightforward. However, for the larger investor, selling a considerable amount of bars at once, at a profit exceeding your annual £12k allowance, will incur tax, and therefore reduce the overall sale value of your gold bar.

One way around this for sellers of larger quantities of gold bars is to sell some bars before the April 5th tax year and others after the tax year. Spreading profits over two years, ensuring gains are below annual allowances will mean no tax. This strengthens the argument for buying lots of medium-sized bars instead of very large bars which may incur CGT.

7)   Timing

Obviously, the underlying gold price affects the value of gold bars, as covered in point one above. But there are other timing issues that can impact the value of your gold bar.

Firstly, the general market sentiment and supply/demand dynamic can impact the value of gold bars. That’s because the premium or discount to the spot price can vary according to how busy the market is. When the gold price rises, demand for gold increases and the number of sellers reduces. In this scenario, premiums to buy gold bars can increase to reflect the robust demand and prices paid to buy back gold also increases.

The opposite is true when the gold price is in a period of downside. Fewer buyers mean that gold bars may be snapped up at slightly lower premiums, while dealers may pay a percent less for your gold bar if you’re selling as there are an increased number of sellers.

What can I learn from this?

To maximize your gold bar’s value, buy when the market is quiet (and low) and sell when the market is on fire (even though everyone will think you’re mad!).

Secondly, the value of your gold wafer or bar can be based on either the live gold price or one of the two daily fixings. This may sound like a moot point, but it’s important to understand that on a volatile day, perhaps when important economic figures are released or interest rates increase, the price can vary greatly from morning to afternoon. So if you’re seeking to sell your gold bar, make sure you agree if you’re basing it off the live price, the morning fix (10.30am) or the afternoon fix (3 pm), as this can greatly impact your bar’s worth.

Buy Gold Bars directly from us

Now that you know how to determine the value of a gold bar, why not contact Physical Gold to buy gold bars (or even silver bars) of the weight you want? You can call us on 020 7060 9992 or send us an email through our contact page, and we will be glad to serve you.

Image Credits: Public Domain Pictures and Hamilton Leen

Gold is likely to remain the preferred investment option for most investors. The yellow metal does not suffer from the volatility associated with other asset classes. Gold has consistently delivered steady returns to investors over the short and long term and protected assets by providing insurance against market downturns.

The rate of returns provided by gold has also beaten inflation and all of these reasons have been instrumental in the preference of gold when building an investment portfolio. Investors need to understand the best places to buy gold safely. Regular gold investments can help beat ups and downs in the market and provides stability to an investor’s portfolio. Therefore, many investors look for the best avenues to buy gold in the market.

Making regular investments

The gold market has certain ups and downs like any other commodity market. The gold price can rise or fall by a certain amount, over a period of time. To protect yourself against these price movements, it is best to follow a strategy of making regular gold investments. Investing at different price points at different times averages out these price changes.

When we look at gold price charts, it becomes abundantly clear that gold has outperformed the market and provided steady returns over decades. Currently, due to the economic crisis caused by the global pandemic, gold prices are high. In August 2020, the price of gold reached its highest ever peak as investors decided to move their money to gold to protect themselves against market volatility caused by the COVID-19 pandemic. The current price of gold is $1,789 per ounce.

Where to buy investment-grade gold?

The best option for any investor who wishes to buy investment-grade gold is to purchase it from a reputed online dealer. Online dealers provide investors with far greater choices when it comes to gold products. High-street retailers, jewellery shops and pawnbrokers do not hold this level of inventory.

Avoid online sites such as eBay and Craig’s List. By buying from these sites, you risk paying over the odds and even worse, buying gold that isn’t genuine. The best bet is to search for trustworthy online gold dealers in Google. Results will bring several options. Only consider sites that provide transparent up to the minute pricing. Research each dealer for track record and reviews and ensure they will buy back your gold. Then it’s down to price.

It is important to research the reputation of the online gold dealer you intend to trade with. Checking their reviews on Google can give you a clearer picture of the experience that other customers may have had with them. Also, check if they have been in business for a long time. Most reputed gold dealers in the market will have a solid reputation and will have been in business for years. Good dealers will also be available to answer any questions you may have regarding your purchases and provide free advice. They should also be able to provide you with a certificate of authenticity for your purchases, as well, as have a buyback scheme. The British Numismatic Trade Association (BNTA) lists all the reputed gold dealers on their website.

Building a relationship with your gold dealer

To avail of the best customer experience, you must establish a strong relationship with your gold dealer. This can play a key role in the dealer. Understanding your investment objectives and recommending the best products for you to buy. Also, if you are a regular buyer, you are more likely to get better price discounts on bulk purchases.

Get in touch with Physical Gold for all your gold investment needs

Physical Gold has a strong reputation as one of the country’s most reliable and dependable online gold dealers. Our team offers free advice to customers and guide them on buying the best gold bars and coins. Please get in touch with us on (020) 7060 9992 or visit our website to send an email to our investment team.

 

Image Credits: Mick Baker and Wikimedia Commons

The many reasons to buy gold have been very well documented over the past few years. Most people are aware that the price has increased dramatically, they understand that gold offers great portfolio balance, protection against inflation and security against economic and political uncertainty.

What’s less obvious is which forms and types of gold to invest in. Like any tangible asset you buy, it is the price you ease you can sell it for which will determine your profit. If you buy a piece of gold that no one wants then it doesn’t matter how much the gold spot price has risen.

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Thinking of Investing in Gold Sovereigns? Download this FREE Cheat Sheet to ensure you get the best value

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Gold Sovereigns

Sovereign gold coins offer a number of compelling reasons to invest.

First of all, they’ve been around for hundreds of years so enjoy a very well established reputation and deep developed the secondary trading market. This means they’re easy to sell anywhere globally. The very fact that there are a huge number in circulation throughout the years also means a buyer has a great choice when buying. This contrasts with another UK coin, the Britannia, which has only been around for 20 or so years. So buyers generally only have the choice of brand new coins.

As a relatively small coin, they offer the chance of owning a larger number and variety than

1oz coins. Variety and diversity are always good benefits when you’re seeking a balanced gold portfolio. Because you get roughly 4 Sovereigns to an ounce it is easy to liquidate the portfolio in smaller fractions. This increased divisibility offers the investor a high degree of flexibility with their gold coins. It is also easier to find buyers of coins worth £200 or so than £900.

A major selling point of Gold Sovereigns is their tax free status. As a 22 carat coin Sovereigns are classified as investment gold and so are VAT exempt. This contrasts to some other forms of gold such as jewellery and gold nuggets, and indeed other precious metals such as Silver and Platinum which all attract VAT of 20%.

Tax Free Gold

The real bonus with Gold Sovereigns is that they’re also Capital Gains Tax free for UK residents. As legal tender in the UK, the Government don’t tax the movement of legal currency. This means that unlike some great foreign coins like the Krugerrand and Maple Leaf, investors get to keep 100% of their profits upon disposal rather than pay up to 28% to the tax man!

So the case for buying Sovereigns is strong, but you still need to ensure you’re getting the best value for money. Almost always avoid buying proof Sovereigns if you’re an investor. You can pay 15-30% premium over bullion coins and will likely receive a fraction of this benefit when you come to sell. You should only consider proof coins if you’re paying close to the bullion price or if you’re a collector.

If you’re considering choosing between full Sovereigns and half or quarter Sovereigns, then always go for a full Sovereign if you can afford it. You’ll likely pay a higher premium for the smaller fractional coins equating to less gold for your money. I also think there is less demand for the half and quarter Sovereigns as they really are very small coins. Conversely, I think the £2 ‘double Sovereign’ and £5 ‘quintuple Sovereign’ represent good options.

Finally, you need to ensure you buy the right age of Sovereign. This rule is relatively simple. Right now brand new Sovereigns remain expensive in my opinion. While they are beautifully finished you can pay 5% or more on top of second-hand prices. Like buying a car, that coin will not be the latest mint year within a year, so will represent bad value. I don’t see a huge difference in the various years of issue in second-hand Sovereigns. Infact, I see value in holding a nice mix of coins, whether they be Elizabethan, Edwardian, Georgian or Victorian. As long as the condition is decent, it can be beneficial and enjoyable to hold coins from a number of eras. Some dealers may pay a little more for Edward VII Sovereigns purely because of his short stay on the throne but the difference is marginal.

When buying gold sovereign coins watch our YouTube video – “6 Hacks to buying the best value gold sovereign coins”

All our semi-numismatic Gold Sovereigns are of at least selected quality which means we handpick our coins for a large number, rejecting those that may be showing their age more than others.

Happy investing!

Are you looking for a unique and special gift to give a loved one this Easter? Easter is now the second biggest holiday of the year for gifting presents, after Christmas. It is no longer enough to simply buy someone chocolate. Gift giving at Easter is becoming increasingly popular. Here at Physical Gold, we specialise in a wide range of one-off gold investments including bullion coins and gold bars, the perfect gifts this Easter.

Easter 2023 Dates

The dates for Easter 2023 are:

• Good Friday – April 7th, 2023
• Easter Sunday – April 9th, 2023
• Easter Bank Holiday Monday – April 10th, 2023

Gold’s association with Easter

There are many traditions that are typically associated with the Easter holidays. Bunny’s, cards, chocolate eggs, and hot cross buns to name but a few. Gold’s association with Easter, however, goes a long way back and it has often been a common practice to paint an egg gold or decorate it in gold leaf at Easter.

This practice was partly influenced by King Edward 1 who once ordered 450 eggs to be gold leaved and coloured to give as gifts to the royal household. Gold is widely recognised as one of the official colours of Easter, along with purple (colour of lent), white (colour of Easter Sunday) and red (the blood of Jesus).

Before this though, graves in Egypt have found ostrich eggs decorated in gold and silver which were dated to five thousand years ago, so the link between gold and eggs actually far pre-dates Easter.

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In 2009 Selfridges made headlines when they advertised a gold themed Easter egg for the incredible sum of £1000. The Easter egg contained a particularly rare one-ounce gold Britannia coin no longer produced by the Royal Mint and was advertised as the ultimate luxury gift.

Why gold coins are the perfect gift this Easter

During the 13^th century, the British royal family gave gifts of food, clothes and coins to the poor on the Thursday before Easter. By the time Charles II came to the throne in 1630, special coins known as Maundy money were produced specifically for the occasion. In the US, one of their long-standing Easter traditions is to fill Easter eggs with chocolate coins or sometimes even real coins can be used.

Gold coins such as Sovereigns and Britannias make very special and unique Easter gifts. Gold is seen as an excellent store of wealth and has continually held its value over long periods. The gift of gold is one that will last a lifetime as opposed to just the 15 minutes it takes to eat an Easter egg. Gold coins that are classed as British legal tender also benefit from being Vat and Capital gains tax-free in the UK providing, they are over 22 karats.

Here are three specific gold investments you may want to make this Easter, which suit a variety of budgets:

• Best value 100g gold bars – around £5,000 each
• 2023 King Charles 1oz Gold Britannia – around £1,680 each and
• 2022 Gold Memorial Sovereign Coin – 7.988 grams – around £410 each

Gift the gift of gold this Easter

Gold represents the perfect gift for either a loved one or special family member this Easter. Not only is it something they can cherish and look after, with a view to possibly handing it down to future generations, it also introduces them to the world of investing.

Physical Gold has one of the largest selections of gold available in the UK. Whether you’re looking to purchase gold sovereigns or gold bars, we have the ideal gift for you this Easter. For more information on any of our product or services, please give us a call on 020 7060 9992.

Image Sources: Postapo

(Click image above to expand infographic)

Gold Storage or Delivery

Is gold storage something you’re thinking about?  Are you interested in purchasing physical Gold or silver, but concerned about where you’ll store it?   Our infographic highlights the various options available; to help put your mind at rest.

The main advantage of owning physical gold is that it’s the real thing!  There’s no counterparty risk, as there’s no electronic trading or paper involved.   It’s as real and solid as can be and something that you have the pleasure of holding in your hand.

 

But how do you keep a precious metal safe and secure?

Insured delivery direct to your door

Delivered to you fully insured, our delivery is discreet, so the whole neighbourhood won’t know what you’re taking delivery of.  It’s packaged in plain, padded envelopes, safely and securely.   We also track every package that we post, which allows us to follow up on any queries and provide reassurance on when you should expect your delivery.    If your gold or silver is in stock, and you place your order before 2pm, then we should be able to get it to you by the next working day. Before 1pm to be precise.     Should your order be out of stock then we’ll aim to deliver it within 2 – 3 days – depending on the stock availability. From 2018 all gold orders benefit from free UK delivery.

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Gold Storage Options

Once you’ve received your package and signed for it, there are several options for you to consider regarding storage:

Home storage

Many people choose to keep their gold stored safely at home and there are many options available for home storage.  A steel safe is the most obvious choice for safety and security – preferable bolted down to the floor.   But if bolting the safe isn’t an option, then try to keep them safe somewhere out of sight, like in a cupboard, hidden by other items.

You can also use everyday household cupboard items, like tins, packets of cereal, boxes of tea bags etc. to hide and conceal your gold, but it’s important that you remember where you’ve stored it so it doesn’t accidentally get thrown away. There are many different steel safes available for home use. These include fireproof and waterproof ones. There are even models that can be unlocked by using your fingerprints. They can also be installed inside the flooring, underneath the carpet.

There are a number of ingenious secret storage items that you can purchase from www.physicalgold.com, such as clocks or wall sockets, to help you conceal & store your precious metals.

Hiding things under the mattress is also more common than you might think, but whichever home storage option you choose, you must ensure your home insurance covers the total value of the gold.  The advantage of keeping your gold at home is that you know exactly where it is, you can keep it close and touch it, as often as you wish.

Bank Deposit Box

Safety deposit boxes at banks are considered to be extremely safe and secure, so it’s worth visiting your bank to ask about the availability of one if this is of interest to you.   Many banks have been withdrawing these facilities over the past few years though, so there may be a waiting list or a box may be quite difficult to acquire.

Safety Deposit Facility

A third-party safety deposit facility offers boxes for you to rent to keep your small, personal household items safe.  These facilities are usually open 9 – 5pm for you to visit and generally cost between £100 – £1000 per year to rent.

Since tariffs are expensive, it could work well as a short-term arrangement. The benefits of using a safety deposit facility are that your valuable assets are stored away from your home.

Additionally, these boxes are available in various sizes and you can choose one according to your requirements. Of course, one of the disadvantages of this arrangement is that you cannot access the box at any time of your choice. You can only do so when the facility is open. Also, there could be a natural disaster like a flood that could damage your belongings stored inside the box. In many cases, the operator may refuse to re-compensate you for your damages when this happens, simply because their insurance may not cover it

Professional Vault Storage  

The most common (and safest) gold storage option is to arrange for the secure storage of your gold with your chosen dealer, as they have access to secure vaults.  These professional vaults offer 24hr safety and security, giving you reassurance and peace of mind.   The vaults are highly secure and generally don’t allow public visits, but rest assured your gold will be personally allocated and stored separately in a fully segregated account, within your own little section in the vault.

At www.physicalgold.com, pension gold, silver coins and gold coins are stored at Loomis International, UK – one of the UK’s most secure gold storage facilities.     Silver Bars are stored at Network Securities in the Channel Islands – a specialist vault facility that has dual controlled security systems and a direct connection to the local police station.

So if you choose to store your precious metals with us, we can reassure you that all of our stored gold and silver is fully insured, segregated and completely ring-fenced and you can request home delivery of your gold at any time.   However, given the high levels of security involved, it’s often not possible for the public to request to view their gold, but we can assure you that it is there – safe and secure.

Gold or Silver Investment – which do I choose?

As investors increasingly turn to precious metals to protect their wealth, a common dilemma faced by many is whether to invest in gold or silver. The two metals behave quite differently, so it’s important to understand the dynamics of investing in either, before deciding to add them to your portfolio. Striking the right balance is essential to extricate value from your investments. Far too many people invest money into these asset classes without understanding what they’re getting into. Unfortunately, this can result in undesirable exposure to risk, further up the road. So, let’s take a close look at the right approach to combining your investments in both precious metals.

Historical analysis

Gold has historically been the precious metal of choice for most investors. During upheaval in the market, gold can provide safety and security for your investment portfolio. If we look back at every financial crisis, it is glaringly obvious that gold has risen to new heights during these times of uncertainty.

During the 2008 market crisis, gold reached its highest point in 2011. Similarly, at the height of the economic crisis created by the global pandemic last year, gold once again touched historical highs in August 2020. Even during a normal period in the market, gold performs steadily. Although the yellow metal may rise or fall in the course of market transactions, it does not suffer from extreme volatility. This makes it a fairly safe bet for most investors.

Investment horizon

Investment planning is perhaps the most important step when investing money into any asset class. Gold and silver exhibit different behaviours across different time horizons. Gold has historically been seen as a safe and steady investment that generates returns and unlocks value over time. Silver, on the other hand, is often seen as a volatile precious metal.

Currently, there is a lot of interest in silver investments as pundits have predicted the mercurial rise of silver in the years to come. Gold is usually a better option for those investing with a shorter time horizon. Silver investors will require a much longer time horizon to unlock value from their investments. However, if the white metal behaves as predicted, there is an incredible opportunity to get in at lower price points and reap great returns in the future.

The gold-silver ratio

Another factor that governs investments in gold or silver is their price ratio. This has widened considerably over the years. It used to be 47:1 but now stands at 85:1. So, silver presents an incredible opportunity for investors to access the precious metals market as it is 85 times cheaper than gold. That is simply an incredible gap, and many investors want to get in and make hay while the sun shines.

But does it make sense to invest in silver? The white metal is a lot cheaper than gold and provides investors with affordable and easy access to the precious metals markets. Due to the widening gold-silver ratio, an entry-level investor may find it more attractive to buy silver.

Daniel Fisher, CEO of Physical Gold believes that the gap could widen further in the near future. According to his prediction, there is a possibility that it could soon be 100:1. Now, more than ever, it is imperative to strike the right balance between these two precious metals, when deciding to add both to your portfolio.

The demand for silver surges

Additionally, silver has suffered from production shortages in the last few years, while demand has risen substantially. As a metal, silver has certain sterling properties. It is one of the most conductive metals and also very ductile. Due to this, it is in demand across several industries like solar, electronics, electric vehicles, etc. Silver investors believe that the price of the white metal may escalate significantly in the years to come, and it may be prudent to lock in investments at low prices now. This may create a wonderful opportunity to reap profits when prices start to rise.

Precious metals portfolio – the right balance

Silver investments can be more volatile when compared to gold. Silver enjoys huge industrial demand and prices are expected to rise as supplies are thinning out. Historical price charts show us that silver tracks gold in terms of growth. Over the long-term, the gold-silver price ratio could reduce to 25:1. The production price is another factor that also needs to be taken into consideration.

In the case of gold, the production margins fade in comparison to its value. However, silver’s current spot price of around £11 does not allow the flexibility to absorb these margins. To strike a healthy balance, a prudent approach could be to maintain a holding of 8% in gold, followed by 20% in silver.

So, if you are focused on building a strong portfolio and hedging risks, gold may be a natural choice. However, if long-term profits attract you, silver investments may fulfil this objective. Gold offers better returns in the short-term and silver can provide you with an opportunity to capitalise over the longer term.

Combining the two metals

It’s actually most prudent to own a mix of both gold and silver. Gold is a more established safe-haven asset, so tends to gain more from market downturns and volatility. Silver can also perform well in these circumstances but also benefits when industrial demand for silver increases as it’s used so widely in electronics. While silver certainly has more opportunity for huge growth, gold is the steadier of the two.

Of course, there are certain tax advantages and disadvantages of buying silver. Silver coins that are legal tender in the UK can qualify for Capital Gains Tax (CGT) exemption. However, other silver investments may not.

The investment experts at Physical Gold can discuss your gold and silver investments

Our investment team is well-placed to offer expert advice to investors like you about investments in either precious metal. Get in touch with us by dialling (020) 7060 9992 or simply send us an email. We can assist you in making the right decision to balance your portfolio by adding both gold and silver.

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