Why Are Gold Sovereigns A Good Investment?

There are many different ways to invest in gold, but have you ever wondered – why are gold sovereigns a good investment? Gold sovereigns, or gold sovereign coins, are not just any gold coins.

They’re unique pieces of history, reflecting the British Empire’s past glory and, more importantly, legal tender.

King Henry VIII minted the first British gold sovereigns. These days though, the sovereign coin you’re most likely to invest in was minted in the UK from 1817 under King George III. It’s named ‘sovereign’ for the image of the enthroned monarch depicted on one side.

Over the centuries, they’ve evolved and been minted under various monarchs, making them highly sought after by collectors and investors.

As a flagship coin from the Royal Mint, the British sovereign is a historically significant coin, with both a pure gold value and collectability value.

• Tax Advantages. Sovereigns qualify as ‘Investment Grade’ gold and therefore are exempt from VAT. Other gold items such as jewellery or less pure gold coins would cost an extra 20% to purchase due to this tax. Additionally, as gold sovereigns are legal tender, they are exempt from Capital Gains Tax. This means that if the value of your gold sovereigns appreciates, you can keep all the profit. This tax efficiency is a significant advantage over other investments, including property, shares, or even gold coins that don’t have this status.

• Historical and Numismatic Value: Gold sovereign coins are a tangible link to history. Each coin reflects the monarch of the era it was originally minted. This can make them highly collectable coins and desirable, often leading to a premium value above their gold content. Some of the most valuable gold sovereigns ever sold did so due to the additional scarcity value.

• Safe Haven Asset: In times of economic crisis or volatility, investors often flock to ‘safe haven’ assets – ones that maintain or increase in value while other asset prices are falling. Gold has long been recognised as a safe haven asset, and gold sovereigns are no exception. Investing in sovereigns provides a level of security that more volatile investments, such as equities, cannot.

• Hedge Against Inflation: When inflation rises, the purchasing power of cash diminishes. Historically, we have seen the value of gold increase with inflation, helping to protect your wealth. Gold sovereigns can, therefore, be a fine example of an inflation hedge, preserving the purchasing power of your investment.

• Store of Value: Gold sovereigns have a proven track record of holding their value over time. Unlike paper currency which can depreciate or digital assets that can disappear, physical gold offers a tangible store of value recognised for centuries. Compared to more volatile or ephemeral asset classes, this makes them a secure long-term investment.

• Liquidity: Gold sovereigns are popular and widely recognised, making them easy to buy and sell globally. This level of liquidity can be particularly beneficial if you need to convert your investment into cash quickly. Gold sovereigns offer much faster liquidity than assets such as property, which can take a significant amount of time to sell.

• Recognised Worldwide: Gold sovereigns are one of the most recognisable coins in the world. This makes them easier to sell internationally, providing access to a larger market than other investments. This global recognition can also make gold sovereigns a practical choice for those who travel or move countries frequently.

• Portfolio Diversification: Including gold sovereigns in your portfolio can help to spread your risk. This is because gold prices often differ from other asset classes, providing a counterbalance during market fluctuations. Diversification is a key strategy investors use to manage risk and enhance long-term returns.

• Long-term Appreciation: While the price of gold can fluctuate in the short term, it has consistently appreciated over the long term. This appreciation, combined with the additional numismatic value of gold sovereigns, can make them an attractive investment for those with a long-term investment horizon.
• Low Entry Point: Unlike some investments that require a high upfront cost, you can start investing in gold sovereigns with just a single coin. This makes it a more accessible investment opportunity for those new to investing or with a limited amount of capital to invest. Sovereigns also come in half-sovereign and quarter-sovereign denominations, reducing the cost even further. Half sovereigns themselves can provide solid long term returns on investment at outstanding entry points, so see how much a half sovereign is worth.

Our Portfolio Creator tool will suggest 4 options based on your budget and objectives. Give it a try below.

Tax implications play a significant role for many investors when deciding on an investment avenue. Regarding gold, not all forms are created equal in the eyes of the British government.

Legal tender coins, like gold sovereigns, offer noteworthy tax benefits distinguishing them from many collectable coins.

Here, we delve into the tax implications when buying and selling gold sovereigns, including Capital Gains Tax, Inheritance Tax, and VAT considerations.

Investing in British gold sovereigns offers a compelling blend of aesthetic and historical appeal, financial security, and substantial tax benefits.

As we’ve journeyed through this guide on why we consider sovereigns a great investment, we’ve unpacked their unique qualities, their role as a store of value, and the benefits they offer to a broad spectrum of investors.

The resilience of gold as an asset, especially during times of economic uncertainty, is well documented. However, gold sovereigns take this a step further.

They provide more than just the intrinsic value of their pure gold content. They represent an integral part of British history, symbolising strength and longevity that resonates with many investors.

Of course, like any investment, gold sovereigns are not without their risks. The potential for market volatility, costs of storage and insurance, and the risk of counterfeits are all factors that need careful consideration.

The decision between investing in a full sovereign or a half-sovereign depends on your investment goals and risk tolerance. We usually recommend a diverse portfolio containing both.

If you’re seeking an investment combining tangible, historical, and financial value, gold sovereigns are a worthy addition to your portfolio.