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.
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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.
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.
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.
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
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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Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.