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Selling your gold coins is the point at which you crystallize your profits. After all, holding gold coins doesn’t pay you a dividend. The idea is that the value of the coins rises during the time you own them. When you eventually sell them, a handsome profit awaits. Simple! Or is it
Perfect timing and luck needn’t be relied upon. If you follow our proven step-by-step commandments, it’ll ensure you squeeze every last penny out of your investment.
This may sound like a lot of forward-thinking but if you want to obtain the best possible prices for your gold, then you need to consider this even before you buy coins. That’s because not all gold is created equal. In a similar way to buying and selling property, some gold coins are deemed very liquid and others are far more obscure and may prove difficult to sell. It’s comparable to buying a 2 bedroom flat, close to a main station in the UK, rather than a quirky property in the middle of nowhere, that only a small handful of people will like.
Remember, the larger the buyer market for your particular coins, the easier it is to sell, and the better value you’ll receive. Play outside of these guidelines and you’re playing with fire. It may well be that you buy a strange and wonderful gold coin which was either ‘going cheap’ or had a fantastic design, but when you try to sell, no one wants it.
Infact, the three key things that you need to focus on when building your gold portfolio are liquidity, variety and value. Focusing on liquidity gives you the opportunity to rake in your capital at the time when you need it most. By buying obscure coins, you are defeating the very purpose of your investments. In order to capitalise on liquidity, your coins need to have a strong secondary market. Some of the most liquid coins in the world are the Britannia, the Krugerrand and the Sovereign. Invest in these and you can’t go wrong.
Of course, variety should be in another point of focus. As you continue to build your portfolio, you need to invest in gold and silver coins of different weights and dimensions. This ensures that you can sell off small portions of your holding at different price points in the market, rather than being forced to sell a large piece of gold at one price. Selling at different price points help you take advantage of rises in the spot price of gold. Value is yet another consideration.
You will probably find that you make end up paying hefty premiums for rare obscure coins. These types of coins are mostly purchased by amateur investors who end up believing that the coin they are buying is indeed something of great value. Sadly, at the time of selling, they are unable to recover the premium they paid. The best strategy to build value is to buy coins that have low premiums so that your capital outlay is minimal. Once the price of gold rises, you can sell off your investments at a decent profit margin.
When you buy gold coins, focus on the best-known investment bullion coins. In the UK, that means focusing on coins issued by The Royal Mint; like various Sovereigns and Britannias. One way to maximise your selling price is to avoid paying any Capital Gains Tax (CGT) on your profits. This can easily be achieved by sticking to UK coins. These coins boast their own face value, qualifying them as CGT free. This way you get to keep all your profits rather than pay the taxman.
If you have non-UK coins to sell, then offloading a large quantity all at once may incur capital gains tax on your profit. To maximise your profit, sell some before the Apr 5th tax year end, and the rest afterwards. Spreading the sale over two tax years could save you thousands in tax.
Some of the non-UK bullion coins are also very liquid; https://www.physicalgold.com/7-crucial-considerations-guide/like the Krugerrand, Maple Leaf and US Eagle. However, be aware that if selling back your coins in the UK, you’ll no doubt obtain better prices for UK coins than non-UK ones. This reflects the tax-free status of these British coins, which means there is a higher demand from UK investors for these, rather than foreign coins.
Wishing to sell your gold coins immediately is one thing. But giving a dealer a few weeks means they can hook your sale up with a keen buyer. A really good gold broker will be able to work with you to achieve higher prices for your coins. They’ll have a large number of buyers and sellers on their books, so pairing buyers and sellers together can improve value for both parties rather than simply selling your coins back into the wholesale market.
Give them time to find a buyer (or buyers) who wants your coins. So, rather than calling your dealer on the day you wish to sell, call them a few weeks before you need the money. Let them know you’re keen on selling over the coming weeks and perhaps set a deadline. Any dealer worth their salt, will share this with their team and actively find buyers so they can improve your selling price. It may only improve the price by a percent or two, but this can add up to a lot in Sterling terms if you’re selling a large number of gold coins.
Proof coins are beautiful to look at.
They tend to have a matt finish foreground detail with a shiny background. This makes the coin designs look more like Ultra HD TV than the Standard definition-like bullion finish coins. However, if you want to maximise the price you get when selling coins (and therefore boost your profit), then proof coins don’t represent good value. Most will be accompanied by expensive wooden presentation boxes when bought and include a certificate detailing the coin and its limited issue number. Like for like prices for a proof coin versus its bullion counterpart can be as much as 30% higher, for the same amount of gold.
In all likelihood, a gold broker would pay you the same for a proof or bullion coin, or at most a few percent more. Almost always, you won’t receive back 30% more than you would a bullion coin. If you want to maximise your selling price (certainly in relation to your buying price), then stick to bullion coins. They’re cheaper to produce and buy, and far better value when you come to sell.
If you’re willing to plan ahead rather than leave your sale to the last minute, you can sell when the market spikes. While the gold price rises over the medium to long-term, it can be notoriously volatile in the short term. In any short-term window, the underlying price can vary considerably, and that’s the first reference point for the value of your gold coins. Preparing your sale ahead of time enables you to have everything in place to quickly close the sale when you see a daily spike in the price.
This is a simple one. Just like maintaining your property, gold coins are physical assets, so your price will be affected by their condition. Keep your coins safe and handle with care. This is especially necessary with 24 carat coins which can scratch, and then impact your sale price. Wash in warm soapy water if dirty. Plastic coin capsules can be purchased from dealers to house the coins, so you can still handle and enjoy them, without actually touching them.
Did someone say that variety is the spice of life Well, the same applies to gold coin portfolios. If you own all of the same coins, then you obviously only have one type of coin, and one price, when it comes to selling. This isn’t a major issue, especially if you stuck to some of our other commandments and bought UK gold coins.
But! We’re in the business of squeezing out every last penny of profit possible for you. And that may mean owning a variety of UK coins. Ideally, owning British tax-free coins of various sizes will add to your portfolio balance. So, depending on the number of coins you buy, that may be some half Sovereigns, full Sovereigns, Quarter and Half Britannias, £2 coins, 1oz Britannias, Lunars and Queens Beast coins, and perhaps some nice chunky £5 gold coins. Owning various age coins adds another dimension again. So, mixing brand new, nearly new and semi-historical coins can actually enhance your chances of maximising profits. Read our Do’s and Don’ts of buying gold.
First of all, some of the older coins can increase in value quicker than newer ones, depending on scarcity and demand at the time you buy and sell. The same can be said of £2 and £5 gold coins which usually include a commemorative element. For this reason, these coins can obtain better selling prices than new ones.
The key is owning a variety, as the supply/demand dynamic for each type of coin is fluid. In other words, at the point you come to sell, it may be that Edward VIII Sovereigns (for example) are trading at a premium due to a relative supply drought in the market. Alternatively, Victorian coins may be trading cheap due to a spike in secondary market supply. Or even Elizabeth coins may be sought after if our cherished queen has passed away. By possessing the different size and period coins, your gold dealer should be able to match selling your coins with the optimum time.
Premiums can vary up to 5% for regular coins and 20% for limited issue coins, so timing shouldn’t be underestimated.
The price one dealer pays may not be the same as another. At the end of the day, they run a business with stock. So, it may be that one dealer will pay less for coins if they already have a huge stock than another who could benefit from the additional stock.
You may also find that certain gold brokers simply pay more for certain coins than others. We tend to pay market leading rates for UK tax free coins such as Sovereigns and Britannias; as investment coins are our niche. We probably pay less for some more extravagant coins.
Using a trusted gold dealer means you’ll receive gold
of the finest quality and which is protected. Your gold should be supplied with a Certificate of Authenticity, meaning you have authentic paperwork when you come to sell. The dealer you purchase from is the one you should approach first about selling your gold, as a reputable dealer should have a ‘Buy Back Guarantee’.
Certainly, if you have older coins, taking the time to find a private buyer or a specialist dealer may increase your sale value.
While a dealer needs to consider selling your coins on, whether to other customers or into wholesale, private buyers will simply pay a price depending on their desire.
Especially if you own limited issue coins, coins that are part of a collection, or gold coins of 100 years in age or more, then finding a private buyer may unlock further profits. Clearly, there are additional risks when dealing with individuals, and it will undoubtedly take far more time and effort to sell coins off piecemeal. For these reasons, you’ll need to weigh up your priorities and sell accordingly.
Many investors (usually failed ones!) think that timing and luck play a huge role in investing. This is driven by laziness, greed and impatience. The appeal of buying gold coins at the very bottom of the market and selling them a week later at a huge profit is sometimes what drives many to bad decision making.
Enjoy our YouTube video – “Gold coins – collecting as a hobby and for profit”.
The fact is that the price of gold and the subsequent value of gold coins fluctuates. Over the short term, there’s a fair chance that the market will be lower than when you bought. That’s because there’s a vast array of elements that can impact the gold price on the macro-economic level. In other words, over the short term, the performance is unpredictable. Not only that but there’s a difference in price between where you can buy a gold coin and sell it. This is known as the bid-offer spread. In practice, trying to buy gold coins and sell for a profit in a very short time period, won’t give the market long enough to overcome the buy/sell margin.
There are two strategies to surmount this challenge. Firstly, try to buy the gold coins in bulk. Gold dealers generally offer discounts with quantity orders. If you plan to buy 100 gold coins, try to do this in one purchase. Then you’ll achieve a larger discount than if you buy 25 coins on four separate occasions. This tactic essentially reduces the buy/sell spread, furthering your profit margin and reducing the amount of time needed to be in profit.
Secondly, and more crucially, you need to buy and hold over the medium to long term. This timeframe irons out any short term volatility and negates the chances of bad luck and timing. Just looking at the last decade, while gold returned north of 30% in 2010 and 2016 for example, it lost 27% in 2013. Buying gold coins and selling them within a year could have been very profitable but also could have been very painful, all depending on which year you chose! However, when we average the returns over the entire 10 year period, price increases are more than 10% per annum. Compound that over the decade, and profits are very handsome indeed.
Not only that, but studies show that this buy and hold strategy (both in precious metals and the stock market) provide far greater profits than short term trading. Luck aside, that’s because the five greatest one-day gains in these markets have generally followed close on the heels of the five worst-performing days. By holding over the long term and riding out any bumps, both markets have proven over many decades to provide large profits.
Whether you’re seeking to buy or sell gold coins and bars, the Physical Gold team of dedicated specialists are here to help. We’re able to share our expertise and network to ensure you maximize your precious metals profits.
Our team can be reached by calling 020 7060 9992 or emailing firstname.lastname@example.org
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.