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.
Sovereigns offer both coin and bullion investment advantages for most kinds of investors.
Their craftsmanship has been perfected over centuries by The Royal Mint, so you know they are of the highest quality.
So, who are the different kinds of investors who’ll benefit from these extremely popular investment coins? Here are 5 suitable investor profiles.
Our Portfolio Creator tool will suggest 4 options based on your budget and objectives. Give it a try below.
Like any form of investment, investing in gold sovereigns is not without risks.
Even though these historical gold coins, crafted from 22-carat gold, have been treasured by investors for centuries, it’s crucial to be aware of potential hazards before embarking on this journey.
Here, we’ll delve deeper into the risks of investing in gold sovereigns.
Gold sovereigns are not immune to the fluctuations of the gold market. The price of gold can swing based on various factors, including geopolitical events, economic indicators, and market speculation.
These fluctuations can directly influence the value of your gold sovereigns, making market awareness crucial for potential investors.
Counterfeiting is a significant risk in the world of gold coins. Fake gold sovereigns can be highly sophisticated and difficult to identify, potentially tricking unsuspecting investors.
Ensuring you’re buying gold sovereigns from reputable dealers like ourselves is critical to mitigating this risk.
Selling standard gold Sovereigns from the past century or so is easy and quick. Sales can be completed through a dealer in a day. You can always see how much a gold sovereign is worth today.
However, It can be a lengthy process to realise the value of rare sovereigns or other historic coins, as much of the value is tied to the numismatic worth, not standard gold bullion prices. Just like selling any collectible physical asset, realising its true value depends on finding the right buyer. There are fewer buyers of rare Sovereigns than standard ones.
The condition of a gold sovereign can significantly affect its value. Older coins, in particular, can vary widely in quality.
A worn or damaged sovereign may fetch a lower price than one in mint condition, even if rare. Thankfully, their 22 carat composition makes them more resilient than 24 carat coins.
Numismatic value can add to a coin’s worth, but it can also fluctuate over time and is often more subjective than the value of the gold itself, as mentioned above.
The value of gold sovereigns can be influenced by various economic factors, including interest rates, the strength of the dollar, and overall economic stability.
In turbulent markets, you’ll usually see gold thrive. In a strong economy, investors might turn to other assets, causing the price of gold and, consequently, gold sovereigns to drop.
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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.
Gold sovereigns are uniquely tax-efficient for UK investors because they are considered legal currency. As such, they are exempt from Capital Gains Tax, meaning that any profit you make when you sell your gold sovereigns is tax-free.
This is a significant advantage over other forms of gold investment, such as gold bars or foreign coins like Krugerrands, which do attract CGT on any profits above your annual tax-free allowance.
We have a guide which details whether you should buy sovereigns or Krugerrands, though, from a tax perspective, the British gold sovereign has the edge.
The tax advantages of gold sovereigns extend to VAT as well. All investment gold, including gold sovereigns, is VAT-free in the UK.
This contrasts with other investment forms, such as silver, platinum, or palladium, which incur VAT.
When you buy gold, especially in times of financial crisis, these savings are another brilliant attraction for investors.
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.