Why invest in gold?

There are so many options for what to invest your hard-earned money in, why would you choose gold?

For almost as long as records have been kept Gold has been considered precious to humans.  Throughout history, from ancient Egyptians to Roman conquerors, from Conquistadors to the modern age, we have been fascinated with gold and searched it out the world over.

The gold market often stands on its own.  When the global economy is in crisis, the gold market tends to stay steady (or even get stronger!)

For example, during the crash of 2008/2009 gold remained strong, and in the subsequent years while world economies were struggling to recover gold made significant gains.

Gold remains strong during rising inflation too, so while the money in your bank loses value many investors look to gold as a safer asset to protect and grow your wealth.

Gold is a finite resource whereas governments can decide to print extra money at any time for quantitative easing.  This, coupled with its continued use in emerging markets and the technology industry means that the price will more than likely stay strong.

Buying and owning physical gold gives you control over your investment.  There is no third-party risk like investing in stocks or even investing in gold ETFs.

Selling is also easy as there is always demand, so pulling your cash out of your gold is never a problem.  There are plenty of reputable online dealers that deal with millions of pounds of gold sales each week and can offer you immediate prices online.

Why invest in gold?

There are so many options for what to invest your hard-earned money in, why would you choose gold?

For almost as long as records have been kept Gold has been considered precious to humans.  Throughout history, from ancient Egyptians to Roman conquerors, from Conquistadors to the modern age, we have been fascinated with gold and searched it out the world over.

The gold market often stands on its own.  When the global economy is in crisis, the gold market tends to stay steady (or even get stronger!)

For example, during the crash of 2008/2009 gold remained strong, and in the subsequent years while world economies were struggling to recover gold made significant gains.

Gold remains strong during rising inflation too, so while the money in your bank loses value many investors look to gold as a safer asset to protect and grow your wealth.

Gold is a finite resource whereas governments can decide to print extra money at any time for quantitative easing.  This, coupled with its continued use in emerging markets and the technology industry means that the price will more than likely stay strong.

Buying and owning physical gold gives you control over your investment.  There is no third-party risk like investing in stocks or even investing in gold ETFs.

Selling is also easy as there is always demand, so pulling your cash out of your gold is never a problem.  There are plenty of reputable online dealers that deal with millions of pounds of gold sales each week and can offer you immediate prices online.

Is it worth investing in gold?

In order for your investment in gold to yield a profit, you rely on an increase in the value on the open market, as opposed to property and stocks that can provide a yearly yield.

To realise this profit can take time. But historically gold has been in an upward trend and has performed very well for investors since the 1970s.

While there may be dips, the overall upward trend is expected to continue making gold a very good investment.

Watch the gold price

Picking the right time to buy gold is a matter of keeping a close eye on the price and picking the opportune moment.

Gold prices change every two minutes, and it is very easy these days to keep track of it on your PC, phone, or tablet.   You have never had more information at your fingertips in order to choose the best moment for you to invest.

While the market feels like it is constantly moving up, it’s not uncommon for the price to drop by 3-5% in one morning.  For many investors, this would pose an opportunity to invest, and for new investors, it might be a great moment to take your first plunge.

Finding the right time to invest is down to the individual investor and the market state that they are most comfortable with.  Some prefer to invest when the market dips, others prefer to invest when during more stable periods, or even in the middle of very strong periods.

Whatever your preference, you should only buy gold when you feel comfortable with the price.

Disclaimer: This is not financial advice.

The security blanket of gold

Investing in gold bullion should be considered a long-term investment and is about owning a safe and secure asset.  It’s not about making quick profits by buying and selling in the short term.

Of course, if you do buy at the right time and you catch a big move up making some great profits then by all means take that profit out.  Plenty of people have and will continue to make large gains from gold.

Investing in gold, however, is ultimately about safeguarding your wealth and protecting yourself in the event of a financial crisis by having at least a portion of it in a safe asset that you physically hold, rather than leaving it in banks or ETFs.

We live by the saying “if you don’t hold it, you don’t own it”.  We understand this can’t apply to all your assets, and in this day and age it wouldn’t make sense to, but, holding a good portion of your wealth in gold DOES make a lot of sense.

And as for profits?  Historical data shows that gold is more likely to make you a better return on investment than any other asset or commodity over the last decade.

Disclaimer: This is not financial advice.

Why buy Royal Mint bullion coins?

Royal mint bullion coins make the ideal investment for a wealthy British investor intending to spend more than £50,000 or more.  Why?

Royal mint bullion coins are British legal tender and because of this are capital gains tax-free.  This means they offer opportunities for high-wealth investors to save on their CTG and maximise profits.

This capital gains exemption applies to Britannias and Sovereign coins as well as special series coins like the Queen’s Beast and Lunar collections.

Add to this the fact that gold is also VAT exempt then making Royal Mint bullion coins one of your primary gold purchases can be a very cost-effective investment.

Gold:

Gold bullion is considered old-fashioned when compared with bitcoin or other cryptocurrencies, but it is still the ideal investment to store and protect your wealth.

Yes, gold bars aren’t easy to carry around with you, and you can’t walk into a shop and buy your groceries with some gold.  But it is an investment resource and a bit of a collectible, and when it comes to your money, old-fashioned is no bad thing.

Gold is seen as a safe haven for your wealth, and rightly so.  Gold is a physical asset that you can hold and access that has a true value.  The value of gold also tends to increase in line with inflation, which is currently between 2.5% and 3%.

At the moment, with the Bank of England’s interest rates and the US Federal Reserve both being limited, we currently have a negative real interest rate.

What does this mean?  It means that inflation rates are growing faster than interest rates and so our fiat currency, whether pound, euro, or dollar is devaluing as the cost of living is increasing.

So leaving your money in the bank is actually costing you money.

Buying gold bullion is the ideal solution to this.  As we’ve said, it matches inflation, is a trusted commodity, it retains its value, and there will always be buyers.

Gold is unarguably less exciting than stocks or cryptocurrencies, and far less headline-grabbing.   And when those markets push higher and higher they can generate fortunes for the savvy investors (or the lucky amateur).  But, when the market comes crashing back down again, as it always does, it’s silver and gold that investors turn back to.

Disclaimer: This is not financial advice.

Portfolio diversification

Investing in and owning physical silver bars and coins is a great way of diversifying an investor’s portfolio.  It helps spread the risk within the portfolio and gives an extra layer of protection against other investments.

It is widely agreed that silver is likely to strengthen over time, and while the price is currently low compared to the highs of 2011, it is a very solid investment.

In particular, silver is very widely used in industry as it is an incredible electrical conductor.  So, despite it being a precious metal, silver is being used extensively in electric cars, solar panels, and computers.

Easy to exchange

Many individuals and investors are turning to silver as an alternative form of currency too as a protection against the possibility that money will lose much of its value.  This is only growing more prevalent in the current uncertain world economic climate.

That’s not to say that fiat currency (your pound coins and notes) are likely to be scrapped and the economy collapses entirely, but British bullion coins are legal tender with a face value, and as an investment against any eventuality it makes a lot of sense.

In the event of complete economic collapse silver offers the ideal currency for small everyday items rather than gold, which is worth about 80 times more than silver, which would be more suited to larger purchases.

Disclaimer: This is not financial advice.

Should I buy silver as well as gold bullion?

It’s not uncommon for investors to put in a lot of time researching whether they should invest in gold or invest in silver.  For the savvy investor, the answer is both!

Gold is a great investment and can act as an insurance policy against uncertain times, while silver is more of a speculative investment.

Both are popular and common investment assets, but silver offers a very different challenge to gold.  A challenge that can generate substantial profits despite the VAT costs.  These differences are why an investor should consider owning both as a part of their portfolio.

Silver is a speculative investment

The price of silver is far more volatile than gold, which is why it doesn’t have the same level of security.  Silver is, however, also a physical asset which means, like gold, it will always have an intrinsic value and can not be simply devalued by inflation.

The volatility in the price actually presents an opportunity for investors to buy and sell over shorter timelines in order to make a profit.  Hence it is more of a speculative investment.

The price can move quickly, and significantly, so applying caution and paying close attention to the financial sector will be key to taking advantage of the opportunities that present.

Historically, silver has proved to be a very good investment.  In the three years between 2008 and 2011, for example, the price of silver rose by 233%.  That is dramatically more than stocks and property, and more than gold too.

More recently, in 2019, silver saw a gain of 28.9%, again outperforming gold in dollars.  The opportunities are there to be taken advantage of.

The price of silver is currently low compared with the highs of 2011.  All markets tend to fluctuate from a bearish market (prices moving down) to a bullish market (prices moving up) and commodities like silver are no different.

Usually, it is only a matter of time before the market decides the price is too high and stops buying, or too low and starts buying.

Disclaimer: This is not financial advice.

Small investors and first-time investors

Smaller and first-time investors wanting to buy gold bullion should consider both bars and coins.

100g gold bars and 1-ounce gold bars are a very popular starting point for new investors, with a price tag of around £2,500 and £750 respectively.

Gold coins seem like the obvious choice when it comes to lower value investment, though depending on how much you want to invest, you may want to consider the lower premiums on bars.

That being said, the South African Krugerrand coins tend to attract a lower premium than other coins and are a very popular choice for new investors at a cost of around £800.

Gold British coins are also a great way to start investing in gold bullion and offer a much cheaper barrier for entry at £200 for a gold sovereign and £100 for a half-sovereign.

Investing in silver is also an excellent start for smaller and newer investors looking to get into commodities, and there are a whole host of 1-ounce silver coins to choose from.

We recommend buying the lower unit cost coins like the silver Maples and the Philharmonic coins as when you come to sell them you only get the intrinsic value of the metal.  So, the cheaper you bought them the better return you’ll make.

Disclaimer: This is not financial advice.