Portfolio Diversification

Posted on by Lee

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.

A Long-Term Investment

Posted on by Lee

A long-term investment

Investors are often turning away from silver because all silver bars and coins are taxed at a rate of 20%.  The paying of VAT (or value added tax) on silver usually leads investors to conclude gold is a better investment.

Silver is still a very good option, however.

Silver should be considered a long terms investment and our advice is to hold it for at least twelve months if not for a good few years.  Twelve months is usually considered to be enough time to compensate for the 20% vat cost and return a profit.

As an example, an investor that invested £5000 (£6000 with VAT) in silver in 2008 and held it for three years would have had the value of their investment rise to over £16,000.

As a bonus tip, second-hand silver doesn’t have VAT charged on it, so it’s always worth asking your dealer if they have any second-hand coins or bars.

 

Disclaimer: This is not financial advice.

Should I buy Silver as Well as Gold Bullion?

Posted on by Lee

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

Posted on by Lee

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.

Should I buy Silver as Well as Gold Bullion?

Posted on by Lee

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.

Large Investors Buying Gold & Silver

Posted on by Lee

For larger investors looking to buy gold bullion, we would buy the larger unit sizes of 500g gold bars, 1-kilo gold bars, and 5-kilo silver bars to really get the best value for your investment.

With larger investments, the savings you make on your premiums by buying larger bars can make a big difference.  In fact, buying larger bars can reduce your premium by as much as 1%.

Buying gold bullion. in larger volumes also offers further savings, as you would expect with any commodity, as the unit price is reduced because of the reduced costs incurred by the dealer.

We also advise, however, that wealthy investors also hold some British gold coins, in particular, as well as their bars, in order to fully maximise their investment. This is because Gold Britannia coins and sovereigns do not attract any capital gains tax in the UK as they are considered British Legal Tender.

While the gold coins will come with a larger premium, any wealthy investor looking to release some larger profits from their gold investments will benefit greatly from selling their coins over their bars.

To really get the best value from your investment, investors usually buy the mixed year gold sovereigns rather than the specific year sovereigns as they come with a lower premium.

Disclaimer: This is not financial advice.

Flexibility – what should I buy? Gold or silver bars or coins?

Posted on by Lee

When investing in gold bullion or silver bullion most investors are looking for the best value when buying to preserve their wealth and making a return on their investment.

The best value when you are buying doesn’t necessarily mean you get the best value when you are selling, however.

Buying larger-sized bars of gold or silver bullion offers the best value as they come with lower premiums.  They don’t offer much in the way of flexibility for a resale, though, as you will only have the option to sell the entire bar.

Buying smaller unit gold bars or gold coins, like the 1oz, 50g or 100g bars gives you a great deal more flexibility when it comes to selling.

There are a number of reasons why you might want to have a bit more flexibility in how you sell your gold – perhaps you want to release some of your investment to access your cash quickly, or you want to take advantage of the higher price, but don’t want to sell all your position.

Let’s look at another example to clarify.

An investor has 20% of their portfolio in gold bullion, specifically a 1-kilo gold bar.  The stock market, however, is on the rise, and the investor wants to move some of the cash tied up in gold in order to take advantage of the current situation.  Owning one gold bar means that the only option the investor has is to sell their entire gold position to release the cash.

This is not ideal as any good investor knows you want to keep at least 5-10% of your portfolio in physical gold.

If, on the other hand, the investor owned ten smaller bars at 100g each, then they would have no problem selling half of their position to take advantage of investment opportunities elsewhere.

Gold coins are an even better option for flexibility as they come in smaller sizes like 1oz, ½ oz 1/4oz, and 1/10oz, which gives you a huge amount of flexibility to really maximise your selling.  They are also much easier to store.

Some of the most popular gold coins at the moment are the famous South African Krugerrand coins as they tend to come with the lowest premiums or the British bullion coins like the gold Britannia or the gold sovereign.

The later coins are great for investors who have a lot of money invested in gold UK coins due to their CGT free status.  (CGT Capital Gains Tax Free)

Silver coins are also a great option, and perhaps offer the most flexibility as they are valued much lower than gold, so can be sold in smaller monetary increments.

Some of the most popular silver coins include the silver Britannia (CGT Free in the UK), silver Maples, and the silver Philharmonic.

If you’re wanting flexibility in your investing then we highly recommend buying gold coins.

Disclaimer: This is not financial advice.

Should I invest in gold bars or gold coins?

Posted on by Lee

Deciding on whether to buy gold bullion in bars or coins is something that should be considered carefully.

There are a number of factors that you should be thinking about when making this decision including the value of your investment, the product premiums, where you plan to store it, how long you plan to keep it, whether you intend on selling it all at once or in smaller parts, capital gains tax.  You get the idea.

A little research can go a long way, and we suggest taking the time to thoroughly go through your plans and options before investing, as there is no right or wrong answer to which is better, bars or coins, without first knowing all of the above factors.

Premiums

Premiums are particularly important to consider in your decision to buy gold bullion bars or coins.

Premiums are additional costs that are charged above the gold spot price and are to cover manufacturing costs, handling, packaging, delivery, and insurance.  These costs are unavoidable and even dealers have to pay premiums above the spot price.

Most reputable dealers will charge investors minimum percentage premiums, however, in a bit to be competitive.

In the consideration of buying gold bars vs gold coins, investing in gold bars is the most effective way of minimising your premiums.  The same can be said for silver bars if you are looking to invest in silver bullion.

Let’s look at an example to see why this would be the case:

If you were wanting to buy 1 kilo of gold then your premium for one 1 kilo bar would be less than ten 100g coins as it requires less manufacturing to make the bar.

By buying gold as a bar instead of coins in this instance you would be looking at a saving of 1%, which, depending on how much you buy could be very significant.

Buying one bar, however, does mean that you have less flexibility when you decide you want to sell as you will have to sell the whole amount.  If you had ten coins instead then you could choose to sell half of your gold and keep the other half as an ongoing investment.

This is why it is so important to take the time and assess what you are wanting to do with your investment, how long you want to hold it, and how you might want to sell it at the other end.

Disclaimer: This is not financial advice.

Storage & Safekeeping of your precious metals

Posted on by Lee

Owning physical gold is great.  You can hold it, touch it, and knowing that you are holding a part of your wealth in your hands is half the fun of owning physical gold.  Storing it can sometimes be a bit of a concern, however, so let’s have a look at a few options.

Most investors are happy to keep their gold bullion at home.  In these instances, we recommend taking steps to avoid compromising the safety of your gold and your home.

Keep the information to yourself.  There’s no need to tell your friends and family or talk about the fact that you have gold at your house to your work colleagues.  You never know who is listening.

Keeping your gold in a safe is ideal, particularly if you have one that can be hidden in a wall or the floor.

Unless you have millions of pounds worth of gold the storage of it won’t be a problem.  This means you could also get creative with where you hide it.  Maybe put it in the attic, or under some floorboards.  Ideally, you want to hide it somewhere that, in the unfortunate event you might be burgled, it is not easily findable or identifiable.

For extra peace of mind at home, you could also consider insuring your gold.

If the idea of keeping your gold in your own home doesn’t feel safe enough to you then you also have the option of hiring a safety deposit box from a bank.

When the time finally comes and you want to sell your gold then it couldn’t be any simpler.  There are plenty of highly reputable gold bullion dealers in the UK.

A little research online goes a long way, and you will get immediate offers based on the current global price of gold from them too, so you won’t have any surprises when you go in.

In most circumstances, the dealer that sold you the gold in the first place will often offer the best rate through their gold buy-back service, but there is never any harm in looking around to find the best price.

Disclaimer: This is not financial advice.

History doesn’t lie

Posted on by Lee

It is very easy to look at the advice that you should own physical gold with a bit of skepticism.  Particularly as that advice often comes from the bullion companies themselves.

However, these recommendations come with a lot of data to back them up.

Looking back, historically the price of gold has been on an upward trend and has consistently outperformed other investments.

Owning physical gold still has the misconception of being only for the super-wealthy in Britain.  This is a shame as it is indeed a misconception, and in other countries like Germany, Russia, Austria, and Turkey it is very common to own and hold physical gold no matter what your social demographic.

Owning gold bullion is a great investment and is a safe haven for your wealth, no matter how much you have to invest.

If the idea of investing in gold interests you, but you don’t want the safe, low risk investment of physical gold, you could look at gold ETFs.  They are more speculative investments, but often a favoured way for new investors to dip their toe into the golden waters.

A shrewd investor might make the most of both worlds and invest in ETFs to speculate on the price, and buy physical gold for the long investment.

Either way, investing in physical gold is a great way to protect and preserve your wealth, and the historical data backs this statement up.

Disclaimer: This is not financial advice.