Investing in gold bullion coins offers tax benefits that are more advantageous than putting your money into equities. Physical gold also has an advantage over exchange-traded fund (ETF) as they are legal tender and do not carry capital gains tax when you sell them.
Among the most popular gold bullion products is the Britannia coin. Produced by the Royal Mint they are sold for a small margin above spot price on the day of purchase. At the time of writing, spot price for gold is£744.60 an ounce.
Dealers typically add a premium of around 4 per cent above spot price, so at the going rate today you shouldn’t expect to pay more than £775. Shop around as some dealers can charge up to 15% on physical coins, more if they are collectable. As a rule of thumb, purchase the latest issue as demand is higher should you need to sell your gold coins quickly.
Online dealers generally offer the best deals as there is more competition than high-street traders. Alternatively head to your local jewellery precinct where there is a higher concentration of shops dealing in gold coins. Again the competitiveness brings the price down.
Buying in bulk also reduces the cost of your investment as you pay a lower premium. The royal mint issue Britannia coins in rolls of 10. Avoid buying from online site such as eBay or Craigslist as there is a high number of fraudulent coins in circulation. Only buy from reputable dealers that belong the London Bullion Market Association (IBMA).
Why should you buy physical gold coins?
When investing in gold, you have two options; bullion coins or exchange-traded funds (ETF’s). Physical gold coins offer more insurance than ETF’s as they can be shipped to your home where you can store them safely and now they are to hand when the time comes to sell.
ETF’s are purchased electronically and stored in a computer system. If the company or bank you purchase your electronic gold from goes bankrupt there is a strong chance you could lose your investment.
However, the purchase of ETF’s is easier than buying physical gold, principally because it is readily available and does not require shipping. When buying physical gold coins you also need to factor in shipping costs or storage charges for holding your gold in a high-security vault.
Also bear in mind that if you do choose to keep your bullion in a bank, there is also the risk that it is confiscated if the banking system collapses and the gold is needed to bail out the bank or if there is a war. Again it is better to have your Britannia coins shipped to your home address.
The risk of losing your gold investment is also high. The credit culture has amassed a fortune of debt which will collapse the financial system and bring banks to their knees. Laws are already in place allowing banks to take your money and your investments. It is therefore a safer investment to buy Britannia gold coins in physical bullion.