www.InvestmentGuide.co.uk
www.InvestmentGuide.co.uk
GOLD
A convenient means of investing in gold. You hope to make a capital gain by selling for more than you paid but you may end up with a loss by selling for less. The price of gold coins is closely linked to the price of gold but different coins may sell for a different premium over the price of gold. Since 2000 most gold coins and gold bars have been exempt from VAT.
Sovereigns contain .2354 of a Troy ounce of pure gold. The other main coin traded, the Krugerrand, contains one Troy ounce of pure gold. Other gold coins are the Britannia, Maple Leaf, Double Eagle, Nugget. Half sovereigns and certain dates of sovereigns sell for a higher premium because of rarity.
Who can invest Anyone.
How worthwhile Investors have become interested in physical gold again as an investment because of the lack of confidence in financial institutions, especially banks. The extent of future rises or falls in the price are impossible to predict. Another way to invest in gold is to there are also tracker funds quoted on the London Stock Exchange backed by physical stocks of gold. Gold is traded in US$ so fluctuations in the £/$ exchange rate can also affect how much money you can make or lose. The downside is you need to keep the coins somewhere safe and if you invest through a secondary method, for example a fund which buys gold, there is always a slight chance that the gold backing for your fund can turn out to be a fraction of the worth of the fund through fraud.
Minimum The price of 1 coin. With gold at £400 a Troy ounce, one second-hand sovereign might cost £51 including VAT on the dealer's margin. To sell you would get £44 each. Krugerrands might cost £448 each. The dealers margin is closer for larger deals, say, 100 sovereigns and 25 krugerrands.
Maximum None.
Suitable Lump sums. Regular savings.
Money back At once at the market price.
Interest None.
Tax Gains you make on the sale of coins are liable to capital gains tax.
Fees to pay None: commission is usually included in the buying and selling price. If coins are delivered to you, postage and insurance.
Passbook None. You get the coins.
Children Suitable as gifts especially from parents. Children's capital gains are not aggregated with their parents.
Risk High. The value of gold can go down as well as up.At the time of writing the price is really high at over $1,000 an ounce. Keep the coins in a safe place like a deed box in a bank, and/or have them insured.
How to invest Check the current price in US$ here. There is a linkon the page to charts of the price in most major currencies including £ sterling. Check with a few dealers how much their coins will cost to buy. When you sell, do the same. When you ask for the price, don't say whether you are buying or selling and ask for the prices for both.
Where from Visit the Coin Dealers Directory.
Last updated 28
November 2009.