Gold hit yet another all-time high last week and it’s set to keep beating its own personal bests in the near future as the world looks ever more volatile.
Because when things look shaky politically and economically, individuals, governments and banks rush to the safe haven of gold.
However, although the gold price going up signals potentially worrying times for the world, it also offers opportunities for investors like you and me to profit if we own some of the shiny yellow stuff!
The question is, how do you invest in gold, and is it a good idea for everyone?
I’ll take a look at the first part of that question in a moment, but for the second part, of course the answer is that everyone is different and our needs are all different, so investing in gold isn’t right for absolutely everyone.
However, as fiat currencies (pounds, dollars, euros etc) lose their value more and more, and even governments and central banks are turning to gold as a solid store of value, it does seem that gold is likely to remain popular for a few years to come.
Gold hit yet another all-time high last week
GETTY
In 2023, central banks added 1,037 tonnes of gold, the second-highest annual purchase in history, following a record high of 1,082 tonnes in 2022.
China, India, Russia and the Arab states are particularly big buyers of gold,and these countries, together with African states, south American countries and Asian countries, are working on creating new currencies (many gold-backed) to replace the dollar as their ‘reserve currency’.
So how do you get your hands on gold in a safe and profitable way? Should you have actual gold coins under the bed or should you invest in gold mining companies? Should you try some digital gold or try a gold Exchange-Traded Fund (ETF)?
Part of the problem – and joy – of investing in gold is the big choice of ways to invest in it.
Probably the most straightforward way to invest in gold is to buy the actual metal, either in the form of coins – as in sovereigns – or in actual bullion or gold bars.
An extra bonus of buying sovereigns is that you cut down on tax. For start, sovereigns are classed as British legal tender so you don’t have to pay VAT when you buy them.
Then you can also avoid Capital Gains Tax (CGT) when you sell them, even if it’s your inheritors that do the selling, again because they’re classed as legal tender..i.e. actual coins that you could possibly use in the shops (not that you would!).
However, Harry Thorne of Bullionclub.co.uk cautions that “it’s important to make sure you buy sovereigns produced by the Royal Mint”.
“Anything that is minted by the Royal Mint – which is only what we sell – is not subject to Capital Gains,” he said. “But if you get your coins from companies that sell sovereigns that could have been produced anywhere, you end up paying CGT.”
Thorne also points out that gold coins are recognised worldwide so it’s a very ‘liquid asset’ – in other words, it’s easy to sell.
Of course, the downside of owning physical gold is that you have to store it somewhere safe.
If you trust your bank (and, let’s be honest, many of us don’t) you could pay for a safe deposit box there, which would be secure but would cost you an annual fee.
Or you could keep it somewhere safe (you hope) at home and make sure it is mentioned on your home insurance policy.
MORE FROM GBN MEMBERSHIP:
If the idea of owning physical gold makes you feel uncomfortable, there are lots of ways of owning gold without ever actually seeing it.
One of the simplest and cheapest is to invest in a gold Exchange-Traded Fund (ETF).
This is a low-cost way of tracking the gold price without ever having to own and store the gold yourself. It’s simple and effective.
If you’d like to know more about these and other ways to invest in gold, come to a free webinar I am holding on Thursday October 17 from 1-2pm. It’s all about how to invest in gold and there will be gold experts on the panel who can answer any questions you have. Join us online for free by signing up here. I’ll be hosting the event so I’ll look forward to meeting you then!.
