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Gold UK. How to buy and invest in physical gold in the UK

The golden rule is, those who own the gold, rule

Buying gold online in the UK is like buying bitcoin in the UK. It’s easy.

In fact, for the technically illiterate, it’s easier to buy gold in the UK than bitcoin.

Thanks to the internet, within a few mouse clicks, you can browse, order and buy physical gold in the UK and have it delivered to your home within a couple of days.

That said, the idea of buying thousands of pounds’ worth of gold on the internet and having it delivered to your door will no doubt sound daunting to some.

As someone who’s bought gold online in the UK and had delivered to me, I’m going to show you how easy it is and why it’s not daunting at all.

Gold is a fascinating topic and in this article you’ll discover why you should invest in gold, the history of gold through the ages, why it’s so valuable, the types to invest in and how to buy gold online.

Why invest in gold in the UK?

buy gold uk
The Queen’s golden carriage made in 1760.

Around the world gold has been considered valuable for millennia and, given its track record, will likely remain so long after you and I have left this earth.

Gold is a scarce asset and all of the world’s would create just a 70ft by 70ft cube in size. Even if you melted it all down, it would just be enough to fill three Olympic swimming pools.

Throughout history, wars have been fought and lives have been lost because of gold and humanity’s determination to acquire it.

A lot has changed in the last hundred years or so. A country’s currency circulation used to be linked to the number of gold reserves it had stored in its vaults.

This meant the amount of money supply in the economy could only increase if the gold supply increased also.

This is known as the gold standard which was abandoned in the UK in 1931 and the US followed suit in 1933.

Today all countries use ‘fiat’ money which is essentially backed by nothing but the government’s promise to honour it. This allows any government to create as much of their own currency as they like and herein lies the problem.

As countries around the world cope with the Covid-19 pandemic, including job losses and lack of productivity, their governments are filling their economies with surplus money through quantitive easing.

This extra money in the system tends to cause inflation which means the over-supply in the economy devalues the currency.

The UK is no different and the Bank of England has been busy printing £745 billion off since the pandemic hit. This of course will devalue the pound making anyone who has savings less wealthy.

Why gold is valuable

The total value of gold in the world is worth £8.05 trillion. In numerical terms that’s £8,050,000,000,000.

That’s a helluva lot of money and while gold is valuable it has no intrinsic value.

For example, gold is used in electrical goods and dentistry but over 95% of it around the world is kept as a store of value.

Gold is valuable because everyone agrees it is but essentially gold is just a metal like silver, copper and aluminium. Sure, it looks prettier and shinier than other metals but it doesn’t do anything different. In fact it doesn’t do much at all.

That said, gold differs from them because it has certain properties that make it valuable.

Scarcity is gold’s greatest feature.

Given that gold has been valuable for thousands of years, the total supply is still very small.

The average concentration of gold in the earth’s crust is 0.005 parts per million, which is equivalent to 5 grams of gold per 1000 tons of earth.

While some gold remains in the earth or at the bottom of the ocean, it is too difficult to extract without the costs being higher than the sale value.

Gold is impossible to synthesise.

Gold cannot be made using other materials in a laboratory meaning the supply can’t be increased by humans.

Durability is what makes gold precious.

Gold doesn’t rust or corrode. You can bury it in the ground for a five hundred years and it will still look the same when you take it out. Gold lasts for thousands of years and is virtually impossible to destroy.

Gold as a long-term store of value

Because of its durability along with its scarce supply and the inability to synthetically make it in a lab makes gold a great long-term store of value. Not to mention it looks beautiful too.

Before modern banking, gold coins were used as money because they held their value and didn’t decay. After modern banking, gold positioned itself as a place to store wealth as its track record shows it value increases over time.

Compared with a fiat currency like the pound or dollar, which have both continued to decrease over time, gold makes a great long-term store of value.

buy gold uk
Returns on gold since 1971. Source: Bloomberg

The chart above shows gold returns from 1971 to present-day against. In the UK, there has only been one decade that gold didn’t produce a positive yield against the pound.

With the price of gold reaching a new all-time high in July of this year, gold is expected to be at the beginning of another bull run as investors look for a safe haven hedge.

Lawyer and author, Jim Rickards, who wrote the book, The New Case for Gold, said in April 2020 he believes we are now in “the third great bull market” for gold.

According to Rickards, the first bull market was 1971 to 1980 where gold went up over 2000% and the second bull market was 1999 to 2011 when it went up 700%. Taking an average of the two, he believes we’ll see a percentage price increase of 1300% in the future.

Rickards’ latest forecast has gold at $16,000 (£12,260) an ounce in the next four years. Given it’s currently at around $2,000 (£1,530) per ounce that’s a steep increase.  

Time will tell of course and this is not financial advice.

Is buying UK gold a good investment?

To be blunt, buying gold wherever you live is likely a good investment in the long-term.

As the chart above shows, if you bought gold in the UK in 1971 it would be worth a lot more today than it was back then in real terms.

Like any investment, you have to be in it for the long-term and the timeline with gold should be in ten-year increments.

Gold should also only be one asset within your portfolio and you should invest in a range of assets including stocks, ETFs, property and bitcoin to decrease your risk.

Most advisers suggest having 1% to 5% of your portfolio in gold but, like all investments, never invest in something you can’t afford to lose or hold onto for a long time.

Physical gold vs paper gold

There are essentially two ways to own gold:

Physical gold: Where you own the underlying metal and either store it yourself or pay to have it stored for you.

Paper gold: Where you don’t own the underlying metal but instead your cash investment is pegged against gold’s price.

With paper gold, you don’t actually own any gold at all. It’s an obligation rather than an asset, meaning it’s a riskier investment despite being more convenient.

Owning it is the best way to invest in gold in my opinion. You shouldn’t depend on third parties to look after it for you or be obligated to you.

Sure it takes a little more time and is a little less convenient but you have full ownership of it. Self-sovereignty is key.

Buying gold online in the UK

There are a lot of companies offering gold for sale in the UK and thanks to the internet they’ll deliver it to you regardless of where you are in the country.

A search on Google for ‘buy gold uk’ will bring up numerous results of companies offering to sell you gold and deliver it to you.

These companies offer a range of products and services to both new and experienced gold investors.

You don’t have to be wealthy to use these services either. The starting weight for gold bullion bars they sell is 1g which costs less than £70.

The weight gets progressively heavier going from 1g to 1kg, the latter of which costs around £54,000 at the time of writing.

You can also buy gold bullion bars which have been cast and packaged in various countries. Most offer UK gold, Swiss gold and Emirati gold to name a few.

Does it matter where your gold has come from? Not really. Gold is gold is gold regardless of where it is packaged.

That said, they usually come with different designs and some look better than others. But as long as the weight is the same it doesn’t really matter.

As well as offering gold bullion bars these companies also offer gold coins too.

Most UK gold coins come in half-sovereign, sovereign and double sovereign coins, but you can buy a range of different kinds and weights.

You can also buy coins from other countries. The 1/4oz Krugerrand South African coin, the 1oz American eagle coin and the 30-gram Chinese panda coin to name a few.

Investing in UK gold bars vs gold coins

buy gold uk
Gold bars vs gold coins

Remember, gold is gold is gold so there is little difference between owning a Swiss gold bar and South African gold coin. As long as they weigh the same their value will be too.

However, if you’re in the UK there are certain tax advantages of buying gold coins over gold bullion bars. Not just any gold coin, however, it has to be a UK Britannia coin or gold sovereign coin.

In the UK you pay capital gains tax on any asset that has increased in value when you sell it. This applies to assets such as a second home, antiques, shares, or gold bullion

However, capital gains tax is exempt on British currency, so if you own gold Britannia coins or gold sovereigns you won’t pay tax on them because they are legal currency in the UK.

Gold coins tend to cost a little more than gold bars in the UK so you will have to work out which is the most cost-efficient. But let’s say if gold doubles in value in the next five years you’ll pay no tax on your coins if you sold them.

My experience buying gold in the UK

A few months ago I decided the time was right to invest in gold.

I researched the market and tried to understand what is going on in the wider economy with Covid-19 and quantitive easing, and decided to take the plunge and buy it online.

Having gone down the bitcoin rabbit hole a few years ago I decided to look into gold as another store of value alongside bitcoin.

After all, people consider bitcoin as ‘digital gold’ but it has only been a store of value for 11 years compared with gold’s multi-millennia track record.

A lot of hardcore bitcoiners would no doubt tell me gold is inferior to bitcoin and I should instead invest in more of the cryptocurrency.

They have a point. Compared to gold, bitcoin has a lot of features that gold doesn’t but you should always diversify your investments to hedge against risk.

I’m completely on board with bitcoin and I believe it has a chance of becoming a reserve currency but, at the same time, it could suffer a black swan event where I lose it all.

What this black swan event could be I don’t know but someone once said something about not putting all your eggs in one basket and the same applies to investing also.

The company I used to buy my gold is The Gold Bullion Company whose website is here. I found them using Google as they were on the first page when I searched for ‘buy gold online uk.’

The Gold Bullion Company is headquartered in Wolverhampton and was established in 1993 so they have been in business for almost 30 years.

They sell a range of gold bullion bars and coins online (and silver too) and use a range of suppliers such as the Royal Mint, PAMP Suisse and Baird & Co.

I’m providing this information here because when I first discovered them I had to ensure they were a legit company. Imagine thinking you’re buying from a proper source only to be scammed.

Google is pretty good at removing scam sites from its search rankings but it’s always best to do due diligence when purchasing a high-price product online.

What reassured me about The Gold Bullion Company is when I called them up to ask them a few questions I had.

The lady who I spoke to was knowledgeable about investing in gold and reassured me that the gold delivered to your door is both insured for loss and protected from fraud.

In the end, I decided to invest in the PAMP Suisse Lady Fortuna gold bar. I love the intricate design of the Fortuna and despite costing a little bit more I think is worth it.

If you’re buying, for example, a 5oz gold bar you might want to consider buying five 1oz gold bars instead of one 5oz bar. This is because there may come a time when you want to sell some of it but not all of it.

If you have a 5oz gold bar you will have to sell it all at the same time. You can’t chop it into pieces.

Also, for peace of mind, I didn’t buy it all together. Despite being reassured by The Gold Bullion Company that sending it in the post was fine, I wanted to test the process first and then buy more once I was confident in it.

As promised the gold was delivered safe and sound in inconspicuous packaging and in a matter of days.

Tips for buying gold online in the UK

If you’re looking to invest in gold and you’re in the UK, here are some things to consider before making a purchase.

  • Think long-term. Investing in gold should be done over the long-term. Even though the gold price is currently rising you should at least invest for five years minimum but ideally ten years or more.
  • Gold bars or gold coins? As mentioned, if you’re in the UK and you invest in British gold coins you won’t pay capital gains tax on them but they will cost you a little more to buy.
  • Investing in five 1oz gold bars is better than one 5oz bar. If the gold price increases you may want to cash in a little on your investment and if you have one 5oz bar you’ll have to sell it all. If you have five 1oz bars you can sell a percentage of them.
  • Do your research before choosing an online gold seller. As I mentioned earlier, I was fairly meticulous in researching suppliers before I finally bought from the Gold Bullion Company. Look for online reviews from customers and call them up to speak to them. They should alleviate any concerns you have.
  • Hold your own gold and don’t depend on anyone else. Some may disagree but gold is a doomsday asset that should anything go badly wrong with the world you should have access to it. Don’t depend on anyone to store it for you and don’t invest in paper-backed gold. Own your own gold!

Written by Ste Davies

Stephen Davies is a digital strategist, consultant and speaker. You can reach him here.

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