The Beginner’s Guide To Investing In Gold Bullion
In recent years, the gold market has seen a surge in interest from investors, with many people entering the market for the very first time. This short guide should help those new to the concept of investing in gold bullion to reach an informed decision before taking the plunge.
What are the origins of the term “Bullion”?
The word "bullion" is of French origin and means “boiling”, a reference to the practice of melting the raw gold to create ingots and bars. This practice would occur in melting houses and the term has remained the umbrella term for gold coins and bars ever since.
Popular types of bullion:
- Gold Coins
The most popular and recognised British gold bullion coins are The Britannia and Sovereign. Due to these coins being legal tender in the UK, they are exempt from Capital Gains Tax (CGT), meaning UK investors have the freedom to invest in as many of these coins as they require, without paying tax on any profit they make when it comes to selling them.
Other popular bullion coins from across the globe include the U.S. Gold Eagle, Canadian Maple Leaf, and South African Krugerrand.
- Gold Bars
The selection of gold bars available today is extensive, ranging from 1 gram right up to 1 kilo in weight. A gold bar is exactly that, a bar of gold, manufactured by various Mints from across the world to a pre-determined weight and quality standard.
Which is best, gold coins or bars?
For investors looking for the convenience of ownership and added capital gains tax benefits, then gold coins could be the best choice. Coins can offer greater liquidity, and can feature attractive or historical designs stamped with a date, sometimes adding a ’collectable’ element to the precious metal investment.
For anyone looking to make a larger investment and avoid paying a higher premium, then Gold bars could be the better option. Bars usually work out a little bit cheaper to buy than the same weight for a coin, due to lower production costs. However, this also applies to the resale value.
You can read more information about the pros and cons of both coins and bars in greater detail here.
The purity of gold bullion (or ‘fineness’) is measured in parts per thousand. For example, many gold coins have a fineness of 999.0 meaning it contains 999 parts gold and 1 part of another metal. As 100% pure gold is virtually impossible to achieve, the purest type of gold available is 999.99, and any coin or bar containing 999.0 or above is considered ‘fine gold’.
Some coins, most notably the ever-popular sovereign, are struck in 22ct gold, or 916.7 fineness. This means the coin contains 916.7 parts gold and 83.3 parts of another metal or combination of metals, such as copper. The use of copper makes the coin more hard-wearing but of course, less valuable because of its reduced purity.
Why do people choose to invest in gold?
A core reason why many choose to invest in gold bullion is to protect their wealth against economic fluctuations. The value of assets like property and shares are heavily influenced by the global economies so they can lose vast amounts of value very quickly, should an economy crash. Gold, on the other hand, will often appreciate in value in times of economic slumps as it is seen as a more stable and reliable form of investment for protecting wealth in the long term.
However, it’s also worth noting that, due to the variety of designs of new coins being bought out each year, gold bullion coins can also be a popular choice as a collector’s item.
Should I buy pre-owned or new gold bullion?
If you are looking to get the most physical gold for your money, buying pre-owned can often be a great option. New products attract costs such as manufacturer’s premiums, yet pre-owned coins and bars are often sold at a lower price, helping the investor save money.
You can see more information about buying pre-owned vs new in greater detail here.
How to buy gold bullion
When it comes to buying gold bullion, it is essential to do your research. World affairs and stock market activity often results in fluctuating gold prices, so it is important to take this into consideration when purchasing. If you are buying bullion online, take your time and don’t forget to dive a little deeper when it comes to the bullion dealers. One great way of doing this is to visit, independent third party review sites such as Trustpilot, Google reviews or Feefo and read first-hand what their customers think of them.
During the course of your research, our experts are on hand to answer any questions you may have, so feel free to give them a call on 0121 355 0620 or email them at email@example.com.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.