Gold is considered a safe haven by investors during times of economic turmoil. Meaning right now is a great time to invest in Gold! When currencies go through devaluation and surges of inflation or deflation occur - investors tend to look towards gold.
Huge demand causes an increase in the price of gold. This is why we’ve seen the price slowly rise since March, to a whopping £1482.33 per troy ounce (as of 21st August 2020). Greatly higher since the day lockdown measures began in the UK on 23rd March: £1280.
The price has been rising since early February, when the scale of the global pandemic began to emerge. Whilst the price changes from day to day, gold has proven to retain its value over longer periods of time. Meaning buying gold at times of financial uncertainty, is a great way to guard your finances!
If you’re a first-time investor in gold, there are a few things you should know before taking the plunge. Here are some of our top tips to investing in gold during 2020:
Gold is a safe investment – but it’s important to remember nothing is certain
Gold has proven its resilience throughout the COVID-19 pandemic - just as it has over the years, all around the globe.
The most recent and relevant example of this (prior to COVID), was during the Brexit uncertainty. Gold prices reflected that many people were investing as worry heightened around the UK’s handling of withdrawal negotiations from the EU.
Traditionally, this precious metal has held its value throughout recessions - as investors use it to diversify their portfolios. During the ‘Great Recession’ (2008-09), gold prices heightened, which showed its resilience during economical downturns.
This being said, historical performance can never predict future prices. Our advice is to do your research, understand patterns, but don’t invest unless you can afford for uncertainty.
Gold can be free from Capital Gains Tax
Capital Gains Tax (CGT) is a tax paid on profit when you sell (or give away) an asset that has increased in value, since you first invested. CGT applies to a wide range of assets including a second home, shares or bullion.
Every individual has an annual CGT allowance. Any profits below the allowance limit are exempt from CGT. Whilst gains over your allowance will be subject to tax, in line with HMRC guidelines. For the 2019/20 financial year, the CGT allowance is £12,000. Though, it is recommended to check with HMRC for the most up to date information.
British Sovereign and Britannia coins are exempt from CGT, as they’re classed as UK legal tender. If you think CGT could be an issue for you, you may want to consider investing in British gold sovereign instead of gold bars. Though this could attract a slightly higher premium when purchasing your gold – it could give you large savings when you decide to sell.
Investing in gold can be free from VAT
Gold bullion and coins have been exempt from VAT in the EU since 2000. This makes Gold bullion investments more appealing for investors. However, Platinum, Silver and Palladium bullion products are subject to VAT.
Be sure you know whether you’ll have to pay VAT before purchasing.
What’s the difference between gold bars, rounds and coins?
Gold is available to purchase for investment, in the form of bars, rounds and coins. The main difference between each, is the size.
Gold coins come in various sizes, usually similar to that of legal tender. The benefit of gold coins is that they’re highly portable and are easy to sell in whatever quantity you’d like.
Gold bars, however, are much larger than coins. You can buy gold bars in various sizes, to allow for selling off assets when needed. But if you purchase just one high-value bar, you’ll have to sell the entire bar or nothing at all. This can be considered as one of the only drawbacks of investing in gold bars. Unlike gold coins, bars offer little flexibility.
Rounds are similar in appearance to coins, but they aren’t legal tender.
Choosing when to buy or sell your gold
Gold is a pretty stable investment, compared to investing in stock markets. Only very slight gain can be made day to day, by watching market fluctuations. Over the life of your investment, this will end up being a fairly insignificant return. The price of gold is still rising – making right now a great time to invest in gold.
Your decision to sell gold will always be influenced by your financial circumstances. Before selling, we advise that you watch the markets and speak to different dealers to gauge the demand of gold. Each day you’ll find updated spot prices for all metals on our website.
Buy from a seller you trust
Sonny’s Jewellers are one of the leading Jewellers in Birmingham’s Jewellery Quarter and have been in the industry for over 50 years. Our strong relationships with our customers make us a great company to trust with your investments.
All of our bars are brand new, pure 24-carat gold (999.9) and come with a genuine certificate of authenticity.
Our stock of investment coins are bullion-grade and include a complete range of the world’s most popular coins. All our coins are manufactured by Internationally trusted mints.
You can have your gold delivered right to your door! Fully insured, it’ll be with you the day after dispatch, via Royal Mail Special Delivery. Please explore your options via our Bullion Buying Guide.
If you’re looking to invest, please fill out our enquiry form to find out more.