Guide to Invest in Gold

In the greek mythology Midas’s Touch, King Midas is granted a wish. He decides to ask for – anything that he touches, should turn into gold. It is very evident from a greek myth also that gold is precious. Gold has always been an epitome of wealth and security. Gold is an alluring precious metal. This has been laid down in history so many times. Gold has been a symbol for status and power. A lot of our economy is defined by how much gold reserve does a country hold. This shiny metal might look beautiful in a jewellery item, but on its own too, it is a great investment tool. The desire for it is always going to be present because of its monetary value and returns.

But what exactly does it mean to invest in gold ? Should you just buy it randomly from anywhere ? Why should you really invest in it ? How can you invest in it ? Why are the prices rising so rapidly ? This article will be your guide to all the questions above.

Why Invest in Gold or Buy Gold?

So often we hear stories of royals fleeing in turbulent times, but always attempting to carry along with them pieces of jewellery. The pieces of jewellery have a very important element that makes them so expensive; precious metal. Gold as we all know, is the most sought after precious metal.

The very important reason why you should be investing in gold is for security. Gold stores values. It stores values even when it’s passed down from generations. Gold acts as a provision or safeguard during inflation. Gold is a secure long term investment. It is relatively low risk. One should always allocate a certain proportion of their savings towards gold. Especially in times of inflation and economic uncertainties, gold can often act as a saviour. It is always good to have gold to diversify your portfolio as well.

Gold is also easy to liquidate. When you compare its liquidity against other investment options, such as real estate, it is easier to liquidate gold.

In cases of currency devaluation, you can also use gold to sell out. This is a very common practice. Currency will always fluctuate. Gold on the other hand provides a more solid investment against paper money.

A very tempting fact is that the gold coins and gold bars sold by The Royal Mint, are VAT free. Not only that, UK legal tender gold coins get Capital Gains Tax (CGT) exemption.

How to Invest in or Buy Gold?

There are numerous ways to invest in gold. You can buy gold either physically or in paper form.

In paper form you can buy gold in Gold Stocks and Exchange Traded Funds (ETFs). Although there is scope for earning dividends here, you don’t have physical possession of the gold. It is important to note that the price of gold stock is dependent on the performance of the company and not the bullion.

In physical forms you can buy gold in form of gold coins and gold bars.

Gold coins made by The Royal Mint are considered legal tender in UK. These coins are available in different collections such as – The Sovereign, Britannia, Lunar and Queen’s Beasts, The Royal Arms and the Two Dragons.

These coins are available in 24K Fine gold which is 0.999 and in 22K Fine gold which is 0.916.

Gold bars are available in different weights. Often they look like small sized cards. Not only to the make for a beautiful gift, but also they make great investments.

At Pure Jewels we sell Britannia Bullion Coins as well as gold bars.
The gold bars we sell are made using 24k fine gold (99.9% gold). These bars made in Switzerland by Argor-Heraeus. Each one includes a certificate and unique serial number.

Why is The Gold Price Rising ?

The price currently for 18 karat gold is different than what is was a couple of months ago.
The price currently for 22 karat gold is also different than what is was a couple of months ago.

Why did the prices change ? More specifically, why did the prices rise ?

Gold prices depend on a lot of factors. The main factors that it depends on are monetary policy, currency valuation (as the price of gold is in US Dollars), inflation, supply and demand, and market scenario and central bank reserves.

We are in a middle of a pandemic. Before the pandemic we were already heading towards recession. The pandemic just accelerated it. Markets fall and rise. That is how they work. Eventually you do come out of the bleakest market.

The pandemic in place has restricted trade. This has had a lot of effect on the gold prices. Gold prices are rising because the supply is becoming limited. It is becoming limited because trade has been put into stop. This also means the transportation of gold from one country to another has been put into stop.

Before COVID-19, globally the growth rate was declining. To cope up with the implications of COVID-19, the government has to pull out its reserves to help and aid its citizens.

What is the Best Gold to Buy for Investment ?

When you compare physical gold and digital gold (ETFs), or even gold jewellery items, every object has their advantages and disadvantages.

Gold stocks and Exchange Traded Funds are convenient. There is no risk of thievery. You might also earn dividend on it. However, it is not exempted from VAT and CGT. The value of it depends more on how the operating mine or company is performing instead of current market price of gold.

Physical gold is always a good idea. Although there is no income on it, it is a safe and secure option backed by tax exemptions. Gold does not perish. It always has a value to it. Physical gold even more so. Gold bars and gold coins can always be passed down for inheritance. Their value is not going to decline.

Gold Jewellery is another excellent way of doing it, however when you compare it with gold in form of gold coins and gold bars, you do end up losing a little money in the melting of it and labour costs. This does not discount the fact that an item of gold jewellery cannot be an investment piece. However, it is advisable to only sell off that piece or melt it in cases of emergency and dire need.

Important Things to Remember

If you do plan on buying physical gold i.e gold in form of coins or bars or even jewellery, make sure that it is hallmarked. Buy from a known and trusted source.

Legally all gold jewellery above 1 gram is hallmarked.

Store it in a safe place. Although this goes without saying, it is important to have a safe or a similar device to store it in.

When buying gold coins, there also are collector gold coins. These coins generally have a premium over the value of usual gold coins. If you are not familiar with it, don’t buy without having complete information on it.

If you have any questions regarding buying or selling gold, or if you wish to sell gold, you can always contact us for further assistance.

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