There is no definitive right or wrong answer but careful consideration should be taken when choosing between bars or coins.
Gold comes in a variety of forms which begs the questions what form is best? All the information below is provided to ensure all investors make the best choice for their circumstance.
CGT & VAT
Coins or Bars?
Gold and silver coin purchases and CGT
When reading through HMRC’s Capital Gains Manual, it can be seen that coins, which are UK legal tender at their time of acquisition or disposal are exempt from Capital Gains Tax.
This is because sterling is not an included form of asset for CGT calculation purposes. Examples of exempt coins would be (but are not limited to):
Gold and silver Sovereign coins from 1837 (Queen Victoria reign and onwards)
Britannia gold and silver coins
Royal Mint Queens Beast series
Royal Mint Lunar series
The denomination value is all important on a coin and shows the legal value of a coin, for example, the Britannia below has a value of £100.
All non-UK coins are not currency and are classed as “chargeable assets” and are subject to Capital Gains Tax on any profits, these would include as examples – South African Krugerrands, American Eagles, Canadian Maple Leaf coins, etc.
For further information, click here to visit the HMRC page about Capital Gains Tax.
Premium prices or better value long term?
The premium is the additional cost charged above the gold spot price attributed to manufacturing
costs, handling, packaging, insurance and delivery. Reputable bullion dealers charge investors
very small percentage premiums in a bid to be competitive, however they are unavoidable as even
bullion dealers have to buy gold above the spot price.
The most effective way to keep premiums at an absolute minimum is to buy gold bars, or silver bars
if you are looking to invest in silver bullion. Gold bars attract a smaller premium as opposed to bullion
coins due to their larger unit size resulting in lower manufacturing costs. For example, it is more cost
effective to buy a 1 kilo gold bar than to buy ten 100g gold bars for the very same reason. Despite them
both containing exactly the same amount of gold, you would expect to make a saving of around 1%
which is a fairly substantial saving of approximately £350. If you plan on keeping your gold for a long
time and have no intention of wanting or needing to sell part of your investment, then larger gold bars
are ideal for you. However, be mindful that this relatively small savings would result in a lack of flexibility.
High Quality & VAT free
Cast bars refers to gold poured into a mould, which results in a distinctive round-edged look. It is often the cheapest form of gold, but to ensure a good resale price, make sure that you are buying a brand that is well accepted in the market.
Most investors buy gold bullion with the intention of preserving wealth and making a return on
their investment. Where the larger unit size gold bars or silver bars offer the best value when
buying, they do not necessarily represent the best value when it comes to selling your gold or
silver at a later date. Smaller unit gold bars such as the 1oz, 50g and 100g bars, and in particular
gold coins and silver coins offer greater flexibility at resale. There are many reasons where this
flexibility would come in use, releasing part of your investment for quick access to cash, or perhaps
part-selling which is often an effective way of getting a maximum return on investment.
Over time, individuals often want to change the balance of their portfolios, for example an investor may
have 20% of their liquid wealth held in a 1 kilo gold bar, but want to release half of this to reinvest in
stocks. At this point, the investor would either have to sell their entire gold bar or leave it and miss out
on the other potentially lucrative investment opportunities. However, if they had originally invested in
ten 100g gold bars, they could have easily sold half the bars to gain instant access to half of the money. Better still, bullion coins represent even greater flexibility and are a very popular option for new and experienced investors alike who are mindful of this and anticipate selling part of their bullion in the near
or distance future. Gold coins are available in a variety of sizes such as 1oz, 1/2oz, 1/4oz and 1/10oz
making them highly versatile, easy to store and ideal for trading if the banking system did ever collapse.
Graded or loose what is better?
As collecting coins became increasingly popular during the 1900’s the condition of a coin along with its rarity, became essential in determining the coins value, as is still very much the case today among investors.
Graded coins are nearly always more valuable than ungraded coins, especially unprotected coins vulnerable to the elements. Ungraded coins have no guarantee of grade, condition and even authenticity. Graded coins are certified by a professional grading company and assigned a grade between 1 and 70, 1 being poor, barely identifiable through 70, mint state perfect with no microscopic flaws.
Although ungraded coins can certainly be cheaper, many consider them a riskier investment, as the true value of a coin above its spot price relies on it being minted by an established mint and certified by a recognised grading service. The PCGS (Professional Coin Grading Service) represent the industry standard and are recognised as the world leaders in coin certification.
Bullion House are proud to be an authorised dealer of the PCGS.
Benefits of owning graded coins:
Graded coins almost always increase in value more than loose coins or bars
Guarantee of authenticity and condition
Gold coins are VAT free
U.K. Gold coins are capital gains tax-free
Graded coins have been shown to be less susceptible to market volatility
Higher resale price than loose coins
More collectable than loose coins and bars
Easy to store and stack
CGT free but what about VAT?
Silver is a very small market—so small, in fact, that a little money moving into or out of the industry can impact the price to a much greater degree than other assets (including gold). This greater volatility means that in bear markets, silver falls more than gold. But in bull markets, silver will soar much further and faster than gold.
We can expect this outperformance to repeat in the next bull market, too, because the silver industry remains tiny.
Storing Bars & Coins
Book safes or secure vaults what do you need?
Please email [email protected] or call 02071172889 for information on safes and storage options.