Guide to Investing in Gold Bullion Coins and Gold Bars

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The Beginner’s Guide to Investing in Gold

Here’s everything you need to know about how to invest in this precious metal.

Imagine yourself sitting in a stream swirling water in a pan, desperately hoping to see a small yellow glint of gold and dreaming of striking it rich. America has come a long way since the early 1850s, but gold still holds a prominent place in our global economy today. Here’s a comprehensive introduction to gold, from why it’s valuable and how we obtain it to how to invest in it, the risks and benefits of each approach, and advice on where beginners should start.

Why is gold valuable?

In ancient times, gold’s malleability and luster led to its use in jewelry and early coins. It was also hard to dig gold out of the ground — and the more difficult something is to obtain, the higher it is valued.

Over time, humans began using the precious metal as a way to facilitate trade and accumulate and store wealth. In fact, early paper currencies were generally backed by gold, with every printed bill corresponding to an amount of gold held in a vault somewhere for which it could, technically, be exchanged (this rarely happened). This approach to paper money lasted well into the 20th century. Nowadays, modern currencies are largely fiat currencies, so the link between gold and paper money has long been broken. However, people still love the yellow metal.

Where does demand for gold come from?

The largest demand industry by far is jewelry, which accounts for around 50% of gold demand. Another 40% comes from direct physical investment in gold, including that used to create coins, bullion, medals, and gold bars. (Bullion is a gold bar or coin stamped with the amount of gold it contains and the gold’s purity. It is different than numismatic coins, collectibles that trade based on demand for the specific type of coin rather than its gold content.)

Investors in physical gold include individuals, central banks, and, more recently, exchange-traded funds that purchase gold on behalf of others. Gold is often viewed as a “safe-haven” investment. If paper money were to suddenly become worthless, the world would have to fall back on something of value to facilitate trade. This is one of the reasons that investors tend to push up the price of gold when financial markets are volatile.

Since gold is a good conductor of electricity, the remaining demand for gold comes from industry, for use in things such as dentistry, heat shields, and tech gadgets.

How is the price of gold determined?

Gold is a commodity that trades based on supply and demand. The interplay between supply and demand ultimately determines what the spot price of gold is at any given time.

The demand for jewelry is fairly constant, though economic downturns do, obviously, lead to some temporary reductions in demand from this industry. The demand from investors, including central banks, however, tends to inversely track the economy and investor sentiment. When investors are worried about the economy, they often buy gold, and based on the increase in demand, push its price higher. You can keep track of gold’s ups and downs at the website of the World Gold Council, an industry trade group backed by some of the largest gold miners in the world.

How much gold is there?

Gold is actually quite plentiful in nature but is difficult to extract. For example, seawater contains gold — but in such small quantities it would cost more to extract than the gold would be worth. So there is a big difference between the availability of gold and how much gold there is in the world. The World Gold Council estimates that there are about 190,000 metric tons of gold above ground being used today and roughly 54,000 metric tons of gold that can be economically extracted from the Earth using current technology. Advances in extraction methods or materially higher gold prices could shift that number. Gold has been discovered near undersea thermal vents in quantities that suggest it might be worth extracting if prices rose high enough.

Image source: Getty Images.

How do we get gold?

Although panning for gold was a common practice during the California Gold Rush, nowadays it is mined from the ground. While gold can be found by itself, it’s far more commonly found along with other metals, including silver and copper. Thus, a miner may actually produce gold as a by-product of its other mining efforts.

Miners begin by finding a place where they believe gold is located in large enough quantities that it can be economically obtained. Then local governments and agencies have to grant the company permission to build and operate a mine. Developing a mine is a dangerous, expensive, and time-consuming process with little to no economic return until the mine is finally operational — which often takes a decade or more from start to finish.

How well does gold hold its value in a downturn?

The answer depends partly on how you invest in gold, but a quick look at gold prices relative to stock prices during the bear market of the 2007-2009 recession provides a telling example.

Between Nov. 30, 2007, and June 1, 2009, the S&P 500 index fell 36%. The price of gold, on the other hand, rose 25%. This is the most recent example of a material and prolonged stock downturn, but it’s also a particularly dramatic one because, at the time, there were very rea­l concerns about the viability of the global financial system.

When capital markets are in turmoil, gold often performs relatively well as investors seek out safe-haven investments.

Ways to invest in gold

Here are all the ways you can invest in gold, from owning the actual metal to investing in companies that finance gold miners.

Investment Option Pros Cons Examples
Jewelry
  • Easy to acquire
  • High markups
  • Questionable resale value
  • Just about any piece of gold jewelry with sufficient gold content (generally 14k or higher)
Physical gold
  • Direct exposure
  • Tangible ownership
  • Markups
  • No upside beyond gold price changes
  • Storage
  • Can be difficult to liquidate
  • Collectible coins
  • Bullion (noncollectible gold bars and coins)
Gold certificates
  • Direct exposure
  • No need to own physical gold

  • Only as good as the company that backs them
  • Only a few companies issue them
  • Largely illiquid
  • Perth Mint Certificates
Gold ETFs
  • Direct exposure
  • Highly liquid
  • Fees
  • No upside beyond gold price changes
  • SPDR Gold Shares (NYSEMKT: GLD)
Futures contracts
  • Little up-front capital required to control a large amount of gold
  • Highly liquid
  • Indirect gold exposure
  • Highly leveraged
  • Contracts are time-limited
  • Futures contracts from the Chicago Mercantile Exchange (constantly updating as old contracts expire)
Gold mining stocks
  • Upside from mine development
  • Usually tracks gold prices
  • Indirect gold exposure
  • Mine operating risks
  • Exposure to other commodities
  • Barrick Gold (NYSE: ABX)
  • Goldcorp (NYSE: GG)
  • Newmont Goldcorp (NYSE: NEM)
Gold mining-focused mutual funds and ETFs
  • Diversification
  • Upside from mine development
  • Usually tracks gold prices
  • Indirect gold exposure
  • Mine operating risks
  • Exposure to other commodities
  • Fidelity Select Gold Portfolio (NASDAQMUTFUND: FSAGX)
  • VanEck Vectors Gold Miners ETF (NYSEMKT: GDX)
  • VanEck Vectors Junior Gold Miners ETF (NYSEMKT: GDXJ)
Streaming and royalty
companies
  • Diversification
  • Upside from mine development
  • Usually tracks gold prices
  • Consistent wide margins
  • Indirect gold exposure
  • Mine operating risks
  • Exposure to other commodities
  • Wheaton Precious Metals (NYSE: WPM)
  • Royal Gold (NASDAQ: RGLD)
  • Franco-Nevada (NYSE: FNV)

Jewelry

The markups in the jewelry industry make this a bad option for investing in gold. Once you’ve bought it, its resale value is likely to fall materially. This also assumes you’re talking about gold jewelry of at least 10 karat. (Pure gold is 24 karat.) Extremely expensive jewelry may hold its value, but more because it is a collector’s item than because of its gold content.

Bullion, bars, and coins

These are the best option for owning physical gold. However, there are markups to consider. The money it takes to turn raw gold into a coin is often passed on to the end customer. Also, most coin dealers will add a markup to their prices to compensate them for acting as middlemen. Perhaps the best option for most investors looking to own physical gold is to buy gold bullion directly from the U.S. Mint, so you know you are dealing with a reputable dealer.

Then you have to store the gold you’ve purchased. That could mean renting a safe deposit box from the local bank, where you could end up paying an ongoing cost for storage. Selling, meanwhile, can be difficult since you have to bring your gold to a dealer, who may offer you a price that’s below the current spot price.

Gold certificates

Another way to get direct exposure to gold without physically owning it, gold certificates are notes issued by a company that owns gold. These notes are usually for unallocated gold, meaning there’s no specific gold associated with the certificate, but the company says it has enough to back all outstanding certificates. You can buy allocated gold certificates, but the costs are higher. The big problem here is that the certificates are really only as good as the company backing them, sort of like banks before FDIC insurance was created. This is why one of the most desirable options for gold certificates is the Perth Mint, which is backed by the government of Western Australia. That said, if you’re going to simply buy a paper representation of gold, you might want to consider exchange-traded funds instead.

Exchange-traded funds

If you don’t particularly care about holding the gold you own but want direct exposure to the metal, then an exchange-traded fund (ETF) like SPDR Gold Shares is probably the way to go. This fund directly purchases gold on behalf of its shareholders. You’ll likely have to pay a commission to trade an ETF, and there will be a management fee (SPDR Gold Share’s expense ratio is 0.40%), but you’ll benefit from a liquid asset that invests directly in gold coins, bullion, and bars.

Futures contracts

Another way to own gold indirectly, futures contracts are a highly leveraged and risky choice that is inappropriate for beginners. Even experienced investors should think twice here. Essentially, a futures contract is an agreement between a buyer and a seller to exchange a specified amount of gold at a specified future date and price. As gold prices move up and down, the value of the contract fluctuates, with the accounts of the seller and buyer adjusted accordingly. Futures contracts are generally traded on exchanges, so you’d need to talk to your broker to see if it supports them.

The biggest problem: Futures contracts are usually bought with only a small fraction of the total contract cost. For example, an investor might only have to put down 20% of the full cost of the gold controlled by the contract. This creates leverage, which increases an investor’s potential gains — and losses. And since contracts have specific end dates, you can’t simply hold on to a losing position and hope it rebounds. Futures contracts are a complex and time-consuming investment that can materially amplify gains and losses. Although they are an option, they are high-risk and not recommended for beginners.

Gold mining stocks

One major issue with a direct investment in gold is that there’s no growth potential. An ounce of gold today will be the same ounce of gold 100 years from now. That’s one of the key reasons famed investor Warren Buffett doesn’t like gold — it is, essentially, an unproductive asset.

This is why some investors turn to mining stocks. Their prices tend to follow the prices of the commodities on which they focus; however, because miners are running businesses that can expand over time, investors can benefit from increasing production. This can provide upside that owning physical gold never will.

However, running a business also comes with the accompanying risks. Mines don’t always produce as much gold as expected, workers sometimes go on strike, and disasters like a mine collapse or deadly gas leak can halt production and even cost lives. All in all, gold miners can perform better or worse than gold — depending on what’s going on at that particular miner.

In addition, most gold miners produce more than just gold. That’s a function of the way gold is found in nature, as well as diversification decisions on the part of the mining company’s management. If you’re looking for a diversified investment in precious and semiprecious metals, then a miner that produces more than just gold could be seen as a net positive. However, if what you really want is pure gold exposure, every ounce of a different metal that a miner pulls from the ground simply dilutes your gold exposure.

Potential investors should pay close attention to a company’s mining costs, existing mine portfolio, and expansion opportunities at both existing and new assets when deciding on which gold mining stocks to buy.

Mining-focused ETFs

If you’re looking for a single investment that provides broadly diversified exposure to gold miners, then low-cost index-based ETFs like VanEck Vectors Gold Miners ETF and VanEck Vectors Junior Gold Miners ETF are a good option. Both also have exposure to other metals, but the latter focuses on smaller miners; their expense ratios are 0.53% and 0.54%, respectively.

As you research gold ETFs, look closely at the index being tracked, paying particular attention to how it is constructed, the weighting approach, and when and how it gets rebalanced. All are important pieces of information that are easy to overlook when you assume that a simple ETF name will translate into a simple investment approach.

Mutual funds

Investors who prefer the idea of owning mining stocks over direct gold exposure can effectively own a portfolio of miners by investing in a mutual fund. This saves the legwork of researching the various mining options and is a simple way to create a diversified portfolio of mining stocks with a single investment. There are a lot of options here, with most major mutual fund houses offering open-end funds that invest in gold miners, such as the Fidelity Select Gold Portfolio and Vanguard Precious Metals Fund.

However, as the Vanguard fund’s name implies, you are likely to find a fund’s portfolio contains exposure to miners that deal with precious, semiprecious, and base metals other than gold. That’s not materially different from owning mining stocks directly, but you should keep this factor in mind, because not all fund names make this clear. (For example, the Fidelity Select Gold Portfolio also invests in companies that mine silver and other precious metals.)

Fees for actively managed funds, meanwhile, can be materially higher than those of index-based products. You’ll want to read a fund’s prospectus to get a better handle on its investing approach, whether it is actively managed or a passive index fund, and its cost structure. Note that expense ratios can vary greatly between funds.

Also, when you buy shares of an actively managed mutual fund, you are trusting that the fund managers can invest profitably on your behalf. That doesn’t always work out as planned.

Streaming and royalty companies

For most investors, buying stock in a streaming and royalty company is probably the best all-around option for investing in gold. These companies provide miners with cash up front for the right to buy gold and other metals from specific mines at reduced rates in the future. They are like specialty finance companies that get paid in gold, allowing them to avoid many of the headaches and risks associated with running a mine.

Benefits of such companies includes widely diversified portfolios, contractually built-in low prices that lead to wide margins in good years and bad, and exposure to gold price changes (since streaming companies make money by selling the gold they buy from the miners). That said, none of the major streaming companies has a pure gold portfolio, with silver the most common added exposure. (Franco-Nevada, the largest streaming and royalty company, also has exposure to oil and gas drilling.) So you’ll need to do a little homework to fully understand what commodity exposures you’ll get from your investment. And while streaming companies avoid many of the risks of running a mine, they don’t completely sidestep them: If a mine isn’t producing any gold, there’s nothing for a streaming company to buy.

The built-in wide margins that result from the streaming approach provide an important buffer for these businesses. That has allowed the profitability of streamers to hold up better than miners’ when gold prices are falling. This is the key factor that gives streaming companies an edge as an investment. They provide exposure to gold, they offer growth potential via the investment in new mines, and their wide margins through the cycle provide some downside protection when gold prices fall. That combination is hard to beat.

What’s the best way for a beginner to invest in gold?

There’s no perfect way to own gold: Each option comes with trade-offs. That said, probably the best strategy for most people is to buy stock in streaming and royalty companies. However, what to invest in is just one piece of the puzzle: There are other factors that you need to consider.

How much should you invest in gold?

Gold can be a volatile investment, so you shouldn’t put a large amount of your assets into it — it’s best to keep it to less than 10% of your overall stock portfolio. The real benefit, for new and experienced investors alike, comes from the diversification that gold can offer. Once you’ve built your gold position, make sure to periodically balance your portfolio so that your relative exposure to it remains the same.

When should you buy gold?

It’s best to buy small amounts over time. When gold prices are high, the price of gold-related stocks rises as well. That can mean lackluster returns in the near term, but it doesn’t diminish the benefit over the long term of holding gold to diversify your portfolio. By buying a little at a time, you can dollar-cost average into the position.

As with any investment, there’s no one-size-fits-all answer for how you should invest in gold. But armed with the knowledge of how the gold industry works, what each type of investment entails, and what to consider when weighing your options, you can make the decision that’s right for you.

A beginner’s guide to investing in gold

Gold is the ultimate insurance policy – an essential part of your portfolio. Here’s how to invest in it.

  • 1. A beginner’s guide to investing in gold
  • 2. How to buy gold bullion
  • 3. Why you should buy gold sovereigns
  • 4. How and where to buy gold coins and bars
  • 5. Do gold ETFs make safe investments?
  • 6. Gold miners should regain their shine – but choose carefully

See all pages

Gold can be a very useful way to diversify your portfolio. It’s relatively rare, and its value often doesn’t move in line with other assets such as equities or property. At MoneyWeek, we’ve consistently said that gold provides insurance for your portfolio, and we believe that most people should probably allocate around 5%-15% of their portfolios to gold or gold-related investments. So the follow-up question is: how should you invest in gold?

Invest in physical gold

Physical gold is worth holding because it’s a universal finite currency, held by most central banks. In the same way that the family home should not be regarded as an investment, gold bullion is not an investment per se, rather a form of saving for a rainy day or of financial insurance. You shouldn’t trade your gold. You wouldn’t trade an insurance policy, so don’t trade your gold.

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Gold is a good way to ensure wealth preservation and for passing wealth from one generation to the next. Once you’ve got some gold bullion in your portfolio, then other investments such as mining shares, investment funds and other more speculative gold investments can be considered.

If you want to know where to buy gold bullion, read on here

Modern bullion coins and bars

Modern bullion coins allow investors to own investment-grade gold legal tender coins at a small premium to the spot price of gold as quoted on the markets. The value of bullion coins and bars is determined almost solely by the price of gold, and thus follows the bullion price.

Gold, silver, and platinum are all available in the form of bullion coins, minted in the UK, the US, in Canada, South Africa, Austria, Australia, China and other countries. Most bullion coins are minted in 1/10oz, 1/4oz, 1/2oz & 1oz form (and some can be bought in 2oz, 10oz & 1 kilo). However, one-ounce gold bullion coins such as Krugerrands or Britannias are by far the most popular for both small investors and high-net-worth individuals who see the advantages of owning legal tender bullion coins, either in their possession or in depositories, and recognise the advantages of the divisibility afforded by them.

Buying investment-grade gold bullion for investment is stamp-duty free and tax free (VAT exempt) in the UK and EU due to the EU Gold Directive of 2000.

We have compiled a directory of leading gold brokers where you can buy gold bullion, coins and bars online, over the phone or even in branch: How and where to buy gold coins and bars.

Semi-numismatic and numismatic gold coins

Numismatic or older and rare coins are bought not solely for their precious metal content, but also for their rarity and their historical, aesthetic appeal. They are leveraged to the gold price, which means that the price of these coins will generally increase faster than the gold price in a bull market and will decrease by more when gold is in a bear market.

The British gold sovereign (originally the one pound coin) is the most widely traded and owned semi-numismatic gold coin in the world. It’s worth noting that British gold sovereigns are also exempt from capital gains tax (CGT).

Gold certificates

The Perth Mint Certificate Programme is the only government backed precious metal certificate programme in the world. It allows you to own investment grade gold which is stored in vaults in the Perth Mint of Western Australia. The gold is stored in a government mint and insured by Lloyds of London. That said, this is unallocated gold’. That means that you don’t own actual gold, you own a promise from the Perth Mint to give you back your gold if you want it. (With allocated gold’, you are the legal owner of the gold, and the account provider is the custodian.) There are no initial or ongoing shipping, insurance, holding or custodial fees and thus it is one of the most cost effective ways for investors to own bullion over the long term.

Most investors opt to own their bullion in unallocated accounts as there are no insurance or holding fees on them, and there is the flexibility of being able to transfer to an allocated account simply by paying small fabrication fees should the investor deem it necessary.

Allocated accounts

Allocated gold accounts allow an investor to buy gold coins and bars from a bullion brokerage which will transfer or ship the bullion to an individual’s account in a depository or bank. Allocated accounts involve ownership of specific gold and the owner has title to the individual coins or bars. Due diligence should be done on allocated gold account providers and the history, security, credit rating and net worth of the provider is of vital importance.

Providers include BullionVault and Gold Money. They offer allocated accounts where gold can be instantly bought or sold, and where every gold bar is audited and accounted for and it is considered a safe way to own bullion.

Investing in paper gold

Another approach is to invest in companies that either mine gold or are exploring for new gold deposits. Some companies are both miners and explorers. If you’re going to invest in mining companies, it’s a good idea to diversify your investment across several companies. Investing in a miner is riskier than investing in gold itself.

Should I Invest in Gold Bars or Gold Coins?

Whether you’re new to bullion investment or not, deciding whether to invest in bullion bars or bullion coins should take some consideration. Before making this decision, it would be advisable that you conduct your research as there is no definitive right or wrong answer, it will vary depending on the needs and circumstances of the individual investor. However, as when making any other investment there are a several factors to consider including the value of your investment and the product premiums, how long you plan on keeping it, where to store it, and how you plan on realising the value of your investment.

Premiums

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.

Flexibility

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.

Popular gold coins include the famous South African Krugerrand coins which tend to attract the lowest
premiums making them perfect for smaller and first time investors. Alternatively, British bullion coins like
the Gold Sovereign, Half Sovereign and Gold Britannia are perfect for coin investors who hold a large amount
of money in gold bullion due to their CGT free status. For the ultimate flexibility, perhaps consider silver
coins which are substantially lower in value than gold coins and come in a 1oz size. Popular silver coins
include silver Maples, the silver Britannia coin and the silver Philharmonic coin which tends to be the very
cheapest coin to buy. For ultimate flexibility, buying gold coins for investment is recommended, despite the
slightly higher premium.

Small Investors and First Time Investors

It is advised that small and first time investors look into both coins and bars, despite coins being the
obvious choice for lower value investments. A 100g gold bar costing around £2,600 or a 1 ounce gold
bar costing around £800 are popular starting points for some investors. Popular gold coins include the
famous South African Krugerrand coins costing around £800, which tend to attract the very lowest
premiums making them perfect for smaller and first time investors. Gold British coins, in particular gold
sovereigns and half sovereigns, offer a much cheaper way to buy gold in smaller units costing around
£200 and £100 respectively.

For silver investment, there are a whole host of 1oz silver coins available which are an ideal starter point.
It is advisable to look for the coin with the very lowest unit cost which tends to be the silver Maples and
the Philharmonic coins. We advise this as when selling your bullion, you only get the intrinsic value of
the metal, so the cheaper you bought them for originally, the higher return on investment you make.

Large Investors

With individuals looking to invest large amounts of money in gold investment bullion, the decision is less
complicated as it’s important to get the very best value for your money to maximum return on
investment. It would be best to buy the largest unit sizes you can so 500g gold bars, 1 kilo gold
bars and 5 kilo silver bars will represent the best value. Also, buying gold in volume can also
offer further savings as the unit price is reduced when you buy more than one due to the lower
costs incurred by the bullion dealer.

Changing Premiums

Bullion coins, with particular reference to gold bullion coins, have in the past demanded additional premiums depending on market factors at the time. A fine example of this was in the 1960’s there was a premium of up to 40% associated with buying and selling gold sovereigns. This is another factor worth taking into consideration when buying gold, where coins could potentially provide you with greater return on investment, bullion bars will only ever be worth the intrinsic value of the metal content.

Recommendation

At BullionByPost we encourage our customers to opt for the bullion products which offer the very best value for money as your investment, therefore obtaining the highest intrinsic value of gold and silver for your budget. The best way to buy gold ultimately depends on your individual situation. This is all about personal preference and circumstances, taking into account all factors mentioned above with particular reference to premiums and flexibility.
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Related Links: If you have any questions about gold bullion investment, please feel free to contact our knowledgeable and friendly team on +44 121 634 8082 who will be happy to talk your through any queries you may have. Alternatively, you can email us at [email protected] and we will get back to you as soon as possible.

How to Invest in Gold? The Ultimate Guide to Gold Investment

For centuries savvy investors have been aware of the importance of gold as part of a well balanced portfolio. In addition to offering wealth diversification, gold is a world renowned safe haven for investors offering the ultimate insurance and protection against turbulent economic times.

History illustrates that gold is a timeless asset, not only proving to be a successful
preserver of wealth, but high gold prices and record demand has ensured it has
outperformed most other forms of investment.

According to the World Gold Council, Central Bank gold buying was at its highest level
for 50 years in 2020, with the global economic slowdown weighing on the minds of
financial experts. Gold did so well that it broke price records in most currencies, with a staggering 72 nations reporting peak gold price, and the likes of the Pound, Euro, Yuan
and Swiss Franc near all-time highs.

Investor demand for gold grew by 4% last year. Despite the Chinese economy slowing
down due to pressure on exports to the United States, China’s demand for gold stayed
roughly even from the previous year, while demand in other areas such as the UK and
South-East Asia grew by up to 12%.

As 2020 rumbles on, gold prices have steadily risen – up $99 in the past six months.
Demand is high and investor interest in gold mining firms is strong, with several large
mergers in progress. The expectation, as detailed in our annual Gold Price Forecast, is
that gold will continue to make steady gains this year as investor demand rises. Last
year’s demand was based on slowing economies and restricted trade, with gold’s safe
haven status making it a desirable asset to diversify portfolios and provide a hedge
against risk.

With Brexit yet to be resolved and applying pressure on the Pound, very weak economic
performance in the Eurozone, and the ongoing US/China trade war, could now be the
ideal time to invest in gold bullion?

How to Buy Gold?

The guide provides essential reading for all investors. If you’ve never bought gold before
then we can help explain how to invest in gold for beginners. Even seasoned investors
can benefit though, and this guide is packed with must read information and advice on
how to invest in gold coins and bars, including why buy gold, and where to buy gold.

The guide also looks into bars vs coins, gold vs silver, the benefits of owning physical gold over paper and electronic gold, and much more.

Why Invest in Gold?

In order to know if gold is a good investment, it is important to understand why people buy
gold. In times of economic uncertainty and instability, buying gold makes more sense than
other assets. With confidence in the banking system and worldwide economy at an all-time
low, gold bullion could be the ultimate insurance and should act as an essential part of
everybody’s investment portfolio.

With the famous yellow metal in greater demand than ever, there are many reasons why
people should buy gold. Owning gold could be the ultimate way to preserve your wealth, and
possibly make a healthy return in these uncertain times. It’s an age old question which people
have been asking for centuries – where is my money really safe? And more and more people
are now choosing the oldest answer: GOLD.

Why Buy Physical Gold? Physical Gold Vs ETFs

As the old saying goes; if you don’t hold it, you don’t own it. There really are numerous
benefits of physically holding your gold in your hands, as opposed to buying electronic
gold (ETF) or paper gold. In these unpredictable economic times of banking instability,
low interest rates, underperforming currency markets, volatile stocks and repeated
rounds of printing money, gold offers a welcome safeguard to the turbulence.

However not any form of gold, but physical gold. Physical gold is a timeless asset which
will always have a value and always lasts the test of time. Holding physical gold bars
and/or gold coins provides the ultimate control and insurance for your wealth against
financial crisis in an underperforming wider economy.

Where to Buy Gold?

Research is everything. Your decision to buy gold online wouldn’t have been taken lightly and
should be backed by your own research. Much the same, when it comes to selecting your
chosen bullion dealer, again research is vital. The Internet is the best place to conduct your
research. The Internet holds information about the impartial experiences, opinions and
recommendations of millions of people all around the world. It sounds obvious, but why not
start your research by simply typing in the bullion dealers brand name into Google.co.uk. The
Internet really is the world’s largest open forum in which companies have no control. It will
become quickly apparent if a bullion dealer has a negative online reputation, in which case
they should be avoided at all costs.

When to Invest in Gold?

Looking back at historical data, in hindsight it is easy to identify 2005/06 as a great time to buy
gold bullion before the constant rises when the price of gold stood at just £250 T/OZ. Again in
2007/08 the UK banking crisis offered another great opportunity to jump onto the gold bandwagon
with the gold price standing at around £350 T/OZ. Some of the most common questions heard
now on a daily basis are; is it too late to buy gold? And; how much longer can the gold price
continue to rise?

Unfortunately, there’s no exact science to knowing when to buy gold, but there are lots of effective
and timeless techniques and indicators that most successful investors use to help them and look
out for.

Gold Bars Vs Gold Coins?

Whether you’re new to bullion investment or not, deciding whether to invest in bullion bars
or bullion coins should take some consideration. Before making this decision, it would be
advisable that you conduct your research as there is no definitive right or wrong answer, it
will vary depending on the needs and circumstances of the individual investor. However,
as when making any other investment there are several factors to consider including: the
value of your investment and the product premiums, how long you plan on holding your gold,
how you will store it, taxation and how you plan on realising the value of your investment.

Should I Buy Gold & Silver?

Many investors spend time deciding whether to buy gold or buy silver, however the savviest
investors own both. Whereas gold could offer the ultimate insurance and protection against
uncertain economic times, silver is a more speculative investment. Despite gold and silver
both being commonly invested precious metals, silver is an entirely different investment which
can realise substantial profits despite the initial VAT outlay. It’s because of these differences
that owning both gold and silver together can be of benefit.

Is Bullion Subject to VAT?

The good news is investment grade gold is VAT free. This includes all the gold bullion bars and
coins on our website. However, unlike gold, VAT is payable on silver at your local tariff rate, making
silver a more long term, speculative investment. However, due to the volatile nature of the silver
price, returns are often quickly realised. If you are VAT registered and think you may be able to
claim your VAT back, then we advise you speak to your Accountant.

Where Should I Store my Gold?

The physical possession and control of your bullion is one of the main benefits of investing in gold
bullion bars and coins over electronic or paper gold, however you must consider where to store
your gold. There really is no one correct answer, the truth is you can do with it as you please and
can store it where you like; it really is down to personal preference. Storing gold bullion really isn’t
anything new; people have been successfully storing gold and silver bullion for centuries and is
particularly common in Germany and India.

On a basic level there are four different options; allocated storage, a bank safety deposit box, a home
safe or be a bit more creative. Although allocated storage with BullionByPost is the most secure all
four options offer a variety of pros and cons, these should be investigated before making a decision
as to how to store your gold bars and gold coins.

Why Buy Gold Online at BullionByPost?

How to Buy Gold Online at BullionByPost?

Buying gold online at BullionByPost is quick, simple and secure. You can create and register your account online in as little as two minutes. Once your account is setup, you can buy gold and buy silver bullion online 24 hours a day at the click of a button. Your online account will also allow you to track the performance of your gold investment against the current price of gold as well as providing you with the latest product news and a safe place to store your invoices. With a comprehensive range of gold and silver bullion products available at low margins, buying gold UK has never been so safe and easy.

Related Links: If you have any questions about investing in gold, please feel free to contact our knowledgeable and friendly team on +44 121 634 8082 who will be happy to talk your through any queries you may have. Alternatively, you can email us at [email protected] and we will get back to you as soon as possible.

View our Top 5 Gold Investments and our Top 5 Silver Investments

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