Should amateurs invest in gold coins?

09-07-18
Are there benefits to gold coins over gold bars? Should I invest in gold coins or gold bars? Benefits of gold sovereign Should an amateur buy a gold bar? Should amateurs buy gold coins?

The question behind this question is should amateurs invest in gold? Assuming you’ve already answered with a big shiny yellow YES, then next on the list might be “should I invest in gold bars or gold coins?”

Like anything there is no right answer, it all depends on your goals and current situation. Although gold coins may hold some benefits over bars for those new to the game.

If you haven’t bought gold before then coins represent more of a toe dip than a cannonball. 

A single Gold Sovereign is somewhere around £232 a pop. Whereas a 1kg gold bar is going to set you back £31k, now that’s a big splash.

If you are thinking of buying, you should also be thinking about selling. If your investment gold coins sit there forever and you never sell them then they aren’t an investment for you, they’re an investment for your heirs or they’re an archaeological find waiting to happen.

Assuming you will sell one day, what is going to be easiest for you?

Let’s say some time in the future you are sitting on a 1kg gold bar that had gained sufficient value, but you only want to liquidate 10%. (selling, not smelting).

A bit tricky with a single gold bar. You could trade for equal value smaller denominations but then the dealer is going to take a cut eating into your profits. Hmmm… If only you had a stack of coins instead of a single bar making it easier to split up. After all gold is gold.

Hang on, all gold is not equal…

When browsing the different coins available, which do you go for?

As always, you must look to the future. A popular coin may be easier to sell than a rarer coin. Think American Eagle, Canadian Maple Leaf, South African Kruggerand etc.

Will a rarer coin be as easy? That’s difficult to say. On one hand, perhaps buyers want to stick to what they know and deal in the most common options as mentioned above.

On the other hand, if you’ve invested in some limited edition, rare or hard to find coin then you open yourself up to the coin collector market. This could potentially increase the value above merely the gold price. It could be something to consider.

If you are wanting to sell in the future, keep in mind your other investments. What is your capital gains tax bill going to look like? How can you keep that bill down?

Option 1, depending on how much you are selling you could split a modest liquidation of your Gold Coins across 2 financial years to minimise your tax bill.

Option 2, buy the Gold Sovereign or Gold Britannia. These are legal tender within the UK and therefore you would pay ZERO capital gains tax when selling. Ooh, now we’re cooking.

So really if you are asking “Is buying coins better than buying bullion?” Better? Not really, gold is gold. 

Are gold coins easier to sell? In smaller quantities than a bar, definitely. It also gives you the option of investing in a wider variety of coins that may have better premiums are different times, a benefit you won’t get if the same investment is tied up in a single bar.

My advice if you want to invest is start with coins and you’ll be good as gold

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About the author

Phil Blackett

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I am an entrepreneurial retailer and wholesaler with a strong track record of achievement and success in E-Commerce within a B2C environment.

For over 30 years I have successfully founded, created and operated businesses within Men’s High St retail and online optical. I’ve built successful, high-performing teams – both technical and non-technical and always enjoyed developing profitable, long-term relationships with clients. 

It hasn’t all been plain sailing. I’ve learnt some hard lessons along the way that have shaped my ‘people first’ approach. I have a laser focus when it comes to margin, I believe profit tops turnover, cash is king and putting the customer first builds the right reputation. I’ve worked extensively with clients and suppliers all across the globe – giving me a truly international perspective in understanding cultural nuance and sensitivity.

By the very nature of my career to date, I have a very broad business experience and perspective. From developing international supply chains, merchandising and store design to raising VC funding, negotiating with banks and property agents and building high performance E-commerce sites – I believe I can bring value and insight to solve a broad range of business challenges.

Throughout my business career hindsight would have been a wonderful thing. I feel that I’m now able to share my knowledge and experience with others and help them avoid pitfalls and overcome the challenges that I’ve faced over a thirty-year career. In addition I believe my e-commerce knowledge and experience is very much at the cutting edge – enabling me to not only support ‘traditional’ small business – but also add value to those looking to establish themselves in the digital economy.

Additional Skills

E-commerce business seeding and transformation

I am also a Director of London Gold Bullion.

https://www.londongoldbullion.co.uk

 

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