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Many people assume that investing in gold is only for the super rich, but in reality you can get started with as little as just a few pounds.
There are several different types of gold you can buy, including physical gold, digital gold, and exchange-traded funds, which are a type of pooled investment that tracks the price of gold.
Here, we explain the various options that are available to anyone wanting to buy gold, how to go about it, and why gold remains such a popular investment.
Please remember that investing in gold is not without risk and before making any investment decisions, you may want to seek advice from a professional independent financial advisor.
Why buy gold?
Gold can be a really useful diversifier for investors, as the price of gold often behaves differently to other assets such as shares and bonds. That’s because its value is determined by factors such as supply and demand, investor sentiment and central bank policies.
Prices are particularly sensitive to the former, as gold is a finite resource that cannot be made. Often gold prices will rise when share prices fall (although this isn’t guaranteed) as investors typically tend to pile into ‘tangible assets’ such as gold when markets are uncertain.
Gold is also seen as a useful hedge against inflation, or in other words, it is able to maintain its value during periods when living costs are going up due to its scarcity.
How to buy gold
There are several different ways to buy gold, and the right one for you will depend on how much you want to buy and how you plan to store and insure it, or if you want that side of things taken care of on your behalf.
Buying bullion
The Royal Mint has a vast collection of bullion coins and bullion bars, all of which are created from 99.9% pure gold. There’s something to suit every budget, with prices starting at less than £100, increasing right up to hundreds of thousands of pounds.
For example, The Royal Mint’s Britannia gold coins and bars are available in various sizes, with prices starting from around £90 for a 1g Minted Gold Bar. The Best Value Quarter Sovereign gold bullion coins, which are pre-owned and available in 22 and 24 carat fine gold, start from around £145.
Thinking of Investing in Tax-Free Gold?
Speak with The Royal Mint’s wealth management team today and discover how you could diversify your investment portfolio, hedge against inflation, and secure your family’s future with tax-free gold.
One of the biggest benefits of buying bullion coins from The Royal Mint is that they are exempt from Capital Gains Tax (CGT) for UK residents because of their status as legal British currency.
If you are investing a substantial amount in gold, you will need to consider how you will store it securely. There are two main options, either to store it yourself, or keep it in a professionally managed vault.
Bear in mind too that you’ll need to let your home contents insurance provider know that you’ll be storing gold in your property. You may find that you will need to increase your premiums to ensure that your investment is protected, or that your insurer may refuse to cover it at all, in which case you may need to take out specialist insurance.
For many people, it simply won’t be practical, or safe, to store gold at home, but if you are buying gold from The Royal Mint, you have the choice of having it delivered directly to you free of charge, or you can pay a small annual fee to keep your assets in The Vault®, which is The Royal Mint’s secure on-site storage facility.
Purchasing digital gold investments
If you’d rather not buy physical gold because you’re worried about how you’d store and insure it, or you want to get started by investing a small amount, then digital gold investments might be worth considering.
The Royal Mint’s digital gold product DigiGold, for example, provides one of the simplest ways to buy gold.
As the name suggests, you invest digitally, buying a fractional amount of a large gold bar which is held securely in The Vault® at The Royal Mint, so you won’t have any concerns about security. You will be buying gold based on its value rather than weight, and the minimum you can invest is £25, making this an accessible investment for people on lower budgets as well as those with larger sums to invest.
The rate at which you buy and sell gold digitally is based on live precious metal prices, and you can buy and sell whenever you want online. Bear in mind that if you invest in digital gold, any gains you make when you come to sell it that are above the current Capital Gains Tax allowance (£3,000 in the 2024/25 tax year) will be liable for CGT. This is unlike bullion coins which, as mentioned above, are exempt from CGT as they are considered legal currency.
Thinking of Investing in Tax-Free Gold?
Speak with The Royal Mint’s wealth management team today and discover how you could diversify your investment portfolio, hedge against inflation, and secure your family’s future with tax-free gold.
Investing in exchange-traded funds
Another way to invest in gold is through an exchange-traded fund (ETF) that tracks the price of gold.
There are a number of ETFs (often known as exchange-traded commodities or ETCs) which follow the price of bullion and back their gold holding with physical gold. ETCs are what’s known as open-ended securities, which means they are listed and traded on the stock exchange, with the price affected by changes in the price of gold.
Providers of ETCs aren’t required to use any particular method to track the price of gold and may sometimes use short-term derivatives to gain exposure to commodity prices. Derivatives are financial instruments that have no intrinsic value themselves, but instead their value is based on the expected future price movements of the asset to which they are linked.
In 2020, The Royal Mint launched its first gold ETC (LSE: RMAU, RMAP) which is fully backed by physical gold bars stored in The Royal Mint’s own vaults in South Wales. Investors in The Royal Mint Responsibly Sourced Physical Gold ETC can also opt to redeem their shares for physical bars and coins instead of cash.
A final thought…
Remember that gold, like all investments, can fall as well as rise in value and you may get back less than you invested. Similarly, the past performance of gold, in common with all investments, is not a guide to future performance.
That said, gold over the years has proved a tried and trusted way to diversify a portfolio and hedge against inflation, and can also provide a safe haven during periods of economic and political uncertainty.
The Royal Mint makes it easy to buy and gives you a wide range of different gold product options to choose from, so that you can find the right one to suit your circumstances and stage of life.
Speak with The Royal Mint’s wealth management team today and discover how you could diversify your investment portfolio, hedge against inflation, and secure your family’s future with tax-free gold.