A short guide to investing in Gold

In times of peace and prosperity so called ‘smart’ money is invested in stock markets and other intangible assets.

In times of discord however a lot of money flows into tangible assets such as gold and although arguably this should have happened when Russia invaded the Ukraine, but there was a delay although it started to rise later in the year.

Gold price is rising

World prices are generally quoted in US Dollars and on March 1, 2022 an ounce of pure gold was trading at $1,808 whilst on December 1, 2023 it had risen to $2,037 and appears to be on an upward swing.

If you are thinking of investing in gold there are a number of do and don’ts which if followed will help you get the best value for money.

Firstly don’t expect to pay the published spot price for small gold purchases, the price you see on the web or in newspapers is a general indication and like stocks and shares there is a lower price for selling gold and a higher price for buying it.

Tips for small investors

If you are a small investor than there are a few tips worth following.

The two biggest don’ts are don’t buy new gold jewellery  from a ‘high street’ jeweller as not only does it include the cost of manufacture but a retail hike of around 350 per cent plus VAT (or IVA) so apart from looking good and having some intrinsic value, you can be fairly certain you’ll never make a profit.

The other big don’t is don’t buy collector proof coins from State Mints or coin dealers (especially those who advertise on TV) as they are adding large mark ups and in most cases VAT to the selling price.

Bullion coins generally best value

Where you can benefit is in purchasing bullion COINS (never medallions) direct from a number of State Mints around the world or Gold ingots from registered bullion dealers.

These organisations sell Gold Bullion at a percentage over the spot price and the actual amount charged depends upon the price for the day and the volume of gold purchased.

For a single 1oz Bullion coin you could expect to pay as little as 4 to 5 per cent over spot although for smaller sizes the percentage charged will increase to up to 25 per cent.

This is the same with Gold Bullion ingots and in both cases you will have to pay a charge for registered post.

Another option is to purchase the gold but leave it the hands of the dealer who can then sell it on your behalf if required at some time in the future.

The only possible drawback however is that you have to be satisfied that whoever you choose to look after your gold is trustworthy and holds it in a manner whereby you can’t be defrauded.

For larger volumes of gold, there are brokers as well as investment funds who can purchase the gold for you but as with stocks and shares there will always be a charge for their services.