How to Invest in Gold for Beginners

Author: Corey McDowell - Economics Editor

Published: 22 Nov 2019

Last Updated: 28 Nov 2019

Synopsis

Researching around for the ideal gold investment can be time consuming and daunting for new investors. Competing businesses offer various gold products with differing levels of transparency. With so many options to choose from, we at Chards thought a concise primer in how to invest in gold for beginners would be appropriate.

 

Do Your Homework!

The most important aspect by far for anyone wishing to start investing in gold is to do your research. Take time to shop around, ask questions and read up on all the different products. A well-informed decision should shield you from any nasty surprises in the future. Consider aspects such as why to choose goldprice premiumshidden costs like “free postage”tax and VAT status, reselling options and the reputation of the business/individual when looking into gold products. Occasionally we do unfortunately hear horror stories from customers who have got ripped off by dishonest business practices which would make a second-hand car salesman blush. Even worse are the scams on eBay, where unfortunate consumers have been sold fake gold items with no repercussions to the seller. We cannot over-emphasise this point to consumers – be vigilant when investing and do your homework!

Budgets and Timeframes

It makes sense to start small and gradually build if you are starting your gold investment portfolio. Gold investment products come in many different shapes and sizes. Small gold coins such as sovereigns and half sovereigns are very affordable, as are small gold bars like these one gram and five gram options. While the premium on smaller gold items may be greater compared to larger gold products, they still represent an inexpensive way to begin investing in gold.

The primary purpose of gold investment is the protection of wealth over time, so bear in mind that gold should be a medium to long-term investment. Non-arguments such as “gold has no yield!” do not take into consideration that gold is a store of value as a low-risk safe haven asset. This is illustrated in the change of the gold price in the graphs below:

Examples of Gold Investment With Differing Budgets

Our advice usually follows when purchasing gold items purely for investment purposes you should compare premiums and go for the lowest possible. These are often, but not always, on coins rather than bars. For example, our best-value one ounce gold bars have a premium of 5.5% but our best value one ounce gold coins have premiums starting at just 2.5%. The is also an added advantage in buying a large amount of individual gold investment items in that you have an option to sell part of your collection if it suited. This would not be an option if you had just the one large gold investment item. To illustrate this point, imagine you have 30 gold 1 oz coins instead of a 1kg gold bar. You can sell five of these coins when the price is right. This flexibility is not an option with the larger bar as you would be liquidising your whole investment in selling this single item. It is worth bearing in mind that British legal tender coins also have an advantage in that they are Capital Gains Tax Exempt. Here are some potential gold investment ideas for differing budgets:

£500

Three secondary market bullion half sovereigns (£439.80), or eleven 1g gold bars (£495.66), or a secondary market quarter ounce krugerrand and two 2g gold bars (£469.36).

£5,000

18 secondary market bullion full sovereigns (£4914.18), or four newly minted 1oz britannias (£4676.24), or eight secondary market half ounce krugerrands and a 5g gold bar (£4920.97).

£50,000

42 newly minted 1oz britannias (£48983.76), or 181 newly minted bullion full sovereigns (£49809.39), or a 1kg Australian Lunar gold coin and eleven secondary market 1oz krugerrands (£49381.99).

These are just some simple examples of what type of gold you could invest in on any sort of budget - you can explore more on our gold products page!

Prices are correct at the time of publication. These prices may change due to the ever-fluctuating spot price of gold.

Make Gold Part of a Diverse Investment Portfolio

We can offer basic investment information for those who are interested, and we like to keep any information we give as simple as possible. It should not come as a surprise to anyone that we advocate gold coins and bars as investment assets, but only a fool would invest in only one type of asset. Gold is a great way to start your investment portfolio but be sure to include a wide range of assets over time to spread out risks. 

Identification Requirements

As per money laundering regulations issued by HMRC, we are obliged to ask for two identity documents from anyone purchasing investment gold, so remember to have identity documents handy when looking to buy gold. Generally speaking, the more money is spent, the more checks that need to be fulfilled. Be careful when buying or selling gold to pawnbrokers who may not be fully in tune with the law; we at Chards are fully compliant with regulations set down by government and as such are fully transparent with our buying and selling prices. You might not get a fair deal from a pawnbroker, but you will definitely get fair deals from us. We do however appreciate that asking for “proof of identity” can be incredibly frustrating and intrusive. In the past, we used to be able to sell 1,000 gold sovereigns for £3,500 and accept payment in cash, with no need to record the buyer's name or other contact details. We would advise those who object to these compulsory “ID checks” to give their elected representatives an earful. After all, why should the government need to know which private law-abiding individuals are purchasing gold?

Further Reading

We have a vast investment information section of encyclopaedic proportions should you wish to read more information. To examine these guides, please see our gold and silver information and advice pages.

For geopolitical news, you may be interested in exploring articles in our precious metal and coin news section of the website.

This guide and its content is copyright of Chard (1964) Ltd - © Chard (1964) Ltd 2019. All rights reserved. Any redistribution or reproduction of part or all of the contents in any form is prohibited.

We are not financial advisers and we would always recommend that you consult with one prior to making any investment decision.

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