Why You Should Buy Physical Gold & Silver Bullion

Written by Lawrence Chard - Company Director and Expert Numismatist • Last updated 5 Dec 2018

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Why You Should Buy Physical Gold & Silver Bullion?

Whilst we would always suggest that you spread your investment portfolio, we strongly recommend that you should invest in gold and silver. Like most commodities, the price can go up and down but when you physically own gold and silver bullion you have an asset which will always have a material value.

Throughout history, in times of economic crisis, gold and silver have been used as a payment method which has traversed continents and is acceptable for both small and large debt settlement.

2017 Britannia 1oz gold and silver bullion coins

2017 Britannia 1oz Bullion Coins

British Economy - Although the UK is performing better than many other countries, national debt is currently £1.8 trillion and increases at the rate of over £5,100 per second. Sterling continues to fluctuate against the US dollar, Euro and Yen. On one hand analysts are forecasting 1.30 against the dollar if a swift transitional deal is agreed in the Brexit negotiations but on the other, this could drop to 1.10 if the agony is prolonged. This would be the ideal time for the government to encourage British manufacturing and an increase of agricultural sustainability. As the cost of imports increase, Britain should take advantage of our ability to produce goods of the highest quality which would be attractive to overseas buyers. 

Brexit - Whether you were for or against Brexit, the die is cast and soon the withdrawal will start in earnest. Like a rotten tooth, no doubt there will be a great deal of pain before the eventual release from the European Union. There are many advantages to being a part of the largest club in the world but the price we, the United Kingdom, pay has become to many, unsustainable. Strategies that will be used to undertake the most significant foreign policy since 1970 have yet to be unveiled. No doubt there will be plenty of opposition along every step of the way and the negotiators will have their work cut out to ensure that Britain doesn't end up with the biggest divorce bill in history.

 

EU Referendum IN / OUT Medallion

EU Referendum IN / OUT Medallion

Europe - The Central European Bank continues to print money in a desperate plan to save the Euro and the economy of the European Union but as the UK's Brexit plan takes shape, the realisation that one of the EU's strongest members is closing its wallet is causing many of the remaining member states to revert to childish behaviour in the hope that the UK will pay dearly to leave. The collapse of the Euro is a matter of when it happens, not if.

European Politics - It appears that the right wing factions within Europe are taking advantage of the confusion of Brexit, failing economies and the increasing fear of terrorism. 

Netherlands - Whilst Prime Minister Ruttecampaigns to remain in power for a third term, Geert Wilders' pledges to de-Islamise the Netherlands. Thi destabilise one of the most free thinking and prosperous countries in Europe. It is unlikely that Wilders will succeed but if he wins a substantial number of votes, a coalition would be necessary which could trigger a Nexit referendum.

France - If far right Marine Le Pen is voted into power in the French elections in April, France will vote upon a Frexit referendum. Creating yet another fracture in the already precarious European Union.

Germany - Angela Merkel's strong grip as the country's favourite leader starts to loosen as Germany starts to realise the cost of bailing out struggling EU member states whilst struggling with the influx of refugees. 

Greece - Sticking plasters continue to be applied to the cracks of the struggling economy of Greece but the country's debt is unsustainable. A once prosperous Greece is crumbling under the weight of the debt, the crisis of youth unemployment and the cost of the influx of immigrants on a broken social system.  

Trump - Will He Succeed In Making America Great Again? - It's early days for Trump at the White House. His travel ban has been overturned and he has recently issued threats to impose huge import duties to encourage Americans to buy US goods. Will his plans to make America great again using bullish tactics backfire and incite more instability and friction? The US Federal Reserve increased interest rates today in a show of confidence that America is no longer in crisis mode. One cannot help but think that with a national debt approaching US$20 trillion it may be too optimistic to think that their economy is out of danger yet.  

Terrorism - The threat of terrorism makes us tense and wary. We shouldn't live in fear but we should be aware that cyber terrorism is more likely to affect us than physical attacks.

We beleive owning physical gold is the "real" investment rather than digital gold for example as you have total control of the coins or bars once they are delivered. There is no reliance on third party systems, security or financial advisors and you are in total control of your personal wealth in terms of how you store and trade it.  

Physical gold is ideal for a mid to long term investor looking to protect their wealth from economic uncertainlty and downturns. Suitable for both the individual new to investing and to those with established mainstream portfolios - the major point is that precious metal investing, particularly gold, is unlikely to make you short term profits (though it has been known - view our live price graph to see the rise and fall of gold price. Economic prosperity is often inversely correlated to gold value and as such gold tends to favour the investor with this in mind.

Which leads us back to why we believe you should buy physical gold and silver bullion to manage your own financial security. 

Investment Gold

Investment gold is VAT free and offers an excellent opportunity to buy large or small amounts of gold bullion at low premiums. We always suggest that you watch the live gold price, do some research as to the amount of money that you want to invest and choose a product that suits your needs. We stock a wide range of gold bullion coins and bars from major mints around the world. 

 A Selection of Gold Bullion Coins
A Selection of Gold Bullion Coins

The cheapest form of buying gold is that with the lowest premiums, these include:

Gold Bars from 1g to 1kg

Gold Bars from 1g to 1kg

Another popular way to purchase gold is buying numismatic collectables at bullion prices. We often have a selection of commemorative coins and coin sets which are sold at low premiums, these include:

2003 Bridges Pattern One Pound Gold Proof Coin Set

2003 Bridges Pattern One Pound Gold Proof Coin Set

Investment Silver

Silver attracts VAT, at 20%, to some this may not seem like the most cost effective investment. However, whilst the price of silver is so low, investors see this as a long term investment. It is an ideal time to purchase silver coins and bars. There are ways to reduce your VAT implications. One way is to buy through a VAT registered company where you can reclaim the Vat, the other is to buy silver via the special scheme where you only pay VAT on the dealer's premium.

Selection of Silver Bullion 1oz Coins
Selection of Silver Bullion 1oz Coins
 
Selection of Silver 1kg Bars
Selection of Silver 1kg Bars

Capital Gains Tax

You may need to consider whether or not to buy coins which are subject to Capital Gains Tax. Profits realised on disposals of investment gold is normally subject to CGT, although there are annual allowances before CGT becomes chargeable, so that most private investors would probably have no tax to pay. Read our blog to find out more about Capital Gains Tax

Gold Silver Ratio

The gold silver ratio refers to how many ounces of silver can be used to buy one ounce of gold. As the live prices vary, so does the proportional relationship between the live price of gold and silver. For example, if the gold silver ratio is 71:1 you would be able to buy 71 ounces of silver for the same price as one ounce of gold. The ratio fluctuates with the live metal prices.

Gold and Silver Live Prices
At Chard, we use the live price so you aren't reliant on the AM / PM fix. You can decide how much to invest and when the time is right for you to buy and sell.

What is Investment Gold?

For the purpose of the VAT exemption, Investment Gold is defined as:

  • Gold of a purity not less than 995 thousandths that is in the form of a bar, or a wafer, of a weight accepted by the bullion markets;
  • A gold coin minted after 1800 that-
  • is of a purity of not less than 900 thousandths, 
  • is, or has been, legal tender in its country of origin, and 
  • is of a description of coin that is normally sold at a price that does not exceed 180% of the open market value of the gold contained in the coin; or
  • A gold coin of a description specified in Notice 701/21A Investment gold coins.

VAT Exemption

As from 1st January 2000, investment gold became exempt throughout the entire EU.

We're not saying it's time to panic, we aim to remain neutral and are constantly watching the markets, the news and keeping our ear to the ground. Sign up to our Mailing List and receive our latest updates on how world news and market conditions affect bullion.

You may wish to view all of our articles on our gold guide

You may wish to view all of our articles on our silver guide