Advice Guide for UK Bullion Investors
As CEO of Chards with over 55 years of experience in the precious metals industry, I am proud to present to you our guide to investing. As an investor, it is crucial to have a understanding of the various products and services that are available in the market. In this first article, I offer concise but comprehensive information on the most common precious metals available, tax considerations, prices and premiums, storage for your investments, transport or shipping costs and the difference between new products versus secondary market (pre-owned) products.
Before we explain why we believe gold to be the superior investment choice and why it remains the most popular choice with our customers, it is worth noting the other precious metals. There are 8 known precious metals in the periodic table - gold, silver, platinum, palladium, rhodium, ruthenium, iridium, and osmium with price and rarity dictating the classification. In this article we offer information on the most commonly traded precious metals which in order of volume traded are gold, silver, platinum and palladium.
When investing in precious metals there are many things to consider, this includes the benefits of investing in gold over other precious metals in terms of VAT, CGT (Capital Gains Tax) exempt coins and the effect on your investments if you do not purchase British legal tender coins, premiums of coins and ratios of each precious metal. Additional things to consider are storage for your investments, transport or shipping costs and the difference between new products versus secondary market (pre-owned) products.
Whether you are a first-time investor or a seasoned professional, our guide content will help you make informed decisions, choose the metal to meet your investing objectives, and take advantage of the many benefits that gold has to offer.
Investing in Gold
Gold coins are by far our most popular product, and we believe gold should be your first choice for a number of reasons.
Gold Buying Advice
- Investment gold is exempt from VAT in the UK (& also the EU).
- You should aim to buy at the lowest percentage premium within reason. It is important to compare percentage premiums, not prices to ensure you are getting the best deal.
- Does size matter? Yes!
- One ounce gold bullion coins are usually available at low premiums. We dedicate a page to comparing one ounce coins to fractional sizes.
- Gold sovereigns are often available at only slightly higher premiums, and are more affordable because they are smaller, containing just less than a quarter ounce (0.2354 tr oz) of fine gold.
- Gold bars do not command a higher premium than gold coins, due to the extra minting costs that gold coins require in comparison to gold bars that do not.
- Most coins and bars smaller than one ounce usually cost a relatively high premium, due to the manufacturing costs being higher relative to the value of the gold in the coin.
Investing in Silver
Silver is also a popular investment and has many enthusiastic fans.
Silver Buying Advice
- Silver is subject to VAT, so in the UK, you pay the current rate of 20% tax at the front end on your investment, which is not really sensible or recommended. That said, if you believe silver has significant potential for price appreciation relative to gold this would offset the VAT charge.
- UK customers (and any international customers subject to local taxes) can save a lot of money by acquiring VAT free silver through bonded warehouses, and as long as you do not take delivery of it you are able to save on the initial tax hit.
- Percentage premiums are higher on silver than on similar size gold coins and bars because the manufacturing cost is relatively higher. For example, if a one ounce silver coin costs £1 to make, that’s about 6% to start with (based on June 2022 prices). If a one ounce gold coin cost £2's to make, that would only be about 0.2%.
- Transport and shipping will cost disproportionately more for silver than for gold.
- Affordability. If you only have a very limited amount to invest, say £100, then you may prefer to buy silver rather than gold, but you will be paying higher premiums plus VAT, and you would be better off buying one gold sovereign when you have accumulated enough spare capital.
Investing in Platinum
Platinum has an interesting price history relative to gold and is worth thinking about as part of an investment portfolio.
Platinum Buying Advice
- For many years, the platinum price was higher than gold. At the time of writing, it is much lower, making it more attractive.
- It does cost slightly more to process platinum than gold, but not vastly more, so premiums are only slightly higher, unlike silver.
- VAT is payable on new platinum coins and bars if you take delivery. We can offer VAT free alternatives stored in a bonded warehouse, such as our 1 kilo platinum bars held in Zurich.
- Platinum coins and bars are available in multiple sizes, although wholesale availability can be less than that of gold and silver.
Investing in Palladium
Palladium is much more of an industrial metal with heavy use in catalytic processes rather than an investment
Palladium Buying Advice
We do deal in palladium coins and palladium bars, but the retail investment market is minuscule, and any stock we have is usually secondary market.
VAT is payable on any new palladium coins and bars, but we will offer low VAT products on the special scheme where we can.
Insurance and Secure Storage
Security, insurance and peace of mind are also factors to consider. While many people may be happy to hide a few gold sovereigns under the floorboards, insurance of high value goods at home can be expensive or impossible. Most people could not afford a high security safe or vault, with alarm systems. Safe deposit boxes are not universally available, and are often not covered by insurance. Third party secure storage is an option.
Storing Gold and Silver
- Chards might be the only UK dealer with multiple domestic strongrooms that we own outright. This means when you opt for UK vaulted storage the only parties in the contractual arrangement are you and Chards, which really keeps things simple. Other dealers will have to use a second third party (as a vaulting partner) which increases counterparty risk and opens up questions about insurance and liability if the proverbial hits the fan. We have been thorough in our offering and look after our customers in this regard.
- Minimum fees do apply, but our fully insured secure storage is very competitive, and, for most people, costs much less than doing it yourself.
- Our customer storage accounts are independently checked and verified by Azets accounting firm. This ensures we have the physical balances in place and our reporting system is up to date and fit for use.
Offshore Secure Storage Can Avoid VAT
Offshore storage is worth considering for larger investors who are interested in VAT free silver and VAT free platinum. Holding metal with a third party is the only way to buy VAT free and this requires you to consider your risk tolerance.
Vaulting Gold and Silver
- Many bullion investors believe in the ethos of "if you don't hold it, you don't own it" and will store metal at their home or workplace, which brings its own set of challenges.
- If you are comfortable to use Chards as a well established and trusted dealer, we can handle all the shipping, insurance and ongoing management on your behalf.
- Investors can spread geographical risk as we can arrange storage all over the world with Brinks and Loomis. For locations where we do not already have stock we can arrange shipping through a custom quote.
- Our insurance covers for any loss directly with you the customer, with no reliance on the third party vaulting partner's insurance. This is important as, should anything occur, we need to honour our contract with you, and in the process, this keeps your investment much safer when you choose storage at Chards.
- As with domestic vaulted storage, customer accounts are independently checked by Azets accounting firm.
- Overseas storage may not be for everyone, but from a purely logical point of view, it makes good sense, as it can avoid having to pay VAT on silver, platinum or palladium.
Bullion Coins vs. Bullion Bars
We often get asked whether coins or bars are the best investment. Short answer is, 'it depends', but there are a number of factors to consider.
Bullion coins and bars in sizes larger than one ounce are available, and are usually at lower premiums, but are not always the best answer. Kilo gold bars, for example, are high value (from £52,990.14), and not everyone can afford them, so even though slightly cheaper to buy, there is a more restricted choice when it comes to sell them. Silver bars are an exception here with both the 1 kilo bar (from £787.24) and the vat-free 1000oz standard bar (premiums in 2022 have been 5%) being popular choices.
Aesthetics should not be of prime importance when investing in bullion, except that it may be slightly easier to sell an attractive item than an ugly one. If the design or appearance of your bullion is important to you, then you may be more of a collector than an investor. Different principles and logic may therefore apply.
We have already touched on these under “smaller sizes”. Premiums will almost always be higher than for the “sweet spot” sizes. Most quarter ounce gold coins, for example, will have a higher premium than for similar sized gold sovereigns, which are available at competitive prices. Tiny sizes, such as 1 gram or less, are usually best avoided because they will be at high premiums.
Fakes, Forgeries, Frauds and Scams
Fakes exist of many bullion coins and bars. It is important to be aware that they exist, but don’t become paranoid. Some fakes are better, or worse, than others. Some gold coins for example contain the correct amount of gold (and sometimes too much). This limits their deficiency in value, but we advise against buying fakes. While the standard advice might be to buy from reputable dealers, not all dealers are as expert or as scrupulous as they should be. Many auction houses for example give little or limited guarantees against counterfeits. We, on the other hand, unconditionally guarantee the authenticity of what we sell.
Scams exist because there are potentially large amounts of money involved, there always have been, and always will be scams, frauds, and deceptions. It pays to be aware and cautious to avoid losing your funds.
We have dedicated pages for fake sovereigns, specifically fake 1958 sovereigns, fake double sovereigns, fake £5 quintuple sovereigns and fake Krugerrands. You may also be interested in reading about a sub-par sovereign shipment from one of our wholesale dealers.
Crown Gold or Fine Gold
Gold bullion coins need to be a minimum of 90% fine gold to qualify as investment gold. Older USA, and many European gold coins were made of 90% (.900 fine). British gold sovereigns are 22ct gold (91.66%), while some modern gold bullion coins are 99.9%, 99.99%, or even 99.999% fine gold (often slightly incorrectly called 24ct). There is no major reason to choose one standard over another in the UK, although some countries have different tax or import charges on coins lower than “24ct”.
Gold bars need to be at least 99.5% to qualify as investment gold for VAT exemption.
Designs of coins and bars vary. Our advice here is similar for aesthetics. If you prefer the design or appearance of different coins or bars, consider if you're willing to recoup any extra when you sell. There is nothing wrong with being a collector, but you may wish to apply different principles compared with purely investing.
There are quite a few foreign mints issuing bullion coins, which provides healthy competition, and choice. The British Royal Mint are competitive nowadays, on price and design. If you prefer to collect a variety, then do so, but be aware of the difference between collecting and investing.
Old vs New Coins
By "old” we mean traditional circulation coins such as the Victorian gold sovereigns (1838-1901) and previous sovereigns from monarchs of the past. As opposed to “new” modern bullion coins which are mainly in ounces, fractions or multiples of ounces. There is no real benefit in buying modern one ounce gold bullion coins compared with older traditional types, such as gold sovereigns, except that it makes the arithmetic or maths slightly easier. One plus point in favour of buying “older” bullion coins is there is more potential demand from collectors compared with modern one ounce pieces.
New vs Secondary Market Products
Generally speaking, secondary market coins and bars will cost less (lower premiums) than their new equivalents, in which case, they are the better buy. Because their premiums are lower, they are often in greater demand, and are therefore not always instantly available, and you might have to wait. This year’s brand new coins are usually more readily available, but will usually be at slightly higher premiums than secondary market coins. For example, as we write this secondary market bullion sovereigns can be bought at a lower premium than the 2022 gold sovereign.
Pre-Owned Coins and Bars Are a Good Deal!
Supply and demand affects premiums and availability. In times of increased demand, there may be delays in getting anything, including new coins. Spikes in demand can outstrip transport, production of blanks, minting / stamping, packaging, and distribution, as well as cleaning out dealers’ stocks.
Financial Crises, such as the Sub-Prime, Credit, and Banking crisis, can and do cause stampedes into bullion and safe-haven assets.
Covid caused demand to increase, and also caused production and transport problems. Although the worst of these now seems to have passed, the pandemic is still adversely affecting supply and transport lines, and not just for bullion products.
CGT – Capital Gains Tax
Most British legal tender coins are exempt from capital gains tax, so it may be worth larger investors paying slightly higher premiums when buying. Other coins and bars are not exempt from CGT, but this might not matter for many smaller investors.
Advice in Your Interest
The advice we give is intended to be in your best interest, and not in ours. Some dealers will give you advice slanted towards whatever makes them more profit. We don’t do that!
We pride ourselves on returning business, and we want to educate our customers as much as possible, allowing you to become a well informed investor. Well informed investors are more able to secure the best deal on any given day and have their wits about them when it comes to unscrupulous dealers and outright scams.
Bullion Market Prices
Spot and live market prices can now be found on many websites, including ours. Spot prices fluctuate almost constantly, but price feeds are only updated periodically, say every 15 seconds. All price feeds can be subject to interruptions, outages, latency, caching, technical glitches and other factors.
How To Compare Prices
The best way to compare value, prices, and deals, is to look at the percentage premiums, rather than at actual monetary differences. If you are someone who does not understand percentages, you may be at a disadvantage. Some dealers and websites make it easier to compare premiums than others. We always remain transparent, clear, and concise because we want to make it easy for investors to make the best decisions. Where VAT is involved, it is not as easy to compare premiums, but then the best premiums will almost always be on VAT exempt investment gold.
Credit or Buy Now Pay Later
Nobody in their right mind gives credit on bullion. It would be almost impossible to do so and remain competitive. We also do not use services such as Klarna where you can take delivery and pay up to say 30 days later. Not only does this amount to a credit line but bullion products are also exempt from the consumer contract regulations and are not eligible for a refund.
Like buying a house or shares, to buy bullion competitively requires immediate or advance payment in cleared funds. Most dealers do not accept payment by credit card, with some exceptions for low value or high margin transactions. Similar applies also to debit cards to a slightly lesser degree. Companies who do accept credit cards are covering their costs by simply charging customers higher premiums! There is no free lunch when it comes to business.....for high value transactions, most dealers have moved to require a prepayment.
Chards offer a GBP pre-payment account where customers can load a balance and all funds are held in a client segregated bank account.
On the other hand, if customers intend to load a balance more slowly over a few weeks, they can gain exposure to metal price by loading a balance onto a metal account. Our Digital Gold and Digital Silver accounts are becoming more and more popular, with our Allocated Metal Accounts.
Legally Binding Contracts
Most bullion deals involve legally binding contracts between both parties. Although most dealers fully understand and comply, not all private investors understand this, but should do.
Distance Selling and Refunds
Most bullion transactions are exempt from, and not subject to, The Consumer Protection (Distance Selling) Regulations 2013, or similar UK laws. Most bullion dealers state this in their terms and conditions.
For customers this means that products with a fluctuating live price (as the intrinsic metal value is constantly changing on the financial markets) are not eligible for a refund.
We calculate shipping (postage) and insurance costs separately for a number of good reasons. It is simpler to programme, clearer and more transparent to display, and more realistic. “Free Postage” is an illusion. On many of our bullion products, we also show prices including shipping costs.
Competitor Price Comparisons
We also show competitor comparison prices on most of our popular bullion products. This is for transparency, and to make it easier for you to see that we are usually the most competitive UK supplier. These comparisons are shown with and without shipping costs.
Coin and Bar Price Comparisons
On most of our product pages you will find a "UK Dealer Comparison Tab". On top of maintaining real time price comparisons we have dedicated pages for the following:
Security and Compliance
Our premises are very secure, while at the same time keeping our showroom accessible. We maintain and enforce a 'Know Your Customer' policy to minimise the risk of fraud and criminal activity, this helps keep our customers details safe, is a deterrent to bad actors, and keeps our showroom welcoming.
Money Laundering, ID, and HMRC Compliance
Because we are major UK dealers, including high value cash transactions, we are required to enforce anti-money laundering, anti-fraud, and other security measures. For most customers, this includes us taking full ID. Please understand this is not extra work we want to do, but we will try to help you through the process; please try to help us. We do not share your data with anybody unless we are required to do so. This would include suspicious behaviour, such as customers trying to evade tax or trying to provide false ID or other information.
Secure Website and Hosting
Our websites and systems are highly secure. We commission security and penetration testing (pen tests) above and beyond what we are required to do by law. This keeps details such as billing and delivery addresses, order history and balance on accounts very safe. It is not uncommon for businesses to be lacking in digital security and our consultants who carry out the test say approximately 50% of businesses (including big business) fail their pen tests. It is a credit to our development team that we have never once failed a test, and no one has ever gained access to any data we store.
Know Your Supplier
Do think carefully who you are buying from. There are many impressive websites, which claim to be the biggest, or best dealer, but often with little evidence to back up their claim. Some have prestigious sounding central London addresses. Other websites fail to make it easy or clear to see who the business is, or its address. Exercise great caution when dealing with these. It is worth checking the VAT registration and company number to ensure they are who they say they are. You can do this using Companies House.
Jewellers Pawnshops Auctions and Ebay
We often see worn, damaged, substandard, or fake gold sovereigns and other coins which people think they have bought cheaply from some of these outlets. While it can obviously be possible to get the occasional bargain, the opposite is all too often the case.
Peer to Peer
You may be able to buy some bullion coins from fellow collectors / stackers / investors, at closer to spot than from dealers, but possibly only in small quantities, and there are still matters of trust. It is akin to buying a car in that you must know what you are looking for, perhaps take a professional with you, as the risk of buying faulty or fake goods is always present. Caveat emptor (buyer beware) will also be enforced in these situations, so you have no recourse after handing over your money, whilst postage cost may still be a factor.
Buy-Back and Buying
Some “coin marketing companies” appear to be very reluctant to buy coins from ordinary people, while some “buy-back”, which implies they will only buy coins they have sold. Real dealers, like us, are more than happy to buy bullion and other coins from multiple sources, and pay competitive prices for them; typically around spot (100%) for the most popular bullion coins.
Although we have done our best to ensure our advice is correct, it does not constitute financial advice, and we do not accept any legal liability for it.
Any Other Business?
If there is something we have not included in this page, anything you don’t understand, or have other questions which you think we should include, then please do get in touch.
This guide and its content is copyright of Chard (1964) Ltd - © Chard (1964) Ltd 2023. 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.