Gold has always been seen as one of the most stable investments and has stood the test of time even when financial markets have been turbulent. If you are starting to think about investing in gold there are a number of different ways that you can which we will cover in this piece.
What is the best way of investing in gold?
When you think about investing in gold, you usually think about big investment firms and people who are professional investors with really deep pockets and the spare cash to do it. However, if you are a little bit savvy there are cost effective ways to invest in the particular precious metal. Without spending too much here are some of the ways that you can invest in gold:
- Small Gold bullion bars
- Coins E.g. Gold sovereigns
How safe is investing in gold?
Just like any investment the value of gold can go up or down. Gold prices can be affected by some of the following factors:
- Consumption & Demand
- Interest rates
- Weakening currency values
- Geopolitical reasons
Gold is certainly not a short term or quick turn around investment. As with the saying, ‘Good things come to those who wait’, is very true with gold as well. This can be seen in the price of gold over the last 20 years. In 1992 an ounce of gold was under £200. Twenty years later (2022) the value of an ounce is approximately £1500. There has been some decreases in the price of gold during this time period however on the whole has gradually climbed. With potential other future geopolitical instabilities, gold could be seen as a good investment.
Why Should I Invest In Gold?
Investing in gold just like with anything else is not for everyone, likewise you have to be comfortable in the level of risk that comes with buying any form of asset, in this case gold.
People have always been attracted to investing in gold as it has always had some form of value to it and for many years countries currencies have been backed by it hence the term ‘Gold Standard’.
For personal investment reasons gold is seen as a great asset to have over the long term due to its upturn in price. Also during market downturn gold has stood strong, held or increased in value. It is another form of wealth that differs from hard cash or other high value items like a house or car.
It is also not subject to any ongoing tax until the asset is sold where you may have to pay capital gains. In some instances however you do not need to pay any capital gains tax at all due to the age of the gold, specifically gold coins.
How is Gold priced?
Gold in the UK is priced by the London Bullion Market Association which has two ways of pricing gold.
Firstly for larger amounts that are commercially traded will be done in the form of fixed price. However the everyday person will not have to worry about this structure of pricing.
Secondly and the most common way that most people buy and sell their gold is in relation to the ‘Spot’ price which is a live price and a price that most local jewellers including us.
How to start investing in gold?
As mentioned, if you are looking to invest in gold, it is better to start off small first. If you haven’t read our explainer about the different types of gold – this would definitely help in understanding purity level and perhaps what types of gold you should initially look to invest in.
If you are starting out we would advise in starting with gold sovereign coins. If you are a little more seasoned and perhaps have a little more disposable cash then investing in small gold bullion may be an alternative option.
If you would like to know more about investing in gold or any other gold related question we would love to hear from you.
Thank you for reading and we’ll catch you in our next update.