Is gold a good investment?
With former popular investments like ISAs and rental properties producing increasingly poor returns, and the risks of the stock market growing, many investors have begun to ask where their money is safe. Interest in gold investments is growing, but new investors might find themselves wondering whether gold is a good investment. Below we’ll discuss why gold is a good investment, and where to start.
Gold has long been considered a smart asset to invest in. As both a hedge against inflation and a way to diversify your portfolio, the benefits of gold investment should be considered by anyone looking for a simple, safe way to protect and grow their money.
Why invest in gold?
Gold has been a highly valued precious metal for most of human history. From the Egyptians, to the first Roman gold coins, right through to the current day; humans continue to have a fascination with the dense, yellow metal.
One of golds key strengths is its isolation from the trends of other markets. Historically, when the global economy has been in crisis, gold has remained strong (and even made significant gains). For example, the price of gold increased rapidly following the financial crisis in 2008/09 and remained high even as economies began to recover. In particular, gold typically makes gains during periods of rising inflation; as investors see that their money is losing value, they look to safer assets like gold that has proven its ability to maintain its value.
Unlike money, which can be printed by banks as part of a quantitative easing program, gold is a limited resource. Increased demand from emerging markets, and gold’s use in the technology industry, mean that when coupled with the finite nature of the metal, the price of gold can remain strong.
Owning physical gold is the ultimate way to control your investment. There is no third-party risk, and you can decide where, and for how long, to store your gold before you sell, whether you take possession or choose to use our secure storage service.
When you do decide to sell, this can be done quickly and simply using online dealers. At BullionByPost we buy gold back at competitive rates and list
live buy-back prices
on our site. This transparency makes it easy for customers to make an informed decision when it comes to selling.
Is it worth investing in gold?
Gold as an investment relies on an increase in value to make returns, rather than the annual yield you might see from stocks and shares or a property. For gold to reach its true potential it can take time, which is why gold is seen as a long-term investment. Gold has shown excellent performance since the 1970s, with a price per ounce that has steadily trended upwards, making it well worth investing in gold.
For a savvy investor, profits can be realised in relatively short periods of time. Awareness of gold’s performance, coupled with a reasonable knowledge of current affairs, can give investors the ability to spot prime opportunities of when to buy or sell their gold. At the BullionByPost news section we report on geopolitical and financial events that could have an impact on the gold market, helping our customers stay informed.
Ultimately though, gold is seen as a good long-term investment, protecting your money over the years. It offers strong potential returns, at low risk, and is the perfect way to
diversify your portfolio
and spread your exposure to any losses.
Investing in gold coins
Investment gold can take various forms; jewellery, bullion, ETFs or even investing in mining companies. All are ways to put your money into gold, but in the UK one of the best ways to invest in gold is to purchase UK coins.
As legal tender, there are various British gold coins that enjoy tax benefits. Gold Britannia coins and Gold Sovereigns are both VAT-free when you buy, and Capital Gains Tax (CGT) exempt when you sell, saving you money when you buy and maximising the returns on your investment.
International coins are also a popular choice, with global recognition making them easy to sell. Countries around the world produce their own investment bullion coins, competing for a part of the growing market. Although no longer exempt from CGT, these international gold coins are still a good investment option.
Investing in gold bars
Another popular alternative to gold coins however is gold bars. The relatively simpler designs, and larger unit size, means that bars will typically have a lower premium than coins. Like coins they are also VAT-free but, unlike coins, gold bars are not exempt from CGT. Larger investors however looking for the absolute best price per gram will often choose gold bars.
Should I invest in gold?
As with any investment, the decision on where to put your money should be made only after careful consideration of the facts. At BullionByPost we recommend that up to 10% of your liquid wealth is kept in gold. Diversifying your portfolio reduces overall risks against the volatility in any market, and by investing in gold you can protect yourself against the wider economic fluctuations and uncertainties that many other assets are weakened by.