How can you use Gold and Silver to help protect your wealth?
Building your own stash of gold doesn’t have to be this risky…!
Perhaps, at some point in your life you have imagined what it would be like to own a safe full of bars of gold or even a big treasure chest full of silver.. Far from the sometimes risky image portrayed in crime films, Gold and Silver is the most traditional safe haven known to the financially prudent.
Wealth held by banks, other financial institutions and governments is not considered as safe as it once was. Consequently, we at Bleyer have seen an increasing demand in the precious metals market over the past couple of years. We continue to meet the changing and varied needs of clients wanting to flexibly hold a percentage of their wealth in this trusted and ancient form. A generation is beginning to return to the wisdom of their grandparents, when owning Gold and Silver (British coins particularity) was a perfectly normal thing to do. In 1970 you could buy an ounce of gold for £14.60, an ounce of gold in 2015 is currently looking incredibly appealing again at the low price of £780. This may seem comparatively high but gold actually almost reached £1,200 an ounce in 2011. Precious metals have long been seen as a strong asset in a diverse portfolio, the ultimate hedge against financial unrest because metal performs when other stocks don’t, the tax advantages can also be fantastic.
Today we will be looking into the fundamentals of precious metal investments, we will show you why you should start to think about buying now to avoid missing the horse!
Sometimes people can get confused between assets they love like jewellery and their homes, convincing themselves that they are an investment, when this is not generally the case. An ounce of pure gold in the form of Jewellery is likely to cost in the region of £2,340, a more preferable alternative such as a pure gold coin or bar with no VAT would cost closer to £820. Everyone knows that gold is valuable, it has been a traditional store of wealth for centuries and wisdom can be found in the form in which we buy our metal. When you buy gold as an investment you should consider the production costs, because you won’t necessarily get them back when you sell. A further advantage to buying bullion in coins and bars is that you will know exactly how much gold you have, it is pure 999.9% gold. There is no higher rating; the 0.01% legally has to be there to account for minute particles of dust – so say the London Bullion Market Association (LBMA). You can trust in the quality of the metal you buy by choosing to purchase bullion produced by trusted refiners and from reliable sources, we at Bleyer only deal with refiners who have a long standing history of producing quality products e.g. The Royal Mint.
“The LBMA is an international trade association, representing the London market for gold and silver bullion which has a global client base. This includes the majority of the gold-holding central banks, private sector investors, mining companies, producers, refiners and fabricators. The on-going work of the Association covers a number of areas, among them refining standards, trading documentation and the development of good trading practices.”
Knowing the authenticity, purity and value of your Bars and Coins is vital when you come to sell them back, either to another investor or a dealer such as Bleyer Bullion. The money you receive from us is based on the current market price and the pure gold content.
How much will I get when I come to sell my gold?
Gold Jewellery, or as we in the industry call ‘scrap gold’ is often undervalued by scrap dealers simply because the client cannot easily tell the exact gold content, and won’t know if the price quoted relates to the current market value the grams of actual gold in their jewellery. There are of course processing costs involved in extracting the pure gold for recycling, this will always knock something off the price you get paid anyway.
Alternatively, when someone wishes to sell pure Gold bullion coins or bars, it is much more straightforward. We quote the price based on the daily current market price, which can be verified by you the client by simply checking the internet. Bullion Dealers prices are usually very transparent, accurate and most importantly the client can see exactly how accountable we are to them. Our company typically buys back gold at 97 to 99% of the market price depending on the condition and its desirability. It really is that straight-forward.
So buying bullion grade metal from a dealer such as ourselves will not only save you VAT but will also give you piece of mind knowing that you can sell for a fair price when you’re ready to cash out. But there is even more knowledge we would like to share with you in this article: If you buy certain Gold products from us, you will not only save on your VAT, but also on your CGT (Capital Gains Tax) as well. CGT is the tax you pay when you make gains on the sale of capital assets in any one tax year, currently £11,100 of gain is exempt and then after that you pay tax on the remainder.
When investing in Gold Bullion there are a few tricks worth knowing about to reduce your exposure whilst you invest.
In our box of tricks we have the 1oz Gold Britannia coin, or the 1 Ounce Gold Lunar coins, additional collectable value, these annually released coins feature a different animal portrayed each year. For something with a lower value, we have the smaller Gold Sovereign coin, all of these are actually classed as legal tender in the United Kingdom making them all Capital Gains Tax exempt! CGT rates currently stand between 18%- 28%, depending on your income bracket. So if this affects you, potentially there are large savings to be had simply by investing in certain physical Gold products over others. We have clients who have bought large amounts of their investments in these 1oz Gold coins, thereby lining up for themselves potential massive savings later on.
The 1 oz Silver Britannia coin and 1oz Silver Lunar coins, are classed as a ‘coin of the realm’ too and are also CGT exempt. However, silver does carry VAT which would effectively off-set most or some of the CGT gain, depending of course on how long you are prepared to hold your coins.
So, if you have an investment to make, consider placing your money into Physical Gold to save yourself both your VAT and CGT. If you don’t have as much money to invest then Silver Coins could be great for long term buy and hold clients.
Another advantage especially with Gold, beyond the tax advantages, is it’s EXTREMELY PORTABLE. A 100 gram bar of Gold is currently selling for £2,578.00, yet it is small enough to slip into a small pocket or middle sized purse. So, clearly Gold and Silver have many advantages.
When is a good time to buy into the precious metal markets? Do you buy now whilst the prices are low or wait until they start to rocket and jump on the bandwagon with everyone else?
The above chart shows us the price pattern for gold over the last 10 years. You will find a certain amount of volatility in any chart but we can clearly see how buyers, especially close to the peak piled into the market, feeling like they were being left behind or missing out. Indeed we were wondering where it was all going to go! I remember the decline starting with the banks dumping loads of paper contracts on the market.
During the past 18 months we have seen a long price consolidation and all signs hint at a push for Gold to go higher. Although we are unable to say that now is a good time to buy, it looks like there is a lot of support and the price is more likely to go up than down.
When we are analysing the picture and trying to work out what is going on we look at charts but also world economics and news. Russian China and even Germany are all buying Gold in large quantities. Germany, particularly, is doing so on the worry that the Greek currency will default.
As recently as May, The Telegraph’s Commodities editor, Andrew Critchlow, headlined his overview with the words “Economic uncertainty in Europe and fear of a Greek default are turning people to buy gold bars and coins.” We in Britain nowadays simply cannot ignore our relationship to Europe and the other financial markets.
“Latest figures from the World Gold Council show that Germans increased their buying of gold coins and bars of bullion by 20pc to 32.2 tonnes in the last quarter, the highest rate of purchases seen in a year. The strong buying of gold – which is traditionally seen by investors as a safe-haven asset – was seen across Europe amid growing uncertainty over central bank policy and the standoff between Athens and its creditors. This was the strongest start in Europe for gold coins and bars that we have seen since 2011,” Alistair Hewitt, head of market intelligence at the World Gold Council told The Telegraph. “German investors are fretting over the ECB, Greece and Ukraine.”
We at Bleyer Bullion notice that the majority of new clients, people like yourselves who may not have ventured into even thinking they could buy Gold and Silver, often then do go ahead and buy, but leave it too long. This means unfortunately that many people buy when the price is high, thus wiping out much of their potential profit over the long run. We would like to encourage our readers to think of the monetary advantages of buying when the price is steady and lower. Isn’t it better to trust your own intuition and what you see in front of you to venture into the financial future, ahead of the crowd. Alternatively, the little and often approach can work well to iron out the peaks and troughs.
We all like to be smart investors, with some more proactive than others. With a small amount of research or even with a quick phone call to Bleyer, we hope to provide you with the information you need to buy with confidence and to see the advantage of buying “low” and holding “long.”
For those of you liking Silver, the gains can be even greater as its moves tend to amplify that of gold. Silver’s value is underpinned by a stable and growing global industrial demand due to its unique properties. We will go into this more at another time. You can visit the blog on our website for other articles and more information.
We have to consider that although the basic price of the metal is a fraction of its gold counterpart fabrication and transport costs are the same per ounce for each bar and coin produced representing a much greater percentage of the cost. On top of this VAT is applied, however silver doesn’t need to go up too much before all of that is absorbed. Here is the graph for you to see for yourself.
To get even more for your money Bleyer Bullion do what they can to make silver more interesting. It’s worth keeping an eye on the constantly changing Special Offers page, which offers the best prices in the UK on several products from 1oz Gold coins to a 5kg Silver bar.
Silver can even be bought and stored free of VAT in Bleyer Bullion’s off-shore storage facility.
If you do not wish to take physical delivery of your Gold, Bleyer offers Secure Storage facilities in the UK for a small fee. Your Gold remains in your name in an allocated account. For a small transfer fee to cover administration, you can change your mind and take delivery at any time.
They can offer Gold products to be held in your Pension and are happy to talk you through this with a no-obligation phone call.
Bleyer Bullion would like to help you with your exciting journey towards owning a very traditional, authentic and transparent store of value for your wealth and savings.
With Bleyer you decide how much Gold and Silver you would like to hold, either personally or in storage. You are not required to buy in bulk but discounts are offered for multi-buys. This is due to postal and handling savings that we are able to pass onto our customers.