Gold has been a symbol of wealth and power for thousands of years. From ancient civilisations to modern economies, the allure of gold has remained strong. For many investors today, gold continues to be a safe haven in times of economic uncertainty and market volatility.
Whether you’re new to the world of precious metals or looking to diversify your portfolio, investing in gold is a time-tested strategy. This comprehensive guide will provide everything you need to know about how and why you should invest in gold.
Why invest in gold?
The number of long-term benefits to investing in gold is far-reaching, making it an attractive option for both novice and seasoned investors alike.
1. A hedge against inflation
One of the primary reasons people invest in gold is its ability to act as a hedge against inflation. Over time, the value of fiat currencies can decline due to inflation, but gold has historically maintained its purchasing power. When inflation rises, the price of gold tends to increase, protecting your investment from the erosive effects of a devalued currency.
2. Safe haven in times of economic uncertainty
Gold has long been viewed as a safe haven asset in times of economic instability. When stock markets are volatile or geopolitical tensions are high, the price of gold often rises. This makes investing in gold a good way to preserve wealth during times of crisis.
3. Diversification of your portfolio
Gold is a unique asset class that typically moves independently of other investments like stocks or bonds. By adding gold to your investment portfolio, you can diversify your assets, reducing risk and providing an additional layer of protection against potential downturns in other markets.
4. Long-term value preservation
Unlike stocks or real estate, gold is a tangible asset that has intrinsic value. It’s not dependent on the performance of a company or the health of the real estate market, which can fluctuate. The 99.9% purity and liquidity of 24-carat gold also ensure it stays in pristine condition and is easily convertible into cash, making it a stable and reliable investment.
Gold bars vs. coins
So, we all know that gold is a solid investment choice, but when it comes to deciding between coins and bars, how do they compare? Both have their own unique advantages, and the best option for you really depends on your individual investment goals. If you need a little more guidance, then read our article on buying gold bars vs coins for further details.
Gold bars
Gold bars, sometimes called ingots, are rectangular slabs of pure gold. They come in a variety of weights, ranging from 1 gram to 1 kilogram. For investors looking to purchase gold in bulk, bars are typically the more economical option because they tend to have lower premiums over the spot price of gold.
Gold coins
Gold coins are another popular way to invest in gold. These coins come in various sizes and designs, with some of the most common being the Gold Britannia coins. These typically carry a higher premium than bars due to their craftsmanship, collectibility, and smaller sizes. However, they are much easier to store and trade.
How to invest in gold
When it comes to purchasing gold, there are several ways to invest:
1. Buying physical gold
The most straightforward way to invest in gold is by purchasing physical gold in the form of bars or coins. This allows you to own the metal outright and store it as you see fit. It’s important to buy from a reputable dealer, such as Bullion Giant, to ensure the authenticity of your purchase.
2. Gold ETFs (Exchange-Traded Funds)
Gold ETFs offer a convenient way to invest in gold without having to store or insure physical gold. When you invest in a gold ETF, you’re buying shares in a fund that owns gold on your behalf. However, with this method, you don’t actually own the gold itself, only a share of the fund.
3. Gold stocks
Another way to invest in gold is by purchasing stocks of companies that mine or produce gold. While this offers exposure to gold prices, it also adds an additional layer of risk, as these companies’ stock prices can be influenced by factors unrelated to the price of gold.
Buying gold from a bullion dealer
If you’re looking for a quick, safe, and convenient way to purchase gold, buying from a reputable online bullion dealer is an excellent option. The process is simple, but to ensure a smooth and secure transaction, there are a few key factors to keep in mind.
First, look for dealers who offer gold from LBMA-approved brands. The London Bullion Market Association (LBMA) is the gold industry’s leading standard for quality and authenticity, so purchasing gold from these approved brands guarantees you’re getting high-quality products. At Bullion Giant, we specialise in selling gold bullion bars and coins from top LBMA-approved brands like Metalor, Heraeus, PAMP, Valcambi Suisse, and Umicore.
Secondly, consider the relationship between weight and premium. Smaller bars or coins generally come with higher premiums due to production costs, while larger bars often have lower premiums. Be sure to compare the cost per gram across different sizes to ensure you’re maximising your investment. Finally, think about storage options—whether you plan to keep your gold at home or use a secure storage facility.
If you need a little more information, then read our article on how to buy gold.
When is the best time to invest in gold?
There is no perfect time to invest in gold, but there are a few indicators that suggest when it might be a good idea to add gold to your portfolio. During periods of market volatility, for instance, when stock markets become unpredictable, many investors turn to gold as a safe haven to protect their wealth. Additionally, if central banks are expected to tighten monetary policy by raising interest rates, this can negatively impact stock markets. In anticipation of such moves, investors often turn to gold to shield their assets.
Does the price of gold fluctuate?
Yes, the price of gold fluctuates, often influenced by several factors:
- Supply and demand: Like any commodity, gold prices are driven by supply and demand. When consumer interest grows or industrial demand increases, prices typically rise. However, if supply exceeds demand, prices can dip accordingly.
- Currency movements: Gold is typically priced in U.S. dollars, so fluctuations in the dollar’s value can affect the price of gold. A stronger dollar tends to lower gold prices, while a weaker dollar can increase them.
- Geopolitical events: Gold prices often rise during times of war, political unrest, or economic instability. This makes other investments, such as stocks or bonds, riskier to invest in.
- Jewellery market: The global demand for gold jewellery plays a significant role in its price. During peak buying seasons like holidays or cultural events, increased consumer demand can drive gold prices up.
Do I pay Capital Gains Tax on gold?
In the UK, physical gold, such as coins and bars, can be subject to Capital Gains Tax (CGT) if your gains exceed the annual allowance. However, not all gold investments are taxed equally. For instance, British coins like the Gold Britannia and Gold Sovereign are considered legal tender in the UK and are exempt from CGT. If you invest in these coins, you won’t need to pay tax on any gains. For further insights, see our blog on how to avoid paying capital gains tax on gold.
Choose Bullion Giant for your gold investment needs
When you decide to invest in gold, it’s essential to work with a trustworthy and reputable dealer. Here at Bullion Giant, we offer a wide range of gold products, including both bullion bars and coins, to suit all levels of investors—from 1g, 5g or 10 gram gold bars to 500g, 1kg and even 12.5kg gold bars.
With Bullion Giant, you can expect:
- High-quality products: All gold sold by Bullion Giant is of the highest 99.99% purity, ensuring you get the best value for your investment.
- Competitive prices: Bullion Giant provides competitive pricing, helping you make the most of your investment.
- Expert advice: Whether you’re new to investing in gold or a seasoned investor, the experts at Bullion Giant are available to guide you through the process.
- Free insured delivery: All products are delivered in secure, protective packaging meaning your asset will arrive to you promptly.
- Flexible payment options: Customers can pay via bank transfer, debit or credit card or spread the cost of your purchase over 3 months with iwocaPay.
Buying online from a trusted dealer like Bullion Giant makes the process quick and convenient. With secure payment methods, insured shipping, and professional advice available, you can confidently invest in gold knowing you’re in good hands. Contact our friendly team today with any queries and we’ll be on hand to assist you.
