Things to know about gold investment: A-Z guide

Things to know about gold investment: A-Z guide


Since the oldest times, gold has been considered a precious metal that people have been using for making jewellery such as bracelets, earrings and necklaces. But gold has also played a major role throughout history as a safe haven investment. The global economy is as unstable as it’s ever been, so the appeal of gold investing is becoming stronger and more widespread. Here are some facts to consider.

Benefits of investing in gold

There are many advantages of gold investment, but some of the most important are the following:

  • Gold has outperformed inflation over hundreds of years. With interest rates at record lows, and even negative in some countries, the return on your cash deposit can be below the rate of inflation. As such, the purchasing power of your cash over years actually diminishes. By moving some of those savings sideways into physical gold, you’re able to secure an inflation proof store of wealth.
  • If you’re seeking a medium to long term savings vehicle, then gold has offered fantastic growth over the past 10 years. Its capital growth has outperformed all other asset classes. Averaging around 10% growth per year. So if you need to grow the value of your savings for a future event such as a college fund, or dream holiday, then gold can be a great solution.
  • Gold tends to rise in value when most other assets fall. In this way, owning gold as part of a balanced portfolio, helps iron out any market volatility. In this way, owning gold helps plan for your future and retirement. Regardless of any nasty market shocks, whether it’s a credit crunch or Brexit, gold makes your portfolio value less volatile and therefore more predictable, enabling you to plan your retirement. Gold bullion also qualifies for some pensions in the UK, so you can enjoy tax free growth.
  • Last but not least, there’s no better heirloom than passing gold coins and bars down the generations as a gift to loved ones.

Things to consider when you intend to buy gold

Choose a reliable source for purchasing gold. Unless you’re a very experienced purchaser of gold, you need the peace of mind that the gold you buy is authentic. Seeking a reputable gold dealer will help source top grade gold at the best prices, and provide a way to sell the gold when you’re ready.

Bear in mind the fact that gold supplies are not unlimited. As demand for gold investment increases steadily, more pressure is placed on fulfilling that demand. With major gold discoveries at a low, very little new supply is entering the market. So while research is necessary, don’t ponder too long, as the price of gold increases each year as demand outstrips supply.

Be aware of the black market! There are many people who want to take advantage of your lack of experience and who would like to overcharge you for your gold. Don’t be tempted to buy off Ebay or from a gold broker without a trackrecord.

Take things step by step! After doing your research about gold investment, another good idea is starting with small investments. As you get a feel for the market and the types of gold available, you can gradually increase your gold holding. In this way, buying in several tranches can also iron out any movement in the gold price.

The place where you keep it is also important! Just imagine how it would be to invest a significant part of your savings in gold, and then someone steals it. Most reputable gold dealers will be able to offer you a storage service so you have the peace of mind that your investment is insured and kept in professional vaults. If you wish to take delivery of your gold investment, ensure you have a safe place at home or a safe deposit box.

Some interesting things about gold and its history:

As well as being a popular investment, gold has played many roles throughout history. Here are some of the most popular.

  • Gold is not only one of the most desirable metals, but also one of the most recycled ones. Believe it or not, even the jewellery that you usually wear are made by recycled pieces of gold, especially due to the fact that this metal has intrinsic value.
  • Gold is considered a symbol of wealth. Not everybody can afford to buy it. During history, various royal families have adorned themselves with precious jewellery made of gold. In fact, the majority of king’s and queen’s crowns are made of this metal, as a symbol of their social standing.
  • Furthermore, there are people who believe that gold is not only a symbol of wealth, but also a religious one which is used for symbolising the Sun. Back in time, the Greeks believed that gold was made by the “tears of God”. Gold still plays a role in today’s religions such as Christianity, Hinduism, Islam and Judaism.
  • The first jewellery made of gold was created in Egypt, thousands years ago, but now, the biggest gold producers are USA, China, South Africa and UK. On the other hand, the biggest consumer when it comes to gold is India. There is no surprise that India occupies a top position, due to the fact that fashion trends from this country indicate the fact that women should wear gold. Moreover, people from India prefer saving gold, due to the fact that that their currency is considered weak.

Three popular ways of investing in gold

Physical Gold ownership. This method is by far the most popular. The choice is between gold bars and gold coins. The main advantage is owning a tangible asset rather than a piece of paper. Owning certain physical gold coins also benefits from being free from VAT and Capital Gains Tax (CGT), so investors keep all their profit. It appeals to those investors seeking balance, security and certainty.

Gold-exchange traded funds. Growing in popularity in recent years, Gold ETFs are considered a very convenient investment method, as charges are low and you don’t need to storage the gold.

Gold futures and options. Dabbling in futures and options isn’t for the feint hearted. It should only be attempted by sophisticated investors as it’s the most high risk of investment methods and suited more towards speculation.