HOW AND WHERE TO BUY GOLD COINS
If you want to buy and own physical gold then one of the most popular ways is to invest in gold coins. Gold coins are popular among investors who actually want to have the gold in their possession and want an investment that is easy to get and to handle. One advantage to buying gold coins rather than gold bullion is that gold coins are portable, you can invest with relatively small amounts of money and it is easier to sell part of your holding if you wish. There are risks involved and there are fake coins around which have other metals mixed in with the gold which obviously decreases their value. For this reason you should make sure you buy your coins from a reputable dealer. For more information about fake coins read our post How to Spot Fake Gold Coins.
THE PRICE OF GOLD COINS
When you buy gold coins there are two costs or prices which you need to know about. The first is the spot price. The spot price of gold (and any other commodity) is the given cash price at a given time and place. It doesn’t include additional costs you may have to pay such as broker commissions or delivery costs. The second cost is the premium over spot. This is the markup from the spot price which the dealer adds on and is his profit. This premium varies from dealer to dealer and also depends on the quantities of gold coins that you are buying. Generally it ranges from 0.1% to 10%. There are also dealers and collectors of gold coins who trade in rare and unusual gold coins. These coins often have a higher premium than the more common easy to find gold coins. These rare or antique gold coins are known as numismatic coins and they have value over and above their gold content because they are collectible.
WHICH GOLD COINS SHOULD YOU BUY
If your only reason for investing in gold coins is the gold content of the coin then you should look for the gold coins with the lowest premium. This includes coins which are common and easy to find such as the South African Krugerrand which is a one ounce gold coin. Although it is South African it was traded around the world and is readily available. Another popular coin is the british gold sovereign which is readily available in one ounce and 1/2 ounce coins. The Canadian Maple Leaf gold coin and the American Gold Eagle coin are also very popular. If you can buy gold coins which are pre 1933 at bullion prices then this is even better. This is because these coins are rarer and are likely to appreciate in value above any rise in the price of gold.
It is often, but not always the case that smaller gold coins are sold at a higher premium than the larger ones. For example, if you buy a ½ ounce British Gold Sovereign it may have a higher premium than a one ounce British Gold Sovereign from the same dealer. For this reason you should save up until you can afford the one ounce and you should consider buying a single one ounce gold coin instead of two ½ ounce coins.
WHERE TO BUY GOLD COINS
One of the easiest ways to buy gold coins is to find a local coin dealer or jeweller or antique dealer who sells second hand gold coins. Do your research though to make sure that they are selling the real thing. If you are happy to buy gold coins online there are several reputable sites you can use.
Gold Direct – Gold Direct have a wide selection of the most popular gold coins. They are a dutch company will several offices in Europe and will deliver to addresses in Europe. Gold Direct is registered in the directory of the World Gold Council (www.gold.org) and only works with certified suppliers and partners. Their suppliers of gold bars are always LBMA certified and have the London Good Delivery Status. Your order from Gold Direct is sent to you by insured shipment which currently costs €32.50.
The London Mint Office – The London Mint Office provides a wide range of coins from old to new and originating from virtually every country in the world. They have partnerships with National Banks and State Mints around the world, including the British Royal Mint. If you are not happy with the gold coins you receive the London Mint Office guarantees that it will buy back any goods at the original purchase price, providing they are returned within 14 days of receipt, complete and in mint condition. The London Mint Office will only accept orders from UK residents and their coins are mainly aimed at gold coin collectors.
GOLD COINS AND UK TAX
VAT – At the time of writing, there is no UK VAT due if you buy gold that is investment grade. This means gold that is at least 22 Karat in purity and is in the form of either a gold coin or a gold bar.
CAPITAL GAINS TAX – Any investment that is sold at a profit is subject to Capital Gains Tax (CGT) if you are a resident of the UK. The current exception to this rule is that there is no CGT due if you sell British Gold Sovereigns or Britannias at a profit. This is because these particular gold coins are classed as legal tender.