5 key things a beginner investor should know before they buy Gold Britannia Coins
It is probably the most beautiful gold coin in circulation, but is it worth your investment? Gold Britannia coins offer several benefits but are not short of flaws, especially if you compare them to the Sovereign coin. Still, if you consider their popularity, divisibility range, and low premiums, they are among the best assets out there.
Here are the 5 things a beginner investor should know before buying the coin:
One might ask: “what are the benefits of buying a Britannia gold coin?” The first and most important benefit is that the coins are VAT and CGT-free.
Let’s take a closer look:
The current design of the coin was adopted in 119 AD and has remained virtually the same ever since. With age and consistency comes trust. These coins are popular in the UK and the rest of the world.
You’re spoiled for choice. Whether you are a beginner or an experienced investor, you can choose between the main 1-ounce Britannia gold coin and its fractions which include -ounce coin, 1/10-ounce coin, and ¼-ounce. coin, and 5-ounce coin (has been in circulation since 2013). This wide range of options means you are guaranteed to find a coin that fits your budget. These denominations can also prove highly advantageous for a frequent buyer because they increase the range of exchange.
You will be impressed to realize that all gold Britannia coins are tax-free. The two bothersome taxes, the Capital Gains Tax (CGT) and VAT have been removed. Unfortunately, only the residents of the UK get to enjoy this much-deserved perk.
As an investor, you want to put your money in a hard-to-fake stable gold coin. The Britannia gold coin is probably the most visually secure coin on the planet. The new edition of the coin comes with 4 key unique security features, all of which can be easily read by an unaided eye:
- TINCTURE LINES: These lines are A standard and artistic way to create and use colors and patterns as a security feature. In this coin, they highlight the details on the shield held by the figure of Britannia on the backside.
- LATENT IMAGE: The Trident icon on the bottom left edge of Britannia’s dress changes to a shiny padlock when tilted.
- SURFACE ANIMATION: The micro details on the background of the image of Britannia creates waves that roll when you move the coin.
- MICRO-TEXT: the image of Britannia is surrounded by the Latin phrase “DECUS ET TUTANEM” translating to “ornaments and a safeguard.” The phrase may look simplistic but was printed to great detail by powerful lasers.
The above features make the coin near impossible to fake.
Another benefit of this coin is that you can sell it back, thanks to the wide range of available denominations. Rather than sell the whole 1-ounce Britannia gold coin, you can sell a fraction of your holding, say, a ¼-ounce coin, and keep the rest.
THE FINEST GOLD COIN YET
Gold Britannia coins don’t remain the same forever. Rather, they are updated once in a while to boost the security marks and increase the gold content. The current edition of the coin is the purest ever. The gold alloy used from 1990 onwards contained a significant amount of silver in place of copper. Coins released in a few years leading to 2012 came with 22-carat gold which has a fineness of 0.917.
The fineness has improved considerably over the years. Coins released from 2013 to date are made of 24-carat gold with much more fineness – 0.999.
2). BRITANNIA GOLD COIN VS. GOLD SOVEREIGN – WHICH IS BEST?
There are actually two gold coins available to a UK-based investor – the gold Britannia coin and the Sovereign. Both coins are popular but whether either coin is perfect for you can depend on several factors. Let’s take a glance at five areas that might help you make the right decision:
PRICE AND WEIGHT
Ask yourself how much you’re paying for the gold contained in the coin. A Sovereign is about a quarter the weight of a gold Britannia coin. As you probably know already, weight has a big impact on the cost of gold and pretty any other precious metal. From this information, you can easily tell that a 1-ounce Britannia gold coin will cost you more money than a 1-ounce troy Sovereign.
If you are a starter and you want to make a tiny investment, a Sovereign can be a great option for you. That’s because the Sovereign is small, so it makes the market more accessible for you.
However, big things are often cheaper to produce than small things of the same material. THE SAME APPLIES TO THESE TWO COINS – THE MINT INCURS LESS COST TO PRODUCE A 1-OUNCE BRITANNIA GOLD COIN THAN A 1-OUNCE TROY SOVEREIGN. THIS MEANS YOU ARE PAYING LESS PER GRAM FOR THE GOLD BRITANNIA WHICH TRANSLATES TO MORE WEIGHT OF GOLD FOR ANY SPECIFIC INVESTMENT YOU MAKE.
AGE AND VARIETY RANGE
There are several denominations/fractions of the Britannia gold coin but the 1-ounce coin the most popular. Still, they aren’t as varied as Sovereigns. You may have realized that Sovereigns feature 3 different monarchs in their designs, whereas gold Britannias feature just one of them – Queen Elizabeth II. This means Sovereigns give you more investment options than gold Britannias. If you are lucky to lay your hands on a few Sovereigns with different monarchs, you can be certain of a diverse portfolio with even higher profits in the future.
Another thing is age. Sovereigns have been around longer than Britannias (1987). With age comes rarity and variety, all of which translate to more profits as the coinages.
Somewhere along the way, you will want to sell a fraction of the coin and remain with an easily exchangeable fraction. So, which of the two is more breakable/divisible? Gold coins are generally more divisible than gold bars, and that’s why the former is more popular among both starters and experienced investors.
HEAD TO HEAD, THOUGH, 1-OUNCE TROY SOVEREIGN IS FOUR TIMES DIVISIBLE THAN 1-OUNCE TROY BRITANNIA.AS SUCH, BEGINNERS OR “SMALL MONEY” INVESTORS WITH, SAY, £10.000 ARE OFTEN ADVISED TO GO FOR SEVERAL DIFFERENT SOVEREIGNS TO TAKE ADVANTAGE OF THEIR HIGH BREAKABILITY. On the other hand, those with more money are advised to go for gold Britannias because more cash gives the investor access to more coins which translates to more breakability.
While it’s important to prioritize the capital gains per coin in a given time, among other factors, don’t forget to assess the second-hand market of the coin. Picture a situation where you make a sizeable profit on your coins, but you can’t find the buyer when you desperately need to convert them into cash.
Good news: BOTH BRITANNIA GOLD COINS AND THE SOVEREIGN ARE HIGHLY SOUGHT-AFTER IN THE UK AND THE REST OF THE WORLD. AND BECAUSE THEY CAN BE TRANSACTED AND INVESTED TAX-FREE IN THE UK, THEY SELL LIKE CAKES, SO EXPECT TO EXCHANGE THEM FOR HARD CASH IN A FEW HOURS.
Sovereigns are a little more sought-after than Britannia gold coins when it comes to the global market. One of the reasons is that they have been around longer than their Britannia counterparts. However, it seems this popularity is about to end, more so after the introduction of the 24-carat Britannia.
Both the two coins are VAT-free anywhere you choose to buy within the UK. Profits generated from both coins are CGT-free as well.
TO SUMMARIZE EVERYTHING IN THIS SECTION, A MIXTURE OF BOTH COINS WOULD BE A GREAT IDEA FOR INVESTORS WITH A LOT OF MONEY. HOWEVER, FOR THOSE WITH LESS MONEY, IT WOULD MAKE SENSE YOU START WITH SOVEREIGNS, THEN UPGRADE TO BRITANNIAS AFTER YOU’VE GROWN YOUR PORTFOLIO.
If you would like to focus on a single value coin (price/gram), the coin would definitely be a Britannia.
3). STORAGE OPTIONS
Owning gold Britannias is one thing and storing them properly is an entirely different thing. Whether you plan to keep your coins as a store of value or intend to gift them out, you should protect them from humidity, sunlight, high temperatures, and similar insults of nature. There are 3 primary or temporary storage – tubes, monster boxes, and gift boxes. Oftentimes, gold Britannias bought from the Royal Mint are shipped in special tubes (you must buy 10 or more coins to get these tubes). However, these tubes can be flimsy if they have to support 10 or more coins. Keep your coins in capsules like this ( https://www.physicalgold.com/coin-capsule-gold-full-sovereign ).
Long-term or secondary storage may involve your favorite bank’s safe, but most investors prefer to pay a third-party company for the job.
If you opt to keep your Britannias, consider these:
- Keep the storage area secret, even from your own family and friends. Remember that you can’t trust anyone with something so small yet valuable as a gold coin.
- Do not mix your Britannia gold coins with silver coins. The two metals tend to tarnish each other with friction.
- Consider insuring your coins. Note that the contents insurance doesn’t always cover the entire portfolio.
- The storage environment should be free from dust, dampness, and corrosive elements.
4). BRITANNIA GOLD COINS VS. BITCOIN: HEAD TO HEAD – WHICH IS BETTER?
The ongoing COVID-19 pandemic has been horrendous to many people. Those with savings in the bank lost a big chunk of them to inflation. The stock market hasn’t been spared either. However, one asset seems to have benefited from the pandemic more than anything else, and that asset is Bitcoin. The cryptocurrency leaped from about $5,500 at the start of 2020 to about $30,000 at the end of that year. Though still volatile, it has managed to stray above $32,000 ever since.
Many investors are starting to consider it over gold coins and bars, but is it a better alternative? Let’s compare them side by side and see:
There are no restrictions on dealing and handling Britannia Gold Coins globally. Also, gold Britannias are a little hard to steal and far harder to fake. Crossing the border with your coins might prove difficult depending on the jurisdiction, but they are easier to exchange for cash.
Bitcoin is regulated but depends on where you are. Most countries haven’t recognized it yet,, but few have embraced it almost entirely, led by El Salvador. The crypto isn’t easy to fake or steal either, but can be transferred between super easily.
You can use your gold Britannias as legal tender fairly easily. Bitcoin, too, can be used as means of exchange but not as widely as gold Britannias.
Also, Britannia gold coins, just like any other gold coins and bars, are used for numerous applications – currency, electronics, luxury goods, etc. The fact that you can use gold coins across different functions means the value stays almost the same in turbulent times.
Bitcoin has limited utility. It isn’t even a popular means of transaction. Most of the holders (or “hodlers”) hope to sell to someone else at a profit, something that makes it a speculative investment rather than a currency.
You can sell all or a fraction of your gold Britannias any time you please. Bitcoin is just as a liquid but can depend on a few dynamics. For instance, exchange platforms normally limit the number of Bitcoins you can liquidate per day. Also, if the price of Bitcoin soars beyond the daily limit set by the exchange platform, you won’t be able to withdraw just any amount of crypto you want. Furthermore, if investors panic for any reason and start to sell their crypto, the price of Bitcoin will nosedive immediately.
BITCOIN IS MORE LIQUID IF YOU OWN A TINY AMOUNT OF IT. BRITANNIA GOLD COINS ARE A BETTER OPTION FOR INVESTORS IN SEARCH OF A STABLE YET LIQUID ASSET.
High volatility is Bitcoin’s biggest flaw. The price of crypto is easily swayed by hype, public sentiments, media, investor sentiments, and regulatory concerns. Bitcoin is well capable of falling by 10% in a single day.
So which is better? IT DEPENDS. IF YOU ARE WILLING TO RISK AN INSANE AMOUNT OF MONEY AND YOU HAVE THE GUTS FOR IT, THE VOLATILITY OF BITCOIN MIGHT WORK FOR YOU. IF YOU ARE A LONG-TERM INVESTOR WITH A LOW-RISK TOLERANCE, STICK TO YOUR GOLD COINS.
5). PRICE:WHAT DETERMINES THE PRICE OF BRITANNIA GOLD COINS?
Ask any expert in gold or Britannia gold coins, and they will advise you to keep an eye on these 4 prices and values:
- The spot price, which is based on the live price of gold
- Product premiums
- Buy prices
- Selling prices
The spot price is the most critical of all because it is based on the live price of gold. While Britannia gold coins have been around for about 4 decades, the supply and demand of the coin can vary and impact the market in the process. Also, coins from specific are rare to find than others. Rare coins may carry a premium of 5 percent or less. However, the 1-ounce gold Britannia controls the lion’s share of the port price, about 98 percent.
Another critical yet rare factor is whether a coin was released to commemorate a milestone. The price of one or a few gold Britannia coins may rise dramatically during special commemorative events such as Gold Britannia 30th anniversary in 2017 ( https://www.physicalgold.com/gold-britannia-30th-anniaversary-edition-1oz ). For instance, the Gold Britannia 30th anniversary edition featured a trident 0’ mark on the backside. Only 7,030 of them were released in the market.
Also, the gold Britannia is larger than the Sovereign (the closest competitor) means it contains more gold and costs less to produce. For that reason, investors tend to seek more of it than Sovereign coins.
6). NUMBER:HOW MANY GOLD BRITANNIAS ARE THERE?
There’s a total of 6 gold Britannias out there:
- 1-ounce coin
- ounce coin
- ¼-ounce coin
- 5-ounce (perhaps the most lucrative of the six, introduced in 2013)
- 1/20-ounce coin
Britannia gold coins are highly sought-after in the UK and the rest of the world, something that makes them one of the best assets to buy. And because they can be transacted and invested Tax-free in the UK, they are more liquid and high in demand. Whether you plan to keep your coins as a store of value or intend to gift them out, you should protect them from humidity, sunlight, high temperatures, and similar insults of nature. There are 3 primary or temporary storage – tubes, a monster box, and a gift box.
Before buying any coin, ask yourself how much you’re paying for the gold contained in the coin. 1-ounce troy of Sovereign is about a quarter the weight of a 1-ounce gold Britannia coin. Weight has a big impact on the cost of gold and pretty any other precious metal. A mixture of both coins would be a great idea for investors with a lot of money to invest. However, for those with less money, it would make sense you start with Sovereigns, then upgrade to Britannias after you’ve grown your portfolio.