Gold coins

Buying gold coins for the first time? 5 things you need to know

There’s something incredibly satisfying about holding a 1 oz Gold Britannia in the palm of your hand and feeling its solid weight. Or even better, a ‘roll’ of ten weighty gold coins! Maybe because most of us have completely lost touch with our money. We never see or feel it. Money has been reduced to a figure in our bank account. We may not even be aware of the amount fluctuating as we make deposits and payments via EFTs, debit orders, and credit cards or phone apps.

Buying gold coins is like owning your own mini gold reserve. It offers a solid feeling of security in a world buffeted by a global pandemic and recession. But before you buy your first gold coins, consider these important questions:

1. Which is the best type of gold coin to buy?

Commemorative coins are often touted as rare and valuable – and some of them are. But unless you are an experienced coin collector, you should steer clear of them. It’s very, very easy to pay more than you should for a ‘limited edition’ or historical coin. The problem comes when you try to sell the coin and discover that ‘rare’ does not always mean desirable. Depending on demand for a particular coin, you could struggle to find a buyer who will pay more than the actual value of the metal it contains. And sadly, some commemorative coins contain only a small percentage of precious metal.

When you buy a 1oz Britannia gold coin, you know exactly what you are getting for your money – one ounce of pure gold. This is certified by the Royal Mint, which produces the coins. Prior to 2013, Britannia coins were alloyed with copper or silver to bring their carat value to 22 ct. Coins minted after 2013 are 24 ct. But regardless of whether you buy 22ct or 24ct gold Britannia coins, both contain the same amount of gold and thus have the same value.

This value depends on the current price of gold. Whilst the gold price fluctuates regularly, over the past 20 years gold has increased in value by 564%.

2. How much does a 1 oz Britannia gold coin cost?

These coins are literally worth their weight in gold! That’s because their value is aligned to the current gold price. At the time of writing, a 1 oz Britannia Gold coin would cost you around £1 330, depending on where you buy it. This excludes VAT which is not payable when you buy Britannia gold coins in the UK. Coin dealers and shops add on a handling fee – from 2% upwards depending on the service they offer. Obviously, you will pay more if you buy your coins from a knowledgeable dealer in well maintained, discreet and secure premises. But isn’t it worth it to ensure your safety and privacy?

Another popular option is to buy coins on the Internet. It’s quick, convenient and safe, as long as you use a reputable dealer. Visit the British Numismatic Trade Association website for a list of registered dealers. Avoid private sellers on sites like Gumtree – especially if they offer coins at well below the going rate!

If you’re looking for a cheaper option, why not consider half, quarter or one-tenth ounce gold Britannia coins? You can pick up a one-tenth gold Britannia coin for under £150.

Unless you are a coin collector, stick to normal uncirculated mint coins rather than paying more for proof coins. Although proof coins have a higher value, this is related to the appearance, condition and rarity of the coin. There is no difference in the amount of gold it contains.

3. Where should I keep my gold coins?

There’s nothing like walking out of a shop with a bag or pocket full of gold coins to make you acutely aware of the dangers of mugger and pickpockets. Small, valuable, untraceable and easy to grab and hide, gold coins are a thief’s dream. So before you buy your first coin, consider how you are going to keep it safe.

Some dealers – and the Royal Mint – offer secure vault storage. Bank safety deposit boxes are another option. Both of these involve an ongoing cost. Depending on the number of gold coins you have, you may prefer to hide them at home. If you take this risk, do resist the temptation to tell your friends all about your new possession – the fewer people who know about it, the better. That said, make sure at least one trusted relative or friend knows where you’ve hidden your coins. Or leave a letter to be opened in the event of your death.

Should you insure gold coins hidden at home? If you do, you will almost certainly have to declare them as a separate item on your home insurance policy. Because they are high risk items, this will push up the cost of your insurance considerably. You may also be concerned that, unlikely as it seems, someone at the insurance company might tip off a thief to the presence of gold coins at your address.

4. How easy is to sell Britannia gold coins if I need cash unexpectedly?

You can sell Britannia gold coins whenever you want, usually at around 98% of the prevailing spot price of gold. Shop around online to find the best prices offered, but be sure to use a reputable dealer – preferably one who specialises in gold bullion.

You may be able to get a higher price for your coins if you sell them privately, but this involves greater risk, unless you know and trust the buyer. Jewellers or high street dealers usually offer a far lower price; some will try to tell you that your coin is worth less because of the date it was minted or the design on it. Remember, neither of these factors has any bearing on the value of a Britannia gold coin, which is based solely on the gold it contains.

5. What are the tax implications?

If you are a British tax payer, you can sell gold Britannia coins without paying any Capital Gains Tax on the profit you make, up to £12 000 per year. That is because British gold coins are legal tender in the UK and all sterling currency is exempt from CGT. Again, you need to be aware of this when you sell your coins to avoid being misled by third parties.

This tax benefit only applies to UK gold coins. If you own South African Krugerrands, American Eagles, Candadian Maple Leafs, etc. you will be liable for CGT when you sell them as they are not sterling currency. This makes the gold Britannia coins first choice for British buyers.

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