Going for Gold – Part 1

How to buy gold (and silver)

Reggie's Mind of Evil, Going Postal

Over the last 6 months I’ve taken an interest in buying gold and silver, for reasons which I will deal with in a separate article. Much research has been undertaken and I have gained some basic knowledge of what I feel I should be buying and how / where. There is much yet to be learnt but that can only come with experience. In the meantime, I thought this might make the basis of an interesting series of articles for GP.

Like many things, the internet has made buying goods and services considerably easier than ever before. It has also created competition which, on the whole, can be a good thing as it can in theory reduce the price of items to a minimum, although cheapest isn’t always best.

If you’re thinking of buying gold (or silver) there are many different dealers who specialise in selling precious metals online and having decided to take the plunge earlier this year I’ve used a number of different dealers and have had positive experiences with them all so far. Prior to the first purchase I had to decide between buying coins, bars of both. Some friendly Puffins advised me to purchase coins for several reasons: –

  • Providing they are UK legal tender there is no VAT to pay
  • They are capital gains tax (CGT) exempt
  • They are easier to sell as some coins can attract a premium over and above their value in weight in gold / silver

Taking on board this sound advice I researched what UK legal tender there was to buy in gold and silver. The two most common types of coin are the Sovereign and the Britannia (I will cover each in more detail in a separate article). Within each coin type there are different sizes / weights giving the purchaser the opportunity to build up their ‘stack’ for a relatively modest outlay over a period of time.

Sovereigns are very plentiful, having been around for over 200 hundred years. I decided that I would start by buying the newest Sovereigns I could afford as this would guarantee the condition of the coins were as close to ‘mint’ as possible. Condition isn’t really that important, clearly older coins will be more worn than newer unused ones but their value is the same as it’s based on the weight of the gold. The exception to this are coins produced in limited numbers and those produced to ‘proof’ standard (again the subject of another article). The 2021 range of Sovereigns are produced by the Royal Mint in a variety of sizes; quintuple, double, sovereign, half and quarter sovereign (the quintuple and quarter only available in limited numbers as part of proof sets). I decided to buy the double, single and half sovereign to kick things off.

The price and availability of sovereigns varies from dealer to dealer. When researching price it was not uncommon to find a dealer was completely out of stock. I don’t know if this is usual or whether other factors are creating additional pressure on stocks of coins. Anecdotally it seems that the recent increase in the price of silver has created additional demand for coins, some of which has spilled over in to gold. Also, with many people stuck at home and not much to spend their money on some have done what I am now doing. Finally some coins will sell out quicker than the Royal Mint makes them.

To give you some examples of pricing and availability of 2021 Sovereigns across a number of dealers:

Dealer Price per Sovereign Delivery Cost Availability
The Royal Mint £327.18 £0.00 Awaiting Stock
Atkinsons £326.47 £0.00 Available now
Bleyer Bullion £327.59 £0.00 Pre-order
Baird & Co £318.82 £13.20 Available now
Bullion By Post £327.00 £0.00 Available now
Gold.co.uk £332.80 £0.00 Available now
Chards £320.22 £6.00 Pre-order
Gold Bullion Co £327.22 £0.00 Available now
ATS Bullion £327.00 £0.00 Not available
Gerrards Bullion £326.60 £0.00 Available now
Ebay £330 to £475 From £0.00 Available now

Prices as at 10pm on 22/2/21.   Spot Price of gold £1,286.81 per Troy Oz.

A Sovereign weighs 0.235 Troy Oz.

As you can see there is a reasonable spread of prices and availability. In my case I decided to use the Royal Mint. Firstly, because their coins come in hard plastic coin capsules which keeps the coins free of damage and finger prints (most other dealers provide their coins in a soft plastic wallet). Secondly by buying from the company who makes the coins I can be sure of their provenance, although I doubt any of the companies listed above would knowingly sell fakes. In the case of Ebay I personally would never buy any coins from this source (unless the seller was a reputable company) as there are far too many stories of people being ripped off. It’s just too much of a risk to me.

As a guide you would expect to pay the gold spot price (the price at the time of purchase) plus 5% margin for a single coin. When buying more than one coin the margin reduces the more coins you buy.  The lowest margin would be around 2% above spot price.

In my opinion it’s worth shopping around to get the best price but if the difference is only marginal and they have the coin you are looking for in stock I would choose the Royal Mint every time. I have also used Atkinsons, Bleyer and Baird & Co when they offered a better price or had stock in when the Royal Mint didn’t.

Each company above has their own website and it’s just a case of registering for an account (providing your name, address and contact number). Only in the case on one company have I been asked to provide any additional information (driving licence and passport). Each company has a duty, under anti-money laundering rules, to keep a record of those spending more than £10,000 per annum. Not a problem in my case…..

One other potential source of buying gold coins are auctions. I’ve been looking at prices for various auctions around the UK and am continually surprised at the prices people are paying for bog standard Sovereigns. By the time all the fees have been included the purchaser is very often paying over the odds, but I guess for those interested in a particular year or condition of coin price isn’t the most important factor. The Sale Room (thesaleroom.com) is a site which covers many different auctions across the UK – an easy way to search for and bid on upcoming lots.

Finally, what happens when you want to cash some of your gold or silver in? Most of the sites listed above will buy gold at spot price minus 2% or so. Alternatively, some local jewellers will apparently buy gold coins, although I’m not sure what rate you would get.

Whether buying or selling I would recommend you join the Silver Forum (https://www.thesilverforum.com/) – it’s free to join and a useful resource for advice on what to do / not do when buying gold or silver or other precious metals. Members often list items for sale which can be a good way of buying at lower prices than available elsewhere.

In conclusion, once you know what you’re looking for it’s really easy to purchase gold / silver coins.

The pictures below show 3 coins which I inherited from my uncle many years ago. I don’t know how he came by the coins or why they are framed as they are. The coins are a 1912 Sovereign, a 1912 half Sovereign and an 1836 William IV silver Crown. The Sovereign is in excellent condition showing very little sign of wear. The half Sovereign shows some sign of wear and the silver Crown is fairly worn. Having researched these coins none of them appear to be anything particularly special but I won’t be selling them any time soon.

Reggie's Mind of Evil, Going Postal

Featured image: “Crowne-Gold-Silver-Bullion” by digitalmoneyworld is licensed under CC BY 2.0

© text & images Reggie’s Mind Of Evil 2021

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