How to invest in Gold

heydee

Hi,

I was hoping to canvass some opinion in best ways to invest in gold.

I had a fairly succesful flirtation with it over a 4 year period a wee while back that returned a really good return on a small sum when I needed it.

Only problem was, I bought physical from a dealer so ended up paying 3% when I bought, and 3% when I sold. Luckily, due increase spot price and exchange rates, I made a good deal on it, so that 6% loss didn't pain me too much, but it could have been better.

What are most cost effective ways to invest in Gold over the long term?

Cheers:j

cardsharps

Asheron is the man you need to see about this, don't worry, he'll won't be too long.

heydee

Lol! :rotfl:cheers

DiggerUK

heydee,
As you have gone physical before, go physical again.

Any gold bought outside Europe will be taxed on entry to UK.
If you will be exceeding CGT limits then go UK legal tender Sovereigns and Britannia's.

Premiums have changed, it is normal to pay 5/6% over when buying, but get 1/2% over when selling.
Have a quick look on these sites for live time spreads.
http://www.invest.gold.org/sites/en/where_to_invest/directory/?country=UNITED+KINGDOM&cb%5B%5D=coins&submit=Search&agree=1&task=search

http://www.coininvestdirect.com/en/

Only other alternative is to buy allocated physical or Gold ETF's that mean you don't have to worry about storage.
Best of fortune.

mr_fishbulb

When I was in it before, I bought PHAU - a gold ETF with physical metal backing it. With an ETF you have a bid and an offer spread, plus a trading fee. So although you are not paying a commission to the dealer (your 3%) there are still other charges to consider (as well as the management fee - 0.39% for PHAU)

In between a fund and holding the money yourself, is something like GoldMoney or BullionVault. This is where you buy the physical metal through them, and store it in their safe. You have to pay an ongoing fee to hold the gold in their vaults.

The currency risk you experienced worked in your favour (as it did when I held PHAU), but it can work the other way - you lose money when the pound strengthens. The pound has dropped a bit recently against the $. Will it drop further, or will it recover? Who knows.

shaun_from_Africa

Any gold bought outside Europe will be taxed on entry to UK.

As long as you are buying bullion bars or coins, there shouldn't be any duty or VAT payable.
"Investment gold" can be imported into the EU free of any tax, duty or VAT. This is how it is possible to buy something like a Krugerrand for approx the same price in the UK as in any other country in the world.
All you pay for is the spot price for 1oz of gold, plus the dealers margin on top of that.

Last year I picked up some krugers from a place in Guernsey, declared them when coming back into the UK and wasn't charged a penny.

This page from HMRC will show you the requirements for investment gold coins (the purity requirements are the same for bullion bars)

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&columns=1&id=HMCE_CL_000108

DiggerUK

shaun_from_Africa wrote: »

....."Investment gold" can be imported into the EU free of any tax, duty or VAT....

From section 14.1 of HMRC Notice 701/21. VAT Gold.

"If it has been imported from outside the EC, is there evidence that the gold has been properly declared at import and that import VAT has been paid if appropriate?"

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000104&propertyType=document#P559_47984

An issue that involves the tax man is never entirely clear, and best treated circumspectively.

shaun_from_Africa

import VAT has been paid if appropriate

VAT and duty is payable on jewellery or other gold items not classified as investment gold.
Section 2 of the link you provided Digger gives the exemption for this.

It's not just the UK that allows this type of gold to imported free of duty, but it is an EU wide ruling.

DiggerUK

shaun_from_Africa wrote: »

......VAT and duty is payable on jewellery or other gold items not classified as investment gold.Section 2 of the link you provided Digger gives the exemption for this..../QUOTE]

99% of me says you are right. Maybe I am just being over cautious with plonks in uniform, who have legal powers to cavity search me in quiet sound proof rooms :eek:

Asheron

Agreed, Buy Physical Gold Coins. But also think about Silver Coins.

Never buy paper gold or silver.

shaun_from_Africa

The biggest problem with buying silver coins is that they have VAT added to the selling price.
Once you've included the dealers mark up, the price of silver would have to go up around 22% to 25% before your investment showed any profit.

The cheapest 1oz coins are usually Canadian Maples or US Silver dollars, and todays price was about £15.76 when you buy from a dealer, and £12.32 selling to the same dealer.