Best way to hold gold? Are ETFs safe?

MacsReturns

Did you get that 1kg bar, Phildew? £27,049.00 today

I'd echo most of shaun's sentiments regarding coins - don't buy for the 'numismatic' value - the one exception I made was to once pay an extra £5 for a 'shieldback' sovereign - but that was back when it only cost £125 (£233 at Bairds currently, so I don't mind the extra £5 now...)

I personally like sovereigns because 1) they're readily available, 2) they are 'coin of the realm' as well as bullion, 3) I can't afford to buy Britannias :rotfl:

I've established a relationship with a local jeweller who often gets sovereigns from folks cashing in, and over the months, I've seen the 'premium' I pay come down to about 1% over spot, so I'm happy with the arrangement. Generally speaking though, Krugerrands have the lowest premium.

While one might be at sale for £200 and another at £400, how would one know they're both worth (say) £190?

A full sovereign is 8g at 22 carat, so has a gold content of 0.2354oz - armed with the day's spot price and a calculator, you will know what is a fair price/how much premium is being charged. If you buy in person as I do, it's always good to hint that you know the spot, even when you don't

I assume the buyers market for actual gold bars is really limited - how and where do you sell it if you need to convert back to cash quickly?

Disclosure: I have profound doomer tendencies, so I've never really thought of selling up, but I'm sure there's always a market via the same dealers who are selling now - though getting cash back may be tricky if you're looking for actual folding notes. There are also various refiners/smelters around. Not to mention Goldman Sachs employees looking to avoid the pitchforks...

Asheron

phildew wrote: »

i want to invest quite a large lump sum in gold. I don't like the way the pound is going down and my feeling is the economy is going to get worse before it gets better.

I'd welcome any views on the best way to invest in gold? I have read that etfs are the easiest, but are they really safe if the financial sector goes pear shaped again?

Say i buy into etfs, it means i get shares in another company that owns the gold, and the shares are managed by another company as a custodian like barclays. So what happens if the etf trading company or the company that owns the shares goes belly up, or the custodian collapses (do banks fill anyone with complete confidence any more?), or what if one of these efts turns out to be part of a madoff type fraud? If i invest in an online etf, what have i got apart from a bit of paper or an email to secure my investment in gold?

If anyone thinks my concerns are unfounded, then which etf is best?

Thanks for any suggestions.

do not buy paper gold!

Hold it in your hands!

JamesU

MacsReturns wrote: »

Did you get that 1kg bar, Phildew? £27,049.00 today

I personally like sovereigns because 1) they're readily available, 2) they are 'coin of the realm' as well as bullion, 3) I can't afford to buy Britannias :rotfl:

Do you happen to know if all gold sovereigns are considered legal tender for CGT purposes irresepective of date? Or is it just decimal QEII sovereigns that are legal tender?

JamesU

MacsReturns

Apparently (according to Wiki...) it is weight, rather than age, that matters:

English law allows a sovereign to be legal tender so long as it weighs 122.5 grains, or more; and the difference between this and the full standard weight, or 0.774 grain, represents the margin allowed for abrasion.

It has a 'face value' of £1, so the (pre-)decimal issue shouldn't come into it.

JamesU

MacsReturns wrote: »

Apparently (according to Wiki...) it is weight, rather than age, that matters: It has a 'face value' of £1, so the (pre-)decimal issue shouldn't come into it.

Thanks for this.

Just checked elsewhere also as in link below: "Thus all post-1837 British gold sovereigns – because they are legal tender and have a legal tender face value - are capital gains tax free, which is obviously a massive benefit to investors vis-à-vis other gold investments."

Guess this is another reason why they are so popular as an investment.

JamesU

http://www.moneyweek.com/investments/precious-metals-and-gems/why-you-should-buy-british-gold-sovereigns-16088.aspx