Is gold the best option?

zippy1969

Hi.

I have come across somebody in the course of my work who has started to save a large amount of cash in their home. Obviously in most people's opinion this is pretty foolish. However, regardless of whether it is foolish or not, the individual is adamant that they are not going to put their money into a bank or building society.

The person involved has home contents insurance and thought the cash was covered but the cover for cash on their policy is only £500. I called the British Insurance Brokers Association who advised that this is an industry wide norm. They did try three brokers for me who they thought may have higher cash insurance limits but the limit was always £500.

Safety deposit boxes were mentioned but the person will not hand the money over...they will not let it out of their home.

At the end of the day it is their money and their choice of what to do with it.

Anyway, the person is willing to consider converting the money into something like gold. This way they can store the gold in a safe and because it's a physical item it will be covered by their home contents insurance if they raise the insured amount. At the moment they have a £15,000 limit but can raise this to, say, £25,000 and pay a slightly higher premium.

So the questions are:

1. Is gold the best option with regard to buying something that will hold or increase in value?
2. Where can you buy and sell gold and not get ripped off?
3. Will gold be covered by home contents insurance?

I know you'll all want to suggest they put the money in a bank or building society and I agree. Please though, don't mention that because the person concerned will not consider this regardless of what anyone offers in the way of advice on the subject.

Many thanks if you can help.

lee111s

Do they overpay on their mortgage?

Mammal

I am also interested in what you´re asking.

Lokolo

1) No a bank account is the best option. Even if it is ruled out, it's still the best option.

2) With cash, nowhere likely. The internet helps keeps costs low but internet means depositing the money somewhere and buying using a credit or debit card.

3) I think it will vary from provider to provider. I suspect there will be a per item limit, so if the person bought 1 very expensive item, it would ony be part covered. But its best to check the T&Cs of the insurance provider.

Stompa

I think you'd have to list the gold as a 'specified item' on the insurance policy.

George_Michael

1. Is gold the best option?
Gold is one option, no one can say if it's the best or the worst as what is good for one person's circumstances may not be good for a different person.
Gold has the potential to rise in price dramatically in a very short period, but it can also fall just as much.
2. Where can you buy and sell gold and not get ripped off?
There are loads of places (coininvest direct, Chard etc).
Provided a bit of care is taken, buying gold is no riskier than buying anything else.
3. Will gold be covered by home contents insurance?
It all depends on the insurance company. Some cover valuables such as gold, some don't, and those that do will have varying terms and conditions relating to the cover provided.

zippy1969

Lokolo wrote: »

1) No a bank account is the best option. Even if it is ruled out, it's still the best option.

2) With cash, nowhere likely. The internet helps keeps costs low but internet means depositing the money somewhere and buying using a credit or debit card.

3) I think it will vary from provider to provider. I suspect there will be a per item limit, so if the person bought 1 very expensive item, it would ony be part covered. But its best to check the T&Cs of the insurance provider.

A bank account isn't an option as the person has 100% ruled it out. When asking if gold were the best option I was meaning are there any better alternatives to gold in regard to physical items that will maintain or increase their value?

ColdIron

Be very careful with gold and insurance. I enquired into this once and many insurance companies would only insure gold coins if they constituted 'a collection'. In trying to define exactly what a collection was it became rather obscure but a random selection of krugs, sovs etc was unlikely to fit the definition

It may be OK but I would make it very clear to the insurance company precisely what you expect to be covered and have their response in writing

George_Michael

are there any better alternatives to gold in regard to physical items that will maintain or increase their value?

That is one question that no one will be able to give a guaranteed answer to.
Investing in anything, be it a physical product such as gold, precious stones, art, wine etc, or a paper product such as stocks and shares, currency etc will always be a bit of a gamble.

Lokolo

zippy1969 wrote: »

A bank account isn't an option as the person has 100% ruled it out. When asking if gold were the best option I was meaning are there any better alternatives to gold in regard to physical items that will maintain or increase their value?

There isn't a gaurentee that any physical items will maintain or increase their value. Gold or otherwise. All items can lose value in some way or another.

http://www.kitco.com/charts/popup/au0182nyb.html

For example, if the person in question bought at the beginning of October but suddenly needed it now, it would be worth less.

gadgetmind

The best option is for them to keep hoarding cash, be burgled and lose the lot, and then realise that banks exist for a very good reason.

Yes, it's an expensive lesson, but how else will they learn?