Is buying gold a good idea?

Malthusian

ripplyuk wrote: »

He is very likely to leave this money sitting in the bank (in his current account too). So I'm thinking it might be better to buy gold than leave the cash sitting doing nothing.

If he buys gold the money will still be sitting around doing nothing. However if it sits around in a cash deposit doing nothing its value will stay the same (in nominal terms) while if it is sitting around in gold doing nothing (other than being shiny) its value will go up and down at random according to the whims of speculators.

He wants this gold in his hand, not just a certificate of it.

So as well as the risk of volatility he wants the risk of it being nicked.

I've just been googling about forgeries which is worrying. Is there any way to know for sure if the stuff is real?

Bite it? I'm sure you can pay for someone to authenticate it but you are then at even more disadvantage in terms of making a return, as you now need speculators to drive up the price of gold to recover the money you spent on authenticating it, before you can actually make any money from it.

Is it safest to buy it from the royal mint?

Safe is a very relative word here. You are probably minimising the risk of being outright scammed, but that is really the least of your worries.

ripplyuk

He's planning to keep it at home. I assume he'll hide it somewhere. I know the amount he is planning to buy will be under £10,000 so maybe normal home insurance would cover it.

redped

Like others here, I buy one or two sovereigns a year - I've always used bullionbypost, and would recommend them.

DiggerUK

Check with your insurance company. If you avoid "numismatics" then it will be insured as a job lot, not a collection.
The amount you are thinking about purchasing is not insignificant, and I would suggest that you consider buying over a four to six month period. Prices are trending down for now, and I suspect there may be some more down side to the price. But that's just my opinion.

This is my favoured site for checking the price. Play around with it. You can track the price back to 1973, pay particular attention to the price movements over the last ten years. As you will be buying and selling in pounds, follow the pound price. USD is just the international pricing currency. http://goldprice.org

Lastly, these two sites are consistently best value. I have used both. Remember to check for delivery and p&p charges.
http://www.elminvestments.co.uk/gold-coins.html
https://atkinsonsbullion.com/gold/gold-coins
Of the other sites recommended I can also vouch for Coin Invest, Hatton Garden and Bairds..._

EdGasketTheSecond

Yes it's a great idea. A gold ETF is the most cost effective way to own gold.

Eco_Miser

Malthusian wrote: »

I've just been googling about forgeries which is worrying. Is there any way to know for sure if the stuff is real?

Bite it?

If you do this, note that pure gold is soft and will show the teeth marks if you bite hard enough.

Geoff1963

What if your house burns down

Gold melts at 1064 deg C. It is quite hard to destroy, and quite easy to find.

Gold is free of VAT ; and legal tender gold coins ( Sovereigns + parts, Britannias and parts ) are CGT free.

Keeping it in the house, doesn't make your house more likely to be burgled ; but people thinking you have it in the house, makes you more likely to be tortured. For that reason alone, I'd say it's a bad idea.

atush

Yeah, try looking for gold coins in a tower fire?

While the gold may not be destroyed in a fire, it can be unrecoverable for the owner.

Geoff1963

While the gold may not be destroyed in a fire, it can be unrecoverable for the owner.

I was comparing gold to other at-home physical investments, such as currency notes or fine art.

atush

i was comparing with savings in a bank, or equities.

This guy wants 10K in gold in his house.

To me, bad investment (produces no income, and all eggs in one basket) and unsafe.