Buying gold virtually or physically?

socratez

When (or if) the price of gold goes down I plan to invest some money into it. This will probably be between 5% and 10% of my total investment.

Am I better off buying gold physically in a secure safe at home or virtually via something like the Royal Mint Digigold scheme. I understand I will not pay VAT on either, so I cannot see many advantages to either. Holding gold at home has the risk of it being stolen which I understand. I guess some people (not me!) keep physical gold so they can evade capital gains tax if they sell at a profit, and any real gold can be kept "off the record" and not accounted for, but for an office working law abiding person like me it doesn't matter. Are there any other advantages or disadvantages for the average person?

MX5huggy

British legal currency (sovereigns, crowns etc) in gold or silver are exempt of CGT or Income Tax, no off the books required. The buy sell spread is very wide, minimised if you live near to a gold market. 

jimjames

I'd have thought if you are investing in gold as a hedge against something then you'd want to actually own it in your possession. Otherwise you could end up not being able to access it when you want.

On the other hand plenty of Romans thought the same and their gold was safe until it was found 2000 years later.

george4064

I’d say your best bet would be to invest in a Gold ETF.

Such as this one: https://www.hl.co.uk/shares/shares-search-results/w/wisdomtree-physical-gold-gbp

ChainsawCharlie

I wonder how costly it would be to safely store your physical gold too

Albermarle

If you want to hold gold as part of a portfolio of diversified investments , then easier just to buy the ETF linked in the previous post, or a similar ishares one .

If you want to hold gold in case the world economic order collapses , so you can use it to buy guns , baked beans etc then better to hold the physical asset at home.

Adyinvestment

I have recently started getting into gold a little and am in the hold it yourself camp.

My thoughts...

Stick to UK Bullion coins such as Britannia's and Sovereigns as the 0% VAT and 0% CGT is the main draw for me, the premiums are quite low (a single Britannia is 3.9% where I buy and a little cheaper if buying more) on these, and can be sold easily and very close to the spot value. You are not "evading" CGT and "keeping it off the record" is part of the appeal.

An ETF would be cheaper but ongoing charges and platform fees will eventually erode at least some of the initial premium if you are keeping it for many years/decades, and then you have to pay CGT when you sell. Although CGT might not be an issue for you depending on amount/circumstances.

Storing it might be worrying for some and will always have some (I think very small) level of risk, but unless you are buying serious amounts (hundreds of thousands) it is probably a lot smaller than you would think and very easily hidden. The biggest risk I think is telling people, personally I don't insure but when I have enough to bury the only risk will be someone torturing me for the location.

Some will say there is a risk of the dealers database being hacked but I think as long as you use reputable dealers this is so low as to be not worth worrying about.

If you are happy with the above, it is a great feeling owning and holding your own shiny stuff, knowing that it is always there for you and not under the control of anyone else

Albermarle

An ETF would be cheaper but ongoing charges and platform fees will eventually erode at least some of the initial premium if you are keeping it for many years/decades, and then you have to pay CGT when you sell. Although CGT might not be an issue for you depending on amount/circumstances.

Just for info .

Total charges are around 0.15% to 0.5% pa  depending on platform etc .

No CGT liability if held within a SIPP/ISA

jimjames

Adyinvestment said:

 The biggest risk I think is telling people, personally I don't insure but when I have enough to bury the only risk will be someone torturing me for the location.

As per my comment above, I see the biggest risk as losing the location where you have buried it regardless of how that happens. In 2000 years someone might discover your stash.

Adyinvestment

jimjames said:

As per my comment above, I see the biggest risk as losing the location where you have buried it regardless of how that happens. In 2000 years someone might discover your stash.

If I get to the burying stage my partner only will know the location if something were to happen to me.

If we both were to die together then the kids would get an exciting treasure map in the will.

If the whole family were to go down on a plane together then I couldn't give a **** who finds it 

socratez

Albermarle said:

An ETF would be cheaper but ongoing charges and platform fees will eventually erode at least some of the initial premium if you are keeping it for many years/decades, and then you have to pay CGT when you sell. Although CGT might not be an issue for you depending on amount/circumstances.

Just for info .

Total charges are around 0.15% to 0.5% pa  depending on platform etc .

No CGT liability if held within a SIPP/ISA

That's not so good for me as I would want the gold in addition to my £20k S&S ISA allowance