Buying gold/silver instead of an ISA

mrsspuddy

Hello
I'm wondering if buying gold/silver coins is  better than investing in something like an ISA, such as buying sovereigns from the Royal Mint.
Does anyone know if this is a better option for long term saving??

Middle_of_the_Road

You cannot compare the two options in your post title.
One is no better than the other, each will serve a different purpose in a balanced investment strategy.
No one on here will recommend holding all your wealth in gold, but having a small percentage of gold (~5%) isn't a bad thing.

https://www.fidelity.co.uk/markets-insights/investing-ideas/investing-ideas/gold-is-booming-but-is-now-a-good-time-to-invest/

What_time_is_it

I can see the appeal. The downside is, of course, that you have to look after the physical items themselves. A couple of years ago my partner’s mum passed away and, purely by chance, we found a Krugerrand and a nugget hidden amongst some old books that we were throwing out. Her dad had bought them years ago, hidden them, and not told anyone. It’s amazing that they didn’t end up in the bin. We decided to sell them and put the money into savings accounts instead. Yes, we could have made more by holding onto them. But the upside is that we have a tangible, liquid asset that is secure, and can be accessed by anyone if the worst were to happen.
So, gold and silver wouldn’t be my choice, but if you do go down that route make sure you can secure it and that somebody else knows about it!

PRAISETHESUN

It's not as simple as ISA vs. gold/silver - for starters what type of ISA are you referring to? Cash, S&S? A good starting portfolio should be balanced and have a little bit of everything, rather than focusing solely on one thing (eg. a mix of cash savings, share/stocks, etc). You can then tweak it from there towards your preferred levels of exposure to certain things, to try and achieve the goals you want to achieve. Putting your life savings into gold/silver and shoving it under your mattress is fairly high up there in the risk spectrum as far as I'm concerned.

vacheron

I'm going to assume that you are referring to a stocks and shares ISA?

The VERY concentrated opinion is that gold is often considered a hedge (an opposite position) to a bouyant market, so people who thing the economy will flourish often buy stocks and shares, those who think it will fall or fail buy gold. 

Also, people who think that the pound will weaken against the rest of the worlds currencies may also buy gold, so this could be a hedge against a cash ISA held in Pounds.

You have to consider that the gold price can also be volatile, and you need somewhere safe to store it if you own it physically (an opportunist burglar can'r steal your entire ISA while you are in the back garden)! #

There are also ways of holding gold without physically holding gold, but this isn't nearly as impressive when you show your friends. 

njkmr

I thought about buying a small amount a few years ago.
Think it was priced at about £1675 per ounce.
The only thing that stopped me was reading that to sell it I would be getting about £1530 per ounce so straight away I was in defecit. I didn't like the idea of this so didn't bother.
Today about 2 or three years later it is £2323 per ounce so in hindsight it wouldn't have been a bad move back then.
They will hold it for you if you don't wish to store it yourself. Not sure if there is a charge for this.?

jimjames

mrsspuddy said:

Hello
I'm wondering if buying gold/silver coins is  better than investing in something like an ISA, such as buying sovereigns from the Royal Mint.
Does anyone know if this is a better option for long term saving??

Depends what you want. Gold pays no income so won't be any use if you want that. 

aroominyork

njkmr said:

I thought about buying a small amount a few years ago.
Think it was priced at about £1675 per ounce.
The only thing that stopped me was reading that to sell it I would be getting about £1530 per ounce so straight away I was in defecit. I didn't like the idea of this so didn't bother.
Today about 2 or three years later it is £2323 per ounce so in hindsight it wouldn't have been a bad move back then.
They will hold it for you if you don't wish to store it yourself. Not sure if there is a charge for this.?

I don't think the buy/sell spread is as large as £1530/£1675=91.3%. For example, Atkinsons' buy and sell prices, at the time of this post, are £2320/£2365=98.1% for Pre-Owned UK Queen Elizabeth II Britannia 1oz Gold Coin (2014 - 2023) - Mixed Dates.

Albermarle

This is the spread on a Gold ETF ( Wisdom Tree  physical)

Sell:21,642.00p Buy:21,655.00p

0.06% / 99.94%

njkmr

aroominyork said:

njkmr said:

I thought about buying a small amount a few years ago.
Think it was priced at about £1675 per ounce.
The only thing that stopped me was reading that to sell it I would be getting about £1530 per ounce so straight away I was in defecit. I didn't like the idea of this so didn't bother.
Today about 2 or three years later it is £2323 per ounce so in hindsight it wouldn't have been a bad move back then.
They will hold it for you if you don't wish to store it yourself. Not sure if there is a charge for this.?

I don't think the buy/sell spread is as large as £1530/£1675=91.3%. For example, Atkinsons' buy and sell prices, at the time of this post, are £2320/£2365=98.1% for Pre-Owned UK Queen Elizabeth II Britannia 1oz Gold Coin (2014 - 2023) - Mixed Dates.

Yeh you are probably correct, but I know it was enough to stop me buying it in the end. 

masonic

Sovereign_Hunter_999 said:

Returns are going to be much higher from gold than an ISA

That makes no sense. An ISA is just an account which can hold a variety of different investments. Gold is an example of an investment that could be held in an ISA (via an ETC). Gold is looking pretty overvalued at the moment, and has previously risen by a lot. Those factors count against forward returns from here being very spectacular, but I suppose if WW3 breaks out...