Gold Buying Guide | Buy Gold Sovereign | Buy Gold Britannia

Buying gold can bring stability and diversification to an investment portfolio, especially in the UK's on-going economic conditions of high inflation and stock market volatility. 

Here's what you need to know about buying gold in its physical form.

How is gold valued?

Gold is valued by reference to its weight and purity. To calculate the value, then this is multiplied by the gold spot price. It's worth noting that the London Bullion Market sets the gold price two times a day to maintain supply and demand.

1. How is the purity of gold measured?

Gold items are prepared by mixing with other metals and alloys. Carat is the measuring unit of gold that defines the proportion of gold relative to other metals. How much carat there is stamped on the gold, ranging from 0 to 24. The higher the carat, the higher the proportion of gold as compared to the other metals like silver, copper or palladium. 100% gold means 24 carats which is completely pure.

2. How is the weight of gold measured?

Further you will find that gold is measured in ‘Troy’. It's a bit complex. Remember that one Troy ounce weighs a little over 31 grams, or nearly 1.1 UK imperial ounces. The Royal Mint, official maker of British coins, sells gold coins measured in Troy ounces. However, its bullion bars are measured in grams.

How can you buy gold in physical form?

One can purchase physical gold in the form of bullion, coins or jewelry from precious metal dealers and other sources.

1. Bullion bars

Gold bullion bars are available in the weight range from one gram to over 10 kilograms. These bars are stamped with weight and the purity level. The Royal Mint is among the main sources of bullion bars in the country but levies a premium above the ‘spot price’ of the gold to cover manufacturing and other costs. The price range of 24-carat bullion bars of The Royal Mint is from just £73.71 for a 1g bar to £13,104.35 for a 250g bar.

2. Gold coins

Gold coins have lower gold content compared to bullion bars. The Royal Mint produces two kinds of flagship gold coins such as the Sovereign and Britannia.

 

Sovereign: Such 22-carat coins feature the portrait of the Queen and are measured in Troy ounces. One of the most popular gold coins is Queen Elizabeth II Gold Sovereign - 2020. The sovereign coins are available in different price ranges so as weight and gold content. You can consider buying gold sovereigns to strengthen your investment portfolio.

Britannia: These coins have the portrait of Britannia and are available in Troy ounces. Today you can buy gold Britannia of 1 Troy ounce at just £1,667.61. Note that the coin is made of 999.9 fine gold.

Both coins are legal tender in the UK so they are free from capital gains tax and VAT for its residents. The Royal Mint also issues a few expensive commemorative coins. While these coins are subject to tax benefits as Sovereign and Britannia coins, banks and companies are not required to receive them as legal tender.

3. Gold jewelry

Jewelry like gifts and antique pieces are different avenues for buying gold. Buyers need to pay a mark-up relative to the content of the gold much similar to gold coins. The mark-up is generally upwards of about 20%, and can be far higher depending on the manufacturer, and shields the design's labor cost and manufacture and the retail margin.

Factors to consider when buying gold

If you are all set to buy physical gold, you must keep a few things in mind.

Storage: The physical gold should be kept in high security, mostly not in your home. This can be kept away from damp, corrosives and metals like silver, which might tarnish it. You can consider third-party storage.

Insurance: Some people like to store the gold at home to avoid extra cost. However, you should look for a home insurance policy that covers gold items. In case, you are relying on a third-party storage facility, better you check whether they hold adequate insurance.

Provenance: It is always suggested to make gold trade with a reputable gold dealer only. In the end, all of us want a fair deal that ensures authentic items. You are free to explore other alternative sources.

Purity: You know the gold content in the bar, coin or jewelry decides its value. A high carat i.e. 21 carat or above is ideal as it holds a higher proportion of gold and is less likely to tarnish. In other words, the higher carat gold needs more care so that it's not damaged.