Toby Walne tracks down a brilliant investment: I’LL GO GOLD!

Sitting in a 150-year-old coin dealership with a magnifying glass in my hand is not my way of investing. Like most, I manage my money online, with occasional visits to my local bank branch.

But like a growing number of investors, I’m considering buying gold, which takes me across the city from a coin dealer to London’s famous jewelry district, Hatton Garden.

Rising interest in gold is driving the precious metal’s price to record highs. Its attractiveness has increased during the recent banking crisis. It is historically considered a safe haven amidst financial turmoil as it cannot be touched by meddling central banks or governments.

Investors often like to buy gold via stocks or funds. You can trade these online from the comfort of your own home. But a growing number of investors are also looking for physical gold.

At a time when other assets like stocks, bonds, and currencies are being spun around, there can be something comforting about a tangible asset that you hold, can transport easily, and has been admired by people for millennia as a means of storing value.

Stamped: Trader Neil Paisley of London's AH Baldwin & Sons shows Toby Walne a rare sovereign

Stamped: Trader Neil Paisley of London’s AH Baldwin & Sons shows Toby Walne a rare sovereign

However, buying gold is not easy, as I quickly discover. Although the Royal Mint publishes live prices by weight – measured in troy ounces – the actual price at which gold is bought and sold is much more complex. Regardless of how it’s bought, gold should only make up a small portion of most investors’ portfolios.

Gold coins are a good place to start

My first stop is AH Baldwin and Sons, which has been dealing in coins since 1872. Its premises on the Strand in London have recently been refurbished, but it still has an old-world feel. Boxes with valuable rarities are stacked on the shelves.

Managing Director Neil Paisley explains that Sovereigns, or Britannias – gold coins issued by Britain’s Royal Mint – are a great option for buying gold. Because they are considered legal tender and are therefore exempt from capital gains tax. When buying and selling other types of gold – such as jewellery, gold bars or coins minted abroad – a capital gains tax of 20 percent applies after the capital gains tax exemption has been exhausted.

Paisley shows me a number of gold sovereigns for sale, about the size of a pound coin and valued at around £420.

“The gold content of a coin like this is currently worth around £376,” he explains. “However, the price is higher because the gold is in sovereign form, which tends to make it easier to trade than other types of gold. In addition, there is usually a surcharge of around six to ten percent on top of the price to cover the retailer’s costs and profits.’

Paisley adds that when you sell a sovereign to a dealer, they may ask you to mark down about 5 percent of its true value to make it worth buying.

Sovereigns are 22k gold – 22 parts gold to 2 parts copper. They are made in this composition because an alloy coin is much tougher and less likely to be damaged. Britannias have been 24 carats since 2013. The value of Sovereign and Britannia coins is also affected by their rarity and condition. The modern 22k gold Sovereign has been manufactured by the Royal Mint since 1817. Previously, a previous sovereign was minted during the reign of King Henry VII from 1489 until shortly after when James I ascended the throne in 1603.

Paisley shows me a 1489 Sovereign in top condition. Holding this £175,000 rarity between my fingers, I can feel why this historic coin is worth far more than the £800 worth of the gold from which it was minted.

Rare sovereigns have sold for huge sums over the years. A version starring Edward VIII before he abdicated in 1936 sold for a record £1million in 2020.

Bargain hunting at Hatton Garden

Next I drive to Hatton Garden hoping for an even better deal. People have been coming here to trade precious metals and gemstones since the early 1800’s so I’m hoping for a good trade price. However, as an outsider, the place feels almost impenetrable.

I try precious metal dealers Baird & Co, lured by a sign that says Best Price Paid. But as I enter the brightly lit room, adorned with gold coins sealed behind bulletproof glass, there are no vendors in sight.

I’m leaving after ten minutes. I may have better luck on his website which says Sovereigns can be picked up for £419. It does not provide details of the prices paid.

All that glitters… in this cave from Aladdin

Next, I decide to buy gold in jewelry form. Surely a pretty necklace would be worth more than the gold underneath.

However, when I look around at jewelry stores in the area, I am quickly corrected. Most often, old jewelry is bought by weight. Items may have sentimental meaning to the owner, but this is unlikely to translate into monetary value.

Gloss: Sovereigns are 22k gold – 22 parts gold to 2 parts copper

Gloss: Sovereigns are 22k gold – 22 parts gold to 2 parts copper

There are of course exceptions. Visiting the family run antique jewelery shop AR Ullman in Hatton Garden, it’s like stepping back in time.

An imposing 1902 oil painting by founder Joseph proudly gazes down from the wall at his great-grandson Max Ullman, welcoming me to this glorious Aladdin cave. They buy and sell rare and esoteric knick-knacks spanning centuries. Max says, “The value of these items is greater than the value of the precious metal from which they are made.”

However, there is always a risk in buying jewelry as a store of value – unlike sovereigns, the price the items fetch depends on the tastes of the buyers at the time of sale. As an alternative, Ullman playfully suggests that I buy a sovereign to wear as jewelry.

This gives you the stored value of gold in sovereign form – and a bit of jewelry to wear. He shows me a ruler seated in a golden ring. “You can buy this for £900,” he says. “It’s the pinnacle of street fashion.”

However, I’m not convinced it’s a smart buy. I feel more like 1980’s football manager Ron Atkinson, who had a thing for oversized glitz.

To be sure, try the Royal Mint

IF you don’t like the idea of ​​sneaking around to dealers and experts, the Royal Mint offers a safe and secure way to buy gold. It sells gold coins and bars with prices starting at £76 for a very small minted bar.

However, you will not find a bargain in his online shop. It is currently selling a 2012 Elizabeth II Diamond Jubilee Sovereign weighing around £400 for £2,320.

Coins in special editions or with presentation boxes can cost significantly more, but do not necessarily increase their intrinsic value.

When trading online with Sovereigns, also compare prices to other bullion dealers and coin specialists including Spink, Chards, BullionVault, ATS Bullion, Gold and Baird & Co.

When buying gold or coins online, be very careful and only deal with trusted companies.

Track the metal price… or invest in miners

There are several ways to invest in gold without buying physical pieces. One of the simplest is investing in an Exchange Traded Fund (ETF), an investment that tracks the price of gold and is listed on the London Stock Exchange.

Among those to consider is Invesco Physical Gold ETC, which follows the price of gold as tracked by the London Bullion Market Association (LBMA). It charges an annual fee of 0.12 percent.

Another option is Wisdom Tree Physical Gold, which follows the physical gold spot price and charges an annual management fee of 0.39 percent. Also, iShares Physical Gold ETC tracks the LBMA price of gold and charges an annual fee of 0.12 percent.

Alternatively, you may prefer to invest money in companies that mine gold and other precious metals. Mining is difficult and businesses sometimes fail, so it may be better to spread your risk by investing in a fund that buys multiples.

Funds that invest in gold miners include BlackRock Gold & General, which has annual fees of 1.16 percent. The £1bn fund has invested 88% of its money in mining for gold – the rest is invested in exploring for silver, copper and platinum.

Its largest holdings include seven percent in UK-based Endeavor Mining — which operates gold mines in West African locations like Ivory Coast. The fund holds a similarly sized stake in Canada-based Barrick Gold Corporation, which mines worldwide, including in South American countries like Argentina, Canada, the United States and across Africa.

The £1 billion JPM Natural Resources fund is another option, with 11 percent of its portfolio focused on mining gold and other precious metals. The annual fee is 0.83 percent.

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