Before investing in any asset, there are questions we need to ask ourselves. Some of these questions will be about the asset class, some will be about our own goals and financial needs.
Chris Carter of Money Week recently stated that “Gold is neither cheap nor risk-free – but it holds its value and helps to diversify your portfolio.”
There may well be more than 10 Questions to ask. But here’s an introduction to help inspire:
How much capital can you afford to tie up in an investment? Physical Gold and Silver produce no ‘interest’ or ‘income’. Although technically easy to re-sell, it requires a little effort and time. Conversely, buying Gold and Silver is a great way to ensure we don’t fritter some of our savings away but park our wealth somewhere and forget about it for a while.
How Long Can You Afford to Stay In? Fabrication costs, commission, delivery and tax may all reduce your investment from the moment you buy it, for some time. So – ideally - you need to be able to hold your metal, sit back and watch the price rise over time, without being under pressure to sell at a set future date.
Gold or Silver, or both? Silver often incurs VAT – investment Gold does not – although there are more and more ways to buy Silver with low or paid VAT than ever before. See Bleyer’s website for more information. Both metals often track each other but with Silver’s path often more volatile. This is due to its conflicting roles as both an investment and industrial metal. Silver’s down-side is greater sudden losses; it’s up-side greater gain, due to its current lower price ratio to Gold. For example, if Silver’s historical value to Gold is 1/16th but it is currently selling at 1/74th, there is a clear argument that the Silver price has more room to increase in relation to Gold. Gold and Silver are different metals in the same class, sharing some identical, but some different, advantages. Research both before investing.
Coins or Bars? Coins will give you smaller increments of investment, especially for very flexible resale. Coins are also more beautifully crafted, make stunning gifts and are very portable. Collectors are more attracted to coins than bars, for example. Bars, on the other hand, tend to have lower fabrication costs, so offer a more pragmatic metal-for-your-money investment. But the larger bars will lock away a larger portion of one’s savings until resale, as one cannot sell half a bar, for example.
TAX? As previously touched upon, all investment Gold is VAT free. In addition, any UK legal tender coin such as the: Britannia, Lunar, Beast and Sovereign coins are also exempt from Capital Gains Tax. UK Silver coins are exempt from CGT also. Bleyer now offer ways to reduce the TAX burden of purchasing Silver. Please click here for more information. For rules on Inheritance Tax regarding giving gifts of Gold and Silver, please see Gov.uk
Finding the right Bullion Dealer for you? If you’re a night bird, finding a reputable dealer who has an online basket is great. If you are a people person, finding a dealer who also offers a face to face meeting or chat over the phone can be of greater value to you. How important to you is customer service and are you prepared to pay for it? Or is price everything and you trust the internet? Each client has their own criteria.
Buying in one go or over time? Most coins and bars attract discounts if you buy more in one purchase. On the other hand, it may not be practicable to over-spend on one investment in one go. Many companies will allow regular smaller purchases of coins and small bars, some even holding them to group postage costs together. Ask your dealer what they might offer.
Store in your home or in a storage facility? Buying Gold and Silver is the initial step to investment. The second is deciding where to keep your products. Would you need a home safe? Does your home insurance cover the current price? What if the price rose significantly? How crucial is it to you to have immediate access to your Gold and / or Silver? Gold storage is cheaper and more readily available than for Silver, as Silver needs more space to store the same value as Gold, for example.
How and to whom will you resell? It is crucial to remember that we only ever make a profit on our investment when we sell it. It is only then that we lock in our gains. Therefore, what is your exit strategy and are you ready to go at a moment’s notice, if one day the price looks attractive enough to sell? Or are you keeping your Gold and Silver for the next generation, in which case, do they have written instructions on how to sell an asset with which they may not be familiar? We highly recommend never selling Gold or Silver to a dealer who visits a town for a set day etc. but a dealer who has a registered address and is well established with customer feedback.
How Can I Avoid Being Ripped Off? Before entering the physical Gold and Silver market, know:
- the spot price
- is delivery and insurance in transit included in the price
- what a good commission margin should be
- what written communication to expect
- which geo-political events are likely to influence the price
- when you want to buy and sell, as opposed to when you might need to
- what you want to buy and sell
- whether you need more information from your bullion dealer before proceeding.
In conclusion: These 10 Questions are designed to open up a thought process, for each individual to follow up as they feel fit. Never be afraid to ask all the questions you need of your bullion dealer(s). Call the Bleyer Team on 01769 618618, email [email protected] and browse the Bleyer website for more details.