Why gold and silver?
There are many good reasons why one may want to think about buying physical gold and silver. Let’s take a look at some of the reasons buyers choose gold and silver:
High global demand
Both of these beautiful metals and have been used throughout the ages as currency and in the form of jewellery and adornment.
Gold does not rust, doesn’t decay, can’t be burnt and as a result of these characteristics, it has been used in industry for a variety of uses including use within mobile phones and computer equipment.
Strong demand in a variety of sectors coupled with its scarcity have seen gold increase in value over time. Since 1970 where a Troy Ounce (around 31.1g) of gold would cost just £15.06, gold is now selling in excess of £1,500 per troy ounce. That’s an increase of over 10,000% in just over 53 years!
Seen as hedge against inflation
We know that £100 had far more value and buying power 20 years ago than it does today. The value of cash decreases over time with inflation. So how can gold and silver help with this?
Well, imagine you had £10,000 saved 20 years ago and decided to buy gold at that time (approx. £7.21 per gram), you’d have bought 1,386 grams of gold. Today that gold would be worth around £69,000!
However if you had left the cash balance saved in your account, although the balance may still be £10,000 it would have lost at least 20% of its value (assuming only 2% annual inflation). So in real terms, the buying power of tat money would be less than £8,000
So here you can see how buying gold or silver can potentially be a hedge against inflation and help safeguard your wealth.
Performs well even in economic downturn
When there are economic downturns, investors tend to pull their money out of riskier asset classes and gravitate towards gold (and silver), which is seen by many as a “safe haven” in times of economic uncertainty.
We have seen that while stocks and cryptocurrencies are generally down in the market, gold and silver have both been preforming quite well and seen an increase in value. It’s reputation as a potential hedge against inflation at times of high inflation and economic uncertainty, help drive the demands for these metals.
High liquidity
Unlike assets such as property, buying and selling your precious metals can be a very quick and easy process.
For example, with the Minted app, you can sell your gold or silver in just a few clicks and your money will be added to your wallet balance which can be withdrawn directly to your bank account from the comfort of your own home.
You can also go into bullion dealer or jewellery stores or sell your precious metals on various online platforms for cash.
The fact that it can be converted quickly from metal to cash is another appealing characteristic for people who want to buy but have the ability to take out their money as and when needed.
Physical asset with intrinsic value
Unlike stocks and cryptocurrency, physical gold and silver are a tangible asset that you can own and hold. They have an intrinsic value in their own right. Your gold or silver is valuable anywhere in the world and can be used as a medium of exchange globally.
VAT free and some CGT free options
There are also a number of potential tax benefits to buying various forms of gold and silver. For example, investment grade 24kt gold bullion bars are VAT exempt in the UK. Gold Britannia coins are also VAT ad Capital Gains Tax (CGT) exempt as they are considered currency in the UK. Silver Britannia coins are also CGT exempt although silver does incur VAT in the UK.
Coins such as the Britannia are popular with many buyers in the UK due to the tax exemptions that are currently in place.
Please note: We do not offer financial advice or offer recommendation. Buyers must conduct their own research to determine whether the buying of precious metals is suitable for them. We would encourage seeking the advice of a qualified financial advisor.