The Best Ways to Invest in Gold Today

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Mark O'Byrne
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The Best Ways to Invest in Gold Today

– The cost of buying and selling gold
– How to buy gold on the cheap
– How to avoid paying capital gains tax (CGT) on your gold
– Open an account with one of the online bullion dealers – the likes of GoldMoney, GoldCore or Bullion Vault
–  Gold Sovereigns and Gold Britannias make for a considerable saving on cost because of the CGT exemption

Gold Britannias and Sovereigns are free of Capital Gains Tax (CGT) - Click to enlarge

Dominic Frisby has looked at the best ways to invest in gold in the UK’s best selling financial publication Money Week.

Frisby looks at the various ways to invest in and own gold and points how gold ETFs are not much cheaper than online gold bullion dealers such as GoldMoney, GoldCore or Bullion Vault and yet there is the difficulty of taking delivery which is “cumbersome.”

The other important consideration when investing in gold is to consider the tax implications and the capital gains tax (CGT).

Buyers of gold ETFs and digital gold through e-gold providers like Bullion Vault and GoldMoney are subject to capital gains tax. However buyers of Gold Britannias and Gold Sovereigns are not subject to this expensive tax:

Competition between ETFs and bullion dealers has conspired to drive down prices, much to the benefit of the consumer. But there is one huge cost that neither of these methods is able to avoid – tax. This assumes you’re not buying your gold via an ISA or a SIPP, which it is, for the most part, possible to do via ETF or bullion dealer.

Capital gains tax (CGT) currently stands at 20% in the UK for higher rate taxpayers and 10% for lower. Funds don’t pay CGT. It is paid by the investor when they sell or redeem, assuming they made a profit. It kicks in once you have made profits of more than £11,100 in a year (£11,300 from next tax year).

So over and above that level, you’re facing an unavoidable 10% or 20% cost for buying and selling gold at a profit. It used to be 18% or 28%. We have George Osborne and his team to thank for lowering it – but even at current rates, it’s a considerable dent to profits.

There’s another method of buying gold (and silver), which, quite legally, avoids this cost altogether. There is a slightly higher premium to spot when you buy, there are slightly higher storage costs, and there is a slight discount to spot when you sell – but we are talking about a few per cent here, nothing like 20%.

Given the potential savings involved, it’s surprising that more UK investors don’t buy their gold and silver in this way. The method I’m describing, if you haven’t already figured it out, is to buy sovereigns and Britannias.

Frisby concludes the piece by pointing out how GoldCore offer capital gains tax (CGT) free gold sovereigns and gold britannias and how Frisby likes GoldCore:

“I like Goldcore. You can deal with them either over the phone or open an account online. You can buy sovereigns, Britannias, bars and probably even bells, and they’ll take care of the storage too.”

Access the Article On Money Week here