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How to invest in gold in the UK?

Written by, Marija Petkova

Updated May, 12, 2022

Gold is largely considered to be a reliable store of value that helps investors hedge against inflation.

If you’re considering gold as an investment but you’re not quite sure where to start, here’s how to invest in gold in the UK.

How to Invest in Gold in the UK?

There are three main ways to invest in gold in the UK. You can buy physical assets or choose between investing money in gold by buying shares of a mutual or exchange-traded fund that copy the price of gold or trading in futures or futures options in the commodities market.

Physical gold investment might seem a little complex to people used to trading stocks and bonds online.

You’ll almost always deal with sellers outside of typical brokerages, and you’ll almost certainly have to pay for storage and insurance. Still, physical gold investment is considered the best way to invest in gold in 2022.

What type of physical gold should I buy?

Over the last decade, demand for physical gold bars and coins has exploded in the UK. 

As a result, more consumers are actively looking for ways to get some if not all of their savings and investments out of the banking industry, which is becoming extremely unstable.

Gold bullion 

The majority of people associate gold investing with bullion—large, dazzling gold bars kept in a safety deposit box. Gold bullion comes in a variety of sizes, ranging from a few grams to 400 ounces, with one- and 10-ounce bars being the most common.

However, purchasing gold bullion is a pricey proposition, at least at the moment, with the price of gold hovering above $1,900 per ounce. In addition, a fractional share of a gold bar, unlike regular shares, is difficult to find and obtain.

Gold coins

Independent investors increasingly turn to gold bullion coins because they provide the ideal balance of worth, divisibility, and mobility. The standard gold coin contains a full troy ounce (31.1034768 grams) of genuine pure gold in a 22 carat (91.67%) or 24 carats (99.99%) coin shape. 

The classic gold coin, the South African 1oz Krugerrand (22 carats), the Canadian Gold Maple (24 carats), and the Royal Mint’s Capital Gains Tax-Free 1oz Gold Britannia, which has contained an entire troy ounce of 24-carat gold throughout 2013, are all common investment gold coins.

Gold jewellery 

When picking gold jewellery, it is crucial to consider the weight and fineness of the item. 24-carat gold is the purest form of gold, within 99.5% purity. The formula to calculate the cost of gold jewellery is: Price x Weight + Design Premium = Market Price. 

You can also increase the gold value by combining it with precious jewels and metals. Pieces are commonly passed down as family heirlooms, adding emotive value beyond the piece’s inherent worth.

Exchange-Traded Funds (ETFs)

Gold Exchange Traded Products (ETFs) or exchange-traded commodities are more sophisticated investment options that monitor the changes in the gold price index and deliver profits (or losses) accordingly. 

Some funds are backed by genuine gold, while others are called “artificial” funds because they have no physical backing. Because such funds do not invest in bullion in the client’s name, they are vulnerable to the financial health of the holding firm.

Digitally traded gold investment funds have cheap commissions, often as low as 0.2% each trade. Still, they demand a far more profound knowledge of market transactions and, in most cases, the help of an advisor to create and manage your investment.

Mining Gold Stock Shares

The gold mine investment market offers a different, more discreet gold investing possibility. Investors buy stock in genuine gold prospecting firms in the expectation of significant returns on performance.

What sets this type of investing apart is that it’s far less secure compared to other types of gold investing.

Investing in gold stock is a factor-based investment technique in which you choose stocks that you believe are selling for less than their inherent value, usually by comparing the stock’s price to one or more measures.

You may be interested in: How to Get Free Stocks in the UK?

Self-invested personal pension (SIPP)

SIPPs can be a cost-effective, flexible, and simple way to save for a pension. Some people choose to manage where their money goes and how it grows rather than allowing a pension company to decide how their money is invested, unlike a drawdown pension

What’s more, you can keep gold as your self-invested personal pension, which is another way to invest in gold. 

Bottom Line 

Investing in gold is different but it’s price is tightly connected to that of paper investments. 

Its cost may fluctuate in the short term, but gold is largely considered to be a buffer against inflation and the depreciation of major currencies over the years, making it a worthwhile investment. 

                           

Frequently Asked Questions And Their Answers

Is buying gold a good investment?

Yes! Learning how to  invest in gold in the UK is a great way to diversify your portfolio. Although the cost of gold fluctuates in the short term, it has always held a solid store of value over time.

How do beginners invest in gold?

There are a few types of gold investment, but buying gold bullion is the most common one. Investment-grade gold is often found in the form of bars, ingots, or coins and is referred to as gold bullion. Gems always have the manufacturer’s brand, weight, and purity engraved on them.

What is the safest way to invest in gold?

Although gold coins and ingots are a generally safe way to purchase gold, some investors choose to invest in gold funds like mutual funds or exchange-traded funds (ETFs). Stocks are much easier to sell than actual gold.