I really do hope that my posts don't make me sound like a broken record?? But honestly I could talk about the benefits of precious metals all day. Following on from yesterday's post - precious metals for dummies - Introduction, I'd like to carry on that vibe with trying to explain a few more simple points I believe all collectors and investors should consider.
Your options essentially consist of coins, bars or digital precious metals. Each of these forms have both advantages and disadvantages, and the choice is very much dependent on the requirements and individual circumstances of the purchaser. I personally am "ALL-IN" for physical assets that I can hold and store myself.
The main reason to buy gold bars is because they are cheaper than gold coins. Gold coins require more “work” to produce them. They have the added work of designing both a front and back (or obverse and reverse) of the coin. But also the minting and machining process for a coin is far more involved than for a bar. With this said, the decision between coins and bars is often dependent on the funds which are available to the buyer; coins tend to be cited as being more suitable for those making a modest outlay while bars offer a more straightforward means of acquiring larger quantities.
Furthermore, some of the other considerations which are often cited are:
When investing in bullion, one of the first questions asked by many is “how do I resell it?”, as if you choose to take delivery of your purchase, at some point you may wish to liquidate it. As bullion coins also have a certain numismatic quality (they may also be desirable to coin collectors for example), they may be easier to sell than bars, as bars tend to be sold for their intrinsic value only - SPOT PRICE.
I talked about Capital gains tax in a recently blog, and an important consideration for some investors is Capital Gains Tax (CGT). As all bullion coins produced by the Royal Mint in the UK have legal tender status, they are exempt from UK Capital Gains Tax for UK residents. This applies to gold, silver and platinum coins, but the same exemption does not apply to any bullion bars or digital precious metals, as these are not classed as "Legal tender".
In terms of the actual purchase cost, it is usually the case that as the quantity of bullion increases, the purchase premium decreases. Bars are likely to carry a lower premium as you move upwards from 1g, though the premium for coins tends to be higher. However, due to the lower storage and the fact that "digital precious metals" are made up, and require no manufacturing costs, they are often the lowest priced premium product. The fact that I personally avoid digital precious metals like the plague can be kept and explained in a future blog.
A wide range of bullion products are exempt from "VALUE ADDED TAX" (VAT) and are classed as VAT free for non-VAT registered private individuals. These includes all UK gold coinage, such as The Sovereign & Britannias, plus certain bars produced solely by the Royal Mint. In contrast to this, newly minted silver and platinum bullion coins and bars are both sold subject to VAT at the standard rate. I have long argued that VAT on what is technically legal tender, is a criminal offence, but the tax man is greedy and won't be revoking this anytime soon.
Want to find out more about gold and silver? Get the latest news, guides and information by following the best community on the blockchain - #silvergoldstackers. We're a group of like minded precious metal stackers that love to chat, share ideas and spread the word about the benefits of "stacking". Please feel free to leave a comment below or join us in the community page, or on discord.
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Since I’m originally a coin collector I have a little bit different light on this subject. Don’t get me wrong I do stack for weight, but if you buy the right coins in the right condition you make a HELL of a lot more money then you’ll ever make stacking. I’ve bought coins for under $100 and have sold them for as much as $2,000. Not a chance of that happening stacking for weight.
Such great information on this article. I enjoyed reading it.
Have a good evening, and take care 🥰🌺🤙
Thankfully we do not have a VAT tax in the U.S. @welshstacker. Many states will tax precious metals with sales tax, Washington State is tax free because they consider precious metals to fiat and visa versa just an exchange of assets...so nice!!🤗