What makes Krugerrand investment a good choice

South Africa had several points to prove to the world in 1967. One of its was the marketability of their gold. In order to show the world they were being undervalued, South Africa minted their first gold krugerrand. Despite the fact that it is a legal currency in the country, it is not usually used for this purpose. With time and with its growing popularity, the krugerrand has now become a collector’ item and several people worldwide try and acquire some. These krugerrands are also known as medal coins in the collector’s domain. This is the first country internationally that comes at current gold prices and not a rate that has been fixed earlier. It made its debut as 22-carat coins and then moved on to be minted in several denominations.

Many people have been investing in Krugerrands for a sense of financial security. This is especially for the long term. If you are amongst those, then there are a few points you will need to keep in mind. One fact is that krugerrands are only minted in 22-carat and not 24-carat. This is simply because gold in its purest form is extremely soft. Also, never compare its rate to lower denominations like 18-carat or 14 or 12. If you have ever been sold 24-carat krugerrands, you can be sure the coin has been cut with another metal and you have not got your money’s worth.

If you are looking to enhance your collection, then one place you should be looking at are estate sales. The price of the krugerrands will depend on the prevalent rate in the market on that day. If you get a good price it means that you will be able to sell it for the same price on a later date. That is how it works with these coins. The only possible drawback to this could be that on the day you need to sell them, the rate of gold may be lower than when you made your purchase. This could mean a small loss. This is a small risk you will have to take.

Internationally, coins of the likes of the Canadian Gold Maple Leaf and the Australian Nugget as well as the Mexican Gold Peso and US Golden Eagle have been popular for those interested in collecting and investing. But the fact that they are not as easily available as the Krugerrand, they are susceptible to counterfeiting. Therefore you need to have an expert take a look at it before you make your purchase.

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The fundamentals of gold investment

When you look at it, trading in stocks and shares can be an extremely volatile option when compared to the more steady gold based industry. Perhaps its stability is what has made it an industry to reckon with. If you make the comparison, powerful currencies such as the dollar and euro too no longer match to that of gold.

Considering the volatility of the market, those interested in a stable place to invest their money are now turning to the gold one. So how does the gold market work and what is it that allows it to remain as stable as it is when the rest of the economic world has gone berserk. One of the first reasons is public sentiment. People choose to give gold the valuable status that it has today and that is why it enjoys such popularity. This in fact is the basis of several companies that give out cash for gold and enjoy brisk business online.

From the world’s perspective, the more the demand for gold, the same way go its rates. You have to know that the demand for gold is not only from the jewelry world, but also from technology, medicine and others. It is also coming to enjoy an important status in the world, with more people realizing its value and therefore boosting the industry. Many use it as means to balance out their losses incurred in the stocks and shares market. With the increase in demand, the higher the prices of gold.

Until the world escapes the clutches of recession, gold will continue to remain the sole stable means for an international economy to build itself. Of course should this actually be the case, then gold could get into a bit of trouble, though this scenario cannot really be predicted. The tendency of most investors is to begin pumping into the industry the minute they see it looking up. This means having to liquidate all their gold resources. This will bring down the cost of gold and fill the market with it, more than the existing demand.

So in the present economic scenario if you are looking for opportunities to invest in a stable way, then the gold market would be a good choice. Even then you will have to look at current prices and the near future of the market to ensure that you are getting your money’s worth if not a profit as well.

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The Best Gold Coins to Purchase

Many people want to buy gold coins but tend to ignore the ease of selling them whenever they want. More focus is made on purchasing than gold’s liquidity which gives you the desired profit.
Hence, when you wish to purchase gold coins, you should focus on selecting coins that are in good condition. Do not purchase any gold coin based on the price or cost. The best type of gold coin would be the bullion coins that are more popular; these make safe investments. These include the international renowned Sovereigns, Eagles, Britannias, Maple Leafs and Krugerrands.

A novice or amateur investor should not indulge in numismatic gold coins or historical gold coins without proper research and experience. Although these types offer great potential for profit, they can also incur great losses for the amateur investor. Hence, proof coins are usually not the typical gold investor’s choice as these seldom return the full premium.

Modest investors may find it more fun to consider various types of bullion coins to include into their portfolio; Sovereign coins would be a good inclusion with their interesting background and beautiful designs.
UK investors who desire a bigger investment must include the tax factor as part of their investment capital. The nation’s Capital Gains tax has increased to 28% for tax payers in the higher rate category in UK. Hence, if your sale of gold coins bring you a profit that is more than your  yearly limit (which currently is about £10,000), you will find yourself paying one third of the excess to taxation. This includes other assets which you might also sell during that year. Thus, whether gold, shares or investment property, you will be paying high taxes on your sales’ excess profit.

But, you can plan carefully with some sound consultation and assistance from some reputable gold dealer to avoid the extra taxes. There are tax free coins like the Sovereign and Britannia gold coins. These are free to UK residents only who take them as legal tender. Hence, they make the best choice of gold coin investment for UK investors; they are tax free gold coins.

Having said all that, everyone has different motives and reasons for buying and selling gold coins. The general rule of thumb in investing into gold coins is to understand the value of the preferred gold coin before you match that to your investment needs, motivations and budget.  True knowledge will pay dividends to the wise gold investor.

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Preference of Physical Gold over Paper Gold

ETFs may be an investor’s avenue into the gold market but fears circulate around their integrity and security.  Many investors were burnt while investing in asset backed AAA graded securities which turned into junk overnight with the linked subprime mortgages problem. It revealed a sad fact: many so called investment experts did not understand the links of their assets to protect their investments.
Press reports are speculating that actual gold is backing only 10% traded ETF as there is insufficient gold. You may not be able to access your ETFs if a lot of investors withdraw simultaneously.

Counterparty risk was not important to bank deposits ten years ago; savings in an established bank was safe then. But now, such establishments are near collapse level. Bankruptcies have come upon major corporations like General Motors and Lehman Brothers whose share value fell hard on those planning for retirement. Now is the counterparty risk phase with Sovereign debt. Government bonds were thought to be secure for a full pay out but history proved otherwise. Many nations in desperate financial woes need financial bail out from IMF and EU which implies a low return for bond holders.

Counterparty risk does not exist with physical gold; you can manipulate it anyhow you want. When you invest in gold mining stock, gold fund or ETF, there are some counterparty risks and threats on your asset value.  Paper gold is not the real thing as it is just a promise to pay.
Physical gold and mining stocks are different classes of asset with different risk profiles. Mining stocks investments are linked to a company’s performance. If the company performs poorly, your paper asset will be worthless. But gold bars and coins with their intrinsic content of gold never touch zero value.

Global economic turmoil affects the performance of mining stocks and bullion coins negatively. Hence, more people are investing into gold coins and bars for financial safety. Mining stocks may give potential impressive returns but they cannot outperform physical gold in crises. Mining stocks are impacted by the broad equity markets instead of bullion gold price.

Gold can be a portfolio insurance that provides security against political and economic unrest; it is considered the ideal safe haven asset today. This wealth protector is unlike paper gold which has counterparty risks.
UK provides the opportunity to own physical gold coins that are tax free and VAT exempt such as the UK Britannia and Sovereign coins which are legal tender in UK. Mining stocks require taxes on all dividends as well as capital gains tax after selling your investment with profit which can account to one third of your sales profit!

Gold is invested as a crisis hedge. If the current world financial system collapses, your gold ETF, gold fund or mining shares would be inaccessible. But physical gold in globally recognized coins will provide you instant liquidity.

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Gold Sovereigns make Great Investment

There are many reasons documented for gold purchases as gold price keeps increasing. People are being more aware of gold’s attributes of providing a great portfolio balance, a hedge of protection against deflation and inflation as well as a security against any political or economic uncertainty.
Buying gold may be easier than selling it. As with any tangible asset purchased, you must also consider the ease in which you will sell it off for the desired profit. An unfavourable gold piece will not attract buyers no matter how high the gold price is.

Sovereign gold coins

This type of gold coins offers many compelling investment reasons. They have a very established reputation with a well developed secondary market for trading; this means these coins are very liquid globally. There are many pieces in circulation which allows the buyer a wider selection for purchase unlike the UK Britannia which is only established in the last 20 years, leaving buyers with fewer choices of coins.

With its small size, Sovereign gold coins offer their buyers a great opportunity of possessing more pieces and variety instead of the typical 1 ounce size. A balanced portfolio on gold requires diversity and variety. And this makes liquidation easier too.

Sovereign coins are tax free; they have investment gold classification. They are also VAT exempted unlike other gold categories such as nuggets and jewellery; even precious metals like Platinum and Silver attract 20% VAT.

UK residents benefit from investing with Sovereign coins as they are Capital Gains Tax free being legal currency. There is no 28% tax and the investor keeps 100% of the sales profit.

However, avoid buying proof Sovereigns as an investor for you will pay a higher premium but receive only a fraction back when sold. Proof coins are beneficial when you pay close to the price of gold bullion or only if you are a coin collector.

Always go for full Sovereign coins if you have the budget as there is less demand for the other types of smaller Sovereign coins.

Purchase the right aged Sovereign; new ones are very expensive. A diverse representation of Sovereign coins such as Edwardian, Elizabethan, Victorian or Georgian would be a better investment option. There are coin dealers who would want a Sovereign coin of some particular era for its historical value although the price difference may not be very wide.

Semi-numismatic Sovereign gold coins should be carefully and rightly selected of high quality which requires the vast knowledge on gold coins, wide experience in handling such coins and understanding the gold market well.

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Cash is no longer king; Gold is.

Although many thought that the worst is over for the banks in the credit crisis issue, there have been 279 banks collapsing since September 28, 2008. Washington Mutual was the largest bank failure on that fateful day to start the ball rolling. Many banks followed suit with more collapsing in the last two years than over the last six years where a total of 35 banks collapsed.

What is the lesson from this? Firstly, the banking crisis is not yet over. Although many well established UK banks were financially rescued by the national government, its Treasury is now under much pressure to reduce the huge national debt that is incurred. There does not seem to be much possibility of any cash injections in the near future. Hence, there may not be enough internally to rescue another failing establishment unless it sources outside or become self reliant.

The past economic downturns have always stood on the traditional stance that cash was the top asset. It was king in all situations. When the stock markets rock, or if property prices fluctuate wildly, have your money safe in the bank. No doubt arose over the money in the bank.

But the world changed drastically. In UK, your money is protected only up to £50k in every bank. Should the bank go bankrupt, you will lose all your money. This would seem a ridiculous thought a decade ago but not now; it is very realistic and happening. A previous government investment a few years back, Icesave, gave good returns by the British Government. But the UK Treasury got nothing back although they were sure of being reimbursed by the Government of Iceland.

Money markets are very tight today with bottom low interest rates that give about 1% returns for UK savers who still get taxed! With inflation above 3%, you will find that you actually have lost money on your capital in the bank. There is the risk that the bank you trusted may collapse anytime with your money in it.

Hence, the saying that gold has overtaken cash as king today is getting more rampant.

The better way in avoiding bank risks, Sterling, or counterparty risk, is to transfer a bit of your savings to physical gold. The old mindset of putting your money into the banks for a raining day no longer holds much water; with the changing times, changing strategies apply. It is unwise to put all your eggs into one basket; hence, forget about putting your total liquid assets in paper money or bank accounts.

Are you looking to Buy or Sell Sovereigns? Welcome to Physical Gold to secure your wealth and future. We specialise in buying & selling gold sovereign coins and explain how Sovereign coins can be combined with other gold coins to form a balanced tax free investment.

Anticipated Gold Performance in 2011

Some of us may be getting a bit panicky with the slight downward trend of gold price after its strong bull run. Many fear an end to the current bull run but a proper perspective of the recent drop is needed.

Gold is very volatile by nature which can be below 1-standard deviation in any month where the average volatility was at 4.9% in the last decade. Gold must be viewed as a medium to long term investment rather than a short term investment.

Market fundamentals point to a continuous upward motion for gold in the following year. More buyers flooded January which is usually very quiet after the Christmas season, which implies that many are viewing a buying opportunity at this moment.

The UK economy has declined this year as its residents feel the tax hikes and cuts in spending in an attempt to control the national debt that is currently spiralling downwards at £1trillion and not reaching the bottom as yet despite many austerity measures being implemented.

Last year end, Bank of England cut UK growth forecasts to 2.5% from 3.5% for 2011 with an implied consistently high inflation until 2012. December inflation figures have indeed spiked from 3.3% to 3.7% which is high above even that of Zimbabwe’s. However, the RPI is at 4.8% with real inflation standing at 6.46%; official inflation indices are usually adjusted to present a lower real inflation report by successive governments.

At the same time, youth unemployment figures spiked to its record high with total unemployment at 2.5 million which implies the failure of the private sector in creating sufficient jobs to cater to the public sector needs.

The Q4 2010 GDP values show a reversal of the UK economy which implies an official recession if this trend continues, realising our worst fears of ‘double dip’. This is in the midst of the existing European Sovereign debt issues of last year. Perhaps a re-emergence of bailout from Ireland, Spain and Portugal may provide a plausible solution.

This year continued with last year’s political unrests and terror threats at the global plane. There is an increase in global political instability with Africa and Middle East areas. Nevertheless, the basic fundamentals driving gold to higher returns in the past ten years are still in place. But the political and economical problems will still persist.

A price correction may happen soon which can be viewed as a purchase opportunity as gold is viewed positively as investment insurance and wealth in these difficult times.

If you want to buy & sell UK gold sovereign coins from a reputable gold dealer? Physical Gold offer clients to select the best value Gold Sovereigns to buy, provide live Gold Sovereign prices and explain how Sovereign coins can be combined with other gold coins to form a balanced tax free investment.