Gold has long been considered a reliable store of value. Through times of political and economic turbulence, gold has been the default safe-haven to protect wealth against the threats of inflation, depreciation and currency fluctuations.
Protect against Inflation
Inflation, in simple terms, is the increasing cost of goods and services to the real-world value of the currency for which they are traded. Gold is regarded as reliable hedge against inflation, holding strong in relation to the real-world value of the goods it can buy. Gold has a long tradition as the primary hedge against inflation, holding strong whilst other commodities weaken.
The classic adage of gold and the ability to hold value throughout history… In Victorian times, it was said that a 'quality gentleman's suit would cost roughly one gold sovereign', with the current value of a sovereign being just above £218 (PM Fix 4th November 2013) you would still expect to be well tailored with such a suit.
Hedge against Currency Depreciation
Currency depreciation is one of the biggest challenges facing many governments in the modern age, protecting their national currency whilst maintaining a balance of payments is vital to the general health of an economy. Gold is considered exceptional at holding strong against the world's primary trading currency, the US dollar, when the US dollar index weakens, the gold price reacts moving in the opposite direction.
A Firm Foundation for Your Portfolio
Building a diverse investment portfolio, it's important to find the right balance between attractive, sometimes niche investments and rock solid stable options. Many financial advisers recommend private individuals build their portfolio with a 10-20% foundation of a tier-1 asset – Gold or currency… The famed textbook hierarchical diagram always builds from a solid base of gold!
Capital Gains Tax Free
In the UK, certain gold and silver coins are free from CGT (Capital Gains Tax), this ensures that you’ll pay no tax on the profits realised on your investment when you come to sell. Investors should look for Royal Mint Gold Britannia, Gold Sovereign and Silver Britannia products – On our web site, all CGT free products are marked by a badge to signify their tax free status.
Gold is actually quite a portable product, meaning you can easily store and move your investment, whether it be stored at home or in a safety deposit box – Portability means there are little or no restrictions on the withdraw or transportation of your investment, even if you decide to take your investment across national borders!
You would expect this to top the list, and really it should! Over the past thirty five years (a typical longer term investment), the value of gold has made an impressive drive from £110 per troy ounce in 1978 to £1,072 in March 2013 – That’s 875% … Over the past five years the price of gold has accelerated quickly, exploiting global economic and political insecurities to by far out-perform traditional saving, stocks and share investment options.
Taking everything into consideration, the tax benefits, hedge against inflation, depreciation and general performance, for many people, the real reasons to own physical gold bars and coins comes from the want for security, a safe vehicle in which to hold the kids university fees, the money for a rainy day – their life savings.
We're not talking Armageddon preaching, conspiracy theorists hoarding kilos of gold in nuclear bunkers! Every day we talk to ordinary people who are desperate to ensure their mid to longer term investments achieve their hopes and expectations in the face of a procession of bank bailouts and national debt!
If you're considering buying physical gold bullion as an investment and would like a friendly voice to help reassure your fears and answer questions, please feel free to contact our customer service team on 0121 523 1047, we’re here to help.