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Investing in gold has long been considered a safe haven for investors looking to diversify their portfolios and protect their wealth against economic uncertainties. However, with various forms of gold available, it can be challenging to determine the best option for your investment needs. This blog post will explore what gold you should consider buying, evaluating the benefits of bullion, coins, legal tender, funds, and other forms. Our focus keyword, “what gold,” will guide us through the intricate world of gold investment.

Bullion: The Classic Investment

Bullion, which includes gold bars and ingots, is one of the most straightforward forms of gold investment. It is valued based on its weight and purity, making it a clear choice for those who want to invest directly in gold.

Benefits of Bullion:

• Simplicity: Bullion is easy to understand, with its value directly tied to the current market price of gold.

• Returns: Historically, bullion has provided steady returns, aligning closely with the rise in gold prices.

Considerations:

• Storage: Requires secure storage, which can be costly.

• Liquidity: While relatively liquid, selling large bars can be less flexible compared to smaller denominations or coins.

• Tax: Depending on your country, bullion may be subject to capital gains tax.

Coins: A Popular Choice

Gold coins are highly sought after by investors for their historical value and ease of trade. Popular options include American Eagles, Canadian Maple Leafs, and South African Krugerrands.

Benefits of Coins:

• Portability: Coins are smaller and more convenient to store and transport.

• Liquidity: Easily sold or traded, often at a premium over spot gold price due to their numismatic value.

• Diversification: Coins offer a variety of designs and origins, adding a layer of diversification to your gold portfolio.

Considerations:

• Premiums: Coins often come with higher premiums over the spot price.

• Tax: Like bullion, coins can be subject to capital gains tax, but this varies by country and coin type.

Legal Tender: Maximizing Tax Benefits

UK Legal tender gold coins, such as the British Sovereign or Britannia, offer unique tax advantages, particularly in certain jurisdictions.

Benefits of Legal Tender:

• Tax Benefits: In the UK, legal tender coins are exempt from capital gains tax, making them a highly attractive investment to those looking for tax efficiency.

• Security: Recognized and backed by governments, providing an extra layer of security.

• Liquidity: High demand and easy to sell or trade.

Considerations:

• Premiums: Legal tender coins can also carry higher premiums due to their legal status and government backing.

• Counterfeits: Investors must ensure they purchase from reputable dealers to avoid counterfeit risks.

Gold Funds: For the Hands-Off Investor

Gold exchange-traded funds (ETFs) and mutual funds offer a way to invest in gold without physically owning it. These funds track the price of gold and provide exposure to gold’s performance.

Benefits of Gold Funds:

• Simplicity: Easy to buy and sell through stock exchanges.

• Liquidity: Highly liquid, with the ability to trade during market hours.

• No Storage Worries: Investors do not need to worry about physical storage.

Considerations:

• Fees: Management fees can erode returns over time.

• Tax: Depending on the jurisdiction, gains from gold funds may be subject to taxes.

Other Forms: Jewellery and Digital Gold

Gold jewellery and digital gold are additional forms of gold investment. While popular, jewellery is less favoured for investment due to high markups and design costs. Digital gold offers a modern approach, allowing investors to buy and sell gold through digital platforms.

Benefits of Digital Gold:

• Accessibility: Easy to buy and sell online.

• Low Entry Cost: Investors can buy small amounts, making it accessible for everyone.

Considerations:

• Trust: Requires trust in the platform and its security measures.

• Tax: Digital gold investments are typically subject to capital gains tax.

What Gold Should You Buy?

When deciding what gold to buy, legal tender coins stand out as the best option for many investors. The myriad tax benefits, combined with their government-backed security and high liquidity, make them an excellent choice. While bullion and coins offer tangible assets, and gold funds provide convenience, the tax advantages of legal tender coins often outweigh other considerations.

Ultimately, the best form of gold investment depends on your individual circumstances, investment goals, and tax considerations. By understanding the benefits and drawbacks of each type, you can make an informed decision on what gold to include in your portfolio.

Invest wisely, and let gold safeguard your financial future.

For help finding out what gold type is best for you – request a discovery call from our Gold Investment Partners