If 2017 is anything like 2016, then we’re in for a bumpy ride. With stocks and currency jumping all over the place thanks to political upsets in the UK and the US, it’s perhaps better to err on the side of caution when it comes to financial investments and pensions. There are numerous low-risk investment strategies you can make, such as high-yield savings accounts, money market funds, certificates of deposit (CDs), etc. There are so many ways to get rich slowly and safely, but I’d like to look at something many people perhaps haven’t considered: gold. Here are five very good reasons to safely invest in gold bullion in 2017, and the odd piece of advice on how to do it.
The Value of Gold Tends to Rise During Economic Turmoil
It would be wrong to say that gold has never dropped in price. Of course it has. Like any commodity, its value rises and falls. However, unlike most other commodities, gold is less reactive and less prone to devaluation in times of economic turmoil. In fact, gold tends to increase in value during turbulent times. Just look at last year’s Brexit referendum results, when gold prices went up by 22%. Obviously big spikes like this can imply market volatility, but the entire market was volatile last summer. People turn to gold when the economy looks a little messy because they know gold is intrinsically valuable – they know gold is a non-perishable physical asset, as opposed to numbers in a computer or a piece of paper.
Given this, it’s always best to buy gold when the world is in a more stable condition. The prices will be lower and you can be confident that they won’t drop too far (if at all). What’s more, should something happen that causes widespread panic in the markets, gold is more likely to rise. Then you can sell, making a lot of money whilst other investors are losing money.
It is Very Easy to Keep an Eye on the Value of Gold
Another good reason to invest in gold is because it is very easy to keep track of its value. Unlike other investments, where their ups and downs can be confusing to follow, gold’s is relatively straightforward. Much of the World’s gold market bases itself on the London Gold Fix – also called the London Fix. It is the price of gold in London’s gold auctions and is usually updated each day at 10.30am and 3.00pm. London Gold Bullion has a gold value widget on its site that tells you in real time what the value of gold is. This lets you keep track of it from day to day. Try doing this for a week or two to see how the value changes. You’ll notice how much more steady it is than most other investments you’ve seen.
Gold is a Physical Asset Without the Need for a Third Party
Obviously, gold bullion is a physical asset and you’ll need to insure and secure it in a safe place. But other than the security, there is no third-party involvement. No company going under will result in your gold disappearing, no financial turmoil will result in gold no longer being valuable. It might drop, but gold will always be one of the most valuable commodities in the world, so huge loses, complete losses, are impossible. This is where investing in gold bullion really sets itself apart from other kinds of investments. If you’re the kind of person who likes to see what you’ve got and keep it safe, then this kind of investment should appeal to you.
You Do Not Pay Stamp Duty or VAT on Gold Bullion
One of the biggest benefits of investing in gold bullion over other kinds of assets, especially property, is that you do not have to pay stamp duty. Unlike property, you can invest large sums on money in gold without being punished by a heavy stamp duty. This is perfect if you come into a large sum of money or you have some sitting around doing absolutely nothing. The same goes for VAT, which you do not pay on gold bullion. This means that the money you’re spending goes completely into the investment, instead of hundreds and thousands getting siphoned off with each big purchase.
You Do Not Pay Capital Gains Tax on Some Gold Coins
For any investor weighing up the risks and costs of adding to their portfolio, capital gains tax obviously comes to mind. The great thing about some gold coins is that there is no capital gains tax on them as they are sterling. So gold (and silver) Britannia coins and gold Sovereigns are exempt from capital gains tax. This means that you can add gold coins to your investment portfolio too, mixing coins and bullion as you see fit.
It’s also worth noting that capital gains tax applies on any net profit you make for the year over £11,000. So if you hang onto your gold and only sell it off in smaller doses, you may be able to limit the capital gains sting in a way you can’t with most other investments.
There are other advantages to investing in gold bullion and coins, but this article has covered the big ones. I hope you’ve learned something useful about gold investment, and that you might consider it in the future.