The price of gold has been climbing steadily over the last couple of months and many people are now seeing the wisdom of investing in gold. There is a different way that you sell gold bullion but the easiest one that does not attract capital gains tax and storage costs or higher premiums. This method involves buying Sovereigns and Britannias.
From 1816, the gold sovereign was a pound coin. Imagine a pound coin made of solid gold! Over the years, gold coins were retracted from public circulation until 1932-33 when most of the world abandoned the gold standard. It’s hard to believe that a 22 karat gold coin weighing 7g was once worth a mere pound!
Sovereigns were created and minted by the British Royal Mint. The mint continued producing these gold bullion coins even after the gold standard was abandoned. There is a huge market for sovereigns in the world and the older coins fetch high prices at auction and amongst coin collectors. Some coins are extremely rare because of the low numbers that were sold or not really circulated. For instance, in 1937 sovereign coins struck for Edward VIII were not circulated because of his abdication of the throne. Those 1937 sovereign coins that do exist have a considerable numismatic value. In 2014, one of them sold for over £500 million.
Sovereigns are very common and because of this they don’t have much of a numismatic value. You can buy old Victorian coins for a couple of cents more than the spot price. The history of the coin will not get you more money.
Gold Britannias have been used since 1987. They are considered to be one of the coins of the realm. Britannias weigh one ounce and have a face value of £100. However, an ounce of gold is close to a £1,000. As coins of the British realm, they too are exempt from capital gains tax.
If you are buying these coins in large quantities you may have to pay 4%-6% premiums over spot price. Then you need to store them. You could keep them in a safe in your home of shell out more for a safety deposit box in a bank. Some dealers offer storage and this may be a simpler solution. They may even have a buyback policy which makes it easy to sell gold bullion coins when you need quick cash.
There are a lot of other coins that are worth buying. When shopping for gold coins to invest in you will come across two types of coins: Numismatic coins and bullion coins. Numismatic coins are valued for their gold content and the their designs. They tend to be rare because a certain number of them gets minted once. Gold bullion coins on the other hand, are struck on a yearly basis. These coins were used as legal tender in the early 20th century but they are now only sold to gold investors. Sovereign and Britannias are amongst the most popular bullion coins minted in other countries like the South African Kruger Rand, the Canadian Maple Leaf, the American Gold Eagle, Australian Gold nugget, the Chinese Gold Panda and the Austrian Vienna Philharmonic to name a few.
Bullion coins are easier to sell than numismatic coins. They are always in demand and can withstand fluctuations in the spot price. Numismatic gold coins on the other hand are hard to sell because they are sold largely to collectors who are picky about their coins.