Gold prices have been steadily rising in recent months, leading many to recognize the value of investing in this precious metal. While there are various ways to buy and sell bullion, one of the easiest methods, which doesn’t attract capital gains tax, storage costs, or higher premiums, is through purchasing Sovereigns and Britannias.
Understanding Gold Sovereigns
From 1816, the gold sovereign was equivalent to a pound coin—imagine a pound coin made of solid gold! Over time, gold coins were gradually withdrawn from public circulation, culminating in 1932-33 when most of the world moved away from the gold standard. It’s astonishing to think that a 22-karat gold coin weighing 7 grams was once worth only a pound!
Sovereigns were originally minted by the British Royal Mint, and production continued even after the gold standard was abandoned. Today, there is a significant global market for sovereigns, with older coins fetching high prices at auctions and among collectors. Some coins are extremely rare due to limited circulation or low minting numbers. For example, the 1937 sovereign coins struck for Edward VIII were never circulated due to his abdication. These coins now hold considerable numismatic value, with one selling for over £500 million in 2014.
However, most sovereigns are quite common, which limits their numismatic value. You can often purchase older Victorian coins for just a bit more than the spot price, as their historical significance doesn’t necessarily translate into higher profits.
The Appeal of Gold Britannias
Introduced in 1987, Gold Britannias are considered one of the official coins of the British realm. Weighing one ounce and carrying a face value of £100, these coins are worth significantly more, with an ounce of gold nearing £1,000. Like sovereigns, Britannias are exempt from capital gains tax.
When purchasing these coins in large quantities, you may need to pay a premium of 4%-6% over the spot price. Storing them is another consideration—you could keep them in a home safe or opt for a safety deposit box at a bank. Some dealers also offer storage options, which may simplify things, especially if they have a buyback policy that makes it easy to sell bullion coins when you need quick cash.
Choosing the Right Coins
When investing in gold coins, you’ll encounter two main types: Numismatic coins and bullion coins. Numismatic coins are valued not only for their gold content but also for their designs and rarity, as they are often minted in limited quantities. Gold bullion coins, on the other hand, are struck annually and were once used as legal tender in the early 20th century. Today, they are primarily sold to gold investors.
Sovereigns and Britannias are among the most popular bullion coins, along with others like the South African Krugerrand, Canadian Maple Leaf, American Gold Eagle, Australian Gold Nugget, Chinese Gold Panda, and Austrian Vienna Philharmonic.
Selling Your Gold bullion.
Bullion coins are generally easier to sell than numismatic coins, as they are always in demand and can withstand fluctuations in the spot price. Numismatic gold coins, however, are harder to sell since they are primarily targeted at collectors who can be selective about the coins they purchase.