Toby Walne tracks down a glittering investment: I’M GOING FOR GOLD!

Sitting in a 150 year old coin dealer with a magnifying glass in hand is not how I normally approach investing. Like most, I manage my money online, with the occasional trip to my local bank branch.

But like a growing number of investors, I’m considering buying gold, which takes me all over the city – from a coin dealer to London’s famous jewelery district of Hatton Garden.

Rising interest in gold is pushing the price of the precious metal to record highs. Its appeal has only grown during the last banking crisis. It has historically been seen as a safe haven in the midst of financial turbulence, as it cannot be touched by meddlesome central banks or governments.

Investors like to buy gold through stocks or funds. These are easy to trade online from the comfort of your own home. But a growing number of investors are also looking for physical gold.

At times when other assets such as stocks, bonds and currencies are being tossed around, there can be something reassuring about a tangible asset that you can hold, carry around easily and that has been admired by people for thousands of years as a way to hold onto value .

However, buying gold is not easy, I soon notice. Although the Royal Mint publishes the current weight price – measured in troy ounces – the price at which gold is bought and sold is much more complex. Regardless of how it is purchased, gold should be a small part of most investors’ portfolios.

Gold coins are a good place to start

My first stop is AH Baldwin and Sons, which has been trading coins since 1872. The property on London’s Strand has recently been given a makeover, but it still retains an old-world feel. Shelves are stacked with boxes of precious rarities.

Managing director Neil Paisley explains that Sovereigns or Britannias – gold coins made by Britain’s Royal Mint – are a great option for buying gold. That is because they are treated as legal tender and are therefore exempt from capital gains tax. Buying and selling other types of gold — such as jewelry, gold bars or coins minted in other countries — becomes subject to a 20 percent capital gains tax once you’ve used up your capital gains tax deduction.

Paisley shows me some gold government bonds for sale, about the size of a pound coin and priced at about £420.

“The gold content of a coin like this is currently worth about £376,” he explains. However, the price is higher because the gold is in sovereign form, making it easier to trade than other types of gold. Also, about six to ten percent is usually added to the price to cover the dealer’s costs and profit.’

Paisley adds that if you sell a state to a merchant, they may ask you to knock off about five percent of its true value to make it worth buying.

Sovereigns are 22 carat gold – in other words 22 parts gold to two parts copper. They are made in this composition because an alloy coin is much tougher and less likely to be damaged. Britannias are 24 carat since 2013. The value of Sovereign and Britannia coins is also affected by their rarity and condition. The modern 22-karat gold sovereign has been produced by the Royal Mint since 1817. Before that, an earlier sovereign was minted during the reign of King Henry VII from 1489 until shortly after, when James I ascended the throne in 1603.

Paisley shows me a 1489 sovereign in top condition. With this £175,000 rarity between my fingers, I can feel why this historic coin is worth far more than the £800 worth of the gold it was minted from.

Rare sovereigns have been sold for huge sums over the years. A version featuring Edward VIII before his abdication in 1936 sold for a record £1 million in 2020.

Bargain hunt in Hatton Garden

Next I head to Hatton Garden hoping to get an even better deal. People have been coming here to trade precious metals and gemstones since the early 19th century, so I hope for a good trading price. As an outsider, however, the place feels almost impenetrable.

I try bullion trader Baird & Co, tempted by a sign promising ‘best prices paid’. But when I enter the brightly lit room adorned with gold coins behind bulletproof glass, there is no sign of salesmen.

I leave in ten minutes. I might have better luck on its website, which says Sovereigns can be picked up for £419. It doesn’t offer details of prices paid.

Everything that glitters… in this Aladdin’s cave

Next, I decide to look into buying gold in the form of jewelry. A beautiful necklace would have a higher value than the underlying gold.

However, looking around jewelry stores nearby I am quickly corrected. More often than not, old jewelry is bought by weight. Items may have sentimental meaning to the owner, but it is unlikely to translate into monetary value.

There are of course exceptions. Visiting the family run AR Ullman antique jewelery shop in Hatton Garden is like stepping back in time.

An imposing 1902 oil painting by the founder, Joseph, looks proudly from the wall at his great-grandson Max Ullman, welcoming me to this glorious cave of Aladdin. They buy and sell rare and esoteric little pieces from across the ages. Max says, “The value of these objects exceeds that of the precious metal from which they are made.”

However, there is always a risk involved in buying jewelery as a store of value – unlike with Sovereigns, the price items will command depends on the tastes of the buyers at the time you come to sell. Alternatively, Ullman playfully suggests I buy a sovereign that can be worn as jewelry.

That way you get the stored value of gold in sovereign form – and a little bit of bling to wear. He shows me a sovereign sitting in a gold ring, pictured. “You can buy this for £900,” he says. “It’s the pinnacle of street fashion.”

However, I’m not convinced it’s a smart purchase. I feel more like ’80s football manager Ron Atkinson, who had a soft spot for oversized glitter.

To be sure, try the Royal Mint

IF you don’t like the idea of ​​lugging around dealers and experts, the Royal Mint offers a safe way to buy gold. It sells gold coins and bars, with prices starting at £76 for a very small minted bar.

However, you will not find a bargain in the online store. It is currently selling a 2012 Elizabeth II Diamond Jubilee Sovereign with a weight value of around £400 for £2,320.

Special edition coins or presentation box coins can cost significantly more, but they do not necessarily add to their intrinsic value.

When trading sovereigns online, also compare prices with other bullion dealers and coin specialists, including Spink, Chards, BullionVault, ATS Bullion, Gold and Baird & Co.

Be very careful when buying gold or coins online and only go with trusted companies.