Now you can buy a bit of a gold bar for £20
Last autumn the Royal Mint launched its new online bullion service, allowing ordinary folks like you and me to invest in the glamorous world of gold. But still, back then, you still had to buy at least one coin, with a minimum price dependent on the gold content and the current price of gold. Now, Royal Mint’s new signature service allows you to own proper gold bullion for as little as £20.
The Mint said its new “signature” gold service will allow customers to buy gold in “quantities to suit all budgets”, meaning you can now purchase and own a fractional sliver of an actual 400oz gold bullion bar, which currently sells for around $475,000 (£311,000) on the international market if you were to buy the whole thing.
The Royal Mint said customers will hold full legal title over every ounce of gold they purchase (so the Mint won’t have a “direct claim” on your gold, and you can buy and sell it back to the Mint as they choose. However, as the Mint aren’t in the business of actually shaving off tiny bitys of gold bars, you will have to store your gold as part of a larger bar inside the trademarked VaultTM for which privilege the Mint will charge you a “management fee” of 0.5 per cent (plus VAT) per year based on the value of the customer’s gold holding being stored.
You will also pay a premium on the gold you purchase depending on the value of your proposed holding. Purchases of up to £5,000 will attract a premium of 2.5% on the market price, purchases between £5,000 and £250,000 a 2% charge, and those of £250,000 plus a 1.75% additional cost.
But is gold a good investment?It has become a popular investment in recent years, as a hedge against inflation and stock market movement as gold prices tend to move independently of other markets. However, the price is still nowhere near the 2011 high for gold prices, currently selling for around $1,190/oz, lower than the $1,220/oz when the online bullion service launched in September last year.
However, remember that the tax advantages to buying gold coins over other, more traditional types of investment do not apply to tiny bits of a bullion bar. Gold bullion coins are exempted from VAT and coins are also not liable to pay transfer taxes such as Stamp Duties which are liable when buying some company shares. Crucially, Britannia, Sovereign and Lunar bullion coins are only exempted from capital gains tax at 18%/28% on any gain on disposal as they are actually considered legal tender. And while it is possible (if inadvisable) to spend a sovereign in the local chip shop, you can't go out and spend any amount of a bullion bar.
Martin McDade, the Royal Mint’s director of bullion, said: “The launch of our online bullion platform last September opened up gold trading to an audience that may previously have been put off by the perceived complexities of the market.” He added: “With the introduction of signature gold, we hope to expand this audience even further.”