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Home » Buying Guide » Why Should You Buy Gold?

Why Should You Buy Gold?

Gold is not just one of the most precious elements but also a long term asset that investors can take advantage of. Gold has existed for decades and there was a time when most currencies existed in gold. History illustrates that gold was used extensively for buying different types of commodities a few centuries ago. Is it the allure of gold that brings people to invest in it? Why should you buy gold at all?

There are several reasons for investing in gold and one of the primary reasons is financial stability. The world is going through financial upheavals and many countries are facing economic crisis due to the financial instability. There is a lot of uncertainty in the stock and shares investment market and property is not doing well altogether. In such a situation, what is the one investment that still offers plenty of financial security? Gold! Today, more than ever before, gold is in high demand and more and more people are getting to realise its potential as a strong investment.

The need to invest in gold arises from the fact that it is the only investment instrument that offers financial security and insurance against financial crisis. Ask yourself the question - is my money safe in shares and stocks? The answer will be negative but when you ask the same question for gold, you will get a positive answer. In fact, the one investment that was not shaken during the great recession 5 years back was gold. Property prices dwindled, currencies lost their value, and banks went bankrupt but gold even with its small dips remained a hot commodity.

What are the Benefits of Investing in Gold?

Experts from the investment market believe that an investment portfolio should contain gold bullion. In fact, the recommended amount of gold bullion holding should be 20% and you can diversify it further by investing in silver bars as well. There are several benefits of investing in gold bullion and they include:

One of the innate qualities of gold is its indestructibility. It is hard and hence has a longer life span than most of the precious metals or elements. This means that you can store gold over a long period without it becoming tarnished. This indestructibility adds to the demand and the price of gold bullion.

Gold is scarce and the procedure of finding gold is highly risky and expensive. There is always a demand for gold in the market and this is one of the reasons for the consistent rise in price. There is not enough supply of gold in the market to suffice the need of investors, organisations, and countries. When supply is less than demand, the price of gold automatically increases.

Investment in gold means there is little or no risk of devaluation. When the price of gold dips, the demand for gold increases. When prices fall, most gold investors rush to buy as much gold as possible. It is regarded as a safe product that offers high financial returns and security especially during economic downturns or upheavals.

In the UK, an investor can enjoy VAT advantages as well. Gold is exempt from VAT while silver is not. You can even avoid Capital Gains Tax as long as you sell within the limit specified by HM Revenue and customs. The limit is currently set at £10,600. Another salient aspect is that gold sovereigns minted in the year 1837 and later are completely exempt from capital gains tax.

By investing in gold bullion you can protect your purchasing power during periods of high inflation.

Last but not the least, investment in gold and silver coins does not have any counterparty risks as compared to other types of investments.

What is the Future of Gold?

With prices of gold on the increase, there are chances of a dip in price here and there but most experts believe that the price will be on the rise and become consistent. The value of gold started to increase after August 2007, which was the time when UK was undergoing a banking crisis. When the economy was falling apart, the only thing shining bright as ever was gold.

Historical data throws light on the fact that gold hit a high in the UK in the 1980's. It reached a point where the UK stock market could be bought with just 1.2 ounces of gold. By the middle of 1999, the ratio increased to 38, which means that FTSE (Financial Times and Stock Exchange) could be bought for 38 ounces of gold. Since then, the price of gold has been on the rise.

The latest data highlights the fact that the value of physical gold including gold bars and coins has increased consecutively for the 12th year in a row. As compared to gold-related equities, physical gold has been doing extremely well. Right now, the investment market for gold bullion looks extremely robust.

How Secured Am I With Gold Investment?

It is a known fact that gold investment offers high degree of financial stability and security. It is better than any insurance product in the world. The only way you can ensure long term security is by holding on to your physical gold. As an investor, you need to understand the importance of buying gold and holding it. The longer you hold your goal, the higher the profit or returns on gold bullion and the better the financial security. 

The reality is that when you have physical control over your gold bars and coins, you will be able to enjoy control over your wealth as well. It is much better to be in control of your asset rather than trust a third party, a firm, or a bank to have control over your assets. This is an advantage that you can have only with gold bullion. Even gold Exchange Traded Funds (ETF's) don't offer this kind of security and control over your wealth.

The bottom line is that if you invest in gold coins and bars then your financial future will be completely secure!

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Gold Price History
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Gold Price History UK in GBP per Ounce