Which are the best gold coins to buy?

One of the most common questions I hear is from keen investors wanting to know the best gold coins to buy as an investment.

The most important thing people seem to overlook is the ease in which you’ll be able to sell the coins. It sounds obvious, but so many buyers focus purely on trying to get as much gold for their money when they invest that they forget to consider the liquidity of the gold.

Liquidity makes the best gold coins

Remember that your profit is only realised on physical gold when you actually sell the coins at a profit. So when buying coins your primary focus must be on choosing well-known coins in desirable condition. So please don’t be tempted by an obscure coin just because its £10 cheaper than its globally renowned alternative.  With this in mind, any of the well-known bullion coins are a safe bet. These could be Sovereigns, Britannias, Krugerrands, Eagles, etc. You can find a comprehensive list with thorough descriptions at Bullion coins.

A novice should never try to be too smart by delving into the world of numismatic or historical coins. These generally present high potential profit, but also large losses for those without market experience.  Proof coins should generally be avoided by the gold investor as you won’t necessarily get the full premium back that they command.

For very modest investors it can be fun to select a variety of bullion coins for your portfolio, perhaps choosing some Sovereign coins with an interesting background or coins with beautiful designs.

Tax efficiency

However, for those UK investors considering a more sizeable investment you must consider factors such as tax. Capital Gains tax was recently increased for higher rate tax payers in the UK to 28%. That means that if you sell your gold coins at a profit exceeding your annual limit (currently around £10k) then you’ll pay away alomst a third of that excess to the taxman. Any other assets you sell in that year will use up that £10k limit too. So if you sell shares or an investment property and make a profit, you’ll no doubt be paying CGT on all your gold profit!

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The great news is that with some careful planning and help from a reputable gold dealer, you can source tax free gold coins. Britannia and Sovereign coins are free from Capital gains Tax for UK residents due to their status as legal tender. Quite simply the taxman cannot tax the movement of legal currency. For this reason, together with the fact that these two coins are amongst the world’s best known, most UK investors are best off investing into these tax free gold coins.

The most important rule with gold coin investing is that everyone’s situation, needs and motivations for buying differ, and so the best gold coins to buy may also vary. This is where the real value of a knowledgeable gold dealer pays dividends!