Precious metal investment coins

Precious metal coins are currently being minted as investment coins rather than circulation currency. The last gold circulation currency in the UK was issued in 1930's with silver coins lasting until the 1940's.

Current legal tender investment coins have a face value far below that of their worth as metal. For example, the British Double Sovereign, with a face value of just two pounds, sells for in excess of £500. This is because it contains over fourteen grams of pure gold.

Precious metal investment coins have been around since the late 1960's when South Africa introduced the Krugerrand in response to a growing demand from investors around the world. Seeing how popular this coin was, other countries such as the UK, US and Canada began producing their own precious metal investment coin series. Over the years more countries have joined the ranks, and the ranges have further expanded, with many different coins to choose from.

Gold and silver are the most popular two metals used in precious metal coins, and more investors have turned to these products as a way to protect their wealth and diversify their portfolios.

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Precious metal coins

When considering precious metal coins investors generally choose gold, but silver, platinum and palladium are also available. In the UK gold has the advantage over other metals of being free from VAT, plus UK gold and silver coins are also exempt from Capital Gains Tax, which is applied to both bars and coins from other countries.

These tax advantages are the main reason precious metal coins are such a popular choice. They often feature beautiful designs, or can form part of collectable series however, which also adds an additional layer of excitement and desirability to owning them.

Despite the VAT advantage of gold over other precious metals, there are good reasons why other metals should be considered for investment. Silver and platinum are considerably cheaper than gold, while platinum and palladium are much rarer metals than gold. Plus, as pure metals, they are in greater demand from industry and technology, and this constant state of demand allows for a greater degree prediction of market prices.

Due to the 20% VAT on precious metal coins other than gold, investors would need to achieve gains of more than 20% before breaking even. The market history shows this to be very achievable but only in the long-term. So, whilst including precious metal coins other than gold in a portfolio increases diversification and further spread any risk, these coins should be viewed as a more long-term option.

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Investing in gold coins

Investing in gold coins then is the choice most go for, but even having decided this there can be an overwhelming array of choices to make. There are many established gold coins that are worth an investor pursuing as an addition to their portfolio. The internationally renowned gold Krugerrand is available in many weights and has been a successful investment since it was first minted in 1967. By 1980 it accounted for 90% of the world gold coin market. The arrival of new coins from other countries has reduced it's market domination today, but the Krugerrand remains a popular choice for anyone investing in gold coins.

For investors in the UK however, the Sovereign and Britannia have been continual market front runners, with the Sovereign retaining an historic interest following its prevalence during the time of the British Empire, and the Britannia offering a larger, pre 24 carat gold coin to invest in.

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Investing in silver coins

Most of the eminent gold coins also offer silver variants for investors. They feature the same designs, but are produced in pure 999 silver, with a reduced legal tender value. These include the Krugerrand, Britannia, American Eagle and Chinese Panda. Also popular is the Silver Canadian Maple and, presently the only Euro denomination investment coin, the Austrian Philharmonic.

For UK customers thinking of investing in silver coins, British options once again make the overwhelming majority, thanks to their exemption from CGT. This will mostly be the Britannia, but collectable series like the Queen's Beasts have also been a very popular choice in recent years.

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Platinum and palladium

Platinum and palladium coins are far fewer in variety and supply than gold or silver. The primary bullion versions are the Platinum Britannia and Canadian Maple.

The Pobjoy Mint, on behalf of the Isle of Man, have also previously minted a Platinum Noble.