Investing in precious metals like gold and silver has been a popular investment strategy for decades.
But what about buying actual pieces of precious metal in the form of minted coins or bars? Is it a good idea? What are some of the advantages and risks to this investment strategy? And more importantly, who are some reputable dealers that one can work with safely?
In this article were going to go over some of the basics of buying and selling physical precious metals as well as review one of the most highly regarded precious metal dealer, The Royal Mint Bullion, which is owned by the Queen of England’s Treasury.
The lowdown on precious metals investing
Investing in anything is a choice that can only be made by you – the investor. But if you’ve decided that precious metals are right for your portfolio (as many others have), there are a few different ways that you can accomplish this.
Some people choose to invest in precious metal funds that trade just like stocks on the stock market. Others like to buy and hold the metals themselves, and still others prefer to be the legal owner of the physical metals but entrust securing them to someone else in exchange for a fee.
Let’s go over these now.
Precious metal funds
Buying shares in a precious metals fund like OPGSX or EKWAX is by far the most convenient route. It’s also arguably the lowest risk way to invest in this asset class.
Shares can be bought and sold whenever your stock market is available, the tax implications are almost always arranged by your brokerage, and there is no risk of the assets being stolen from you.
There are several downsides to consider, however.
First, buying shares in a gold fund comes with costs. Gold and other precious metal funds charge fees that affect the share price of the fund. While you may not directly see or pay these fees yourself, you pay for them when the value of your investment drops periodically as fees are collected annually or quarterly depending on the fund.
OPGSX, for example, assesses a 1.7% fee per year. Another concern is that if the fund has any kinds of trouble, your holdings could be locked away or even put at risk.
In this arrangement, you are trusting a company to do what they say and maintain a reserve of precious metals.
Holding metals yourself
The advantages of buying and holding precious metals yourself is that you are not relying on any third party to maintain your investment for you.
The metals are always kept in your possession and you can do with them as you please. There are also no annual or monthly fees. This method also provides a unique form of security in that if a major financial event or catastrophe occurs, you will always have full access to your assets.
The main disadvantage to holding physical precious metals is that you are required to protect them yourself. This means protection from both theft and natural disasters.
Further, selling physical precious metals may be inconvenient depending on where you live.
Hiring others to secure your metals
The third primary way of investing in precious metals, namely buying them yourself and having a company hold it for you, also has its own advantages and disadvantages.
The main advantage is that you won’t be required to provide security for your assets. Not only that, but custody providers are typically insured against theft or other potentially costly events.
The downside to this model is that these companies charge maintenance fees to store assets. Further, getting them back into your hands if you want to sell them may be inconvenient and time-consuming.
With that out-of-the-way, let’s look at Royal Mint Bullion and their offerings.
Digging into Royal Mint Bullion
Royal Mint Bullion is a UK-based company that has been in business for over 1100-years!
They currently offer gold, silver, and platinum in various forms such as minted coins and bars.
These items range in size and price from 1 gram up to a whopping 400 ounces – nearly 12.5 kilograms!
Prices vary between the different offerings and are largely based on quantity and size discounts. Essentially what that means is the cost per ounce will be higher with smaller units.
- A 1-ounce piece of gold sells for $68.74 at press time ($2,199.86 per troy ounce).
- A 400-ounce bar sells for $604,060.28 dollars, making it cost $1,510.15 per ounce. That’s a discount of $689.71 per ounce.
- Prices for smaller items will drop when buying many items in a larger quantity. The more you can buy at once, the lower price you will receive.
Some price differences do exist between coins and bars and other mintings. Some may have collectible value beyond just the value of the metal itself. If you’re not looking to be a collector and are instead looking at it from purely an investment perspective, you may want to avoid these higher-priced collectibles.
On the other hand, if the collectability of one of these mintings is important to you, then you should focus on what fulfills your needs best.
Profiting on your investment
Gold prices fluctuate over time just like any other investment asset like stocks or bonds.
As such, one way you can profit from buying precious metals from Royal Mint Bullion is by buying at one price and selling it for a higher price later.
Royal Mint Bullion allows its customers to sell minted precious metals (that means no jewelry or scrap metal – only minted and easily identifiable pieces) to the company at the cost of what’s known as a spread.
Simply put, a spread means you will lose a small percentage of the value of your metals when selling it.
Selling metals to Royal Mint Bullion can happen in a few different ways. You can send it to them by post, drop it off at a partner dealership near you, or if you decided to use their “The Vault” storage service, you can sell back to them directly and conveniently.
Precious metal storage services
Royal Mint Bullion also offers a storage solution like we discussed above which they call The Vault. The Vault is a 35-acre facility located near Cardiff Airport in South Wales, England.
The company claims that the site has some of the top security available in the world for precious metals storage today. Storage at The Vault comes at a reasonable cost of 1% per quarter and relieves you of needing to protect your assets yourself.
Storage Fees Example
|Total value of metal held
|Flat Annual Rate
|Estimated Quarterly Fee excluding VAT
|VAT at 20%
|Estimated Quarterly Fee including VAT
It also gives you the peace of mind of not needing to worry about theft or natural disaster, either.
The service is entirely optional for customers. One can always choose to simply hold onto the gold themselves or keep it in a bank safety deposit box of their choice.
One of the most incredible offerings of Royal Mint Bullion is that UK-based investors are not required to pay either sales tax, VAT, or capital gains taxes when buying or selling precious metals through Royal Mint Bullion.
This alone could save thousands or more depending on how much you want to invest in precious metals. Compare that to traditional investment routes like the stock market that comes with costly capital gains taxes that can cripple or even erase your earnings.
It’s easy to see what could make tax-free investments of this type so attractive. Further, even gold funds on the stock market charge in excess of 1% annually, making the cost of storage even more reasonable.
Unfortunately, this tax-free offering is only available to UK-based investors. The company is more than happy to ship internationally for those outside the country though.
Overall, Royal Mint Bullion has an impressive offering and certainly comes with the backing of some serious credibility.
Their diverse offerings with metals such as silver and platinum, and the capability of both buying and selling assets with them makes the company one of the more competitive sellers of precious metals.
Their services do come with a cost, however, and smaller buyers looking to just dip their toes in the waters will end up paying higher fees and costs as compared to those who dive in headfirst and invest larger sums.
For those looking to just invest a few pounds or dollars here and there, Royal Mint Bullion even offers their own gold fund that does not have any minimums in investment size.
That means investments don’t need to correlate to a specific amount of gold such as an entire troy ounce. This could be a good compromise for those that are looking to get exposure to gold in their portfolio but are not necessarily as interested in the potential freedom or security of controlling the assets themselves.
Conversely, for those looking to save for a truly rainy day when electronic investments could be unavailable, Royal Mint Bullion does sell precious metals in increments that are small enough for practically anyone to afford. For example, a 1-gram bar of platinum is available for just around $60. A 100-gram bar of silver goes for around $85.
In conclusion, Royal Mint Bullion is a precious metals dealer and service provider that you should check out if you’re in the market for gold, silver, or platinum coins or bars.
Their diversified and highly flexible offers are sure to meet some or even all your metals investment or collecting needs.