Investing in Gold Guide

Gold Coins

Gold Britannia's are legal tender in UK and have no capital gains tax
These are more divisible - you can sell a 30g coin which is 1/3 of a 100g bar
They generally have a higher spread - if you buy and sell quickly, the difference is often

Gold Bullion Bars

Gold bars do require capital gains tax
Capital gains tax allowance is £12,800 so still low, but you want to avoid going into this where possible
These are less divisible, if you need cash you need to sell a whole 100g bar rather than just a 30g coin
Gold bars have a lower production cost, so are cheaper per gram. With Bullionstar, you only have a tiny spread of about 2%
The consequence of Bullionstar bars is that you pay a higher price for the reward of a higher resale price (GoldAvenue is £4,350 vs Bullionstar of £4,500). The solvency of Bullionstar as a company and their promise of honouring this buy-back clause will determine whether this premium is worth it.

Jurisdictions/Storage/Purchasing

Always avoid paper gold such as gold ETF's or vaulting companies such as BullionVault as you are not actually assigned a physical gold to my name, but you own a fraction of a large gold bar

Royal Mint - safe as it is within the UK and it is a reputable company, but high spreads of 10%

Avoid storing a large amount here as there is a risk of confiscation and the aim is to diversify internationally

Bullionstar Singapore - gold bars have a low spread, but you rely on selling back to them, rather than having the option of selling it to another gold buyer

GoldAvenue Switzerland - free storage and you can resell at spot price, meaning a very low spread

Costs just £45 to ship to UK, so easy to ship home if they went bankrupt
But, the coins are of mixed years, so you may get an old coin with an uncertain condition - this is why you may want to consider buying a 1oz gold bar from them as you can be sure of its condition.

The problem I have is how do we physically verify and be 100% sure of the existence of the gold. We need to ensure that we actually have tangible gold assigned to my name and that this will be honoured when I require it

A physical safety box in an offshore location can be an option, e.g. Das Safe in Austria as I will know that I have the precise amount in gold in that location
You can also have some gold coins on hand - not more than 2 or 3 as there is a theft risk
Bullionstar provides pictures and the option of physically going to visit your Bullion - I recommend visiting Singapore at least once to actually check this

GoldAvenue and Royal Mint do not allow visiting your bullion - you have to trust that it exists until you request a physical delivery of the gold

Use this for storing long term assets - the physical storage makes it less liquid than gold stored with, say, Bullionstar because you need to physically visit the vault and then find a buyer - the spreads might be quite high because of this.
One risk is the government might break into the safety boxes and physically take all the gold there - UK government might want to prevent money laundering. In one raid, you had to prove the sources of the items, so this is where you need invoices and bank statements to show the legitimacy of the assets. The raid that rocked the Met: Why gun and drugs op on 6,717 safety deposit boxes could cost taxpayer a fortune | Daily Mail Online
So, we need to store this away from the UK and in a safe jurisdiction

They offer the opportunity to sell back to them at spot price
Cheap Ryanair flight from UK to Dublin makes visiting it easy
Free insurance of up to 100,000 euros
You can rent a small box for 250 euros per year
With the measurements, you can fit 3 gold coins length-ways (32.7mm * 3 = 98.1mm) for a length of 5 inches (127mm)
25 gold coins upwards (3mm * 25 = 75mm) for a height of 3 inches (76.2mm)
18 coins backwards (32.7mm * 18 = 588.6mm) for a length of 24 inches (609mm)
In total, you can fit 1,350 coins (3 * 25 * 18)
We should be looking at under a 1% storage fee to be competitive, so you need £25,000 minimum investment for this to be viable (£250/£25,000 * 100 = 1%)

Rather than saving up £25,000 in cash, then buying all the coins at once, you should instead buy the coins gradually and then move them to the vault. Once you have £12,500 to spare, you can consider getting the storage box because a 2% storage cost is acceptable and the same as the Royal Mint - then gradually add to this and the storage percentage comes down. The cheapest place to buy will be BullionByPost

Admin

Make sure you have copies of all invoices and bank statements in a secure location such as a Google Drive and a memory stick

Print out physical copies of invoices and bank statements and put in a folder with all email correspondence

Keep track of the values in a excel balance sheet and record all storage costs so we can judge the profitability of holding the gold

Strategy

To hold primarily gold Britannia coins to avoid any risk of capital gains tax
To store in different jurisdictions around the world, to avoid the risk of confiscation and to provide international diversification

Store no more than 3 gold coins with Royal Mint due to high spread. I want some gold stored in the UK, which is why we should store some coins here.
Own 1 gold bar with Bullionstar as you are taking advantage of a low spread option
Store some gold coins with Royal Avenue - you can have a low spread or request cheap delivery to UK
You also need a physical safety box in an offshore location - I recommend storing a large quantity this way as we can be sure of its existence

Do not own more than 3 gold coins with Royal Mint and 3 gold coins with Royal Avenue because there is no way to 100% physically verify the assets

Do not own more than 1 gold bar with Bullionstar as the future resale value depends on the solvency of Bullionstar, so I do not want to be dependent on a single company for a low spread

To hold some gold bars if you know you are keeping these for the long term - I recommend holding with Bullionstar as their gold bars in Singapore have a very minimal spread with a high resale value
To have some physical gold in my possession of around 2-3 gold coins for an emergency
You should have between £5-10k in cash so that you can liquidate these before liquidating gold reserves, this helps to avoid the spread. Do not hold more than £10k as you do not want to be eroded by inflation
Once you have £25,000 in gold, you can look at storing these in a safety box such as Sentinel Vaults because now we are under the 1% storage costs

With the amount stored in Singapore, Switzerland and UK, we are holding roughly £12,500 with these companies which is roughly half of what we have in a safety box
The division should look like the below

ThoughtsOfAndrew