The Royal Mint launches bullion trading service

22nd September 2014


UK coin maker The Royal Mint has launched its very own online bullion trading service for retail investors.

At individuals can buy gold and silver through the site which can be sent to them in coin form however customers are then responsible for storage, security and insurance. Otherwise the Royal Mint can offer storage at a cost of 1% plus VAT per year, based on the average daily market value of an investor’s total gold holding.

Once a customer has set up an account on the platform, which also provides live prices for gold and silver, they will be able to buy brand new Royal Mint Britannia, Sovereign and Lunar bullion coins.

The flagship coin, The Sovereign, is struck in 22 carat gold. Britannia coins are available in either 999.9 fine gold (24 carat) or 999 fine silver, and the UK’s newest Bullion coin, the Lunar coin, is also struck in either 999.9 fine gold (24 carat) or 999 fine silver.

The Royal Mint has also guaranteed that it will provide all customers with a quotation to buy back any gold coins bought from its website and stored in its vault.

It highlighted that research conducted by The World Gold Council has suggested that there is potentially £4bn latent demand for gold investment within the UK alone but consumers have been deterred from taking the plunge because of the perceived barriers to purchasing precious metals.

Shane Bissett, The Royal Mint’s director of commemorative coin and bullion, said: “Where the average consumer may have shunned gold due to perceived complexities, The Royal Mint can help make this option a much more accessible opportunity. We want to help expand the bullion market in the UK, particularly as coins offer a relatively affordable introduction – and believe we are well placed to do so.”

Commenting on the launch Laith Khalaf, senior analyst at Hargreaves Lansdown noted that given the storage charges of 1% plus VAT, it looks like a pricey way to hold gold, when an Exchange Traded Fund (ETF) – which can track the price of physical gold – can give you the same exposure for around a quarter of the annual cost.

For low cost access to gold he would tip Source Physical Gold ETC (SGLD) which is physically backed and has an management expense ratio of 0.29%.

Khalaf added: “Investors need to understand investing in gold is by no means a one way bet. Gold is notoriously difficult to value, subject to seasonal demand, and unlike shares and bonds, it provides no income for investors. Price movements can be fickle and unpredictable.

“It can however be used as a hedge against calamity, and for this reason the gold price soared in the aftermath of the financial crisis. However the price fell sharply last spring when the U.S. central bank started to talk about tapering QE. Given an improving economic outlook and the prospects of interest rate rises in the US and UK, it is hard to see how gold gains many more followers from here, unless economies and central bank policies should go into reverse. It can be used as a hedge against the prospect of this happening, but should make up no more than about 5% of a typical investor’s portfolio.”

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