Why Are Gold Prices at Record Highs?
Several global and domestic factors have driven gold prices to historic levels:- Inflationary Pressures: Persistent inflation erodes the purchasing power of currencies, making gold an attractive hedge.
- Weaker Currencies: The pound has faced downward pressure due to economic headwinds, boosting gold prices in GBP terms.
- Geopolitical Tensions: Ongoing conflicts, trade disputes, and global political instability are fuelling safe-haven demand.
- Central Bank Buying: Many central banks continue to diversify reserves into gold, adding long-term demand.
UK Inflation and Its Impact on Investors
Inflation in the UK has been running above target, impacting everyday costs and reducing the real value of savings. For investors, this means:- Cash Loses Value: Savings accounts may not keep up with inflation.
- Real Returns Matter: Investments that maintain or grow purchasing power become essential.
- Shift to Tangible Assets: Physical gold and silver are seen as reliable stores of value during inflationary periods.
Why Physical Gold and Silver Appeal Now
While there are many ways to gain exposure to precious metals, physical gold and silver offer unique advantages:- Direct Ownership: You hold a tangible asset, free from counterparty risk.
- Tax Benefits: UK legal-tender coins like Gold Britannias and Sovereigns are exempt from Capital Gains Tax.
- Liquidity: Recognised bars and coins can be sold quickly when needed.
- Wealth Preservation: Historically, gold has maintained its value over the long term.
Implications for UK Buyers
For UK investors, the current market environment presents both opportunities and challenges:- Premiums Can Rise: Strong demand can increase the premium over spot prices for popular coins and bars.
- Timing Purchases: Buying during short-term dips can improve long-term returns.
- Product Selection Matters: CGT-exempt coins may offer greater flexibility and tax efficiency.
- Review Your Allocation: Many advisors recommend 5–15% of a portfolio in precious metals.
- Focus on Quality Products: Choose LBMA-approved bars and recognised coins.
- Consider Storage Options: Decide between secure home storage, bank deposit boxes, or professional vaulting.
- Stay Informed: Track economic data, gold price movements, and market news.
