Is this new Britannia coin a golden opportunity as stocks slide?

A new ‘high-tech’ Britannia gold coin is being launched this month – on the back of a boom in demand for gold and a surge in its price.

The new 24-carat one troy ounce of gold coin has been produced with ‘micro-detail’ so the waves in the background appear to roll as you look at them from different angles.

The illusion of moving waves is a security measure introduced to make it difficult for forgers to copy. There are others, including a disk by the bottom of the regal figure’s dress that also acts like a hologram so you can see either a padlock or trident on it, again depending on what angle you look at it from.

High tech: The new Britannia gold coin has been produced with 'micro-detail'

High tech: The new Britannia gold coin has been produced with 'micro-detail'

High tech: The new Britannia gold coin has been produced with ‘micro-detail’

In addition, there is the inscription ‘Decus et Tutamen’ – Latin for ‘an ornament and a safeguard’ – in tiny print repeated around the coin’s inner circle.

Sales of earlier Britannias have more than trebled in the past six months. The price of a Britannia gold coin is about £1,600, compared to £860 five years ago. But investors should be aware that prices can fall.

Key to the current appeal of such coins is gold’s reputation for being a ‘safe haven’ asset. With growing concerns over the state of the world economy, many investors have been seeking the comfort of gold.

In the past year, the price of gold has reached record highs. Peaking at £1,574 per troy ounce on August 6, it has slipped back slightly to £1,481. Despite this, that is still up 23 per cent year in a year.

Adrian Ash, director of research at metal trader BullionVault, says: ‘Though gold has come down from its record high, this does not mean the rally is necessarily over. We have potential economic conflict with China looming, the unpredictable fallout of the US election in November and Brexit in the New Year to contend with – and still no one knows where the Covid crisis will take us. We are living in uncertain times and holding gold in a diversified investment portfolio makes good sense.’

The new gold coin, like all Britannia coins, is deemed legal currency by the Inland Revenue so investors will not have to pay capital gains tax on profits. 

There is also no value added tax to pay. It has a face value of £100, though it sells for about £1,600, largely because of the value of gold it contains.

Ash warns investors looking for resale value rather than novelty value: ‘Do not be tempted by coins that come with fancy packaging, are backed with slick adverts and are special editions.’

The Royal Mint offers other one troy ounce gold bullion coins. Its ‘Queen’s Beast’ portfolio includes coins such as the ‘black bull’, which costs about £2,000. And tomorrow it will be launching a ‘James Bond bullion bar’.

But most experts believe investors should steer clear of such special editions because of the mark-up. Ash says a key consideration is selling the coin further down the line.

You could buy shares in gold instead…

Buying a gold coin is not the only way to invest in the precious metal. Other options include:

A GOLD BAR

A traditional bar – like the one you might find in a bank vault held by Goldfinger, the James Bond villain – is 400 troy ounces and worth about £600,000. But you can also buy shares in such bars, or individual pieces weighing as little as one gram (0.03 troy ounce) for about £50. A bullion trader can store your gold – including coins – for a typical fee of 0.2 per cent of its value every year. This includes insurance against loss or theft.

EXCHANGED TRADED FUNDS

These are funds that track the price of gold and can be bought online via wealth managers such as AJ Bell and Interactive Investor. Funds include iShares Physical Gold, Invesco Physical Gold and WisdomTree Physical Gold. Fees are typically 0.4 per cent a year or less.

ACTIVELY MANAGED GOLD FUND

These invest in firms involved in gold mining. Consider BlackRock Gold & General, JPM Natural Resources and Ninety One Global Gold. Investment trusts include BlackRock Energy and Resources Income. Fees are about 1 per cent a year. 

Like other traders, Royal Mint buys coins for less than it sells them for. The difference is known as the trading spread. It means you will be paid about £1,420 for a coin you could buy for close to £1,600.

So when buying or selling bullion coins it is important to shop around for the best price before sealing a deal. Traders to consider in addition to the Royal Mint include Baird & Co, BullionVault and The Gold Bullion Company.

A Royal Mint spokesman says: ‘The Britannia is our most popular bullion range coin, which is why we chose it to embrace our innovative new security features.’

A smaller coin – the Sovereign – has a face value of £1 and sells for about £380. It is made of 22-carat gold – 22 parts gold and two parts copper alloy – and weighs just under a quarter of a troy ounce. 

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