During 2023, a surge in global economic instability prompted an unprecedented rush towards gold, drawing in a significant influx of investors, as highlighted by the Royal Mint. Their data indicated a remarkable 7% year-on-year surge in the purchase of gold and precious metal bars and coins, surpassing even the peaks witnessed during the 2020 lockdown investment boom.
The upsurge, predominantly fueled by small-scale retail investors seeking the safety of “safe haven” assets, led to a substantial increase in individuals turning to gold amid uncertain times. Simultaneously, the Royal Mint observed a nearly 50% spike in payouts to customers selling their bullion back. This surge followed the record-high prices gold reached last year.
Stuart O’Reilly, an analyst at The Royal Mint, expressed projections of a potential surge in gold prices in the coming year, anticipating central bank interest rate cuts that might diminish the attractiveness of traditional investments like bonds and savings accounts.
Anticipating Federal Reserve rate cuts in 2024, coupled with the weakening US dollar, O’Reilly speculated that these factors could propel gold prices beyond recent highs. He also pointed out that a record number of global elections anticipated in 2024 could further contribute to geopolitical uncertainties, potentially impacting gold markets.
The previous year’s surge in precious metal prices was attributed by O’Reilly to a combination of geopolitical and economic uncertainty, compounded by central bank gold buying. Heightened market volatility due to uncertain global interest rates and conflicts in regions like Ukraine and the tensions between Israel and Hamas further rattled markets.
The significant increase in gold prices led to a 19% rise in customers selling their gold investments back to The Royal Mint, with payouts jumping by 46% compared to the preceding year. Investors primarily focused on more accessible options, with over three quarters opting for “fractional” products—smaller than the conventional size. Products like the Mint’s gold Sovereign, gold Britannia coin, and 1g gold bar emerged as favorites among investors, offering opportunities to invest in physical gold starting from around £75.
The Royal Mint’s initiative in developing smaller, fractional products, allowing entry-level investments starting from £25 via their online platform DigiGold, has notably widened access to gold investments. Andrew Dickey, The Royal Mint’s director of precious metals, emphasized this diversification in investment options, accommodating a broader range of investors from entry level to high-value ones.
The Royal Mint’s bullion coins are indeed exempt from Capital Gains Tax (CGT) for UK residents due to their legal status as British currency.
This exemption applies to all gold, silver, and platinum bullion coins produced by The Royal Mint, including the Sovereign, Gold & Silver Britannia, The Royal Mint Lunar, and The Queen’s Beasts ranges of bullion coins. As a result, investors can make an unlimited tax-free profit on these bullion coins, providing a significant advantage over many other investments and assets, which are typically subject to CGT. This exemption is due to the legal tender status of the coins, and it is the responsibility of the individual investor to declare any Capital Gains Tax payable if their total gains within a financial year exceed the tax-free allowance. Therefore, The Royal Mint’s bullion coins offer a tax-efficient investment opportunity for UK residents