gold investment

Going for the Gold: Why Invest in Sovereign Gold

The current value of gold is at around £824.40 per ounce, a number expected to rise in the coming years. Investors are optimistic that the current figures can easily triple in the next decade. Analysts are continually pointing to gold as one of the most solid investments as a financial insurance plan.

Sovereign Gold

Gold sovereign coins were first minted during the reign of King Henry VII in 1489. Since then, billions of sovereign gold coins were minted or melted into gold bars. This was a standard then, as the country used sovereigns to pay for international investments and debt.

Since the introduction of paper currency, the gold coin has lost its place as the British representative in global markets. Its purpose shifted from being a trade currency to a trade good, wherein its aesthetics contribute to its value.

Difference of Sovereigns from Gold Bars

Unlike gold bars, sovereigns have the added aesthetic value, thanks to the designs they were minted with, making them very collectible. Today, it is estimated that a billion gold sovereigns are still in circulation. Only 1% of Gold sovereign bullion coins minted are in collectible condition. The rarity of these coins actually increases their value beyond the price of gold.

Investing in Gold

Gold is intrinsically different from paper currency because it has material value. A pound, at the end of the day, is just a note with a number printed on it, a sovereign, is a precious metal.

Gold is not an investment in the normal sense of the term when currency is involved. Gold, in its physical form should be treated as insurance, or as a collectible and not as currency. You can’t trade gold away for other goods, like paper money, but sold later when you need the money.

When you trade gold for goods, you’ll have to speculate on the value of both your gold and the good you’ll be getting. In that situation, you’ll have two uncertain figures in one trade. The measurement of value, in this case British pounds, not involved in the trade makes any kind of fair exchange difficult.

If used correctly, even a small amount of British gold sovereigns can spell the difference between a secure, highly competitive investment portfolio, and a middling insurance policy.

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