How to Invest in Gold in the UK

Gold has long been considered a valuable addition to investment portfolios, offering diversification and a potential hedge against economic uncertainty.

It has provided an average annual return of around 5% over the last 100 years, and over the last 20 years, the average annual return has been closer to 10%.

But when someone says they’re looking to invest in gold…what do they even mean?

• Do they want to bet on the price of gold increasing?
• Do they want to purchase physical gold to store in a safe place?
• Do they want to invest in companies that mine gold?

All of these are potential options — totally different options — that would allow someone to “invest in gold”.

This guide breaks down the different ways you can invest in gold and how to go about it in the UK.

Disclaimer: Past performance is not a reliable indicator of future results. All investments have risk and can decrease in value. We are not financial advisers, this is not financial advice.

Investing in the UK

There are several ways to invest in gold in the UK. Let’s explore the most common methods.

Gold ETFs and ETCs

For the majority of casual investors, Exchange Traded Funds (ETFs) or Exchange Traded Commodities (ETCs) offer the most convenient way to invest in gold.

These funds typically own physical gold and issue shares that closely track its spot price.

These investments are easy to buy and sell, and you don’t need to worry about physical storage.

Options include the iShares Physical Gold ETC and WisdomTree Core Physical Gold ETC.

However, they do come with annual management fees, typically ranging from 0.1% to 0.4% of your investment value (0.12% on the linked examples), and you don’t possess a tangible asset.

Specific funds are mentioned for example purposes. They are not recommendations or investment advice.

You can buy and sell gold ETCs and ETFs via online brokerages like Trading 212 and InvestEngine.

Here’s a range of example options you could consider:

Fund	Product Type	Ticker	(Annual) Expense Ratio
iShares Physical Gold	ETC	SGLN	0.12%
WisdomTree Core Physical Gold	ETC	GLDW	0.12%
Invesco Physical Gold A	ETC	SGLS	0.12%
VanEck Gold Miners	ETF	GDX	0.53%
The Royal Mint Physical Gold Commodity	ETC	RMAP	0.25%
abrdn Physical Gold Shares	ETF	SGOL	0.17%

Physical gold

Buying physical gold involves purchasing actual gold bullion or coins.

This tangible form of investment appeals to many, but it comes with certain considerations.

On the positive side, you own a tangible asset that you have full control of.

And UK investors have a unique advantage with sovereign coins produced by the Royal Mint, such as Sovereigns and Britannias.

These coins are classified as legal tender, offering tax benefits. There’s no VAT to pay when purchasing investment-grade gold, and these coins are also exempt from Capital Gains Tax when sold.

However, you’ll need to consider potential storage and security costs, and physical gold is less liquid than other forms of gold investment — you can’t just click a “sell” button.

Despite being legal tender, you’re unlikely to ever use these coins as currency because their gold content value significantly exceeds their face value.

Some reputable vendors of physical gold in the UK include:

BullionByPost: Royal Mint authorised distributor with free insured delivery in the UK, based in Birmingham.

PhysicalGold.com: Streamlined pricing, guaranteed buyback of coins at market prices, broad inventory, insured delivery.

Baird & Co: full service merchants operating out of London. Vault storage, refining, and sovereigns for purchase.

Please note: we have not tested these vendors and have listed them based on their online reputation. Always do your own research.

Gold mining stocks

Investing in companies that mine gold is another option, offering potential for higher returns — stocks generally have a higher upside than commodities — but with increased risk.

While these stocks may provide higher returns than physical gold if the company performs well and may pay dividends, their performance is affected by factors beyond gold prices, such as management decisions and production costs. Prices are generally more volatile than physical gold or gold ETFs.

There are also funds that invest in gold mining companies and mining interests.

The share price of mining companies has tended to trend somewhat close to that of gold over time, but there is a lot more variance in short time frames.

If you’re looking to gold as a source of diversification, it may be easier to just invest in a fund that tracks the physical spot price of gold, rather than gamble on the individual fates of mining stocks. These companies may have isolated issues — not related to gold at all — that affect their stock prices.

Tax considerations

UK investors now face a lower annual Capital Gains Tax (CGT) exemption of just £3,000 — meaning anything over £3,000 earned in annual capital gains will be taxed.

However, capital gains tax can be avoided entirely if you invest inside a Stocks & Shares ISA, SIPP, or other tax-efficient account.

Gains from UK gold sovereign coins are also exempt from CGT.

Is gold even a good investment?

Interestingly, there are many counter-arguments to gold being a good investment in the first place.

A study called The Golden Dilemma suggests that while gold can act as an inflation hedge over extremely long periods, it may not effectively hedge against inflation in the short to medium term, contrary to common belief.

The same study also suggests that gold is a poor ‘safe haven’ — with many gold investors using the commodity as a place to store their funds in case ish ever hits the fan.

A perfect safe haven would see a large number of entries in the second quadrant of this image, and no entries in the third (where gold prices fall in line with the stock market).

That said, the price has gone up substantially in recent times and has generated a positive return over a long period of time. It could be argued that it’s still a good investment — it just might not achieve the things many people think it does.

But the viability of investing in gold is a subject for another day — and not one we could comment conclusively on anyway because we’re not investing experts or qualified financial advisers.

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