Knowledge Base
What to know before you buy
The essentials of investing in physical precious metals: purity, format, authenticity, pricing, storage and tax.
Topics
Basics
Understanding Gold Purity
Investment metals are measured in fineness — parts of pure metal per thousand — rather than karats. A 999.9 bar is 99.99 per cent pure gold, while a 22-karat Krugerrand is 916.7 fine, alloyed with copper so the coin resists scratching. Under EU rules, bars must be at least 995 fine and coins at least 900 fine to count as investment gold.
Investment
Bars and Coins: Which to Choose
Bars carry the lower premium per gram and the advantage grows with size, so a kilo bar is the cheapest way to hold a given weight. Coins cost more per gram but are legal tender, instantly recognised worldwide and can be sold a single piece at a time. Most portfolios mix the two: bars for weight, coins for flexibility.
Security
Authenticating Precious Metals
Weight and dimensions are the first check: a counterfeit almost never matches both at once, because no cheap metal shares gold's density. Modern mints add micro-engraving, radial patterns and serialised assay cards that are difficult to reproduce. Buying from a dealer that sources from LBMA Good Delivery refiners, and leaving the assay packaging sealed, keeps resale straightforward.
Markets
Factors Affecting Metal Prices
Gold responds most strongly to real interest rates: when inflation-adjusted yields fall, holding a non-yielding asset costs less and demand rises. Currency moves matter too, since the metal is quoted in dollars, as do central bank purchases and flows into physically backed funds. Silver and platinum add industrial demand to the same picture, which makes them more volatile than gold.
Storage
Storage Options Explained
Home storage gives immediate access but rarely comes with insurance cover at full replacement value. A bank safe deposit box is more secure, though contents are typically uninsured and reachable only in branch hours. Professional vaulting holds specific, serial-numbered items in your name, fully insured and independently audited.
Vault storage→Tax
Tax Treatment of Investment Gold
Investment gold that meets the EU purity thresholds is exempt from VAT in every member state, which is why bullion coins and bars are priced close to spot. Silver and platinum are sold with standard VAT unless they remain in a bonded vault. Capital gains treatment is set nationally and differs considerably between countries.
VAT-free gold→Care and Handling
Handling
Handle coins and bars by the edges, ideally with cotton gloves. Fingerprints and skin oils mark the surface of proof and fine-finish products permanently.
Storage at Home
Keep items in their original capsules or assay cards, in a cool and dry place. Intact packaging preserves both condition and the documentation a buyer will ask for.
Never Clean Bullion
Polishing removes metal and leaves hairline marks that are obvious to a dealer. Toning on silver is normal and does not reduce the metal value.
Glossary
Troy Ounce
The standard unit for pricing precious metals: 31.1035 grams, heavier than the 28.35 gram ounce used for everyday goods.
LBMA
The London Bullion Market Association, which maintains the Good Delivery List of accredited refiners and sets the market benchmark prices.
Fineness
Purity expressed in parts per thousand. 999.9 means 99.99 per cent pure metal, with the remainder trace elements.
Spot Price
The price for immediate delivery of one troy ounce on the international market, quoted continuously while markets are open.
Premium
The amount paid above spot, covering refining, minting, distribution and dealer margin. Smaller units carry a higher premium per gram.
Allocated Storage
Storage of specific, serial-numbered items held in your name and segregated from the dealer's own stock, so they remain your property at all times.