How To Invest In Gold In The UK: Benefits and How to Buy

Gold’s history starts in ancient times – people defined their wealth based on the amount of gold they owned. They also exchanged it as a currency. Even though centuries have passed, not much has changed in that aspect – Gold is still valued universally. Moreover, it’s one of the most stable assets worldwide, and investors often buy it as a safe haven.

If you seek to diversify your portfolio and mitigate the risk of losses by selecting dependable assets, then you should consider choosing gold. But like every asset, it comes with its own advantages and disadvantages.

So, what are they and how can you buy Gold in the UK? Is purchasing this precious metal a sound investment decision? How is it priced and what influences its value?

Continue reading to learn the answers to these and other questions. We will tell you everything you need to know.

The Introduction of Gold Trading

If you are a new entrant in the financial markets, then you have a lot to learn, but no worries, we are here to aid you. Even if you already have experience, adding to your knowledge will benefit you and increase your chances of success.

So, let’s start from the beginning. As you know, natural resources are finite and the rarer the resource, the higher its value. The World Gold Council (WGC) reported that humans have mined 90% of the world’s gold since the California Gold Rush in the 1850s.

A cube measuring 21 meters would be enough to contain all the gold mined to date. In comparison, the world produces millions of barrels of oil and billions of cubic meters of natural gas each day. That’s not a big amount when considering global resources.

Furthermore, companies have already used 50% of the gold mined over the last decade to make jewelry. They have converted a bit more than a quarter into coins and bars. The tech sector has utilised the leftover gold, or investors have bought it.

In the UK, the Royal Mint produces all of the gold. Based in South Wales, it distributes the mined metals, converting some of the percentage into coins and bullion bars.

However, the United States holds the Gold’s largest reserve worldwide, more than 8,000 tonnes in total. On the markets, the metal’s worth is determined by its weight. WGC reported that the US’ supply represents 4% of the whole amount mined to this date (187,200 tonnes).

On the other hand, the UK currently owns 310 tonnes of this metal, safeguarded in the vaults of the Bank of England. The country sold 400 tonnes between 1999 and 2002, a decision that has been widely debated and criticized, as the sale took place when gold prices were at a historic low.

How Are Gold’s Prices Determined?

As you see, Gold is a commodity with a limited supply. According to the data, Australia, China, and Russia were the largest producers of this metal in 2022. Because of its more or less capped supply, changes in demand significantly influence Gold’s price.

Over the last 30 years, its price increased by £1,640 in the United Kingdom, soaring from £220 to £1,860. At one point in 2024, it hit £1,930, reaching its all-time high.

Currently, the London Bullion Market Association (LBMA) determines the prices of this commodity in Britain. This is a bullion market, trading precious metals, and it sets the prices as well.

However, Gold has two different kinds of prices: fixed and spot. LBMA members set the fixed prices twice a day via conference meeting. They usually use this price for large orders.

On the other hand, traders use spot prices for buying and selling bullions. Sometimes investors call the latter live price.

Why Invest In Gold – For Beginners in the UK

Now that you know about this commodity’s supply and prices, let’s move on to the next part – namely, why should you invest in Gold? There are several good reasons for that, actually. For investors, the most important one is this asset’s safe-haven status.

Most of the financial markets are known for their volatility, especially forex and crypto exchanges. Some kinds of commodities are volatile in their own way. For example, prices of wine or wheat depend on the quality of the harvest and other natural and economic factors. Stock prices also fluctuate frequently.

Unlike other assets, gold’s price depends solely on its supply and demand and is not influenced by global politics or a country’s policy on interest rates. Furthermore, when markets are down due to political conflict or uncertainty, the price of gold tends to rise, similar to other safe-haven assets.

Investors owning this precious metal don’t have to worry about market volatility. In fact, gold investing is a good way to ensure that you have at least one asset in your investment portfolio that will remain stable if others’ values crash.

The latest statistics only reinforce this fact – take Ukraine’s war for example. In the first quarter of 2022, when most of the financial markets ended in the deep red, Gold defied the bearish trend and soared by a whopping 34%. It continued surging over the whole year.

The WGC stated that thanks to retail investors buying this metal, along with enormous central bank purchases, its annual demand hit an 11-year peak.

What Are the Other Advantages Of Investing in Gold In The UK?

Owning Gold is a good way of preserving wealth. Inflation is one of the biggest problems of the global economy, with central banks fighting against it relentlessly. Because of inflation, the currency’s real value decreases over time. Today, you can buy much less with £100 than you could 30 years ago.

Unlike currencies, Gold’s price isn’t subject to inflation. The latter has no influence on this commodity. Consequently, you can protect the real value of your capital if you invest in this precious metal.

Typically, when inflation hits especially high, investors start buying this asset; after all, money is just paper and it might devalue. On the other hand, Gold is a physical asset with its own value, which it maintains despite the market’s developments. Besides, when inflation rises, increased demand for this commodity causes its price to soar as well.

If you’re wondering how to invest in gold in the UK, consider the historical context and current trends. In the United Kingdom, average annual inflation reached 3% over the last 20 years, as the Office for National Statistics reported. WGC also announced that Gold’s average price increased by 10% per year over the same period. This means the real value of the metal soared by an average of 7% year by year (minus the 3% of inflation).

Another good reason for buying this commodity is the diversification of your portfolio. The first rule of investing is to not put all your eggs in one basket. If this basket crashes, where would that leave you?

It’s always a wiser choice to diversify and buy different assets. And while you can easily invest in stocks, forex, crypto, property, or even other commodities, precious metals are always the safer and more reliable choice.

After all, stocks might lose their value, commodities might spoil or run out. But Gold – it knows no bounds of time, it outlasts every other asset.

How Does Gold Correlate with Other Assets?

Analysts claim that this precious metal has an inverse correlation with other investments. For example, if a stock’s value decreases, Gold’s price increases. And let’s not forget about its higher stability. That’s one of the reasons why central banks stock their vaults with it in times of uncertainty.

However, holding this asset isn’t totally risk-free. In fact, it might have several disadvantages. The main one is the price’s volatility. Sometimes investors have to wait for several years before the commodity’s price increases sufficiently to turn a profit with its sale.

If you want big gains and want them fast, you might prefer to choose some other asset. Gold works better as a long-term safe-haven asset. Furthermore, unlike bonds, savings accounts, or dividend-paying shares, this commodity doesn’t give investors yield or income.

Lastly, buying physical gold or trading it might prove difficult for people with limited funds. And if you do that, you will need to verify the authenticity of the metal and store it in a safe place. If you choose a bank (which is an obvious choice nowadays, instead of burying gold on some faraway island or in your backyard), you might have to pay fees for its safeguarding.

Lastly, while this commodity shrugs off most geopolitical events, some of the latter can still influence its price. The G7 banned the imports of gold from Russia in 2022, as a sanction due to the country’s invasion of Ukraine. That definitely influenced the commodity’s price.

Now you know all the pros and cons of investing in gold. So, let’s move on to the next part – namely, how to invest in gold and silver in the UK.

Necessary Steps For Investing in The Precious Metals In The UK

Investing in gold in the UK can be approached in several different ways, depending on your goals and available funds. You have the option to choose between direct and indirect methods, similar to most other types of investments.

If you decide to buy the gold directly, then you need to check its carat numbers. 24 carats means pure gold, and the higher this number, the purer it is. However, as we have mentioned, gold is most often combined with other metals for more durability.

You can buy coins, bullion, or jewelry from banks or precious metal dealers. But be careful, and ensure that the product is authentic. Of these three, jewelry is the worst choice because often its price is bolstered due to the price of craftsmanship, and you get a lower amount of gold for a higher price.

If you decide to store your purchases at home, make sure to install a good safe and insurance.

The second way is to buy exchange-traded funds (ETFs) or invest in gold mining companies. Buying shares in the latter is a good way to profit from this commodity indirectly.

Major gold mining companies include Newmont Corporation, Barrick Gold Corporation, and AngloGold Ashanti. The London Stock Exchange offers access to Rio Tinto, BHP Group, and Glencore.

Overall, investing in precious metals is a good choice, but they don’t bring significant short-term returns. If you decide to add this asset to your portfolio, you should prepare for long years ahead of holding Gold. But the waiting is worth it, especially in times of market volatility.

Now you know how to invest in gold in the UK. But that is only one possibility in the vast financial world. Hop on our other articles to learn more about good investments!

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