1oz gold coins: Krugerrand vs Britannia reviewOctober 1, 2014 12:31 pm
1oz gold coins review
Many of our clients often ask us which 1oz gold coins they should buy. So we thought it would be useful to do a comparison of our most sought after 1oz gold coins. This sparked a debate in the office and we found that we had a difference of opinions ourselves. David will be writing for Krugerrands and I (Michael) will be writing for Britannias.
1oz Krugerrands tend to be the starting point for many first-time investors who are looking to add gold to their portfolio, due to their low premiums, familiarity and ease of trade.
There have been more Krugerrands sold than any of the other 1oz gold coins combined. The South African Chamber of Mines first started producing the Krugerrand in 1967, 20 years before the Royal Mint first produced the Britannia for example.
Their longevity and enduring popularity has created a market for gold coins in which the Krugerrand is recognised worldwide, and this continued trading environment has lowered the premiums on Krugerrands for investors.
Krugerrands have always been made to the same dimensions, purity and design. Although the coin has exactly 1oz of pure gold inside (31.1035g), the coin itself weighs 33.9305g. This is because the Krugerrand is a 22ct gold coin, with around 8% of its makeup a copper alloy. This makes the Krugerrands more robust, meaning that they are less likely to devalue as a result of surface damage.
Often the lowest priced 1oz gold coins available, so purely from an investment point of view, the Krugerrand gives buyers the best chance of making a more profitable return.
Who should buy this? The 1oz gold Krugerrand is a great choice for first-time investors and experienced buyers alike due to their consistently low prices.
Britannia 1oz gold coins are the British one ounce equivalent of the Krugerrand. Unsurprisingly they are hugely popular with British investors and have a growing market abroad.
Unlike their South African counterparts, the one ounce gold Britannia is 24 carat and not 22 carat.
From 2013 onwards, the Britannia has been made in 24ct gold and has seen an upsurge of buyers from around the globe. For the UK, the 24ct versus 22ct distinction is not particularly important, but for many countries, the purity of the gold is of traditional and cultural significance. The popularity of the one ounce gold Britannia in the UK is mainly down to its status as being legal tender, therefore being capital gains tax free (CGT). For many UK citizens, capital gains tax allowance is a significant worry and one ounce gold Britannias offer a convenient store of wealth whilst keeping it within a tax free umbrella.
The Britannia 1oz gold coins may cost a little more to purchase but what is spent now, may well save you a huge tax bill in the future.
Who should buy this? Those with a CGT headache and for the larger UK investor looking to diversify their portfolio.