| Gold Bullion - All That Glisters Should Be Gold.
All 'Investment Gold', including krugerrands, was made exempt from VAT in the EU, from 1st January 2000.
According to UK Customs & Excise:
"Investment gold (other than investment gold coins) is defined as: 'gold of a purity not less than 995 thousandths that is in the form of a bar, or a wafer, of a weight accepted by the bullion markets'".
Capital Gains Tax
In addition to Value Added Tax exemption for investment gold, legal tender sterling gold coins, including sovereigns and Britannias, are also exempt from Capital Gains Tax in the UK.
London Good Delivery Bars
The only size bar normally used in major international markets is the London Good Delivery Bar, which is 400 oz or 12.5 kg. Most gold stored by central banks is in this form.
These are not a convenient size for small investors. They also cost over £100K!
Kilo Bars
One kilo Bars are a convenient weight, and easy to remember. Makes it easier to track the price. Because they are worth over £10,000 each they are above the UK notification level. This makes them less popular than smaller sizes.
Smaller Bars
Smaller bars, such as fractional kilo bars, and one ounce bars, combine convenient size with a reasonably low premium.
Very Small Bars
Weights such as one gram are too small for investment purposes. The cost of making them means their premium is too high over the gold content. They're more suited as a gift item.
Solution: buy modern, one ounce bullion coins.
Because coins are efficiently mass produced they are available at very competitive prices compared with similar size bars.
Because gold coins are almost universally recognised, they are also easy to resell.
Krugerrands: One Ounce of Gold
In 1967, the South African Chamber of Mines had an idea to begin issuing a one ounce bullion coin, to be sold at a very low premium over the intrinsic gold value.
They have legal tender status in South Africa, which allowed them to be imported into many, but not all, countries without import taxes, duty or VAT.
Krugerrands: Half Ounce, Quarter Ounce and Tenth Ounce Sizes
Originally only one size was issued, which contained one full troy ounce (31.1035 grams) of fine gold. This was originally known as a krugerrand, or kruger, for short.
Be aware that from 1980, these three other, smaller sizes were introduced, in a classic case of 'brand dilution'.
Because of these, the original krugerrand is sometimes referred to as a 'full' or 'one ounce' krugerrand. However, within the trade, the word kruger or krugerrand is understood to be the original one ounce version.
The fractional coins have never been as popular as the full one ounce coins.
Low Premium Over Gold Content
According to the publicity at the time, the kruger was to be made available to world bullion dealers at a 3% premium, so that after distribution costs, the coins would be available to investors in quantity at about 4% to 5% over intrinsic gold values (for people who bought in quantity).
Krugers were meant to be a piece of gold with a known weight (1 ounce) and value. Collectors seeking aesthetically pleasing coins should look at British gold sovereigns, or some of the newer bullion coins, like the Manx Angel (great name!) |
