The gold melt-up is upon us. After eight years of rangebound prices, gold has finally broken its glass ceiling, jumping over the £1,200 per troy ounce level in the last few weeks. The breakout to fresh highs opens gold to the potential of climbing yet further, sparking renewed conversation around whether or not now is a good time to buy gold.
To see what all the fuss is about, check out our live gold price tracker here.
Glass ceiling broken
For eight years, buyers have been tempted by elevated prices, but sellers have been biding their time, waiting for a decisive move to the upside, having invested close to the 2011 peak. Their patience has been rewarded greatly this summer, as gold prices have leapt from a mere £700 per troy ounce back in 2015 to as high as £1,237 per troy ounce, as of mid-August this year.
That’s a gain of over 75 per cent in just four years, a significantly higher gain than you would find in many other asset classes over the same period. But just what is causing this gold price melt-up at long last?
The underperformance of Sterling is a major consideration. In 2007, UK investors could expect an exchange rate of $2 to each pound, but after a decade of market turmoil, this gap has reduced. As of August this year, a Brit can only expect to get $1.23 for a pound.
The stellar performance of gold, irrespective of currency, is another factor. Even in US dollars, gold prices have been elevated since 2015, so the slide in sterling is just an added bonus for prospective UK-based gold investors. Trade tensions and Brexit uncertainty weigh on the minds of investors, contributing to the solid gains seen over the past year.
Now that gold has managed to cross the £1,200 per troy ounce level, an important psychological barrier has been lifted. Once gold breaks to fresh highs, the chances of a further rally are usually greatly elevated. As prices have remained elevated but rangebound in the last eight years, investors have been attracted by the value that gold represents, but cautious about selling until fresh highs were seen again.
Now that gold has finally busted through to new highs this summer, not only are some investors starting to come round to the idea that now might be a good time to sell, but many are also of the opinion that it could be worth jumping back into gold as an investment, as it prepares to blast off to even higher levels.
One set of higher highs acts as a springboard for potentially higher prices, as it gives buyers a chance to enter the market, if there’s the slightest consolidation, before sitting back and watching as prices go higher. In turn, the higher prices allow sellers to make good on their investments.
Gold has enjoyed two major bull-runs since the end of the Bretton Woods system in the 1970s. Each bull-run lasted about a decade, from 1970 to 1980, and again between 2001 and 2011. Past performance is not indicative of future results, but it highlights the longer-term potential of the current rally in prices, beyond a month-on-month gain.
Gold coins shine
Gold coins are especially attractive investments for those keen to cash in on the gold rush of 2019. Many of the gold coins we have to offer at UK Bullion are considered legal tender in the UK, meaning that profits made from buying or selling are not counted towards the personal capital gains tax threshold of £11,100 for the current tax year.
The 2019 Gold Full Sovereign is a fitting way to mark a stellar year for gold, and a great opportunity to celebrate the Queen’s enduring legacy, as she continues to enjoy the lengthiest reign of any British monarch in history, having surpassed the reign of her great-great-grandmother, Queen Victoria.
This year’s Gold Full Sovereign is 7.998 grams of gold, struck in 22 carats, with a face value of £1. Of course, its precious metal value is significantly higher. You can acquire one for almost £300 as of early August.
Equally, if you have an interest in more historical gold coins, UK Bullion has an array of coins dating as far back as the 1870s, including the Gold Full Sovereign depicting Victoria utilising the Young Head design, a style that was minted in 22 carats between 1871 and 1887. These coins are available from UK Bullion for over £360 as of early August.
Buying gold online
When you’re looking to buy gold online, from specialists you can trust, to deliver gold bars or coins at the price you expect, UK Bullion has a wide range of gold items to consider investing in. Gold has been an asset that generations of people have used to preserve wealth. Gold has shown great price gains during times of economic and political turbulence and is known as a hedge against currency depreciation and rising inflation.
Based in the West Midlands, UK Bullion has over 20 years of experience in this market. Security is one of our top priorities for selling gold online. Our website’s SSL certificate ensures that all pages are encrypted by the time you reach any part of the site. It also ensures that no unauthorised people are able to view the private information you provide, related to any transaction you wish to make.
Delivery of gold items is done, fully insured, through Royal Mail and private insurers of ours. You can expect your gold to arrive in secure, non-descript packaging, to ensure it reaches you in perfect condition. Payment is carried out through a secure portal, so you can be happy in the knowledge that every transaction is carried out to the highest possible standard.