The Royal Mint has reported a spike in its sales of precious metals in the year ending 31 March. But I prefer to buy gold, silver, and platinum through a Stocks and Shares ISA.
It’s no surprise some investors are increasingly looking to park their savings in precious metals. In 2022, the pound has tumbled against the dollar and global stock markets have tanked.
As well as producing the UK’s currency, the Royal Mint – a limited company – sells gold, silver, and platinum to private investors. The business reported last week that sales were up 30% in 2021/22.
Precious metals are non-interest paying and can see volatile swings in their prices, but I believe gold, silver, and platinum have a place in my portfolio.
At the end of the rainbow…
Historically, gold, silver, and platinum prices have moved in ways that aren’t correlated with equities. Therefore, by having them in my portfolio, I hope to hedge against market panics and stock market collapses. That’s key now as I see the storm clouds of recession gathering.
I wouldn’t buy precious metals through the Royal Mint though.
Instead I’ve invested in WisdomTree Physical Platinum (LSE: PHPT). For gold and silver, I’d also consider adding WisdomTree Physical Gold (LSE: BULP) and WisdomTree Physical Silver (LSE: PHAG).
Gold and silver actually benefit from a huge number of competing funds. However, I prefer WisdomTree as it offers a rock-bottom average expense ratio of 0.45%. And for investing in platinum, I haven’t found any alternative to WisdomTree on the London Stock Exchange.
Why not the Royal Mint?
The Royal Mint offers a range of coins and bars. Although I’m drawn in by their enchanting, lustrous designs, I have to pass.
I want exposure to precious metals as an asset class. While there’s a collectible value to limited edition coins and bars, I’d prefer not to get bogged down there. That seems about as speculative as trading Beanie Babies.
And, unlike Scrooge McDuck, I don’t have a vault in my home where I can hoard my stash.
For me, investing in precious metal funds like WisdomTree’s is a far better alternative.
All that glitters is not gold…
Royal Mint does offer a completely online service for unromantic, practical-minded gold bugs like me: DigiGold. So, why do I prefer investing in WisdomTree funds?
DigiGold is a platform that allows investors to buy a stake in gold, silver, and platinum stored at the Royal Mint.
However, in the small print it says: “The Royal Mint is required by law to charge VAT at 20% on purchases of Digital Silver and Digital Platinum. This is passed to HM Revenue & Customs and is not refundable upon sale.”
Gold, at least, doesn’t attract VAT. However, when I come to sell it, I’ll have to pay a 1% fee and capital gains tax.
A golden solution
Through a Stocks and Shares ISA, I’m guaranteed never to pay capital gains tax.
In addition, I can invest in platinum and silver funds, like those offered by WisdomTree, without burning 20% of my money upfront on VAT.
They say death and taxes are the only certainties in life, and so far, no one has found the golden elixir for immortality.
But through a Stocks and Shares ISA, I can at least keep the taxman away from my precious metal investments!
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.