Is it Thought That VAT Will be Applied to Gold Sales Soon?
We are not aware of any plan to impose VAT on investment gold in the UK.
The World Gold Council
How Will Cryptocurrencies Like BitCoin Affect the Price of Gold
Gold and cryptocurrencies are fundamentally different assets that play distinct roles in an investor’s portfolio. Gold is a well-established, highly liquid asset with a proven track record for serving as a diversifier and a risk hedge while delivering long-term returns. Investors have been recently attracted to cryptocurrencies like Bitcoin due to their significant price increase, but they are also performing as highly speculative and volatile assets that involve assuming significant risk for the potential of high gains. And while investors may choose to embrace high-reward tactical assets such as Bitcoin, they still need the appropriate tools to manage the additional risk. As such, in our view, a higher exposure to cryptocurrencies warrants a higher allocation to gold.
Gold’s performance is not related to the price of bitcoin. The behaviour of gold is determined by four key drivers which in turn respond to the macroeconomic environment. These are: 1) economic growth; 2) uncertainty; 3) opportunity cost; and 4) momentum. To help investors better analyse how gold may perform under certain conditions, we developed QaurumSM, a web-based analytics tools backed by the academically validated Gold Valuation Framework and informed by quarterly scenarios provided by Oxford Economics.
The World Gold Council
What Impact do you Think the Basel 3 NSFR Implementation in June Will Have on the Gold Market and Prices?
The proposed treatment for gold under the Capital Requirements Regulation (CRRII) directive and the subsequent implementation of the Net Stable Funding Ratio (NSFR) has the potential to impact the gold market in a number of ways, some of which may be significant for market participants.
Although the impacts of the 85% Required Stable Funding (RSF) that gold attracts will not be fully realised until after its implementation, we can envisage the increased capital requirements levied on banks to hold and trade gold could potentially lead to a fall in market liquidity as well as a rise in the trading and settlement costs for both banks and investors.
The WGC has commissioned a number of academic-led studies into the market liquidity of gold, most recently covering the disruptions triggered by the COVID-19 outbreak, and in all cases our analysis indicates that gold appears to exhibit the attributes and behaviour of well-established high quality liquid assets (HQLA) such as long-term US Treasuries. Based on these findings, the WGC will continue to lobby the appropriate regulatory bodies to better position gold under NSFR and ensure it is treated in a manner that fully reflects its qualities as a highly liquid asset.
The World Gold Council
Where Does the Royal Mint get Their Gold From?
The Royal Mint purchases gold blanks from an approved list of refiners who are carefully assessed by our team. All of our suppliers are subject to thorough background checks, and must agree to our stringent policies and procedures. The Royal Mint is committed to the highest ethical standards, and will only work with precious metal suppliers who share our values, and comply with our strict criteria.
The Royal Mint
What Happened to the Blockchain Idea?
The market conditions were not right for us to launch RMG at the time.
The Royal Mint
How Secure is Your Website?
The Royal Mint takes web security extremely seriously. We have two-factor authentication in place for customers and we have never experienced a breach.
The Royal Mint
If More Gold is Mined and Increases Supply, Will That Reduce the Value of Existing Gold Stocks?
All changes in supply and demand affect the price of gold, so increasing mine supply would be a negative factor on the gold price, in the same way that any demand is a positive factor. But in general new mine production is small compared to the stock of existing gold, which grows at about 1.7% per annum. Our gold valuation tool, Qaurum, available on Goldhub.com takes account of changes in both supply and demand and I encourage you to go and have a look at it.
The World Gold Council
What are Your Views on the Longer Term Performance of Gold - say in 2031.
We do not provide long-term performance forecast for gold, but would recommend that you check out our Gold Valuation Framework tool, which https://www.gold.org/goldhub/portfolio-tools/gold-valuation-framework
This can be used to calculate the implications for demand and supply of different economic scenarios (there are 5 standard scenarios created for us by Oxford Economics, or the inputs can be completely customised), which can then calculated gold’s implied annual returns over the next 5 years, as well as the Compound Average Growth Rate over the next 3, 5, 10 and 30 years.
Additionally, you may be interested to read our 2018 report ‘Gold 2048: The next 30 years for gold’, which brought together industry-leading experts across the globe to analyse how the gold market is set to evolve over the next 30 years. Gold 2048 | Future of the Global Gold Market | World Gold Council
The World Gold Council
How do you View the Divergence Between the Spot Price of Gold vs the Actual Price Paid for Physical and the Increasing Premiums Being Paid.
The spot price for gold is for a specific bar size (12.5kg / 400oz) in one location (in one of the London vaults that is part of the OTC clearing system). Investment bars have fabrication costs, transport costs, wholesale margins and retail margins so the price for any other type of gold in any location will differ from the spot gold price. Retailers’, wholesalers’, and fabricators stocks are generally low, and fabrication capacity is finite. Increased premiums are usually a reflection of stronger demand and/or logistical issues, both of which happened in 2020. We monitor premiums in many markets to judge the strength of demand and speak to the trade about any unusual premiums to see whether this is due to demand or supply issues.
The World Gold Council
Why are the Bullion Banks Suppressing the Price of Gold and Silver.
Our analysis shows that the performance of gold last year was in line with (in fact, slightly below) the implied performance of gold calculated by our valuation model. The model is based on robust macroeconomic scenarios provided by Oxford Economics and uses demand and supply forecasts – generated by the economic scenario inputs – to calculate implied returns for gold. The results of the model – and the fact that 2020 performance was in line with what the model implied – suggests that the market reflected the underlying fundamentals and the dynamics of demand and supply.
The gold price reached a record high in August, since when it has been in a downward trend. Nevertheless, it was one of the best performing assets of 2020, returning more than 20% in Sterling terms.
In November, two major market risks – the US election and the pandemic – appeared to have subsided given a relatively smooth and bi-partisan outcome of the US election and the announcement of successful COVID vaccines. This drove risky assets like stocks to all-time highs in some countries, and the MSCI World Stock index had its best monthly performance ever, highlighting the global impact of both developments. As these two risks subsided, investors reduced hedges, and this was reflected in gold ETF outflows and higher bond yields.
Despite returning investors an impressive 25% (in US$ terms) in 2020, making it one of the year’s best performing assets, gold has had a much less sparkling start to 2021 – its worst start to a year since 2005. We believe that gold’s performance so far this year can be attributed to rising Treasury yields and a stronger US dollar (the Opportunity Cost driver I discussed in the Webinar) and negative gold price momentum (the Momentum factor that I mentioned). We also feel there has been support for the gold price from investor concerns on inflationary pressures.
For a discussion of the reasons why price has fallen so far this year, please see this recent blogpost from my colleague, Krishan Gopaul, who discusses the three factors that we think have driven gold’s performance so far this year: Gold market fundamentals supportive despite January jitters | Post by Krishan Gopaul | Gold Focus blog | World Gold Council
The World Gold Council
When Will the Premiums Come Back Down to Normal pre 2020 Levels?
Current market prices reflect the high demand and supply-chain difficulties bullion retailers are experiencing globally. From time to time The Royal Mint, like other manufacturers and retailers, must alter its pricing to reflect additional costs incurred. We keep pricing under constant review and aim to provide value to our customers.
The Royal Mint
Do you Think we Will go Back to Gold Standard?
Many people who talk about a return to the Gold Standard are critical of central bank policies, like quantitative easing, which they believe will eventually lead to high inflation and devalue their hard-earned money.
Our belief is that in the current environment, a return to the Gold Standard wouldn’t be viable, as there would need to be consensus between all significant global trading partners, and the resulting wealth redistribution would result in massive inflation in some countries and deflation in others. It would also restrict central banks’ independence in applying monetary policy tools.
In addition, global money supply would only be able to grow at the same pace as new mine production, currently about 1.7% per annum, well below global real GDP growth and thus deflationary. With long delays between discovery and production and as new gold discoveries are on the decline, mine output would be unable to increase materially in the near term.
The final major challenge is that countries could fix themselves at the “wrong” exchange rate, rendering themselves uncompetitive and leading to balance of payments issues. And like other fixed exchange rate systems, the Gold Standard would be subject to speculative attacks.
The World Gold Council
Thoughts on the Possible Negative Interest Rates in the Coming Months Being Issued by the BoE
Low interest rates were one of the factors that drove gold’s strong performance in 2020. Numerous central banks, including the US Federal Reserve and European Central Bank, have signalled greater tolerance for inflation to be temporarily above their traditional target bands, implying that there is room for interest rates to remain lower for longer.
The results of our analysis suggest that, in general, gold may see a positive, though more subdued, performance in 2021. This may be driven primarily by a recovery of consumer demand relative to 2020 as economic conditions improve. In addition, gold’s performance may be boosted further by the prolonged low interest rate environment which would all but remove the opportunity cost of investing in gold.
For a comprehensive look at our outlook on 2021, please see our 2021 Annual Outlook Gold Outlook 2021 | Gold Market Outlook | World Gold Council
The World Gold Council
Do you Have Some Comments About Silver, and Maybe Split a Portfolio Between Gold and Silver.
Silver has also performed really well over the past 12 months but generally it tends to be more volatile. This means that the price can increase or decrease more suddenly than it tends to do with gold. Silver is also, of course, much cheaper than gold so it tends to be a good option for those who are looking for more metal for their money.
The Royal Mint
Does the Production of Gold Damage the Environment?
It’s important to acknowledge that gold mining is, by its nature, an extractive industry. This means that gold mining companies have an important role to play in limiting and mitigating their potential negative impact on the environment and the climate.
There has been a lot of progress made by gold mining companies when it comes to reducing their environmental footprint including the increased use of renewable energy as well as efforts to minimise the volumes of water used at mine sites while also helping ensure that local communities have access to clean water and sanitation.
The industry is guided by a number of internationally agreed and transparent environmental frameworks designed to promote responsible operations and efficient resource use. One of these frameworks was launched by the World Gold Council in 2019, called the Responsible Gold Mining Principles (RGMPs) which includes 51 principles looking at ESG. This framework can help consumers, investors, and the downstream gold supply chain, identify what constitutes responsible gold mining. We believe that the RGMPs will become the industry standard and help increase investor and consumer confidence in responsible gold mining of which an important part is the environment including water management and climate change. All WGC Members are committed to the RGMPs. Companies implementing the RGMPs will have to obtain external assurance from a third party, independent assurance provider and in 2019 we set out a three-year timeline for full implementation.
As part of the development phase, we also looked closely at the UN SDGs targets and indicators. The RGMPs are aligned with the SDGs so when a gold mining companies implements the RGMPs by default they support the SGDs. In a recent report ‘Gold Mining’s Contribution to the UN SDGs’ we have also documented the positive contribution that gold mining makes, including to SDG 15 ‘Life on Land’. The World Gold Council and its Members have long believed that responsible gold mining can support sustained socio-economic development for the communities and countries that host gold mining operations.
The World Gold Council
What is the Likelihood of the State Confiscating any Precious Metal Stored in one of Your Vaults?
This has never happened in UK history.
The Royal Mint
Please Advise What Payment Options are Available?
To prevent issues such as fraud, The Royal Mint permits payment via debit card and bank transfer only.
The Royal Mint
Are There Tours of the Royal Mint?
Yes there are. Unfortunately, The Royal Mint visitor attraction is currently closed due to COVID-19 but more information can be found here: https://www.royalmint.com/the-royal-mint-experience/
The Royal Mint
Do you Have any Cryptocurrency Coins That are Backed by Gold?
No, we do not.
The Royal Mint
Is There any way That Gold may be Purchased Even When not in Stock and Then Delivered When the Stock Returns.
Unfortunately, we are unable to sell through products that we do not have in-stock. This is due to our pricing being so closely linked to the live gold price.
The Royal Mint
Will you Ever Offer Other Digital Metals Such as Palladium or Rhodium?
At The Royal Mint we are continuously developing our product roadmap. We have no short term plans to introduce different metals to or digital provision but we will continue to review customer demand for it.
The Royal Mint
Is Digital Gold Linked to the Physical Metal?
All of our digital gold, silver and platinum is backed by real, physical bullion bars which are fully allocated, insured and stored safely within our vault. A person who owns 'digital' holdings with The Royal Mint, legally owns the equivalent portion of the physical metal that is stored within the vault.
The Royal Mint
Which Pension Companies in the UK Have you Worked With to Invest in Gold Pension Allocation.
We currently work with; @sipp limited, AJ Bell Management Ltd, Alltrust Services Ltd, BW SIPP LLP, Carey Pensions UK LLP, Corporate & Professional Pensions Ltd, Dentons Pension Management Ltd, DP Pensions Ltd, Intelligent Money Ltd, Investacc Pensions Trustees Ltd, I.P.M SIPP Administration Ltd, The James Hay Partnership, JLT Benefit Solutions Ltd, Killick and Co Trustees Ltd, Mattioli Woods PLC, Organnon SIPP Services Ltd, Rowanmoor Personal Pensions Ltd, Talbot and Muir SIPP Ltd, Westerby Truste Services Ltd, Walker Crisps Group PLC, Xaffinity SIPP Services Ltd.
The Royal Mint
Is DigiGold Backed by ''Portions'' of Gold?
All of our digital gold, silver and platinum is backed by real, physical bullion bars which are fully allocated, insured and stored safely within our vault. A person who owns 'digital'holdings with The Royal Mint, legally owns the equivalent 'portion' of the physical metal that is stored within the vault.
The Royal Mint
Isn't There a Risk to Keep Gold Digitally? Is it Possible to Convert Digital Gold Into Hard Gold Coins/Bullion to Receive at Home?
All of our digital gold is backed by real, physical gold which is fully allocated, insured and stored safely within our vault. All digital purchases can be redeemed for physical bullion by selling back the digital holdings and purchasing coins and bars via the precious metals wallet.
The Royal Mint
We’ve Spoken About Gold Today but What is the Difference Between Gold and Silver?
Silver has also performed really well over the past 12 months but generally it tends to be more volatile. This means that the price can increase or decrease more suddenly than it tends to do with gold. Silver is also, of course, much cheaper than gold so it is often popular with those who are looking for more metal for their money.
The Royal Mint
Why do you Charge VAT on Digital Silver?
We have been advised by HMRC that digital silver is standard rated. As a general principle, all goods are standard rated unless there is legislation to say that they can be treated as exempt or zero rated.
The Royal Mint
Please Talk About Capital Gains Tax and Which Products are Free of it
Under current legislation, UK legal tender coins are not counted as assets for Capital Gains Tax purposes. This is specified in of HM Revenue & Customs’ Capital Gains Tax Manual (TCGA92/S21 (1)(b); Currency in sterling is not an asset for capital gains purposes. It is the unit by reference to which capital gains are measured.) HM Revenue & Customs also state in section CG78305 of the Capital Gains Tax Manual that; Coins are to be regarded as currency only if they are legal tender at the time of their acquisition or disposal. Coins which are currency but not sterling, for example Krugerrands, are chargeable assets.
Sovereigns minted in 1837 and later years and Britannia gold coins are currency but, like all sterling currency, are exempt because of TCGA92/S21 (1)(b). Coins (including pre- 1837 sovereigns) which are not legal tender are not currency. They are chattels and qualify for the chattels exemption in TCGA92/S262. A gain on such a coin is therefore exempt if the disposal consideration does not exceed the limit in CG76573. You should bear in mind the possibility that the disposal of more than one coin may constitute the disposal of a `set’, see CG76631+.
The chattels exemption does not apply to coins which are non-sterling currency, TCGA92/S262 (6)(b).All UK gold, silver and platinum coins sold by The Royal Mint have legal tender status, and are therefore exempt from Capital Gains Tax in the UK.
This includes all Britannia, Sovereign (post 1837), Queen’s Beasts, Valiant, Royal Arms, Lunar, Two Dragons, Landmarks of Britain, and Music Legends coins, in all alloys, issued by The Royal Mint.
As bullion bars and DigiGold (which is backed by large bars stored in our vault), do not have legal tender status in the UK, these products are usually counted as chargeable assets for Capital Gains Tax purposes.
The above information is for general information only, you may wish to speak to an independent tax advisor to provide advice specific to your circumstances.
The Royal Mint
With the Bullion Coins, There's a Legal Tender Face Value, Does That Affect the Price of the Coin Even Though it is Made From 999.9 Gold?
The face values we give bullion coins is decided by convention and usually has little to no bearing on the value of a bullion coin in the open market.
For example, the content of a 1oz gold bullion coin (currently around £1,278 of gold) is usually worth significantly more than the face value of the coin (£100).
Most retailers, investors and collectors value the coin based on its metal content or attractiveness as a collector/investor item, rather than the face value.
As The Royal Mint’s bullion coins are legal tender in the UK, they can technically be used at face value to settle debts in court, however they are not designed to be used in general circulation.
UK shops and banks are unlikely to accept these coins as payment based on their face value, but as stated above, the market value of the metal content is usually significantly higher than the face value.
The Royal Mint
Why Does Silver Attract VAT When Delivered?
Most items we buy in the UK are subject to VAT and there usually has to be a good reason for the government to specifically exempt a sale from VAT.
Silver attracts VAT as there is no specific VAT exemption for silver bullion in the UK.
This is also the case across the EU and in many other countries globally.
The Royal Mint
Why gold is VAT free but silver not?
Most items we buy in the UK are subject to VAT and there usually has to be a good reason for the government to specifically exempt a sale from VAT.
Before 1 January 2000 gold sales in the UK were subject to VAT. This changed because of the disparity between rules in the European Union. For example, some countries in the EU didn’t charge VAT on gold at all or charged it at a very low rate. This meant that the UK was at a disadvantage compared with other EU member states. The introduction of the exemption (following European Council Directive 1998/80/EC) meant that for VAT purposes, gold would be treated the same as other investments, such as stocks and shares.Investment gold is exempt from VAT provided it meets one or more the following criteria;
(a) 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
(b) a gold coin minted after 1800 that is:
of a purity of not less than 900 thousandths
or has been, legal tender in its country of origin
of a description of coin that is normally sold at a price that does not exceed 180 per cent of the open market value of the gold contained in the coin
(c) an investment gold coin as specified in Investment gold coins (VAT Notice 701/21A).
However, as there is no specific exemption for silver or platinum, sales of silver or platinum bars or coins attract VAT in the UK.
This is also the case across the EU and in many other countries globally.
The above is for general information only, you may wish to speak to an independent tax advisor to provide advice specific to your circumstances.3
The Royal Mint
What's the Difference Between "Cast" and "Minted" Gold Bars
Cast bars are more natural in appearance and often just bear a stamp or logo. Minted bars are manufactured more intricately and have a smoother finish. Minted bars also tend to come in tamper-proof packaging.
The Royal Mint
Can I buy Britannias Over the Counter Anywhere?
Yes. As well as buying directly from The Royal Mint website (royalmint.com/invest) they are also available to purchase from the Jewellery Quarter in Birmingham and Hatton Garden in London, amongst other places.
The Royal Mint
Can you Tell us More About the new Version of the Gold bar you Talked About?
We have many exciting new bars coming out soon- one is launching on Monday (1st March) please sign up to our emails to be kept in the loop
The Royal Mint
