Investors scramble to acquire gold bullion as prices surge in anticipation of potential Capital Gains Tax adjustments
Record Demand for Gold Coins in the UK
In the third quarter of 2024, the demand for gold coins in the UK has surged to unprecedented levels, with sales of Capital Gains Tax (CGT)-exempt bullion coins hitting a record high. This surge is primarily driven by a 110% increase in sales of these CGT-exempt coins and growing investor interest in gold as a tax-advantaged asset.
According to The Royal Mint, revenues from bullion coin sales increased by an impressive 110% in Q3 2024. This surge aligns with the broader context of record-high global gold prices and investment demand, which rose 5% year-on-year in Q3 2024 to a record 1,313 tonnes, fueled by strong ETF inflows and central bank buying globally.
Key factors contributing to this surge include the CGT exemption on certain UK bullion coins, making them attractive for investors seeking tax efficiency. The UK currency environment and economic uncertainties have also promoted gold's appeal as a safe haven and store of value. Rising global gold prices and investment demand have motivated UK investors to diversify portfolios into physical gold coins rather than other asset classes.
Strong inflows into gold ETFs and general investment demand growth illustrate heightened interest in gold as a financial asset during uncertain macroeconomic conditions. Ongoing geopolitical uncertainty, global volatility, and falling interest rates have also contributed to gold prices rising in the third quarter.
Investors are increasingly keen to protect their future investment gains, favoring CGT-exempt investments over products subject to CGT. As a result, sales of CGT-exempt bullion coins have surged, while sales of bullion bars, which are subject to Capital Gains Tax, have fallen year-on-year.
Moreover, The Royal Mint's Buy Back Service has seen more activity, reflecting a proactive approach to market monitoring and strategic portfolio adjustments. Revenues from silver and gold coin sales rose by 42% and 118% respectively, compared to the same period in 2023. Selling of bullion bars and DigiGold to The Royal Mint resulted in revenues going up 86% and 91% respectively.
Investing in gold is a popular choice, especially during times of uncertainty. With gold prices hitting a record high of £2,060 per ounce on 16 October, it's no wonder that 44% of UK investors are considering investing in CGT-exempt bullion coins to boost wealth and reduce their tax bill. UK investors are increasingly favoring CGT-exempt products, such as bullion coins, as a safe and tax-efficient way to invest in gold.
- Investors, seeking tax efficiency and attracted by the CGT exemption on certain UK bullion coins, are increasingly choosing bullion coins as a tax-advantaged asset for investment.
- The increase in demand for gold coins in the UK has been fueled, in part, by a growing interest in technology-driven personal-finance products like gold Exchange Traded Funds (ETFs).
- In the third quarter of 2024, the rise in global interest rates has led investors to reconsider investments in gold, favoring wealth-management strategies that prioritize alternative assets like gold over traditional ones.
- Amidst economic uncertainties, technology has played a crucial role in enhancing access to finance for individual investors in the UK, enabling them to make informed decisions when investing in gold coins or other financial assets.
