Worth its weight in gold
As the value of gold shoots up, is it worth raiding your jewellery box, asks Paul Lewis
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Gold rose above $5,000 a Troy ounce (31.1g) for the first time in January. Always volatile, its recent gains are exceptional. When I first wrote about gold in RT in 2018, a 1kg bar cost around £31,000. Today that has nearly quadrupled to more than £122,000. But if you had bought one then and sold it now you would not make £91,000! First, the buy-back price will be £6,000 less. Then there would be Capital Gains Tax (CGT) to pay – at least £14,760 and up to £23,800 depending on your income tax rate and any other deals you had done this tax year. And over those eight years you may have paid at least £2,000 for a safe deposit box.
Still, you might think, a tidy profit if only you had a time machine! But the price of gold goes down as well as up. Also, the market prices it in US dollars, so what you get in pounds depends on the exchange rate as well. If you bought a lighter bar, the price per gram rises the smaller it gets.
If you have gold jewellery and wonder about cashing in on the high gold price, you may be disappointed. Most gold jewellery is 9-carat, which contains just 37.5% gold, alloyed with silver, copper or zinc. Even a wedding ring is likely to be only 75% gold – 18ct – though older ones are often 22ct, nearly 92% gold. There is always a hefty retail mark-up on jewellery and, unlike gold bars, VAT is added to the total. So the price you can sell it for is generally much lower than people expect.
There is no VAT on coins. A gold sovereign, about the size of a £1 piece and nominally worth just £1, now costs more than £900. The Royal Mint is a safe – but not the cheapest – place to buy them. A 2026 Charles III sovereign from the Mint, as I write, is £945, but I’ve seen them at £922 and slightly less for older ones. If you sell a sovereign, there is no CGT on the profit as they’re legal tender. I’m still waiting for one in my change!
Prices approximate and correct at the time of writing at the end of January.
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