Gold and silver coin sales surge as investors bet on capital gains tax hike

The Royal Mint's sales figures are for purchases by the general public through its website, for which 90% of customers are based in the UK.

Sales of gold coins that are exempt from UK capital gains tax (CGT) soared in the second quarter, driven by several factors including the prospect of higher levies on bullion profits and a broader shift in demand away from gold bars, according to The Royal Mint and precious metals dealers.

“Our largest ever — multi-millions — single purchase of CGT-exempt coins by an individual occurred in late May this year,” said Chris O’Reilly, The Royal Mint’s head of precious metals sales.

There was a general swing in the online sales away from gold bars last quarter, he added, with the split between them and gold coins going from 50/50 to closer to two-thirds in favor of the latter in terms of money spent.

“We’ve seen a real uplift in the demand for CGT-exempt coins, which is continuing into Q3,” O’Reilly said.

The coins are struck by The Royal Mint and carry a legal tender face value, but they are sold at a premium to the spot price of gold and are not intended to be used as currency. They are exempt from CGT if they are held for at least three years, making them a popular way for investors to buy physical gold.

The prospect of a capital gains hike by Labour adds to the coins’ appeal, but it’s one of many potential drivers for the Mint’s increased sales. Recent reductions in the threshold at which the tax is due may play a part. Buyers are also making a bullish bet on the future spot price of gold, which hit an all-time high earlier this week. Geopolitical uncertainty also favors the precious metal as a haven asset.

The Royal Mint’s sales figures are for purchases by the general public through its website, for which 90% of customers are based in the UK. Bars and coins sold to wholesalers and retailers in the UK and worldwide are excluded from the data.

At least one other precious metals dealer saw a similar trend. Between June 1 and the July election, Merrion Gold’s UK sales of Royal Mint CGT-exempt gold and silver coins almost tripled from a year earlier, reaching £1 million ($1.3m), according to the firm’s head of trading, David Higgins.

“This was largely driven by strong demand for The Royal Mint’s Britannia and Sovereign coins, which saw a 180% increase in sales compared to the same period last year,” he added.

Others still might be considering purchases too.

We have “noted a large increase in traffic to our CGT-related information pages and many more enquiries about CGT from customers,” managing director of Jewellery Quarter Bullion Ltd, Pete Walden, recently said by email.

“Clearly there are many people concerned who are starting to consider their options.”

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