Understand how to buy, store and sell gold, silver and other precious metals — including pricing, fees, tax and platform differences.
Written by precious metals experts to help you understand the key decisions, costs and trade-offs — so you can invest wisely.
Disclaimer
This guide is provided for informational purposes only and does not constitute financial, investment or tax advice.
The information reflects general market practices and our assessment of the sector, which may not apply to all providers or individual circumstances.
The value of precious metals can go down as well as up, and you should ensure any investment is appropriate for your individual circumstances. Where appropriate, you should seek independent professional advice before making any investment decisions.
Introduction
Precious metals have long played a role in how investors protect and grow wealth, and today they remain a widely used asset class alongside equities, bonds and cash.
However, the way investors access and invest in physical precious metals has evolved. There are now multiple formats, platforms and pricing models — each with different costs, levels of flexibility and trade-offs.
This guide is designed to help you navigate those choices. It takes an unbiased, practical approach, focusing on the key factors that matter when deciding how to invest, what to buy and where to do it.
Key Points – The Main Things to Know
Want to skip the detail? Here are the key points you need to know when investing in physical precious metals:
- Precious metals benefit from scarcity, strong returns, diversification and liquidity
- Gold has delivered ~8–9% annualised returns since 1971 and ~150% growth since 2019
- Investors can choose between physical metals and derivatives, with different ownership and risk profiles
- Larger bars benefit from lower premiums, while smaller products carry higher mark-ups and costs
- Large bars are more cost-efficient but typically require whole-unit buying and selling
- Coins can offer UK tax advantages but typically come with higher upfront premiums
- Fractional ownership provides access to large-bar pricing with the ability to trade in smaller amounts
- Platform type significantly impacts pricing, liquidity and execution
- The true cost of investing is driven by spreads and markups, not just the spot price
- Prices are built in layers, with multiple parties adding cost before reaching the individual investor
- Taking physical delivery introduces additional costs and can reduce sell-back efficiency
- VAT and CGT treatment varies by metal, format and how the metal is acquired
- Sell-back pricing is typically below spot and depends on format, platform and condition of the product
- Security depends on both safeguarded funds and how your metals are stored and owned
1. Why Invest in Gold & Precious Metals
Overview
Precious metals are a unique asset class, offering a range of strategic benefits that can help investors protect and grow their wealth.
They combine scarcity, global demand, liquidity and diversification benefits, making them widely used in portfolios alongside equities, bonds and cash.
Within this category, gold is the primary investment metal. While silver, platinum and palladium are also traded, their prices are more influenced by industrial demand. Gold, by contrast, is predominantly driven by investment and financial demand, which underpins its role as a core portfolio asset and reserve.
Why Gold
Gold has a distinct set of characteristics that make it the most widely held and recognised precious metal for investment:
• Scarcity
Gold is finite, with ~80%+ of all gold already mined and annual supply growth typically below ~2%
• Strong returns
Gold has delivered approximately ~8–9% annualised returns since 1971 and ~150% growth since 2019 to 2025
• Diversification
Gold often behaves differently to equities and bonds, particularly during periods of market stress
• Liquidity
The gold market is large, global and highly liquid, with an estimated market size of ~$10tn+ and daily trading volumes of ~$300bn+
• Global demand
Demand comes from investors, central banks, jewellery and technology
2. Physical Gold vs ETFs, ETCs & Other Derivatives
Overview
Investors can gain exposure to precious metals in two main ways: physical ownership or through derivative products.
While both track the price of metals, they differ significantly in terms of ownership, risk, costs and how they are operate.
Physical Precious Metals
Physical investing means owning real metal.
• You own allocated or pooled physical metal
• It is typically stored in vaults or held directly
• Value is directly linked to the underlying metal
• There is no reliance on financial counterparties for price exposure
Physical ownership is commonly used by investors seeking direct exposure and long-term holding.
Derivative Products (ETCs, ETFs & Tokens)
Derivative products provide exposure to metal prices without direct ownership of the physical metal.
• Traded as financial instruments
• May be backed by metal, derivatives or a combination
• Exposure is typically via a claim or structure, not direct ownership
• Includes exchange-traded products and digital tokens
These products are often used for trading, liquidity and portfolio allocation.
Key Differences
| Feature | Physical Metals | Derivatives (ETCs, ETFs, Tokens) |
|---|---|---|
| Ownership | Direct (allocated or pooled) | Indirect (financial instrument) |
| Backing | Physical metal | Varies (physical, synthetic or mixed) |
| Counterparty Risk | Low (depends on custody structure) | Present (issuer / structure dependent) |
| Liquidity | Medium–High (platform dependent) | High |
| Costs | Spreads, Premiums, Storage fees | Spreads, Trading fees, Management fees |
| Use Case | Long-term holding, wealth protection, portfolio exposure | Trading, portfolio exposure |
Counterparty Risk
A key difference is counterparty risk — the risk that a financial institution or structure fails.
• Physical metals (allocated) = ownership of underlying assets
• Derivatives = reliance on issuer, custodian or structure
This distinction becomes more relevant in periods of market stress.
Why This Matters
Both approaches provide exposure to metal prices, but they serve different purposes.
• Physical metals focus on ownership and asset security
• Derivatives focus on access, liquidity and convenience
The right approach depends on your objectives, risk tolerance and investment horizon.
Key Takeaway
Physical precious metals provide direct ownership of real assets, while derivatives provide price exposure through financial structures. Understanding this difference is key when deciding how to invest.
3. Where and How to Buy Physical Precious Metals
Overview
There are three main ways investors access physical precious metals: bullion dealers, marketplaces and trading platforms.
Each operates differently and can have a significant impact on pricing, fees, liquidity and overall experience.
Understanding these differences is important, as the platform you choose directly affects both the cost of investing and how easily you can buy and sell.
Bullion Dealers
Bullion dealers are traditional retailers that sell coins and bars directly to customers.
They typically operate an inventory-led model, where prices are set by the dealer rather than the live market.
Key characteristics:
• Higher premiums, particularly on smaller products
• Wider buy/sell spreads
• Limited or no trading functionality
• Often focused on physical delivery
Marketplaces
Marketplaces connect buyers and sellers of vaulted precious metals.
Prices are influenced by activity on the platform rather than direct access to institutional liquidity.
Key characteristics:
• Pricing closer to spot than dealers, typically
• Dependent on platform liquidity
• Variable spreads based on supply and demand
• Vaulted ownership model
Trading Platforms
Trading platforms connect directly to institutional markets and liquidity providers.
Prices are derived from live market data, enabling continuous trading and tighter spreads.
Key characteristics:
• Pricing closest to spot
• Tight buy/sell spreads
• High liquidity
• Fractional trading and advanced order types
Platform Comparison
| Feature | Bullion Dealers | Marketplaces | Trading Platforms |
|---|---|---|---|
| Formats | Whole coins & bars | Fractional / vaulted bars | Fractional / vaulted bars |
| Pricing Source | Refiner / dealer-set | User-driven | Market-driven |
| Price Spread | Wide | Medium | Tight |
| Buy/Sell Fees | High (especially small units) | Low to medium | Low |
| Liquidity | Low | Medium | High |
| Trading Features | No or limited | Limited | Yes |
| Safeguarded Funds | Typically not, due to e-commerce model | Platform dependent | Typically safeguarded via regulated partners |
| Storage | Physical delivery or optional vault or buyer’s safe | Vaulted | Vaulted |
Comparison Note
The comparisons shown are based on typical market practices and operating models. Features, pricing and performance may vary between providers.
Chart / Image Suggestion
Add a simple platform model diagram:
• Dealer = multiple intermediaries
• Marketplace = buyer/seller matching
• Trading platform = direct liquidity access
4. Coins vs Bars vs Fractional: Which Format to Buy
Overview
Precious metals can be purchased in different formats, most commonly coins, bars and fractional ownership. Each format has different characteristics in terms of cost, flexibility, liquidity and tax treatment.
Understanding these differences is important, as the format you choose has a direct impact on both how much you pay and how easily you can buy and sell.
Coins
Coins are widely recognised and often produced by government mints.
They are popular with retail investors, particularly in the UK where certain coins benefit from favourable tax treatment.
Key characteristics:
• Higher premiums compared to bars
• Widely recognised and easy to buy
• Eligible for CGT exemption for UK legal tender coins
• Typically require whole-unit buying
Bars
Bars are the most common format in institutional markets and are available in a range of sizes.
Larger bars benefit from lower premiums, making them more cost-efficient for larger investments.
Key characteristics:
• Lower premiums, especially for larger bars
• Standardised and widely used in global markets
• More cost-efficient at scale
• Typically require whole-unit buying and selling
Fractional
Fractional ownership allows investors to buy and sell smaller portions of large, investment-grade bars. This combines the pricing efficiency of large bars with greater flexibility.
Key characteristics:
• Access to large-bar pricing
• Lowest buy/sell spreads
• Ability to trade smaller amounts
• Typically held in vaults, allocated or pooled form
Format Comparison
| Feature | Coins | Bars | Fractional |
|---|---|---|---|
| Typical Fee / Premium | High (~6–10%+) | Medium (3–5%+) | Low (~0.5–1%) |
| Entry Cost | High | Medium–High | Low |
| Flexibility | Low | Medium | High |
| Trading Efficiency | Low | Medium | High |
| Liquidity | Medium | Medium–High | High |
| Tax (UK) | CGT-free (eligible coins) | CGT applicable | CGT applicable |
| VAT (Gold) | VAT-free | VAT-free | VAT-free |
| VAT (Silver, Platinum & Palladium) | VAT applies on delivery | VAT applies on delivery | Not applicable unless delivered |
In the UK, investment gold is VAT-free, while silver, platinum and palladium are subject to VAT when physically delivered. Metals held within qualifying bonded warehouse structures typically do not incur VAT unless taken into physical possession.
5. Gold Prices Explained: Spot Price, Spreads and How Pricing Works
Overview
Precious metals are traded in global markets, with benchmark prices changing continuously based on supply and demand. However, the price investors actually buy or sell at is often different from the underlying market price.
This is because providers typically add their own spread or markup to the underlying price, and may also charge separate fees. The more parties involved, the more layers of cost are usually built into the final price.
AM/PM Fix (Benchmark Price)
The AM and PM Fix are benchmark prices set twice daily in London. They are widely used across the industry for valuation, reporting and settlement.
• Provide a standard reference price
• Used by institutions, funds and dealers
• Not typically the price you transact at
Spot Price (Live Market Price)
The spot price is the real-time market price of a precious metal, determined by global trading activity.
• Continuously updated during market hours
• Reflects live supply and demand
• Used as the base price for trading
Most modern platforms use live spot pricing, allowing investors to trade continuously rather than relying on fixed benchmarks.
Spreads (The Real Cost)
In practice, investors trade at prices above or below the spot prices. This difference is often referred to as the spread, but in many retail models it is effectively a markup added to the underlying price.
- • Buy price = spot price (ask) plus a spread / markup
• Sell price = spot price (bid) minus a spread
This means the spread represents a real cost to the investor.
How Prices Are Built
The final price you see is typically made up of multiple layers:
Institutional price (spot) + Refinery / wholesale spread + Dealer or platform spread
= Metal price quoted
Then:
Fees, if applicable = Total cost of investing
The more parties involved in the supply chain, the more layers of spread are typically added.
Why This Varies by Platform
Different platforms access pricing in different ways:
• Bullion dealers = multiple intermediaries, higher cumulative spreads
• Marketplaces = dependent on platform liquidity, variable spreads
• Trading platforms = direct institutional market access, tighter spreads
This is why the same metal can have different prices across providers.
Hidden Costs
Spreads are often not explicitly disclosed and can be harder to compare than visible fees. As a result, two providers may show similar fees but offer very different buy and sell prices.
Diagram / Image Suggestion
Add a simple pricing stack diagram:
Institutional Price (Spot)
- Refinery Spread/ Mark-up
- Dealer / Platform Spread
= Metal Price Quoted - Fees
= Total Cost
6. Fees Explained: Premiums, Spreads and the True Cost of Investing
Overview
Fees are one of the most visible costs when investing in precious metals, but they are only one part of the overall cost. In practice, investors pay a combination of spreads, built into the price, and fees, charged separately.
Understanding both is important, as focusing only on fees can lead to underestimating the true cost of investing.
Premiums
A premium is the additional cost added to the product cost (i.e. metal content value) when buying physical products such as coins or bars.
• Typically expressed as a percentage above the metal content value (product cost) priced at spot
• Varies significantly by product type and size
• Higher for smaller units due to manufacturing and distribution costs – i.e. premiums
Typical ranges:
• Coins: ~6–10%+
• Small bars: ~10–25%
• Large bars: ~3–5%
Premiums are a major driver of cost, particularly for retail investors buying smaller products.
Buy/Sell Fees
Some platforms charge explicit fees when you trade.
• Charged when you buy and/or sell
• Typically expressed as a percentage of transaction value
• More common on trading platforms
These fees are usually transparent and easy to compare.
Vaulted Storage
If metals are held in a vault, a storage fee is typically charged.
• Usually expressed as an annual percentage rate of stored value
• Covers custody, insurance and administration
• Common for vaulted and fractional ownership models
Vaulted storage provides security and convenience but comes with an ongoing cost.
Home Storage
If metals are stored at home, there are typically no ongoing storage fees, but other costs and risks apply.
• Purchase of a safe or secure storage solution
• Potential need to upgrade cover or extend insurance policies
• Responsibility for security and safekeeping
These costs are often overlooked and can vary depending on the level of protection required.
Delivery Costs
If you choose to take physical possession of your metals, additional costs apply.
• Delivery and insurance charges
• Potential handling or fabrication costs
• VAT implications for certain metals
These costs can be significant and are often not recoverable when selling.
The Combined Cost
The total cost of investing is made up of multiple components:
• Spread built into the metal price
o Premiums / markups, on physical products
o Transaction Fees for buy/sell if applicable
o Storage, vaulted or home-related costs
o Delivery, if taking physical possession
Different platforms and formats combine these costs in different ways.
Why This Varies by Format and Platform
Costs vary significantly depending on how and where you invest:
• Coins → high premiums, potential tax advantages
• Bars → lower premiums at scale, less flexibility
• Fractional → low spreads and fees, more efficient pricing
• Bullion dealers → higher embedded spreads and premiums
• Trading platforms → lower spreads, clearer fee structures
This is why two investments in the same metal can have very different total costs.
7. Physical Delivery vs Vaulted Storage: Which Is Better?
Overview
When investing in physical precious metals, you need to decide whether to take delivery or store your metals in a vault. This choice has a direct impact on cost, security, flexibility and how easily you can sell.
Both approaches have advantages and trade-offs, and the right option depends on how you intend to use and manage your investment.
Physical Delivery
Physical delivery means taking possession of the metal and storing it yourself.
• You hold the metal directly
• Full control over storage and access
• No ongoing vault storage fees
However, there are important considerations:
• Responsibility for security and safekeeping
• Potential need for home storage solutions, such as safes
• Insurance requirements and associated costs
• Delivery fees and logistics
• VAT may apply for silver, platinum and palladium
Once delivered, the metal typically needs to be re-verified, for example assay tested, when selling, which can reduce the price you receive.
Vaulted Storage
Vaulted storage means your metals are stored in secure, professional vaults on your behalf.
• Stored in insured, specialist facilities
• Typically allocated to you or held within a defined custody structure
• Managed custody and administration
• Easier and faster to sell
Key considerations:
• Ongoing storage fees
• Access is indirect, as you do not hold the metal physically
• Delivery can usually be requested if needed
Vaulted storage is commonly used in institutional markets and by modern trading platforms.
Key Differences
| Feature | Physical Delivery | Vaulted Storage |
|---|---|---|
| Control | Full physical control | Held on your behalf |
| Security | Self-managed | Professionally managed |
| Storage Costs | No ongoing fee, but setup costs | Typically an ongoing annual fee |
| Insurance | Self-arranged | Typically included |
| Liquidity | Lower, with more steps to sell | Higher, easier to trade |
| Sell-back | May require verification | Typically immediate |
| VAT (Non-Gold) | Applies on delivery | Not applicable unless delivered |
The decision between delivery and vaulting affects both cost and flexibility.
• Delivery can increase costs and reduce ease of selling
• Vaulting improves liquidity and convenience but introduces ongoing fees
Many investors choose vaulted storage for efficiency, particularly when trading, while delivery is often used for long-term holding or personal possession.
Key Takeaway
Taking delivery gives you direct control of your metals, but introduces additional costs and complexity. Vaulted storage offers greater efficiency, security and ease of trading.
8. Gold Tax UK: VAT and Capital Gains Tax Explained
Overview
Tax treatment is an important factor when investing in precious metals in the UK, as it can have a direct impact on overall returns.
The two main taxes to consider are Value Added Tax (VAT) and Capital Gains Tax (CGT).
These vary depending on the metal, the format, and importantly, how the metal is acquired and held.
Tax Comparison
| Feature | Gold | Silver, Platinum & Palladium |
|---|---|---|
| VAT (Delivered) | VAT-free | VAT applies at standard UK rate |
| VAT (Bonded / Vaulted) | VAT-free | Not applicable if held within a qualifying bonded warehouse regime |
| CGT (Coins) | Typically CGT-free, UK legal tender | Typically CGT-free, if legal tender |
| CGT (Bars / Fractional) | CGT applicable | CGT applicable |
VAT (Value Added Tax)
VAT applies differently depending on both the type of metal and how it is purchased and stored.
Gold (investment grade)
• VAT-free in the UK
• Applies to qualifying coins and bars
Silver, Platinum & Palladium
• VAT applies at the standard UK rate when purchased and delivered through retail channels
• This significantly increases the upfront cost
Bonded / Vaulted Metals
• For silver, platinum and palladium, VAT is not charged when metals are acquired within a qualifying bonded warehouse regime
• VAT is only triggered if the metal is removed and physically delivered
Retail Purchase vs Bonded Purchase
• Metals purchased from mints or dealers typically include VAT at the point of sale
• Moving these metals into storage afterwards does not remove or defer VAT
This means VAT efficiency depends on how the metal is acquired, not just where it is stored.
CGT (Capital Gains Tax)
CGT may apply when you sell precious metals at a profit.
UK legal tender coins (e.g. certain gold and silver coins)
• Typically CGT-exempt
• Due to their status as legal currency
Bars and non-qualifying products
• Subject to CGT on gains above the annual allowance
Fractional ownership
• Typically treated the same as bars for CGT purposes
Investors should consider both the potential tax liability and the upfront cost when choosing between formats.
Key Considerations
• Gold benefits from VAT exemption, making it the most efficient metal to purchase
• Non-gold metals can incur significant VAT costs if bought through retail channels
• Bonded warehouse structures can defer VAT until delivery
• CGT treatment varies by format, particularly between coins and bars
• Tax efficiency should be considered alongside pricing, liquidity and flexibility
Important Note
Tax rules are subject to change and may vary depending on individual circumstances. This section provides a general overview of UK tax treatment and should not be considered tax advice.
Key Takeaway
Tax treatment can materially impact returns. Gold is typically the most tax-efficient metal in the UK due to its VAT exemption, while bonded storage can improve efficiency for other metals. However, these benefits depend on how the metal is purchased and held, and should be considered alongside overall costs and flexibility.
9. Selling Gold & Precious Metals: Prices, Spreads and What to Expect
Overview
Selling precious metals is often overlooked, but it is a critical part of the investment journey. The ease, speed and price at which you can sell will directly impact your overall returns.
In practice, selling conditions vary significantly depending on the format and platform used.
Sell Price vs Spot
When selling, you will typically receive a price below the spot price.
• The sell price reflects the bid price in the market
• This includes a spread or discount applied by the buyer
• The difference between buy and sell prices represents a real cost
Wider spreads mean you receive less when exiting your position.
Sell-back by Format
Coins
• Widely recognised but often sold back at a discount
• Premiums paid on purchase are rarely fully recovered
Bars
• Generally more efficient than coins
• Larger bars may require whole-unit selling
Fractional
• Typically offers tighter spreads
• Allows partial selling without liquidating the full position
Delivery Impact
Taking physical delivery introduces additional steps when selling.
• Metal may need to be verified or assay tested
• Buyers may apply a larger discount due to risk
• The selling process can be slower and more manual
This can reduce both the price received and the speed of execution.
Platform Differences
Bullion dealers
• May require manual quotes
• Wider spreads and slower execution
Marketplaces
• Dependent on buyer demand
• Variable pricing and liquidity
Trading platforms
• Continuous pricing
• Instant execution at market prices
Liquidity and Timing
Liquidity affects how easily you can sell without impacting price.
• High liquidity = easier to sell at competitive prices
• Low liquidity = wider spreads and potential delays
Market conditions can also influence sell-back prices, particularly during periods of volatility.
Why This Matters
The ability to sell efficiently is just as important as how you buy.
• Higher spreads reduce realised returns
• Slower execution can limit flexibility
• Additional friction increases overall cost
Investors should consider the full lifecycle — not just the entry point.
Key Takeaway
The price you receive when selling is often lower than the price you see quoted. Efficient platforms and formats can reduce this gap, while physical delivery and higher-cost models can increase it. Sell-back conditions should always be considered before investing.
10. How Gold Is Stored and Protected: Safeguarding, Vaults and Ownership
Overview
When investing in precious metals, it is important to understand how both your money (funds) and your assets (metals) are protected.
These are two distinct areas that should be considered separately.
Investors should look for:
• Safeguarded funds during the payment and trading process
• Secure storage with direct ownership of the underlying metals
Safeguarded Funds
Safeguarding refers to how your money is protected when it is held by a platform before or after transactions.
• Funds are typically held in segregated accounts separate from company operating funds
• Designed to protect customer money if a firm were to fail
• Common in regulated payment and financial services environments
Key considerations:
• Whether funds are held separately from the firm’s own money
• The role of regulated partners, for example payment institutions
• Clarity on when funds are converted into metals
Safeguarding helps ensure that your cash balance is protected during the investment process.
Secure Storage & Direct Ownership
Once funds are converted into metals, the focus shifts to how those assets are held.
Secure storage typically involves:
• Professional vaulting facilities
• Insurance coverage
• Regular audits and verification
Equally important is the concept of direct ownership, which determines how your metals are legally held.
Allocated vs Pooled vs Unallocated
Allocated (Whole Units)
• Specific bars or coins are held in your name
• You own identified, individual units, for example a specific bar with serial number
• Fully segregated from other customers
• Highest level of transparency and control
Allocated (Pooled)
• You own a proportion of a pool of physical metal
• Backed by real, allocated bars held in custody
• Not tied to a specific bar, but fully backed by physical metal
• Common in fractional ownership models
Unallocated
• You have a claim against a provider, not specific metal
• Metal may not be fully reserved or segregated
• The provider may use the metal within its own operations
• Typically carries higher counterparty risk
Why This Matters
Protecting both funds and assets is fundamental to investing.
• Weak safeguarding can expose cash balances to risk
• Unallocated structures introduce counterparty exposure
• Lack of transparency can make it harder to verify holdings
Investors should ensure they understand both layers before committing funds.
Key Takeaway
Security in precious metals investing comes down to two things: how your money is safeguarded and how your metals are stored and owned. Strong structures in both areas provide confidence that your assets are protected throughout the investment lifecycle.
