Share your saving strategy!

recurvrecurv Posts: 55 Copper ✭✭
edited December 2015 in About Gold
Hey folks,

Anyone else from the UK here?

I ask because we have Gold and Silver legal tender coins here that are exempt from Capital Gains Tax (CGT), which makes saving in coins very attractive.

Why?

If you consider that Gold holds its purchasing power as local currencies lose theirs, then in order for your Gold to rise in price, your local currency must have lost purchasing power (unless you're riding inside a Gold bubble).

So, say for example you have around £10,000 in Gold measured in today's local currency, and the currency falls in purchasing power by 50%, your Gold is now worth around £20,000 in local currency (it takes twice as much currency to buy the same amount of Gold). Hooray, you say, but the price of other goods has likely risen too, so you've only really managed to preserve 100% of your purchasing power relative to things you need to buy. You haven't gained anything, you've simply protected. Okay, but that's still good...

However, the government will see the currency difference of £10,000 as a capital gain, and tax you accordingly (up to 28%).

So, whilst you haven't lost as badly as those who didn't save in Gold, you have been punished for making a currency gain even though you haven't actually increased your wealth at all! You will have actually lost a little as a result of being taxed. Seems rather unfair, right?

Now, if you save in legal tender Gold/Silver coins, you don't get taxed for capital gains.

So...

What to do?

Obviously BitGold's strength is in its liquidity, but if it's possible to save incrementally with BitGold, and then withdraw currency to purchase sets of legal tender coins at regular intervals, isn't that the smartest move for long term preservation of wealth?

Would love to hear your thoughts!

Comments

  • BlueJaysBlueJays Posts: 82 Bronze ✭✭✭
    edited December 2015
    @recurv I disagree, the face value (no different then fiat) of the coin will always be accepted by a merchant at the set amount that's stated, unless you want to melt the medal down to sell. With BitGold, buying on the worldwide spot price for gold, the face value of my gold will always be accepted at the current worldwide spot price.. Which I can quickly top up my BitGold MasterCard if in fact, I want to start making some purchases at points of sale. Additionally, going to your local coin dealer and buying coins your paying a hefty premium.. BitGold I'm paying 1% on every deposit... but hey who knows maybe we will be able to buy coins in the future through BitGold (1%)!
  • recurvrecurv Posts: 55 Copper ✭✭
    @BlueJays No, the price paid for a Gold bullion coin will be 98% (or thereabouts) of the spot price, not the silly face value :)

    The question is, would the tax paid on capital gains outstrip the premium paid on coins. I think it would.

  • rohanibuang61rohanibuang61 Posts: 2,379 Gold ✭✭✭✭✭
    Bitgold business strategy is awesome. Use BitGold plastic money that back with gold or save Gold till it maintain to its price unmanipulated origin.
Sign In or Register to comment.