I’ve recently inherited some gold from my late grandfather’s estate. The collection includes some coins and gold bars. How do I find out how much it is worth? And what should I do with it?
You should start by checking whether your grandfather’s coins are pure bullion, collectibles (coins which will have been minted in a limited run size) or numismatic (rare coins with a value to match).
Nick Hammond, executive director at gold coin dealer Baird & Co, says a very rare 1933 US Double Eagle coin was sold at auction for more than $7m in 2002, despite only containing gold worth $300. Bullion coins such as Krugerrands, one of the most popular bullion coins, contain 1 troy ounce of pure gold and trade close to the gold price, so you would get about £980 per coin at today’s market price.
You also need to make sure your grandfather’s bars are what they say they are. If they have four “nines” stamped on them (signifying 99.99 per cent gold), that is as pure as it gets. But there have been cases of counterfeit bars made from poorer quality gold; there have even been cases where large, so-called “market” bars worth about £390,000 at current prices have been hollowed out and filled with a cheaper metal such as tungsten, undetected. A reputable bullion merchant can test the purity of the gold using a range of methods, some dating back 5,000 years.
If you decide to sell your grandfather’s gold, you can do so at one of the established bullion merchants. The official London Bullion Market Association gold price is quoted in the media and is for “spot” gold delivered straightaway (that is, two days after trade). Expect to sell for between 97 and 100 per cent of the value of the gold, depending on how much there is and what form it is in. Collectible gold coins may fetch more, for instance.
If you decide to keep it, think about how and where. You can store your gold in regulated vaults with a bullion dealer. Storage costs are reasonable (they can be as low as 0.2 per cent a year, including insurance), the integrity of the custody chain is intact and the bullion dealer will buy back the gold it is storing, so you do not have the issue of moving the gold. If market bars have been removed from regulated bullion vaults, then expect questions about the origin and provenance of the gold. In all probability, the bar will have to be re-melted and re-assayed (tested for purity).
If the gold is not stored with the bullion merchant from which it was purchased, but is in a home, is it properly insured? Certain specialist insurers will cover storage at home, but the premium can be very high and you will need to answer lots of security questions.
Adrian Ash, director of research at online gold exchange BullionVault, says selling now may be the best option, because the gold coins and small bars mentioned in the bequest are costly and inconvenient to own.
Hiding more than a couple of sovereigns in your sock drawer is not worth the risk, he says. Thieves may use gold-sensitive metal detectors, and you risk invalidating your home insurance if you do not report a holding of £3,000 or above. Declaring it may increase your premiums. Your insurer will want you to use an insurance-rated safe (costing upwards of £400) bolted to a brick wall or concrete floor.
Renting a safe-deposit box is simpler, but more costly. Most high street banks have quit this business, and those that do start at £200 per year, not including insurance. Holding more than £10,000-worth this way will cost £300 or more every year.
All this is frustrating, because gold tends to do well when other assets do badly. If you want the investment protection gold can offer, exchange traded funds may appeal. Vaulted bullion is another low-cost and increasingly popular alternative.
Rob Halliday-Stein, founder and managing director of Bullion By Post, says that if selling, you should look for a well-known reputable dealer offering a small discount to the global price.
It is worth noting that a few gold coins are highly collectible and may be worth significantly above their intrinsic gold value. However, always ensure you have worked out the value of gold in each coin. Some rare coin dealers will tell you that they are paying for the collectability, but often actually offer less than the intrinsic gold value.
Once you have valued your gold collection you can decide whether to keep it. Gold has historically been a great way of preserving wealth and protecting against inflation. Gold prices in sterling have performed strongly since the Brexit vote due to the weakness of sterling. Over the past three years gold is up 27.7 per cent in sterling, but only 5.75 per cent in US dollars.
The opinions in this column are intended for general information purposes only and should not be used as a substitute for professional advice. The Financial Times Ltd and the authors are not responsible for any direct or indirect result arising from any reliance placed on replies, including any loss, and exclude liability to the full extent.
● Do you have a tricky financial dilemma that you’d like FT Money’s team of professional experts to look into? Email your problem in confidence to firstname.lastname@example.org
Our next question
In preparation for buying a house, I moved approximately £1m out of stocks into cash. The property sale fell through and I am now searching again. I do not know when I will need these funds next: it could be two months or three years. What investments could I make to maximise return and access while managing risk for this amount?
Get alerts on Personal Finance when a new story is published