As 2024 unfolds, physical gold is emerging as a top priority for U.K. family offices and ultra-high-net-worth (UHNW) individuals. This shift reflects growing concerns about market volatility, inflation, and economic instability. Gold’s tangible benefits and unique attributes, including tax advantages, are driving its increased demand among family offices. Here’s why physical gold is capturing the attention of family offices and how it aligns with current investment trends and concerns.
The Allure of Physical Gold
Gold has always been a symbol of stability, and its appeal is particularly pronounced in the current economic climate. Over the past five years, the price of gold has surged by 55% in sterling terms, reflecting its growing importance as a secure investment.
“Family offices are increasingly gravitating towards physical gold,” notes Emma Richardson, a senior advisor at Sterling Wealth Management. “Physical gold offers a level of security and tangible ownership that financial instruments like ETFs can’t match. In times of uncertainty, having actual gold can provide peace of mind and stability.”
Unlike ETFs, which are financial instruments representing gold, physical gold—whether in the form of bars, coins, or jewellery—provides direct ownership and a tangible asset that can be physically stored and controlled. This direct ownership is highly valued in today’s uncertain economic environment.
The Value of Physical Gold for Wealth Preservation
Physical gold is not only a hedge against inflation but also a means of preserving family wealth and legacy. Many UHNW individuals and family offices use gold to safeguard their assets and pass them down through generations.
“Physical gold is essential for preserving family wealth,” says James Walker, Managing Director at Heritage Capital. “It’s about more than financial returns; it’s about maintaining family heritage. Unlike ETFs, physical gold—such as coins or jewellery—carries both monetary and sentimental value.”
Gold’s role as a wealth-preserving asset is particularly relevant in light of current economic challenges, including inflation and market volatility. It offers a stable form of investment that can withstand economic fluctuations.
Tax Benefits: Gold Sovereigns and Legal Tender
One of the key advantages of investing in physical gold, especially gold sovereigns, is their tax efficiency. Gold sovereigns are considered legal tender in the U.K., which means they are exempt from Capital Gains Tax (CGT). This tax benefit is particularly attractive for UHNW individuals looking to optimize their investment strategies.
“Gold sovereigns offer a unique tax advantage,” explains Sarah Davis, a wealth advisor at Nova Investments. “As legal tender, they are exempt from CGT, which can significantly enhance the overall return on investment. This makes them an appealing option for UHNW investors.”
Addressing Family Office Concerns
In 2024, family offices face several key concerns that drive their investment strategies. According to Spears, family offices are prioritizing risk management, seeking new investment opportunities, and focusing on portfolio diversification. Physical gold aligns well with these priorities:
1. Risk Management: With investment risk being a top concern, family offices are turning to physical gold as a safe haven. “Gold’s tangible nature helps mitigate risks associated with market volatility and economic downturns,” notes Michael Thompson, Investment Director at Apex Financial.
2. Private Equity and Diversification: Physical gold is becoming a crucial part of diversified portfolios. With private equity surpassing public equity in family office investments, gold offers a stable, non-correlated asset that complements other investments.
3. Succession Planning: As family offices plan for generational wealth transfer, physical gold offers a reliable asset that can be easily passed down through generations. It provides both financial value and a sense of heritage.
4. Cybersecurity and Technology: While family offices invest in technology and cybersecurity, physical gold remains a stable, offline asset that is immune to digital threats. This makes it a reliable component of a well-rounded investment strategy.
The Rising Interest Among Younger Investors
Interestingly, the trend towards physical gold is not limited to older generations. Younger investors are increasingly interested in gold, appreciating its stability and tangible benefits, especially in light of recent cryptocurrency market volatility.
“Gold’s appeal is broadening across age groups,” observes Bill Voss, founder of Bullion Box. “Younger clients are seeking stable, tangible assets like gold, moving away from the volatility of cryptocurrencies.”
Conclusion
For U.K. family offices considering their investment strategies in 2024, physical gold offers distinct advantages over ETFs. Its tangible nature, tax benefits, and role in wealth preservation make it a compelling choice.
At Gold Bullion Partners, we specialize in helping family offices and UHNW individuals acquire physical gold. Our expert brokers, experienced in working with family offices, can provide tailored solutions to meet your investment needs and align with your family’s values. Contact us today to speak with one of our brokers and explore how physical gold can enhance your portfolio and secure your wealth.
For personalized advice on investing in physical gold, including the benefits of gold sovereigns and their tax advantages, reach out to Gold Bullion Partners. Our brokers are ready to assist you in navigating today’s financial landscape and ensuring your wealth is protected with the tangible benefits of gold.
