Investors More Aware of Risk Due to Market Volatility

UK investors are more risk-conscious when it comes to their investment portfolios due to a challenging macroeconomic picture, new research from The Royal Mint shows.

A majority of investors (52%) said they were worried about market volatility impacting their portfolio in 2023, a figure which rose to 58% amongst millennial investors. In addition, more than half of UK investors (55%) said they are worried about inflation impacting their investment portfolio this year.

Growing awareness of risk amongst investors is being underpinned by negative sentiment around financial markets. One in three (34%) UK investors said they are pessimistic about markets in 2023, whilst almost half (48%) said they were worried about their portfolio losing money this year.

The figures form part of a wider piece of research released by The Royal Mint last week following a poll of more than 2,000 investors[1]. The survey revealed that more investors are moving into precious metal investments such as gold, with macroeconomic uncertainty being a key driver. We saw a near 26% uplift year-on-year in the volume of gold investments during 2022, with sales of gold bar investments in particular increasing by 33.5%.

In 2023 to date, gold investors have benefited from a weakening dollar, which pushed gold prices up by 6.6% in year-to-date trading as of 29 March. Research from the World Gold Council[2] has found that gold prices typically fare well during recessions, delivering positive returns in five out of the last seven recessions.

Just as markets rise, they can also fall, and it is important to do your research before investing. Andrew Dickey, Director of Precious Metals at The Royal Mint, has these general considerations for anyone thinking of investing in gold, silver and platinum:

Think about the ‘how’

When considering investing, it is important to understand the different ways to invest in precious metals. Nowadays, you can invest in physical coins and bars, or otherwise digitally. Each way to invest has its own benefits so it is important to do your research and ensure this aligns with your own circumstances and preferences. Whilst many aspire to owning large gold bars, there are a number of ways to invest including more affordable routes such as owning fractional amounts via digital gold products like DigiGold.

Understand premiums on physical metals

Most forms of precious metals investment normally include a ‘premium’ on the product. This is the percentage which is charged for the product over the price of the metal which it contains. Due to economies of scale, smaller products tend to cost slightly more to manufacture, package and distribute. If premiums put you off investing, you could consider investing digitally, which should reduce the premium.

Know your tax benefits

Bullion coins from The Royal Mint are exempt from Capital Gains Tax for UK residents due to their status as legal tender. In fact, all gold, silver and platinum bullion coins produced by The Royal Mint are classed as CGT-free investments. Investors can therefore make an unlimited tax-free profit on all bullion coins produced by The Royal Mint.

Consider your investment time horizon

As we have seen in recent years, markets can be incredibly volatile, rising and falling quickly. If you are thinking of investing, it is important to consider how long you intend to invest for. By committing to investing over the long term, you may be able to ride out any market dips and potentially give yourself a better chance of making a profit from your precious metals investment.

Notes:

[1] All data, unless otherwise specified is taken from 2,005 respondents of a representative sample size conducted by Censuswide in February 2023. All respondents were 18 or above and had previously invested money.
Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.

[2] World Gold Council, December 2022, Gold Outlook 2023: The global economy at a crossroads.

Disclaimer:

The contents of this press release, accurate at the time of publishing, is for general information purposes only, and does not constitute investment, legal, tax, or any other advice. Before making any investment or financial decision, you may wish to seek advice from your financial, legal, tax and/or accounting advisers.