A nyone can walk into a gold dealer (there are several on London’s Strand), buy a Krugerrand for about 900 and walk off. But professional investors usually prefer to speculate in physical gold through internet sellers (from just 30) or through a new instrument called an exchanged traded security, from just 1 a share. Much of the UK’s privately owned gold (believed to be Europe’s biggest hoard) is in an HSBC vault in London’s Docklands (it won’t say exactly where).

Bullion

Britain’s biggest bullion dealer is BullionVault, an online-only operation with vaults in London, New York and Zurich. Buyers can purchase just a gram of gold for about 27 and the first gram is free on signing up. Buyers are in effect taking part-ownership of a 400oz gold bar (you can buy a whole one for $500,000), which allows access to wholesale-style prices when dealing. The firm has 20,000 traders and stores 21 tonnes of gold, about 75% of it in Zurich.

Coins and bars

ATS Bullion, by the Savoy hotel in London, says over-the-counter sales are booming. It used to be the very well-off only, says director Sandra Conway, but now it’s more the man on the street. Krugerrands are the most popular. They come in one-ounce coins, at 892, or half-ounce coins at 485.

But if you were to sell a one-ounce Krugerrand to ATS, you’d only get 827: Conway says there is normally a spread of about 7% between the buying and selling price, so the gold price would have to go up 7% before investors see a profit.

The Britannia is the Royal Mint’s equivalent to a one-ounce Krugerrand, and was selling last week for 917. The higher price reflects the fact that, as it is issued by the Royal Mint, it’s a coin like any other, so there is no liability for capital gains tax if you sell it for a profit, whereas profits on Krugerrands are liable for CGT. Another anomaly is that there is no VAT on investment gold, but VAT is levied on silver and platinum.

ATS will sell you a kilo bar of gold for 28,000, but you must prove to their satisfaction that you are not attempting to launder money.

Synthetic gold

Exchange traded funds are a cheap new way for small investors to access a range of assets, from indices such as the FTSE 100 through to heating oil. Gold ETFs invest in physical gold, and shares in the funds can be bought and sold just like any other share. A stockbroker can buy on your behalf. The fee is 0.39% but there is no stamp duty and the shares will track the physical gold price. Your gold is held in HSBC’s vault. ETFs have grown rapidly and now represent a very liquid market. If your ETF contract manager goes bust, assets are ring-fenced and monitored by an independent manager.

Funds