With a rise in capital gains tax to be announced in the forthcoming emergency budget, people are scrambling to get legal tender bullion coins, as the coins are exempt from CGT.
This increased demand has led to gold dealers struggling to meet the orders, with Britannia coins and gold sovereign now becoming increasingly difficult to source. Esteemed gold dealers have bemoaned the short supply, one remarked: “In the last couple of weeks, supply has been drying up because people hold on to what they've got in a situation like this.”
There is even less gold coming in from abroad as European investors have been hoarding the precious metal due to uncertainty surrounding sovereign debt in the eurozone, as unlike currency gold offers a much safer investment. Another English gold dealer said; “We buy quite a lot of our gold from Europe, and among the Europeans at the moment demand is much higher than it is in the UK. European dealers don't have anything to sell to us at all. We have a backlog of orders at the moment for sovereigns and Krugerrands”.
Back in the UK experts feel that the proposed CGT raise is playing a big role in the collective gold hoarding. With GCT affecting the sales of shares and property UK investors see the CGT free bullion as a safer form of investing.