Gold and Silver Definitions for UK Buyers

The spot price is the current market price for immediate delivery of gold or silver, quoted per troy ounce. It is determined by global trading activity and fluctuates throughout the day based on supply and demand.

The spot price serves as a reference point for pricing physical bullion products. However, the spot price is not the price buyers pay when purchasing physical gold or silver from a dealer — retail prices include additional costs such as premiums, fabrication, and (for silver in the UK) VAT.

For UK buyers, the spot price is typically quoted in US dollars and then converted to British pounds. Exchange rate movements therefore affect the GBP spot price independently of the underlying dollar price.

Learn more: Gold Price (GBP)

A troy ounce is the standard unit of weight used for precious metals. One troy ounce equals approximately 31.1 grams. This differs from a standard (avoirdupois) ounce, which equals approximately 28.35 grams.

When gold or silver prices are quoted "per ounce," they refer to troy ounces unless otherwise stated. This convention applies globally and is used by dealers, exchanges, and price reporting services.

Understanding this distinction matters when comparing prices or calculating the value of a product. A "1 ounce" gold coin contains one troy ounce (31.1g) of gold, not one standard ounce.

A premium is the amount charged above the spot price when buying physical gold or silver. Premiums cover the costs of manufacturing, distributing, and selling bullion products, as well as the dealer's margin.

Premiums vary depending on the product type, size, brand, and market conditions. Smaller items typically carry higher premiums per gram or ounce than larger items. Coins often carry higher premiums than bars of equivalent weight due to additional minting costs and recognition value.

For UK silver buyers, the premium is applied before VAT, meaning VAT is charged on the combined total of spot price plus premium.

Learn more: What Gold and Silver Products Do People Buy?

The spread is the difference between the price at which a dealer will sell a product (the ask price) and the price at which they will buy it back (the bid price). The spread represents a cost to buyers who later wish to sell their holdings back to a dealer.

Spreads vary by product type and dealer. Generally, products with higher premiums also tend to have wider spreads. The spread is an important factor to consider when evaluating the total cost of buying and later selling bullion.

A narrower spread means less value is lost when selling back to a dealer. However, spread is only one factor — liquidity, recognition, and ease of verification also affect resale.

The bid price is the price a dealer or buyer is willing to pay to purchase gold or silver. When selling bullion back to a dealer, the seller receives the bid price, which is typically below the current spot price.

The difference between the bid price and the spot price reflects the dealer's margin and costs involved in buying back and reselling products. Bid prices vary between dealers and depend on the product being sold.

The ask price is the price at which a dealer is willing to sell gold or silver. This is the price a buyer pays when purchasing from a dealer, and it includes the spot price plus the dealer's premium.

The ask price is always higher than the bid price. The difference between them is the spread. When comparing dealers, buyers typically compare ask prices for the same product.

The LBMA is an international trade association representing the London bullion market. It sets standards for the quality of gold and silver bars traded in the wholesale market, known as "Good Delivery" standards.

LBMA-accredited refiners produce bars that meet strict specifications for purity, weight, dimensions, and markings. Bars from LBMA-accredited refiners are widely accepted in the global market and are generally considered trustworthy.

For retail buyers, "LBMA-approved" or "Good Delivery" status on a bar indicates it meets recognised quality standards, though retail bars are typically smaller than the wholesale bars traded on the LBMA market.

The gold and silver "fix" (or benchmark price) is a reference price set twice daily through an auction process administered by the LBMA. The LBMA Gold Price is set at 10:30am and 3:00pm London time; the LBMA Silver Price is set at noon London time.

These benchmark prices are used by producers, consumers, and financial institutions as reference points for contracts and valuations. They represent a snapshot price at a specific moment, whereas the spot price fluctuates continuously.

For most retail buyers, the continuous spot price is more relevant than the fixing price, though both reflect the same underlying market.

Investment gold is a specific category of gold that qualifies for VAT exemption in the UK under HMRC rules. To qualify, gold bars must be of a purity of at least 995 parts per thousand (99.5%). Gold coins must be of a purity of at least 900 parts per thousand (90%), minted after 1800, and be or have been legal tender in their country of origin.

Most standard gold bullion products sold by UK dealers — including Gold Britannias, Gold Sovereigns, and gold bars from recognised refiners — qualify as investment gold and are therefore VAT-free.

This VAT exemption is one reason gold is often considered more straightforward to buy in the UK than silver, which does not have an equivalent exemption.

Learn more: VAT and Tax on Gold and Silver in the UK

Bullion refers to gold, silver, platinum, or palladium in bulk form, valued primarily by weight and purity rather than by design or collectability. Bullion is typically produced as bars or coins intended for investment or wealth preservation purposes.

Bullion products are distinguished from numismatic or collectible coins, which may carry significant premiums based on rarity, historical significance, or condition rather than metal content alone.

When people refer to "buying bullion," they generally mean acquiring physical precious metals in standardised forms from dealers, as opposed to buying jewellery, collectibles, or financial instruments linked to metal prices.

Legal tender is currency that must be accepted for payment of debts under the law. In the UK, certain bullion coins issued by The Royal Mint — such as Gold and Silver Britannias and Gold Sovereigns — carry a face value and are technically legal tender.

However, the face value of these coins (for example, £100 for a 1oz Gold Britannia) is far below their metal value. In practice, no one uses bullion coins as currency — they are bought and sold based on their metal content.

The legal tender status of UK coins is significant for tax purposes. UK legal tender coins are commonly understood to be exempt from Capital Gains Tax (CGT), though buyers should verify current HMRC guidance.

Learn more: Gold Coins vs Bars

The Gold Sovereign is a British gold coin with a long history, first minted in 1489. The modern Sovereign, minted since 1817, contains 7.32 grams of 22-carat gold (91.67% purity), equivalent to 0.2354 troy ounces of pure gold.

Sovereigns are UK legal tender and are therefore commonly understood to be exempt from Capital Gains Tax. They are also VAT-exempt as investment gold. These tax advantages make Sovereigns popular among UK buyers.

Due to their smaller gold content, Sovereigns typically carry higher premiums per gram than larger coins or bars. However, they offer greater divisibility — buyers can sell one Sovereign at a time rather than liquidating a larger holding.

The Britannia is a bullion coin produced by The Royal Mint, available in both gold and silver. Gold Britannias are minted in 24-carat gold (99.99% purity) and are available in various sizes, with the 1oz coin being most common. Silver Britannias contain 1 troy ounce of 99.9% pure silver.

Both Gold and Silver Britannias are UK legal tender. Gold Britannias are VAT-exempt as investment gold and are commonly understood to be CGT-exempt as UK legal tender coins. Silver Britannias, while legal tender, are subject to 20% VAT when purchased from UK dealers.

Britannias are among the most recognisable and widely traded bullion coins in the UK market, with strong liquidity and acceptance among dealers.

A gold bar is a quantity of refined gold cast or minted into a bar shape for investment purposes. Bars are produced in various sizes, from 1 gram to 400 troy ounces (the standard wholesale bar), though retail buyers typically purchase bars ranging from 1 gram to 1 kilogram.

Gold bars of at least 99.5% purity (995 fineness) qualify as investment gold in the UK and are therefore VAT-exempt. Bars generally carry lower premiums per gram than coins of equivalent weight, making them more cost-efficient for larger purchases.

Reputable bars are stamped with their weight, purity, refiner's mark, and often a serial number. Bars from LBMA-accredited refiners are widely accepted and easier to resell.

A silver bar is a quantity of refined silver cast or minted into a bar shape for investment purposes. Common retail sizes include 1oz, 10oz, 100oz, and 1 kilogram bars, though other sizes are available.

Unlike gold bars, silver bars purchased from UK dealers are subject to 20% VAT. This VAT applies regardless of purity or bar size. The VAT cost is a significant factor when considering silver as an investment in the UK.

Larger silver bars typically offer lower premiums per ounce than smaller bars or coins, partially offsetting the VAT impact for those buying in bulk. However, larger bars are less divisible when it comes time to sell.

Learn more: Silver Price (GBP)

Bullion coins are produced primarily for investment purposes, with their value based mainly on metal content. They are minted in large quantities using standard production methods and typically carry lower premiums.

Proof coins are produced using a specialised minting process that creates a highly polished, mirror-like finish with frosted design elements. They are often struck multiple times and individually handled. Proof coins are produced in limited quantities and marketed to collectors.

Proof coins carry significantly higher premiums than bullion coins of the same metal content. Their value depends partly on collectability and condition, not just metal weight. For buyers focused on metal value, bullion-grade coins are generally more cost-effective.

Fineness refers to the proportion of pure precious metal in an item, typically expressed as parts per thousand. For example, 999 fineness means 999 parts per 1,000 are pure metal (99.9% purity). Common finenesses for gold include 999.9 (24-carat), 916.7 (22-carat), and 995.

For UK VAT purposes, investment gold must be at least 995 fineness for bars or 900 fineness for qualifying coins. Most modern bullion products exceed these thresholds.

Higher fineness generally means higher metal value per gram, but does not necessarily indicate better quality for all purposes. Lower-fineness alloys (like 22-carat gold) may be more durable for coins that are handled frequently.

In the UK, silver bullion is subject to Value Added Tax (VAT) at the standard rate of 20%. This applies to silver bars, coins, and rounds purchased from UK dealers, regardless of purity or form. There is no VAT exemption for silver equivalent to the investment gold exemption.

VAT is charged on the full retail price, including the dealer's premium. This means the actual cost of silver to UK buyers is at least 20% above the spot price before considering premiums.

VAT paid on silver cannot be reclaimed by private individuals. When selling silver back to a dealer, the seller receives a price based on metal value — the original VAT is not refunded. This makes the effective cost of buying and selling silver in the UK higher than for gold.

Investment gold is exempt from VAT in the UK under specific HMRC criteria. Gold bars must be of at least 995 fineness (99.5% purity). Gold coins must be at least 900 fineness (90% purity), minted after 1800, and be or have been legal tender in their country of origin.

This exemption means buyers pay no VAT when purchasing qualifying gold products from UK dealers. The exemption applies to most standard gold bullion coins (Britannias, Sovereigns, Krugerrands, American Eagles, etc.) and investment-grade gold bars.

The VAT exemption is one of the key differences between buying gold and silver in the UK, and is often cited as a reason some buyers prefer gold despite silver's lower entry price.

Capital Gains Tax is a UK tax on the profit made when selling an asset that has increased in value. If you sell gold or silver bullion for more than you paid for it, the gain may be subject to CGT, depending on your circumstances and the annual CGT allowance.

UK legal tender coins — including Gold Britannias and Gold Sovereigns — are commonly understood to be exempt from CGT. This is frequently cited as a tax advantage of UK coins over bars or foreign coins, though buyers should verify current HMRC guidance.

Silver bullion (bars and coins) is generally subject to CGT on any gains above the annual allowance. Good record-keeping of purchase prices and dates is important for calculating gains accurately.

UK legal tender coins are commonly understood to be exempt from Capital Gains Tax. This includes Gold Britannias, Silver Britannias, Gold Sovereigns, and other coins issued by The Royal Mint as legal tender.

This exemption is based on the principle that sterling currency is not subject to CGT. Since these coins have a face value in pounds sterling and are legal tender, gains on their sale are generally not taxable.

This potential tax advantage makes UK legal tender coins popular among British buyers, particularly those with larger holdings where CGT could otherwise apply. However, tax rules can change, and buyers should verify current guidance with HMRC or a tax professional.

HMRC (His Majesty's Revenue and Customs) is the UK government department responsible for collecting taxes and administering tax rules. HMRC sets and enforces the rules regarding VAT on precious metals, Capital Gains Tax on bullion sales, and the criteria for investment gold VAT exemption.

For questions about specific tax situations, HMRC guidance and published rules are the authoritative source. Tax rules can change, and individual circumstances vary, so buyers with significant holdings or complex situations may benefit from professional advice.

Allocated storage means that specific, identifiable bars or coins are held in your name in a vault. The metals belong to you and are segregated from other customers' holdings. If the storage provider becomes insolvent, allocated metals are not part of the company's assets.

Allocated storage typically costs more than unallocated storage because of the administrative overhead of tracking individual items. However, it provides clearer ownership and may offer greater protection in the event of provider insolvency.

When considering third-party storage, understanding whether metals are held on an allocated or unallocated basis is important for assessing counterparty risk.

Unallocated storage means you have a claim to a quantity of metal, but no specific bars or coins are assigned to you. Your holding is recorded as an account balance, and the provider holds a pool of metal to cover all customers' claims.

Unallocated storage is typically cheaper than allocated storage, but it carries different risks. In the event of provider insolvency, unallocated metal may be treated as part of the company's assets, leaving customers as unsecured creditors.

Some buyers use unallocated accounts for convenience or cost savings, while others prefer allocated storage or physical possession to avoid counterparty risk.

Vault storage refers to keeping precious metals in a professional secure facility rather than at home. Vaults are operated by specialist storage companies, banks, or bullion dealers, and offer high levels of physical security and insurance.

Vault storage may be appropriate for larger holdings where home storage presents security or insurance challenges. Costs vary by provider, storage type (allocated or unallocated), and the value of metals stored.

Using vault storage means relying on a third party, which introduces counterparty risk. Buyers should research providers carefully, understand the terms of storage, and verify insurance arrangements.

Insured delivery means that precious metals shipped from a dealer to a buyer are covered by insurance during transit. If the package is lost, stolen, or damaged, the insurance covers the value of the contents.

Most established UK bullion dealers include insurance in their delivery costs and use specialist couriers experienced in handling valuable items. Signature on delivery is typically required as proof of receipt.

Buyers should check whether delivery insurance is included in the quoted price and understand the claims process. Once a package is signed for, responsibility usually transfers to the buyer.

A buyback policy is a dealer's commitment to repurchase bullion products from customers. Most established UK dealers offer buyback services, allowing customers to sell metals back without finding a private buyer.

Buyback prices are typically below the current spot price, with the difference representing the dealer's margin (the spread). Buyback prices and terms vary between dealers and may depend on the product being sold.

Having access to a reliable buyback option provides liquidity — the ability to convert holdings back to cash when needed. When choosing a dealer, understanding their buyback terms is part of evaluating the total cost of ownership.

Liquidity refers to how easily an asset can be converted to cash without significantly affecting its price. Highly liquid assets can be sold quickly at close to their market value; illiquid assets may take longer to sell or require accepting a lower price.

Gold is generally considered more liquid than silver because of its higher value-to-weight ratio and broader market. Among gold products, well-known coins like Britannias and Sovereigns are typically more liquid than obscure bars or coins.

Liquidity is an important consideration when buying bullion. Products that are easy to sell back to dealers or other buyers provide flexibility if circumstances change.

XRF (X-ray fluorescence) testing is a non-destructive method for determining the elemental composition of a material. An XRF analyser directs X-rays at the surface of a metal item and measures the resulting fluorescence to identify the elements present and their concentrations.

XRF testing is commonly used by dealers and assay offices to verify the purity of gold and silver products. It provides a quick and accurate surface reading without damaging the item.

However, XRF only analyses the surface layer of a product. Sophisticated counterfeits with genuine gold plating over a base metal core may pass a surface XRF test. For this reason, XRF is often used alongside other tests, such as density measurement, for comprehensive verification.

Learn more: How to Spot Fake Gold and Silver Bullion

Density testing measures the mass of an object relative to its volume to determine whether it matches the expected density of the claimed metal. Gold has a density of approximately 19.3 g/cm³, and silver approximately 10.5 g/cm³.

Because different metals have different densities, a fake item made from a base metal will typically have the wrong density for its size and weight. Density testing can detect counterfeits where weight alone might not, particularly for items with internal cavities or non-precious cores.

Basic density testing can be done at home using a scale and water displacement method (Archimedes' principle). More precise measurements require professional equipment. Density testing complements surface analysis methods like XRF.

A hallmark is an official mark stamped on precious metal items by an assay office to certify their purity. In the UK, hallmarking is legally required for most gold, silver, platinum, and palladium items offered for sale, with certain exemptions including investment bullion coins and bars below specified weights.

UK hallmarks typically include a sponsor's mark (identifying the manufacturer or importer), a fineness mark (indicating purity), an assay office mark (showing which office tested the item), and optionally a date letter.

Investment bullion bars and coins are often exempt from UK hallmarking requirements, but many bars carry the refiner's own stamps indicating weight, purity, and serial number. These are not official hallmarks but serve a similar verification purpose in the bullion market.

Many gold and silver bars from recognised refiners are stamped with unique serial numbers. These numbers allow individual bars to be identified and tracked, which can be useful for insurance, provenance, and verification purposes.

Serial numbers are often recorded on certificates of authenticity or invoices provided by dealers. If a bar is later sold or stored with a third party, the serial number provides a way to confirm that the specific bar received is the one purchased.

Not all bars have serial numbers — smaller bars may only have weight and purity stamps. When buying bars with serial numbers, keeping a record of the numbers alongside purchase documentation is good practice.

An assay is a test to determine the purity or composition of a precious metal. Assaying can be performed using various methods, including fire assay (melting a sample), XRF analysis, or chemical testing. Fire assay is considered the most accurate but is destructive.

Assay offices are official bodies authorised to test precious metals and apply hallmarks. In the UK, there are four assay offices: London, Birmingham, Sheffield, and Edinburgh.

For investment bullion, formal assaying is rarely needed if products are purchased from reputable dealers and come from recognised refiners or mints. Assay services may be relevant if authenticating items of uncertain provenance.

A refiner is a company that processes raw or recycled precious metals to produce high-purity bullion. Refiners cast or mint bars and may also produce blanks for coin production. The refiner's mark on a bar indicates who produced it.

LBMA-accredited refiners have met standards for quality and reliability set by the London Bullion Market Association. Bars from LBMA-accredited refiners are generally accepted without question in the global market.

Well-known refiners include PAMP, Valcambi, Heraeus, Umicore, and The Royal Mint. Buying bars from recognised refiners can make resale easier, as dealers are more confident in the product's authenticity.

A mint is a facility that produces coins. Government mints, such as The Royal Mint (UK), the United States Mint, and the Perth Mint (Australia), produce official legal tender coins as well as bullion products.

Coins from recognised government mints are generally easier to verify and resell than coins from private mints, as they have established specifications and widespread recognition. The reputation of the issuing mint contributes to a coin's acceptability in the market.

Some private mints also produce bullion products, often referred to as "rounds" rather than "coins" since they are not legal tender. These may carry lower premiums but can be less liquid than government-issued coins.

Rounds are coin-shaped bullion products produced by private mints rather than government mints. Unlike official coins, rounds are not legal tender and do not carry a face value. They are valued solely for their metal content.

Silver rounds are common in the market, often carrying lower premiums than government-issued silver coins. However, rounds may be less recognisable and therefore slightly less liquid than well-known coins like Britannias or American Eagles.

When buying rounds, the reputation of the producing mint and the clarity of weight and purity markings are important factors to consider.

Numismatic refers to coins valued for their collectability, rarity, historical significance, or condition, rather than (or in addition to) their metal content. Numismatic coins often carry substantial premiums above their bullion value.

The numismatic market is distinct from the bullion market. Prices for numismatic coins depend on factors like mintage numbers, survival rates, condition grading, and collector demand — not just the spot price of the metal they contain.

For buyers focused on metal value and wealth preservation, bullion products are typically more appropriate than numismatic coins. Numismatic premiums may not be recoverable on resale unless selling to specialist collectors or dealers.

The secondary market refers to previously owned bullion products being resold, as opposed to new products sold directly from mints or refiners (the primary market). Secondary market items may show signs of handling but contain the same metal as new products.

Buying from the secondary market can offer lower premiums than buying new, as the original fabrication premium has already been paid by a previous owner. Dealers often sell secondary market coins and bars alongside new stock.

When buying secondary market bullion, verification and provenance are important. Purchasing from established dealers who test incoming stock provides more confidence than buying privately.