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If you wanted to buy physical gold years ago, you could simply walk into a bank branch and buy a gold bar. You could have the gold stored in a bank vault and, in some cases, even take physical delivery. That way, you became the owner of physical gold.
But times have changed. UK banks no longer sell gold bars and high-street safe-deposit boxes have (almost) disappeared. Why is that the case? How did it work in the past, and what options do you still have to buy physical gold?
The regulation around capital flows has been tightened drastically over the past decade. Physical gold has become a 'high-risk product' for banks under the strict requirements of the UK's Money Laundering Regulations (MLR) and the FCA framework.
Verifying the origin of the gold on the buy side, and the source of funds on the sell side, creates an enormous administrative burden. The operational costs and insurance premiums of holding physical inventory also no longer justify the margins for most banks.
To avoid the risk of fines from regulators, the major UK banks have largely exited retail physical gold sales altogether.
HSBC is one of the world's largest precious metals custodians and a major LBMA market-maker. However, that activity is wholesale and institutional. HSBC does not sell gold bars or coins to retail customers in the UK; only HSBC Private Bank facilitates gold purchases for its high-net-worth clients via third-party dealers.
Barclays was historically active in precious metals, including operating one of London's major gold vaults. The bank wound down its precious metals trading desk in 2014 amid tighter capital rules and lower margins, and physical gold is no longer offered to ordinary retail customers.
Barclays Wealth still arranges access to gold for private banking clients with significant minimum balances, but that route is not available to most savers and small investors.
The Royal Mint is not a commercial bank but the UK's official mint, owned by HM Treasury. It is the country's most accessible 'state-backed' channel for buying physical gold and silver, offering bullion coins (Britannia, Sovereign) and bars in a range of weights.
The Royal Mint also operates The Royal Mint Bullion service, which provides storage of customers' gold and silver in the Mint's own vault facility, with the option of physical delivery.
For UK investors who specifically want a UK-based, state-linked institution rather than a high-street bank, the Royal Mint is currently the most prominent route, although fees and product range differ from independent specialist dealers.
Other major UK banks (including Lloyds, NatWest, and Santander UK) do not sell physical gold bars or coins to retail customers either. They typically refer interested clients to gold-tracking funds, ETFs or wealth-management products instead.
Through banks, retail investors can therefore no longer buy physical gold directly. (Indirectly) investing in gold or (indirectly) investing in silver is still possible at most banks, in the form of "gold ETFs" or "silver ETFs" (Exchange Traded Funds).
These are exchange-listed investment funds that track the gold price, in which you as an investor buy a share in the fund rather than the physical metal itself.
At banks, this typically works through a paper claim, with the bank either managing the gold for the fund or guaranteeing its value via derivatives.
This means you depend on the solvency of the bank and the fund, since you are not a direct owner of physical gold bars.
This stripped-down form therefore does not offer the same guarantees as the physical gold bars that banks used to sell.
Where you previously could simply go to your own bank to buy physical bars, the landscape has changed in recent years. The major UK banks have almost completely closed their physical bullion counters. They now focus primarily on digital banking and digital investment products, which means that for tangible ownership you have to turn to another type of provider.
Through GoldRepublic you can still buy physical gold. You invest in physical precious metals, from as little as £50 or 1 gram. Your investment is held in an independently managed vault in Switzerland, Germany or the Netherlands. You are and remain the legal owner of your gold holdings and can monitor your position and the vault entries 24/7 via your GoldRepublic account.
GoldRepublic was the first precious metals seller in the Netherlands to obtain an AFM licence and currently manages more than £1.3 billion of precious metals on behalf of its clients
You used to be able to buy gold at your bank. Now it is no longer possible. But why? And what options do you still have to buy physical gold?
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