Buying safely: provenance, authentication and paperwork

Almost all the checking happens before the money moves

A settled bank transfer is difficult to reverse. A gold coin arrives without a title deed, and there is no central register recording that it is yours. Put those two facts together and you get the single most useful principle in buying gold: nearly all of the checking that protects you can be done before you pay, and very little of it can be done afterwards.

The encouraging part is that the checking is neither long nor technical. It is a short sequence of confirmations, most of them free, most of them possible from your kitchen table in twenty minutes. The same sequence works whether you are buying one coin or fifty, in person, over the phone or online.

What follows is that sequence in the order you would naturally work through it: who you are dealing with, what you will be asked for in return, the paperwork that records the purchase, how a coin is proved genuine, and what you keep once it is done.

Start with the business, not the coin

Before you look at a single price, satisfy yourself that there is a real, accountable business at the other end of the conversation. Four things establish that.

Company registration and filing history

Every UK limited company has a registered name and a company number, and the register at Companies House is free and public. Check that the number shown on the website belongs to a live company of that name, then look at the incorporation date, the registered office, the named directors and the filing history. Accounts and confirmation statements filed on time, year after year, tell you the business has a paper trail behind it and people whose names are attached to it. That is not a guarantee of anything, but its absence is meaningful.

A real trading address and a voice

A registered office can be an accountant's address. What you want in addition is a place from which the business actually trades and a telephone number answered by a person who gives you their name and can still be reached next week. If you are buying something you intend to hold for years, being able to ring a named person and be recognised is what matters most.

A trading record

How long has the business traded under this name? Is there a consistent record of customers across independent review platforms, spread over years rather than clustered in one month? Longevity is not proof of good behaviour, but it is evidence that the business intends to still be here when you come to sell.

Supervision and trade membership

Under the UK's money laundering regulations, certain businesses must be supervised and must verify who their customers are. A dealer that accepts large cash payments is generally required to register with HMRC as a high value dealer, and HMRC publishes a register of the businesses it supervises. Supervision is a baseline legal requirement rather than an endorsement, but a business in scope of it should be able to tell you plainly who supervises it.

Separately, membership of a trade body such as the British Numismatic Trade Association carries a published code of conduct and a published member list. Check the list itself rather than the logo on the page.

What you will be asked for, and why

The checking runs in both directions. Having satisfied yourself about the business, expect the business to satisfy itself about you. A dealer inside the money laundering regulations is required to establish who its customers are, to form a view on where their money has come from, and to keep a record of having done both. Those are obligations placed on the business, not preferences it has chosen, and it cannot set them aside because a purchase is straightforward or a customer is charming.

Identity and address

Two documents cover the opening stage: photographic identity, usually a passport or a driving licence, and proof of your current address, usually a recent utility bill, council tax bill or bank statement. They are the same documents a bank asks for when you open an account. Some businesses verify them electronically against public records, in which case you may only be asked to confirm a few details.

Where the money came from

On larger purchases you should also expect questions about the source of the funds, and to be asked for something that evidences your answer. What that looks like depends on the answer itself.

The purpose is a plausible, documented account of where the money came from. It is a question about the money, not a judgement about you, and the answer is recorded rather than assessed.

Why some purchases attract more questions than others

The regulations require a business to apply more scrutiny where the risk is higher, and to be able to explain why it did so. Several things raise the level of enquiry: a first purchase, where there is no history to draw on; a sum that is large relative to what you have bought before; payment offered in cash, or from an account in somebody else's name; an instruction to deliver to an address other than your own; or a purchase arranged in unusual haste. If a purchase touches one of those, more questions follow. That is the process working as designed rather than a comment on you.

How your documents should be handled

Anything you hand over is personal data and should be held under UK data protection law. You are entitled to ask how the documents are stored, who inside the business can see them, how long they are kept and what happens to them afterwards. A business that answers those questions readily is telling you something useful about how it runs.

Two practical notes. Gather the documents before you start looking at prices, because checks completed in advance do not then sit between an agreed price and a settled purchase. And pay from an account in your own name: a payment arriving from somebody else's account will stop the process while it is explained, however innocent the explanation.

The paperwork, which is worth more of your time than the price

It is easy to spend an hour comparing prices and half a minute looking at the invoice. The invoice deserves the longer look. It is the document that proves what you bought, from whom, and for how much, and it is the document you will still be relying on in a decade.

A complete invoice states all of the following.

The price you agree, and how long it holds

When you agree a purchase, the price is struck against the live spot price at that moment and normally holds for a limited window rather than indefinitely. From the moment the price is fixed, the dealer is carrying the market risk on the coins set aside for you, which is why the window exists and why it is short. the Understanding Gold lesson on the spot price and the premium sets out how the number itself is built.

Paying

Pay from an account in your own name into an account in the registered business name. In the UK, the Confirmation of Payee check will tell you whether the account name you type matches the account you are paying.

Then do the one thing that prevents the most expensive mistake in the whole process: confirm the bank details by voice, on a telephone number you sourced yourself from the company's own published contact details or its Companies House record. Take the number from your own search, and treat account details that arrive by email as something to be verified by voice rather than used as they stand. Ring, read the account number and sort code aloud, and have them read back. Do this on every purchase, including the fifth one, and do it again if details ever appear to have changed. Keep the payment confirmation with the invoice.

Proving the coin is what it says it is

Authentication is a set of physical measurements, each of which closes off one way of faking a coin. None of them is conclusive alone; together they are very hard to defeat.

All of this rests on knowing the published specification. A full gold sovereign, for example, is struck to a weight of 7.98805 grams in 22 carat gold, roughly 22.05 millimetres across and about 1.52 millimetres thick. Those figures have barely moved since the modern sovereign was introduced in 1817, which is precisely why they are such a good test.

Two things remove most of this work. The first is original packaging that has never been opened, a sealed mint tube or a mint's own capsule still in the producer's tamper evident wrapping. The second is a grading holder: the coin is examined by a grading company, sealed in a tamper evident holder and given a unique certificate number printed on the label. You type that number into the grading company's own public database, reached from an address you found for yourself, and it returns the description of the coin sealed in that holder. The seal is the evidence that the coin described is the coin in your hand. What the grade itself means, and what it is worth paying for, is a subject of its own and is covered in Graded Gold Coins.

What you keep, and where it matters

Keep the invoice, the payment confirmation, any certificate numbers, photographs of the coin and of the holder showing its number, and the delivery or storage documentation. Hold a digital copy as well as the paper, and keep one copy somewhere other than your house.

These records do three jobs. They establish what you own and what you paid, which is the starting point whenever you come to sell. They form your own tax record, sitting alongside the treatment set out in the Capital Gains Tax and VAT lessons earlier in this course. And they are what allows somebody else, an executor or a family member, to understand a holding they did not buy, which the final lesson in Tax and the Markets takes up in full. All three depend entirely on the paperwork you either kept or did not keep on the day.

A final note on where you stand. Buying and owning physical gold is not a regulated activity in the UK. There is no Financial Services Compensation Scheme cover and no access to the Financial Ombudsman Service if something goes wrong, which is exactly why the checks above carry so much weight: the diligence is yours to do, and it is worth doing carefully. Careful buying does not remove the risk in owning gold, and the value of gold can fall as well as rise. Nothing in the Academy is financial or tax advice, and tax treatment depends on your individual circumstances and can change.