Every time markets get jittery or the pound has a wobble, my inbox fills up with the same question: “Matt, should I be buying gold?” It is one of the most common things UK expats in Portugal ask me, and it is also one of the most misunderstood.

Gold has a powerful pull. It feels solid, permanent and reassuringly outside the banking system. But owning it as a British expat living on the Algarve is not quite as simple as buying a few coins and sleeping easier. This guide walks through why expats are drawn to gold, the different ways to actually own it, the tax treatment in both the UK and Portugal, the downsides nobody mentions, and how much (if any) belongs in a sensible portfolio.

Why Gold Appeals So Much to Expats Living in Euros

There is a specific reason gold comes up more often with my expat clients than it ever did when I advised people back in the UK. Most British expats in Portugal earn or hold a chunk of their wealth in sterling, pensions, savings, perhaps a UK property, but they spend their daily lives in euros. That currency gap makes people feel exposed, and gold is often seen as a way to step outside the whole pounds-versus-euros question.

There is some truth to that. Gold is priced globally and tends to hold its purchasing power over very long periods. When confidence in currencies or governments falls, gold has historically been one of the assets people run towards. In recent years, with inflation, geopolitical tension and volatile exchange rates, that “safe haven” reputation has driven prices to record highs.

But “feels safe” and “is safe” are not the same thing, and a record-high price is exactly the moment to think most carefully rather than least. Buying something because it has already gone up a lot is one of the oldest mistakes in investing.

The Different Ways to Actually Own Gold

When someone says “I want to buy gold,” they often have not decided what that actually means in practice. There are several routes, and they behave very differently.

Physical gold (bars and coins). This is what most people picture. You can buy gold bullion bars or coins such as Britannias and Sovereigns. The upside is that you genuinely own a tangible asset. The downsides are real, though: you pay a premium over the raw gold price when you buy, a spread when you sell, and you have to store and insure it safely. A safe at home is a security risk; a vault costs money every year.

Gold ETCs and ETFs. These are exchange-traded products that track the gold price, held inside a normal investment account. You get exposure to gold without storing anything physical, and they are cheap and easy to buy and sell. The trade-off is that you do not hold the metal in your hand, which defeats the purpose for some people, and you need a suitable investment platform that accepts Portuguese-resident clients.

Gold mining shares and funds. These are shares in companies that dig gold out of the ground. They can rise faster than gold itself in a boom, but they can also fall harder, because you are taking on company risk, management risk and operational risk on top of the gold price. This is not the same thing as owning gold, and people often confuse the two.

Allocated versus unallocated. If you do go physical or use a vaulting service, understand whether your gold is “allocated” (specific bars set aside and owned by you) or “unallocated” (a claim on a pool, where you are effectively a creditor of the provider). In a crisis, that distinction matters enormously.

The Tax Angle: UK and Portugal

This is where expats most often trip up, because the rules that applied when you lived in the UK may no longer be the ones that matter.

In the UK, certain gold coins that are legal tender, such as Gold Britannias and post-1837 Sovereigns, are free of Capital Gains Tax for UK residents, and investment-grade gold is exempt from VAT under longstanding rules. That is a genuinely attractive feature, and it is why those coins are so popular with British investors.

But here is the catch that catches people out: once you are tax resident in Portugal, your UK CGT status is largely beside the point. As a Portuguese tax resident, it is the Portuguese tax treatment of any gain that generally governs your position, subject to the UK-Portugal double tax treaty. Portuguese tax rules around the sale of investments are their own world, and the treatment can differ depending on what form your gold takes, physical metal versus a fund or ETC, and how the authorities view the transaction.

I am deliberately not going to give you a single confident number here, because the right answer genuinely depends on your residency status, how you hold the gold, and how much you are dealing with. This is exactly the kind of area where a quick conversation with someone who understands both systems saves you from an expensive assumption. The general principle to hold in your head is simple: do not assume the UK tax perk travels with you to Portugal, because it usually does not.

The Downsides Nobody Mentions

Gold has a marketing machine behind it, so the bull case is easy to find. Here is the part that gets less airtime.

Gold produces no income. A share can pay dividends, a bond pays interest, a rental property pays rent. Gold just sits there. Its only return comes from selling it to someone else for more than you paid, which means it relies entirely on the next buyer being willing to pay up. For a retiree who needs their money to generate an income, that is a significant limitation.

Gold is also more volatile than its calm reputation suggests. It can go years doing nothing, or fall sharply, while feeling perfectly safe the whole time. And the costs of owning physical gold, the buying premium, the selling spread, the storage and insurance, quietly eat into returns in a way that a headline price chart never shows you.

Finally, gold is a favourite of fraudsters. The Financial Conduct Authority regularly warns about gold and precious-metal investment scams aimed at exactly the kind of cautious investor who likes the idea of a “safe” tangible asset. If anyone is cold-calling you, promising guaranteed returns, or pressuring you to act quickly, that is a red flag regardless of what they are selling.

So How Much Gold Should You Actually Hold?

My honest view, after more than two decades advising clients, is that gold can have a place as a small diversifier, not as a core holding and certainly not as a one-way bet. Many sensible portfolios that include gold at all keep it to a modest slice, often in the region of five to ten percent, precisely because it behaves differently from shares and bonds and can provide a little ballast when other things fall.

The key word is diversifier. Gold is not a substitute for a properly built, income-generating portfolio designed around your actual retirement needs in Portugal. If the appeal of gold is really about a fear of currency risk or market falls, there are usually more efficient ways to address those worries directly, and we have written about several of them in our guides on building an expat investment portfolio and managing currency risk.

Before buying any gold, I would always ask: what job is this actually doing in my plan, and is there a better tool for that job?

Frequently Asked Questions

Is it better to buy physical gold or a gold ETF as an expat?

It depends on why you want it. Physical gold suits people who genuinely want a tangible asset outside the financial system and are willing to pay for storage and insurance. A gold ETF or ETC is cheaper, easier to buy and sell, and simpler to hold inside an investment account, but you do not hold the metal yourself. Most people who want gold purely as a portfolio diversifier are better served by the fund route.

Will I pay tax on gold profits in Portugal?

Possibly. As a Portuguese tax resident, your gains are generally assessed under Portuguese rules rather than the UK rules you may be used to, and the treatment can vary depending on how you hold the gold. The UK Capital Gains Tax exemption on certain coins does not automatically protect you once you live in Portugal. This is worth checking with an adviser before you buy or sell.

Is gold a good hedge against the falling pound?

Gold can help, because it is priced globally rather than in a single currency, so it is not directly tied to the pound. But it is a blunt and volatile tool for that job. If your real concern is sterling-to-euro exposure, there are more precise ways to manage currency risk that do not rely on guessing the direction of the gold price.

How do I avoid gold investment scams?

Only deal with established, reputable dealers or regulated providers, never respond to cold calls or unsolicited offers, and treat any “guaranteed return” or high-pressure sales tactic as an automatic warning sign. Check the FCA’s warning list before parting with any money, and if something feels off, walk away.

What to Do Next

Gold can play a modest, sensible role as a diversifier, but it is rarely the answer to the bigger worries that send people looking for it in the first place. The smarter move is usually to address currency risk, inflation and market falls inside a properly designed plan, with gold as a small optional ingredient rather than the main course.

If you’d like to discuss how this affects your personal situation, get in touch with our team. We specialise in helping UK expats in Portugal make the most of their pensions and investments.

Matthew Renier is a Chartered Financial Adviser at Arthur Browns Wealth Management, based in the Algarve, Portugal. He has more than two decades of experience helping British expats manage their pensions and financial planning across borders.

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