Is UK Silver stacking a brilliant con?

[Divmad]

Ok, so I look online at Chards or Bullionbypost or Atkinson's for your bog standard 1oz Silver Britannia 2020 issue. Price quoted is around £27+ vat = £33, which is around 65% mark up on the underlying spot commodity. Without the vat, is still a 35% mark up and you'll be lucky to get the spot price back if you turn round and sell it back to them today. 

Why the mark up? What's so special about this mass produced engraving that has been around, in slightly different end formats, since 1997? Surely can't all be down to the cost per coin of production or marketing. The rest is the online dealer greed factor aka profit margin. Or con factor. An "investor" stacking these generic coins needs the underlying to appreciate by 35% from here just to break even on a re sale to any dealer who will take your silver coins at spot value. 

Is this smart investing? If I buy a silver mine in AIM at least I know I only pay £5 each trade plus a miniscule bid ask spread for the more liquid counters, with leveraged upside in the rising Silver case scenario. 

Selling to other collectors is the way round this dilemma, but isn't that a version of the Greater Fool Theory?

And yet there are countless videos on YouTube smoothly conning viewers to copy their stacking piles, as if they are all going to be mega rich one day. What a f...ING joke. 

The only winners I see are the online dealers. Wish I could buy shares in them.

[HighlandTiger]

Stack sterling silver flatware. Easy to buy under spot, easy to sell at between 88-100% of spot. 

[Shinus73]

Dealers have to make a profit or they wouldn’t be dealers, but I don’t think they make a large profit on new bullion issues.

Likewise, the Mint probably only turns a small profit when you factor in the costs of production / marketing / research / packaging.

Margins are pretty thin for mints and dealers.

[Paul]

Just use bullionvault Or an ETF for the most bang for your buck, if that's your concern

[greektony]

Agree with your point that I don't know why anyone in the UK would want to physically stack silver bought from the UK.

[Thelonerangershorse]

Other than, I'm pretty sure people made the same argument when spot was £12 and dealers were selling for £18 !

[Stacktastic]

By second hand. £20-21 a coin in May/June (excluding postage).  

I guess its like any business, How much do you think designer clothes cost to produce & distribute? or Diamonds for that matter.

I dont think the industry is very large either & the mints probably make a lot more money selling commemorative nickel proof coins (at a guess). I spent £10 on a nickel Peter pan coin the other day for my wife!! Whats the premium on that then!! 

[watchesandwhisky]

if you buy from the trade and then sell back to the trade you are going to get stung twice..buy from a reputable seller here and sell here and you wont get stung half as much.

I have been offering commemorative crowns at spot for weeks and noone wants them..Cheaper silver is out there - but if you want government issue .999 be prepared to pay for it.

[Divmad]

5 hours ago, Thelonerangershorse said:

Other than, I'm pretty sure people made the same argument when spot was £12 and dealers were selling for £18 !

Yes, it's possible to get bailed out by a strong rise in the Silver price. Agreed. But I'm thinking, why not just stick with Gold bullion coins at a max premium of, say, 3% to get round this problem, if you're here for the investment potential and not as a collector.

[Fadeingstar]

The problem with the UK is that we have to pay VAT on silver that puts 20% on the top straight away which is why buying from forum members or the trusted European dealers is the best way to go in my opinion. How can it be cheaper to buy a Britannia from a dealer on the other side of Europe then it is to get it direct from the Royal Mint in Wales. The most bang for your buck will be on using a ETF however for me I like to touch what I own. Stupid I know but just the way I am.

When it comes to mark ups there are still production, distrubution, testing, quality control costs that all need to be factored in on top of the base price of the metal. Then the dealers have to make some money so in my opinion they are best avoided.

I guess it all comes down to why you are buying silver. If you are looking to make a quick buck and flip popular coins for a small profit or are you looking at investing in silver as a bet against inflation and as a way of wealth preservation.

[KDave]

Yes it's a bit of a con for small investors in my opinion, who are convinced stacking will make them rich. Mike Maloney the utter scum bag has convinced people it's the path to wealth, you can tell who he is targeting with his videos such as '500 ounces to buy a house' etc. He knows who his customers are. 

That said, I have a few bars of silver as last position, etf is the better way to go for the main investment though or better yet shares in miners for the leveraged play. Physical is for in the event we see systemic collapse, chances are low now the fed has properly sized it's response to the deflationary conditions, but it was a greater risk for a time and always will be there. For speculating with spot price use an etf or worst case vaulting service, but those are expensive in my opinion, but not as pricey as physical, a kind of half way house insurance. 

[Airhead]

With reference to your question regarding stacking, which I take to mean the holding of physical, I agree that prices are a bit steep compared to the spot price. Which is why most informed people do not buy physical silver from UK dealers, preferring to use Estonian, German or Norwegian dealers where VAT is not applied. Things will change when we exit the transition phase of Brexit when it is likely that both VAT and import duty will be applied to all imports of silver, which will push up the UK price of silver even on the Forum, pushing it even further out of the reach of the average stacker, if a comparison to spot was the only factor informing your purchasing decision.

Personally, if I was only now starting to accumulate PMs I would not collect silver and the silver accumulated when the purchase price of silver was around £12 will be the last bulk silver I buy. The only silver will be low mintage proof issues such as the Una and the Lion for example, preferring to concentrate on Gold and especially Sovereigns.

Gold is for the storage of wealth, Silver is more of a speculative investment IMHO and for those people who bought when the price was low, they are sitting on a reasonable profit. Weather or not the price continues to increase in leaps and bounds or does a wonger is open to debate.

 

[HawkHybrid]

physical silver bullion is an extremely niche product, hence the high premiums reflect this.

 

HH

[Roy]

15 hours ago, KDave said:

Mike Maloney the utter scum bag has convinced people it's the path to wealth, you can tell who he is targeting with his videos such as '500 ounces to buy a house' etc. He knows who his customers are. 

I noticed in his latest ad video he has corrected this.

Now, it will take one 'or two' monster boxes to buy a median home 😂

[KDave]

When silver is $100 an ounce later in the decade then everyone will be a winner even paying 65% premium. But why pay that when there are other options that don't reduce and limit the upside?

I recall buying silver kilo bars for 15% premium including delivery (and taxes) from the EU even then it was hard to part with that money when gold was 1-2% above spot. This was a few years ago sure but the dealers were making a living then otherwise they wouldn't be selling today. The market determines the premium, if people buy for crazy premiums then crazy premiums is what everyone has to pay. I am sorry to say it but if you are paying 65% premium you have paid too much for your silver. You have paid too much. I made a similar mistake in the beginning, I bought 50 ounces, Britannia coins from Bullion by post in 2014 at £18 each delivered when spot was closer to £12, I knew no better. There were coins for sale much closer to spot at the time. Imagine today paying £30 an ounce today that is the equivalent mistake, it limits the upside and is unnecessary. In the US its a bit different, Mike Maloney can sell silver close to spot so what he does is more forgivable, but people in the UK trying to buy 500 ounces for a house at 65% premium are being conned. Would you buy the average house at 65% premium? How about paying 65% premium for a stock market tracker. You get the picture. 

If we want to collect coins, fair enough pay 3, 5, 10 times the metal value but don't pretend its a silver investment, its not its a collectable coin investment. Two different investments, two different markets. Bullion is specifically investment in the metal, you should not be paying huge premiums for bullion, if you can't get hold of it for a low enough premium then look elsewhere, flatware as mentioned above, or buy an ETF or vaulted metals if you like paying fees. All imo. 

[Cooldaddyfunk286]

I thought the #1 rule is to always have your metals in hand? That's all anyone preaches in america. I thought paper silver contracts were basically a fraud since the banks never had all the silver to back the contracts in the first place. Idk, I'm in America. 

[HawkHybrid]

1 hour ago, Cooldaddyfunk286 said:

I thought the #1 rule is to always have your metals in hand? That's all anyone preaches in america. I thought paper silver contracts were basically a fraud since the banks never had all the silver to back the contracts in the first place. Idk, I'm in America. 

 

if you plan to sell your physical metals for currency($,£, etc) then it makes no difference whether or

not you have your silver via contracts or physical metal. the difference is that holding via contracts

cost less for you in spread. physical metals pumpers will always push the line that you must hold

metal in hand(how else can they sell you the physical metal?). there is no way that physical silver

sellers can compete with paper silver contracts on spread. in a doomsday scenario it may be different.

there is much silver that is not bought but merely sourced to sell on for a currency profit(middle men).

 

HH

[HerculeHolmes]

19 hours ago, HawkHybrid said:

 

if you plan to sell your physical metals for currency($,£, etc) then it makes no difference whether or

not you have your silver via contracts or physical metal. the difference is that holding via contracts

cost less for you in spread. physical metals pumpers will always push the line that you must hold

metal in hand(how else can they sell you the physical metal?). there is no way that physical silver

sellers can compete with paper silver contracts on spread. in a doomsday scenario it may be different.

there is much silver that is not bought but merely sourced to sell on for a currency profit(middle men).

 

HH

I've been wondering about that for a long time. Is there really a practical benefit to stacking physical silver or is it just a hobbyist prejudice against paper silver? All I care about is the money.

[HighlandTiger]

3 hours ago, HerculeHolmes said:

I've been wondering about that for a long time. Is there really a practical benefit to stacking physical silver or is it just a hobbyist prejudice against paper silver? All I care about is the money.

If the shtf, as many on here think it will, anything that is held "online", could easily disappear with the press of a button. Hackers get better every year and it's always an arms race between them and the Company software guys.

Holding physical will have its advantage in this situation.

[TeaTime]

I agree that buying small amounts of physical silver in the UK is not the way to go for stackers..... Paying a hefty premium over spot immediately puts the stacker in a massive deficit. I don't believe that people buying one ounce coins are actually stackers though. They're collectors. Even if they don't realise it.

 

 

[Woodsy]

I think everyone is waiting for silver to be priced fairly and the price manipulation to end, then VAT won't seem to bad for those who buy from the UK that is. Historically silver has always been used as money even up to 1947 in the UK and later in other Countries. A Roman Soldiers wage was roughly 2.6 grams of Silver per day. If you take a British Soldiers wage which is approximately £20,000 a year, that would put the price of silver at just over £650 an ounce. And the 30 pieces of Silver that Judas received was used to purchase the Potters field. Now we don't know the size of the field, but by definition a field is a large area of land. A biblical piece was around 4.3 grams of silver, so just over 4 ounces of Silver purchased a field. If Silver ever find it's true value even Mike Maloney could be right 😂😂😂

[SierraWhiskyMike]

The VAT is a key feature, adding 20% to final sale value.

Dealers' costs are quite high too. Staff to run the shop, rates on the shop, maintenance on the shop (e.g. fit out, which isn't usually included in commercial leases) web hosting fees, storage space, telephone and internet bills, insurance because you handle a high risk product, delivery costs... Oh, and your own corporation tax. Silver isn't a big market, which means low volume of sales. Yes, a monster box is a lot of cash to an investor but I suspect it's barely £500 profit before tax to the dealer and they won't be shifting many of them.

I don't think it's surprising that the biggest UK dealers are almost a century old. I suspect that they own the freehold to their premises to keep running costs down.

All these barriers to entry, operating costs and a high investment capital to get started with stock are probably why you don't see many new dealers setting up.

For small investors, silver only pays off if you're either lucky to have bought on a big dip like this summer or if you hold for at least a decade (preferably 2 or 3) and can time when you liquidate your holding after that. This is because PMs offer a better return than cash savings at the moment but you have to overcome the initial "loss" from buying the coins in the first place.

Someone mentioned bulk buying metals. If you're confident that you can sell them, good luck to you. You'd need to find someone who is able to verify the metal at purchase or who can take the risk and buy it anyway. Most retail purchasers can't do that, so government minted coins add a layer of trust because it's fairly easy to spot a fake when a state sponsored mint has so many security features on its coins. That opens up sales to a wider market, which is why I like them.

Silver is definitely a speculation and timing play though if you're trying to make serious money out of it. Then again, there's always a risk of any asset devaluing, even gold (sure, it's a tiny risk based on track record of a few thousand years but it's entirely possible that future generations don't value it any more). Diversification of your assets is definitely key to success.

[kurama]

On 06/09/2020 at 15:25, HighlandTiger said:

If the shtf, as many on here think it will, anything that is held "online", could easily disappear with the press of a button. Hackers get better every year and it's always an arms race between them and the Company software guys.

Holding physical will have its advantage in this situation.

+1 - I agree, holding in hand is better than any contracts. I mean contracts are broken every day...

[Woodsy]

1 hour ago, kurama said:

+1 - I agree, holding in hand is better than any contracts. I mean contracts are broken every day...

If the shtf, I believe the physical price premium will be massively different to any paper contract pricing!!!

[Stacktastic]

On 04/09/2020 at 21:55, KDave said:

Mike Maloney the utter scum bag

I have to say he got me into this originally and yes it is to sell books, a lot like 'the secret' ripped off Napoleon Hill. His Rich dad affiliation speaks volumes, I used to like Robert Kiosaki and just finished his book Fake, but he is constantly wanting more and more, just like his best mate (apparently) trump. If I ended up like that I would to be happy. He is such a smug twat, talks about himself more than his interviewees on his radio show!! 

On 06/09/2020 at 12:04, HerculeHolmes said:

 Is there really a practical benefit to stacking physical silver

Yes when you cant sleep at night, you can go to a vault and pretend you're going to be rich one day. There is somehting in having physical, especially 1oz gold coins & old school sovereigns. Even the queens beast sets make me want to buy more. dont get me started on Platinum, I flipping love its density & weight over silver & even gold! Much nicer metal is you ask me, very undervalued. 

I have been considering a play in the paper silver or gold markets soon as people get spooked out of the recent 'buzz' (its a patient game I think?), but it would only be that, nothing to hold for any amount of time. Mining is apparently where its at, I have 7 or 8 stocks now? Only one is making any decent money (Greatland) most are just slightly in the red. Looking at Barrick as my control in this experiment as its had so much publicity from buffet. If that starts to go up then the rest will follow.

Im checking it far too often, but I should learn to just leave it and trust in my research/judgement.

As per the physical. Its a hedge against an economic meltdown of sorts. I would sell the Brittanias certainly (from £50/oz)  but not the QB or gold, unless I wanted to buy a cheap as chips physical investment (ie a plot of land) & the seller was happy to trade with that (ideal in hyper inflation). No brainer assuming I dont starve or die LOL.