Advice for a new stacker with '0'ozt gold (Sov vs 1oz)

[FourNinesFine]

Hello,

I joined TSF this week, following my first PM purchase - 20oz of silver (20x 1oz coins, split beetween Brits and Maples).

My invsting strategy (such that it is) is to channel the majority of my 'discretionary' monthly funds into silver 1oz coins until I've amassed my first 100oz and then potentially look at some low-weight bars etc. to build a hopefully liquid silver portfolio.

On top of that, I was planning to channel some 'bulk' funds (less regularly) into gold, with a view to diversifying the portfolio some, and maximising the wealth protection / future-proofing aspect that gold allows due to its lower premiums and non-VAT status.

My question then, is why do Sovereigns seem so popular, over and above 1oz gold coins?
(Acknowledging that this could be a fallacy, but this is at least how it seems to me when I read / hear people discussing it.)

My assumption is that sovereigns are more liquid? The reason I ask, is that I'm sure it's a sensible rule of thumb to get the most 'oz' for your money - at the lowest premium. On that basis, the 1oz coins seem to come out on top on both counts.
I'm ruling out 0.5oz coins as an option because the premium for these jumps right up.

So if I were looking to make my first, modest foray into gold stacking, should I be looking at Sovereigns or 1oz? Or is it simply dealers choice?

For clarity, I'm obviously looking at bullion, not proof.

Thanks in advance.

FNF.

[MagnusOpum]

I can highly recommend Backyard Bullion's YouTube channel for help with those questions. One of his recent videos goes in to detail on why cost is generally only relevant the shorter amount of time you expect to hold something. 

I don't mind premiums on smaller coins like half or quarter oz where the options for selling on are greater but I do subscribe to keeping overall cost per oz as low mostly just for the hell of it. 

[MonkeysUncle]

To liquidate a 1oz coin you need to find someone with £1,500 or so at the moment.

To liquidate a Sov or Sovs you need to find a man or men with £360 or so. 

Sovs are easier to shift basically, plus they have history and collectors looking for older ones to add to theirs. The Brit lacks history.

Having said the above I hoarded Queen's Beast 1oz coins thinking premiums will be higher than Brits in future and am contemplating hoarding 1oz Tudor Beasts.

2022 Sov being a different design is something many on here have suggested acquiring and I have a few. They may get some more friends soon...

[GBStacking]

My input would be largely the same as @MonkeysUncle. I've just bought some more sovs to add to my stack as it was (on the gold side of things) mostly in 1oz coins and i wanted a bit more fractional. 1oz are pretty liquid if you don't mind selling to a dealer (from what i can tell, you don't really lose much on the buy back premium unlike with much bigger gold bars), but I also wanted a good holding in smaller sovs. That way, if i want to liquidate a bit of my retirement pot when the times comes, i dont need to do it in £1500 chunks, i can release a more modest few hundred pounds. Plus as mentioned, its much easier to find more people privately with that amount of cash they are willing to part with quickly.

[FourNinesFine]

Thanks everyone. This is very much what I thought in terms of liquidity with it being fractional, as you say.  I just wanted to make sure I wasn't missing anything more fundamental.

Thanks for helping out a noob.

[Shep]

Sovereigns.

2 hours ago, FourNinesFine said:

On top of that, I was planning to channel some 'bulk' funds (less regularly) into gold, with a view to diversifying the portfolio some, and maximising the wealth protection / future-proofing aspect that gold allows due to its lower premiums and non-VAT status.

With the reasons stated above in mind, is there any particular reason why you are prioritising silver over gold? (Genuine question).

I have a considerable amount of bias towards stacking gold, but silver often seems to play the part of a middleman gateway metal for new stackers. Alright it’s “cheaper” per Oz and you can build a large stack relatively quickly, but that comes with its own issues of storing and hiding it. Not to mention the premiums and VAT issue if buying from dealers (although some would argue that the premium is irrelevant and can be passed on when selling to private individuals).

Obviously it’s always good to have a balance, but purely as a store of wealth, with the present situation in the U.K. would it not be preferable to prioritise gold over silver?

Edited April 8, 2022 by Shep

[Sparrow]

I would definitely recommend sovs for the reasons that have been mentioned above, but be warned, there is such incredible variety that buying them can be a little addictive.

But having said that, there's always half sovereigns as well if you want to get more diversity for your money

[stefffana]

Hi, @FourNinesFine

My advice is to go for sovereigns. Indeed, are more liquid, easy to buy, easy to sell. I will try to give you some "tips" from my experience:

1. If you are buying them from dealer, buy only brand new and put them in capsules. Will sell very quick on forum if are looking as new. Also, keep all your invoices for more confidence for buyers. 

2. If you are buying from private market, avoid marketplace and ebay if your experience level is not very high. Buy with confidence from forum and you will be fine. Avoid bad looking old sovereigns, are difficult to sell them if is not a very scarce date/mint. Also, you can find very good deals of very good quality pre-owned sovereigns on Chards and Atkinson's, especially on bundles.

3. If you are pure stacker, do not get trapped in collecting old sovereigns. There are hundreds of types, kings, young/old/veiled heads, several mints, dies, ect. It is amazing, fun, interesting, but expensive. You will be reluctant to sell because you will broke a date run, and it is possible to not get back the expected money.

4. I will suggest you also to not avoid buying another well known low premium gold coins, as a lot of 10 and 20 francs/lire LMU or another well known world coins if you see them on forum at a low premium. Are as well, very easy to liquidate

What can I say more?

Happy stacking, my friend!🤗

Kindest regards,

Stefan.

 

 

 

[27carrots]

2022 sovereigns.

Usually when you buy a coin you expect to lose a couple of % when you need to sell it.

After new year, these will probably go up at least £10 each on top of the starting premium which is rare.

Edited April 8, 2022 by 27carrots

[FourNinesFine]

9 minutes ago, Shep said:

is there any particular reason why you are prioritising silver over gold? (Genuine question).

Silver often seems to play the part of a middleman gateway metal for new stackers.

Hey Shep,

It's a good and valid question and I'll try and be honest in my reasoning. Just be gentle with me if what I say doesn't tally with conventional wisdom (or makes me sound nutty). As I say, I am brand new to this.

I think the easiest way to explain my thinking is just in terms of 'time'. I see gold as a means of providing long-term wealth insurance, and when I say wealth, I just mean converting what I have from FIAT into PM - I am not a 'wealthy' person.

So with gold, I'm looking at what it could mean to me either in retirement or in handing something to my children. Which means I can just add to the stack sequentially over the years, topping up in whatever quantities I can afford.

With silver, it's more about more immediate protection. Having a means of currency / barter that is outside of the traditional banking system, but in denominations and with a value that is much easier to use for smaller transactions. Plus...assuming the 'end-times' don't arrive any time soon, it's something that I'd be happy liquidating in line with any of the 'spikes' that may occur in the silver price in the future. As stated, once I hit my (arbitrary) target of 100oz silver, I'd be looking to rethink.

That's it really. As I say, I'm really only just dipping my toe and looking to balance the near future with the long-term future.

And for what it's worth, I find silver more aesthetically pleasing - but that's by the by. 

Thanks for taking the time to reply, I appreciate it.

FNF.

[FourNinesFine]

17 minutes ago, stefffana said:

Hi, @FourNinesFine

My advice is to go for sovereigns. Indeed, are more liquid, easy to buy, easy to sell. I will try to give you some "tips" from my experience:

1. If you are buying them from dealer, buy only brand new and put them in capsules. Will sell very quick on forum if are looking as new. Also, keep all your invoices for more confidence for buyers. 

2. If you are buying from private market, avoid marketplace and ebay if your experience level is not very high. Buy with confidence from forum and you will be fine. Avoid bad looking old sovereigns, are difficult to sell them if is not a very scarce date/mint. Also, you can find very good deals of very good quality pre-owned sovereigns on Chards and Atkinson's, especially on bundles.

3. If you are pure stacker, do not get trapped in collecting old sovereigns. There are hundreds of types, kings, young/old/veiled heads, several mints, dies, ect. It is amazing, fun, interesting, but expensive. You will be reluctant to sell because you will broke a date run, and it is possible to not get back the expected money.

4. I will suggest you also to not avoid buying another well known low premium gold coins, as a lot of 10 and 20 francs/lire LMU or another well known world coins if you see them on forum at a low premium. Are as well, very easy to liquidate

What can I say more?

Happy stacking, my friend!🤗

Kindest regards,

Stefan.

 

 

 

What fantastic advice. Thank you.

Especially regarding the capsules as I would have likely seen these as an unnecessary expense before your explanations.

May I ask... is this why 'grade c' coins are generally not seen as investment gold despite it being the same weight?

Thanks again,

FNF.

[Bigmarc]

My two pennies worth, I try to stick 15 Oz of silver to 1 sov (just the ratio I like to work with). I came to the forum with no gold but within the last year have balanced it out and I have only sovereigns. I like the history, they are very popular and I am not a fan of 999, silver or gold.

[stefffana]

18 minutes ago, FourNinesFine said:

What fantastic advice. Thank you.

Especially regarding the capsules as I would have likely seen these as an unnecessary expense before your explanations.

May I ask... is this why 'grade c' coins are generally not seen as investment gold despite it being the same weight?

Thanks again,

FNF.

Grade C are ok if are at very low premium (1-3%). When you will sell them, you will sell at pure spot. 

If your coins are looking as new, you can expect to sell them up to 5% even on forum, where people are very sensitive with premium paid.

About capsules, for bullion sovereigns are not necessary to be air-tite or screw type best quality. Can be push-fit regular from Ebay or Amazon. Are still doing a great job.

 

[monkstax]

Sovs tend to be extremely liquid, easy to sell here and on ebay and by a dealer

[Monsmoy]

The whole discussion regarding collecting, stacking and liquidity is interesting and there will be differing views.  I, too, am relatively new to the the world of physical PM, but have some thoughts:

1.  Silver coins are nice, but I question the real sense if truly stacking.  Are we really thinking that at some point we would use them in exchange for goods and services?  Is there a high risk that once you start buying coins, the greed monster kicks in and, where you may have deliberately said "split between Brits and Maples" only, it soon turns into Kooks, Krugers (ASEs if someone is selling cheaper than normal) etc? Also, they tarnish!

2.  One common maxim is that you watch the gold versus silver ratio.  Whilst the number is deemed high, as now at a little under 80:1, you buy silver.  When that number drops, perhaps to 50, you sell the silver and buy gold.  If you follow this, then why not just buy manageable bars (10oz, 250g to 1kg)?

3. Everyone considers different factors when discussing the future of silver. My hope is that any manipulation of the price is relaxed/stopped, but I am also conscious that something seismic may catch us all off guard as Govs could introduce measures to control the price in line with a growing industrial consumption (Indeed, something sooner may happen if the bank exposure is truly understood). If the former, and the aforementioned ratio rebalances, the stackers are quids in with multiple 100% ROI. If the latter, we could all be sitting with dead ducks and wishing we just bought gold.

4. Sovs v Brits.  Yes, Sovs theoretically are easier to sell on at a time of need.  If you are in a time of need, is £360 or £720 going to be sufficient?  

5. If saving for the future, ergo the long investment, then the common cry is the cost now and the premium is less important (than if you are flipping). If you are saving for the future, perhaps you are investing a set amount per month, then surely it's best still to buy the highest amount at the lowest premium?  The aesthetics and heart needs to take a second place to a more business approach.  Of course you can go down the more specific long term investment, buying a rare coin or sets of highly graded or similar, but that is another game and not stacking.

6. Consider the current CGT and VAT rules.

7. A couple of final thoughts: 

a) Collecting coins, gold or silver, can be addictive. Don't get attached

b) There are many sovereigns; there are many different Au and Ag coins. Limit your horizon

c) Consider storage space and insurance

d) Talk to people that have been in this market for sometime.  I have found people on TSF to be extraordinarily kind when sharing advice and thoughts as well as services

7. Last point is that I wager that what you are planning now, your strategy, will have changed within 12 months.

All the best with whatever you do.

[Bigmarc]

1 hour ago, Monsmoy said:

One common maxim is that you watch the gold versus silver ratio.  Whilst the number is deemed high, as now at a little under 80:1, you buy silver.  When that number drops, perhaps to 50, you sell the silver and buy gold.  If you follow this, then why not just buy manageable bars (10oz, 250g to 1kg)?

I use a online account pinned to the spot price of silver for this reason. the difficulty with bars that big is that they are not easy to sell quickly. When the premiums were up last summer I cashed in and done exactly this. I sold some pre 1947s, pre 1920s, Brits, maples, Phillis,  kangaroos and a number of bars ranging from 1oz to 100g. It was a good lesson to learn. I also sold on a few different platforms. The pre decimal always sold straight away. Brits next sold within a couple of days. The rest of the 1oz I sold after a while and the bars took a few weeks to go. 

[FourNinesFine]

2 hours ago, Monsmoy said:

7. A couple of final thoughts: 

a) Collecting coins, gold or silver, can be addictive. Don't get attached

b) There are many sovereigns; there are many different Au and Ag coins. Limit your horizon

c) Consider storage space and insurance

d) Talk to people that have been in this market for sometime.  I have found people on TSF to be extraordinarily kind when sharing advice and thoughts as well as services

7. Last point is that I wager that what you are planning now, your strategy, will have changed within 12 months.

All the best with whatever you do.

Thanks @Monsmoy for such a considered and detailed response. As you mentioned in your advice, I'm hoping that this post is just the start of a broader conversation for me with the knowledgeable TSF community. I've learned so much in just the last couple of days.

The first thing to admit is that I don't know the answers to all the questions. I just had this nagging feeling that I had to start. I'm pretty confident that whilst the geo-political situation is not ideal, the key players don't 'actually' want mutually assured destruction. Still, as I mentioned in one of my other posts... my spider-sense is tingling.

Two weeks ago I thought investing in gold was a pipe-dream for someone like me. Now, I know that it's the most sensible thing I could be doing.

But I'm so far away from truly understanding the intricacies around most of this stuff. The world of PM has opened up like a new horizon - a map to a territory I never knew existed and now I need to work out the best route to my destination, while avoiding the hazardous terrain. The Gold:Silver ratio, dollar-cost averages, etc. etc. These are all new concepts for me to get my head around. As the old adage goes, "the more you learn, the more you realise you don't know."

To your above points specifically:

(a) I don't think I'll become attached to the stack per se. I'm just keen to have a physical, tangible asset portfolio.

(b) In terms of sovereigns, I'm pretty sure I'll just be picking up the 'current' year. I've no desire to complete 'sets' or find rare versions. I have collectable trading cards to scratch that itch.

(c) Insurance and storage are considerations for me... but my stack is some way from that being a real concern right now.

(d) Yes. I hope that the TSF folks don't tire of me and my questions.

(7) Without doubt. That comes with expanding knowledge and every day is a school day.

 

Thanks again for your very generous response.

FNF.

[stefffana]

Hi, @FourNinesFine

I will tell you what I am thinking about stacking silver. It is the same answer for the question asked by @Bigmarc in April 2021 in another very interesting topic on forum:  "How much silver to hold? " see https://www.thesilverforum.com/topic/46885-how-much-silver-to-hold/?tab=comments#comment-500609.

 

So, I've done copy/paste on here to answer at your very good questions about silver. My calculations from April are still pretty accurate even in after one year, at that moment the silver spot price was £18.42/g, very close to £19.04 at the time of typing. I didn't check again the silver prices at dealers to update everything, but this is the idea:

 

" I believe the real potential of silver is in spot price, not in premium. So, now I am stacking only low premium silver, very easy to sell near spot price (1000g,  500g bars, old british currency, and scrap ). I sold already all high premium coins and I've converted all in sovereigns and another silver low premium.

Why? Because in next future the industrial demand will generate a rise in spot price and my stack's value will increase and I will do profit only waiting. The shiny silver coins ( now at spot + 60-95% ) will lose from their high premium when the spot price will be high. The market demand will be for cheap silver, not for expensive coins. 

I can't understand why people are interested to pay now for a silver 1oz coin £28 - £35, equivalent at £18.42 spot price + 52% to +95% premium, when the same metal can be bought easy at 0 to 30% premium in a different shape. I am not talking about numismatic or collectible products. This is another story, I don't know this game, I am talking only about pure stacking.

About quantity... Depends on your style of life, your age, your plan of retirement, depends on what you want to give to next generation. But a minimum one is around 15kg silver and equal value in low premium gold in your stack.

This is my opinion, I am not a guru in PM, but I prefer to stay safe, speculating only the spot price and ignoring high premium products. 

 

Let's imagine a scenario, using today's spot price £18.42/oz silver and a future potential spot price x2.5 = £46.05/oz silver.

 

John bought today from a dealer 1 kg bar, paying £790.62, VAT and shipping included. This is £24.58/oz, +34% premium.

Jane bought today 32oz (app.1 kg) silver Royal Arms and she paid £1129, VAT and shipping included. This is £35.28/oz, +91.5 premium.

After few years, the spot price is £46.05/oz = £1480.7/kg and it is time to sell. 

John will sell quick 5% over spot, having in hand £1554.7. His pure profit is £764/kg.

Jane will struggle to sell at 30% over spot, but because the spot is so high, she will accept finally only 10% over spot, having in hand £1628.7. Her pure profit is only £499/kg.

It is a difference of £265/kg between John and Jane. If the stack is 15kg, the difference is £3975.

 

But let's talk about Bob. He bought today 1kg scrap silver at spot price. He paid £592. He sold his silver in the same day as John and Jane at spot price, having in hand £1480.7. His pure profit is £888.5.

Position in this game:

1. Bob:   £888.5 profit/kg;

2. John: £764 profit/kg;

3. Jane: £499 profit/kg.

 

This is rough, because in reality, Bob was able to buy more scrap than John and Jane, using the same money.

If we are talking about the same money invested, the difference is huge.

 

Let's compare now only Bob and Jane, to be more visible this difference.

Jane paid £1129/kg for Royal Arms and Bob used the same money, buying 1.9kg scrap silver.

Jane is selling after years at £1628.7 with profit £499.

Bob is selling after years at £2813.3 with profit £1684, with a difference between them of £1185.

If the stack is 15kg, the difference of profit between Bob and Jane is £17775.

 

This is the reason I am trusting in spot price, not in premiums.

I hope my explanation was clear enough for all new stackers. I know, it is difficult to see the real potential of scrap. But from scrap to treasure it is only a little step.😊 When you will see here scrap silver at spot price, do not hesitate and buy quick!😁

Happy stacking, guys, happy stacking! "

Kindest regards,

Stefan

[ady]

13 minutes ago, FourNinesFine said:

The world of PM has opened up like a new horizon - a map to a territory I never knew existed and now I need to work out the best route to my destination, while avoiding the hazardous terrain. The Gold:Silver ratio, dollar-cost averages, etc. etc. These are all new concepts for me to get my head around. As the old adage goes, "the more you learn, the more you realise you don't know."

Enjoy the journey, you may take a wrong turn sure we all have, it's all about learning and hopefully here your journey will be fruitful!

[ady]

17 minutes ago, stefffana said:

I believe the real potential of silver is in spot price, not in premium

this and the analysis I think spot on, with the exception of maybe a few pieces, but not prepared to take a gamble on guessing which.

[FourNinesFine]

23 minutes ago, stefffana said:

Hi, @FourNinesFine

I will tell you what I am thinking about stacking silver. It is the same answer for the question asked by @Bigmarc in April 2021 in another very interesting topic on forum:  "How much silver to hold? " see https://www.thesilverforum.com/topic/46885-how-much-silver-to-hold/?tab=comments#comment-500609.

Happy stacking, guys, happy stacking! "

Kindest regards,

Stefan

Thanks @stefffana, I just read the entire thread!

I need to learn more about 'junk', that's for sure.

[goldsilverdash]

Personally, I prefer modern bullion coins like Krugerrands, Maple Leaves, Philharmonics, and Kangaroos.

One benefit of such coins is that they have the metal in question ("fine gold", "fine silver"), and the metal content ("1 oz", "1/2 oz", "1/4 oz") clearly stated on the coin itself, and some of them also the purity. This makes it very clear what exactly it is, and it requires less knowledge in a potential buyer to understand what they are getting.

Historical coins don't have any of that, and you need to be familiar with it in order to know what it is and how many grams of gold or silver it contains.

[FlorinCollector]

My input would be do not start with buying silver. With Sovereigns you can only be stung on a small scale. You can be stung badly on your silver and you will only realise this when you come to sell.

[Monsmoy]

7 minutes ago, FlorinCollector said:

My input would be do not start with buying silver. With Sovereigns you can only be stung on a small scale. You can be stung badly on your silver and you will only realise this when you come to sell.

Do I need to check everything I have bought off you?😁

[ady]

2 minutes ago, FlorinCollector said:

My input would be do not start with buying silver. With Sovereigns you can only be stung on a small scale. You can be stung badly on your silver and you will only realise this when you come to sell.

This is true, but "junk" silver is where I started and was a good buy, not really worth forging on the 3d/6d level. Got stung when I started buying really shiny 1oz's, liked the prospectors and got duped, but now put this down to a learning curve. Would still love some prospectors but feel these have been over shadowed with all the fakes.