£1225 Gold oz

[Abyss]

Apologies for the clickbait subject title. Been looking at the Gold price in US dollars thinking seems very attractive to pull the trigger and add to my stack but when looking at the price from various UK bullion dealers still seems to be hovering £1500 mark despite significant US dollar price reductions.

The reason behind this is the devaluation GBP and strengthening USD. Back in September 2021 single USD purchased 0.7282 GBP and now purchases 0.8753 GBP.

If the GBP retained its September 2021 value against the USD the price per oz Gold in GBP would now be £1225.

Even though purchasing Gold while looking at the USD price seems attractive but earning and holding in GBP adds an exchange rate element need to factor in.

Best scenario buying Gold has always been a sustained period of falling Gold price in USD and increase in GBP exchange rate vs USD. Will this ever happen again in concurrent who knows. 

[Stuntman]

I've been thinking very much the same thing recently.  

If the pound strengthens against the dollar I will probably invest more units into a Gold ETF (I know...) because I'm happy enough with the amount of physical that I currently hold.  But that may change, and if so, I will buy bullion sovereigns just as a stack.

If the spot price of gold in USD doesn't increase correspondingly when and if the pound strengthens, I see it as a definite strong buying opportunity.

[daca]

Back in February I took advantage of the  strengthening  of the euro vs usd and bought a 50g for 2600E including delivery (spot was ~ 1800usd), now with spot at 1675usd and euro in decline the same bar is 2737E without delivery 😪

Edited September 17, 2022 by daca

[Bruce06]

That's meaning holding gold is hedged part of the currency risk exposed to, which is not a bad idea👍

[modofantasma]

Maybe it's a separate topic but are you buying gold to get into gold or are you buying gold to get out of the £? 

 

[swanky]

But the £ hasn't devalued much. What has happened is $ has appreciated against almost everything else. That's why £/gold hasn't moved much, and would be same if $ hadn't appreciated.

[Stuntman]

God has gone down when priced in USD but has roughly maintained its price in GBP because the GBP has weakened against the dollar.
So essentially it's weakness in the gold price, mainly offset by the weakness in the GBP versus the USD if buying / selling in GBP.

I don't think the pound will weaken much, if any, further against the  dollar so the gold price now needs to go up significantly to increase its value in GBP.

Otherwise the price in GBP will reduce when the pound strengthens against the dollar, which was the OP's original point.

I agree with them!

[LawrenceChard]

21 minutes ago, Stuntman said:

God has gone down

Don't worry, have faith, and he or she should rise again.

According to lots of old stories, his her son managed it!

😎

[LawrenceChard]

6 hours ago, Abyss said:

Apologies for the clickbait subject title. Been looking at the Gold price in US dollars thinking seems very attractive to pull the trigger and add to my stack but when looking at the price from various UK bullion dealers still seems to be hovering £1500 mark despite significant US dollar price reductions.

The reason behind this is the devaluation GBP and strengthening USD. Back in September 2021 single USD purchased 0.7282 GBP and now purchases 0.8753 GBP.

If the GBP retained its September 2021 value against the USD the price per oz Gold in GBP would now be £1225.

Even though purchasing Gold while looking at the USD price seems attractive but earning and holding in GBP adds an exchange rate element need to factor in.

Best scenario buying Gold has always been a sustained period of falling Gold price in USD and increase in GBP exchange rate vs USD. Will this ever happen again in concurrent who knows. 

No need to apologies for the "clickbait".

It does make a good and valid point.

😎