Spike in Premiums

[elvee426]

Seems like just the last week there has been a significant spike in premiums.  No doubt this has to do with QEII (RIP), but premiums seem to be up across the board on bars and non-UK coins as well.

Certainly this has been going on with US Eagles for a while.  Looking at Atkinsons Brits are at about £30 for 1 or £26.75 ea when buying a tube of 25 (VAT inc).

US Eagles are pretty nuts at £36 for 1 or £33.25 ea when buying a tube.

Current spot at time of posting £17.13.

Just checked out Chards and their prices seem to be more reasonable (although a lot of items out of stock or with status Orderable rather than In Stock)

Prices in TSF Buy Sell haven't reacted yet - a good time to buy there I would say!

Hoping to get some commentary on the situation from @LawrenceChard 😁

Edited September 21, 2022 by elvee426

[LawrenceChard]

1 hour ago, elvee426 said:

Spike in Premiums

Seems like just the last week there has been a significant spike in premiums.  No doubt this has to do with QEII (RIP), but premiums seem to be up across the board on bars and non-UK coins as well.

Certainly this has been going on with US Eagles for a while.  Looking at Atkinsons Brits are at about £30 for 1 or £26.75 ea when buying a tube of 25 (VAT inc).

US Eagles are pretty nuts at £36 for 1 or £33.25 ea when buying a tube.

Current spot at time of posting £17.13.

Just checked out Chards and their prices seem to be more reasonable (although a lot of items out of stock or with status Orderable rather than In Stock)

Prices in TSF Buy Sell haven't reacted yet - a good time to buy there I would say!

Hoping to get some commentary on the situation from @LawrenceChard 😁

"Brits are at about £30"

Until then, I had presumed you were talking about gold, and even when I saw this, I thought you meant £30 per ounce over spot gold.

At this point, I had to scroll to the top of the page, to find out what you were talking about.

• Home 
•  
• Precious Metals 
•  
• Silver 
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• Spike in Premiums

But it would have been good to have made things clear by using the title "Spike in Silver Premiums".

In the UK, it almost makes no sense to discuss premiums on silver, coin or bars.

Why? Simply because of VAT. You need to strip the VAT out of the price before discussing premiums, otherwise you are discussing prices, not premiums.

And then, you need to remove the intrinsic value, leaving you with an actual premium.

So assume silver Britannias are £30, including VAT, that makes them £25 excluding VAT. If spot silver is £17, that makes an £8 premium, or 47% premium.

Also "Looking at Atkinsons" I'd rather not. But why when Chards are under £25? 

Another reason to save time and effort discussing premiums on silver is the fact that buying silver in the UK or EU, and paying VAT is not a sensible investment. Gold is. Buy silver coins or bars if you want to collect them, you like the designs, or you need a doorstop. Buy gold for investment.

Or, if you do buy silver for investment, don'g pay VAT on it, buy it for offshore storage where it does not attract VAT.

Try reading this:

https://www.chards.co.uk/blog/advice-guide-for-uk-bullion-investors/1041

Now, back to silver Britannia prices and premiums:

Quantity	Premium	Price Per Item (Exc. VAT)	Price Per Item (Inc. VAT)	Total (Inc. VAT)	Est UK Delivery
1	£3.60	£20.72	£24.86	£24.86	£3.50
5	£3.60	£20.72	£24.86	£124.30	£6.00
10	£3.60	£20.72	£24.86	£248.60	£6.00
25	£3.45	£20.57	£24.68	£617.00	£6.00
50	£3.30	£20.42	£24.50	£1,225.00	£11.00
100	£3.15	£20.27	£24.32	£2,432.00	£27.60
250	£2.85	£19.97	£23.96	£5,990.00	£29.60
500	£2.80	£19.92	£23.90	£11,950.00	£48.20
1000+	£2.75	£19.87	£23.84	£23,840.00	£97.40

That makes it easy to see the actual premiums, does any other dealer give you this much information or transparency?

I don't think £3.60 or £2.75 is a notably high premium on new 2022 silver Brtitanias, although without checking, it migh be about 10 or 20 pence more than a month ago.

Also note that @ChardsCoinandBullionDealer premiums are less than half your aforementioned dealer.

I guess you could have chosen other examples from other dealers with similar rip-off premiums.

"Just checked out Chards and their prices seem to be more reasonable"

Of course they are, that's what we do!

Is that enough commentary?

😎

[elvee426]

Thank you Lawrence for taking the time and effort to reply.  Yes from what you say it looks like some other dealers have bumped up their premiums, but Chards are still well priced.

I do not fully agree with the investment argument on Silver Brits due to VAT.  Prices in the secondary market (for example this forum) do take VAT into account - we do not see ex VAT prices in the sales section (unfortunately!).  And legal tender UK coins are free from CGT.  Naturally there are annual CGT thresholds so you'd need a lot of bullion and a lot of profits for that to make a difference.

Spot was down at £10.50 in Mar 2020 and has been as high as £28 in Mar 2011.  If (when?) we see those highs again that's not a bad return.

[LawrenceChard]

21 minutes ago, elvee426 said:

Spot was down at £10.50 in Mar 2020 and has been as high as £28 in Mar 2011.  If (when?) we see those highs again that's not a bad return.

But that is not a "return", unless you can buy and sell at spot.

😎

[elvee426]

15 minutes ago, LawrenceChard said:

But that is not a "return", unless you can buy and sell at spot.

I don't understand.  Say for example I buy when spot is £10.  I pay VAT and also premium.  So let's say I pay £14.

Then later spot is £20.  I sell on TSF (where else?) at a price that is slightly below the dealers (and therefore has VAT and premium built in).  Let's say I sell at £27.50.  I have made a return right?

[LawrenceChard]

12 minutes ago, elvee426 said:

I don't understand.  Say for example I buy when spot is £10.  I pay VAT and also premium.  So let's say I pay £14.

Then later spot is £20.  I sell on TSF (where else?) at a price that is slightly below the dealers (and therefore has VAT and premium built in).  Let's say I sell at £27.50.  I have made a return right?

That's a lot different from "Spot was down at £10.50 in Mar 2020 and has been as high as £28 in Mar 2011."

28.5/10.5 = 2.66, or 166% "return/profit".

27.5/14=1.96. or 96% "return/profit".

Even then, your calculations would only be valid if "free postage" was universal, which it isn't.

You are also limited by the quantity you can buy and sell on TSF at any one time.

Postage is likely to cost relatively more on small transactions. For example if you buy 1 coin, and there is £3 postage, then sell it, another £3 postage, that's £6 off your "profit". This ignores the labour cost of sending and receiving stuff, doing bank transfers, all small amounts which add up.

😎

 

 

[elvee426]

It's a wonder anyone buys any coins at all - we must all be mugs 😜

[Senna]

So does anyone think buying a tube of Silver Britannia’s is better than a couple of Gold Sovereigns?

[StackemHigh]

6 minutes ago, Senna said:

So does anyone think buying a tube of Silver Britannia’s is better than a couple of Gold Sovereigns?

What makes the difference is why you're buying? I now see silver as a collecting hobby date runs and typeset collecting look at some of the Germania mint offerings or power coins.

Gold is more of a wealth protection safe haven for me with a much lower spread than silver (even without VAT) and if i want a quick out with a larger sum of cash a couple of sovereigns is that quick and easy way. I got bigger pieces than sovs but can access a wide total (£) with 0.10, 0.25, 0.5, 1, 2 Toz coins and 5g, 10g, 20g, 50g and 100g bars to choose from.

It's much easier to save with smaller goin coins too.

And i do think dealers will and do in many cases fill the drop in spot with a increase in premium  for a short time. Maybe the size of company can't take the loss of these dips. Maybe it is just price gouging. Either way premiums are a way that companies stay in business, we call it premium, they call it profit. without profit a business wouldn't be there.

1 hour ago, LawrenceChard said:

You are also limited by the quantity you can buy and sell on TSF at any one time.

Postage is likely to cost relatively more on small transactions. For example if you buy 1 coin, and there is £3 postage, then sell it, another £3 postage, that's £6 off your "profit". This ignores the labour cost of sending and receiving stuff, doing bank transfers, all small amounts which add up.

😎

 

 

There are companies like the above mentioned Atties and Chards that have different ways of working with the inc P&P or not. Usually prices are evenly matched when a couple of coins are purchased. Some will have better availability on new coins and some on older secondhand stock and some will be less bullion with more emphasis on more collecting higher quality items. Atties are more new coins and bars, Chards older coins especially sovs and Silvertrader, power coin on collectibles.

Chards are the only company i can see that openly still do an old fashioned phone me up for stuff with their "Stocklist collection"

I rarely use Atties or Chards for silver purchases because of their pricing and availability issues.

All these markets will have difference business structures with different premiums to support their profits.  

[Senna]

Cheers for the reply, for me it is definitely more of an investment or wealth preservation if I’m honest, so I’ll probably stick to just gold. 

As I type this, I’ve just had an email from Chards saying the double sovereigns are back in stock, so might buy one of them.

Out of curiosity if you don’t use the likes of Chards for Silver, where would you go instead?

Edited September 21, 2022 by Senna

[James32]

1 hour ago, Senna said:

Cheers for the reply, for me it is definitely more of an investment or wealth preservation if I’m honest, so I’ll probably stick to just gold. 

As I type this, I’ve just had an email from Chards saying the double sovereigns are back in stock, so might buy one of them.

Out of curiosity if you don’t use the likes of Chards for Silver, where would you go instead?

Seems still out of stock?

[LawrenceChard]

4 hours ago, StackemHigh said:

What makes the difference is why you're buying? I now see silver as a collecting hobby date runs and typeset collecting look at some of the Germania mint offerings or power coins.

Gold is more of a wealth protection safe haven for me with a much lower spread than silver (even without VAT) and if i want a quick out with a larger sum of cash a couple of sovereigns is that quick and easy way. I got bigger pieces than sovs but can access a wide total (£) with 0.10, 0.25, 0.5, 1, 2 Toz coins and 5g, 10g, 20g, 50g and 100g bars to choose from.

It's much easier to save with smaller goin coins too.

And i do think dealers will and do in many cases fill the drop in spot with a increase in premium  for a short time. Maybe the size of company can't take the loss of these dips. Maybe it is just price gouging. Either way premiums are a way that companies stay in business, we call it premium, they call it profit. without profit a business wouldn't be there.

There are companies like the above mentioned Atties and Chards that have different ways of working with the inc P&P or not. Usually prices are evenly matched when a couple of coins are purchased. Some will have better availability on new coins and some on older secondhand stock and some will be less bullion with more emphasis on more collecting higher quality items. Atties are more new coins and bars, Chards older coins especially sovs and Silvertrader, power coin on collectibles.

Chards are the only company i can see that openly still do an old fashioned phone me up for stuff with their "Stocklist collection"

I rarely use Atties or Chards for silver purchases because of their pricing and availability issues.

All these markets will have difference business structures with different premiums to support their profits.  

I agree with much of that.

One small correction.

Premium and profit are related but much different.

If we buy at, say, 3.0% premium, and sell at 5.0% premium, that is only a 2.0% profit, possibly less after inward shipping (no free postage!).

You probably did understand that but did an abbreviated version, but many people do seem to think that the two things are one and the same thing.

 

[bluffer]

6 hours ago, elvee426 said:

It's a wonder anyone buys any coins at all - we must all be mugs 😜

I'm not a mug!

 

 

 

 

 

 

 

 

 

 

 

 

i identify as a cup myself.

[GoldDiggerDave]

Happy days another thread I can stomp all over silver!!!!!!!

Edited September 21, 2022 by GoldDiggerDave
Added my stompers!

[Darr3nG]

38 minutes ago, GoldDiggerDave said:

Happy days another thread I can stomp all over silver!!!!!!!

New boots Dave?

[Senna]

5 hours ago, James32 said:

Seems still out of stock?

Yeah, I found that when I followed the link in the email too. I’ll call them tomorrow and enquire. 

[Stuntman]

56 minutes ago, Darr3nG said:

New boots Dave?

...and panties? 😉

Nice to see a revival of the conversation that we had on the other thread about the relative wealth preservation of DMs versus silver... 😁

[Arganto]

11 hours ago, Stuntman said:

wealth preservation of DMs

If I'd have known they would have turned into nothing but a badge nailed to cheap rubbish materials I would've stock piled thousands of pairs some years ago; they'd probably have appreciated by now... I once was given a pair of brown Air Wair boots by my dad when I was a kid, he'd already been wearing them for years. Someone stole them from me and threw them away when I was in my twenties as they were sick of seeing them on me. Those things lasted.