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At what point will a bullion sovereign become too expensive to buy?


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I had this conversation with a friend yesterday and we were both reminiscing when we were stacking these when they were £190 each and today they are bouncing around the £400 mark.   He was saying for him now they are becoming practically harder to buy 1 a mental block for him as he's still wishes he could buy at the sub £200 mark, (don't we all)  but 2  real world limitations £400 is a chuck of money now for normal people and wages have not doubled in the time gold  has.   Yes you could say buy less per year but is there a point where even buying 1 is a considered purchase. 

We could say it's all relative but it clearly isn't,  by the time every gets their 10% pension boost and workers get there 8-15% pay rise  it's very likely gold would have risen again 15-20% more, is gold accelerating away in terms of affordability for mortals especially if you look at the longer term predictions for gold.  I know anyone can predict anything and the market could go south so this leads me onto another question.......

A what price for a bullion sovereign would you back the truck up......and I mean really back it up, pull a chuck of savings, load the credit card I mean really throw  a good portion of your wealth into it?    

Would be interesting to see where the low and high bar is for people.   

For me I'd back the truck up at £300, but would have to really consider buying less at £600-£650 if they doubled in price again in the next 6-7 years to £800 and wages had still not kept up I'd be out. (I'd be selling loads so I'd still be happy)   

I can hear people saying you can play the spread, of course you can but I just really wanted to simplify at what point is a sovereign too much for a moral working person? 

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I read an article which I can’t find at the moment. It put gold price in terms of world money supply and debt. I believe the estimate was around $60000 an ounce so putting a sov/ 1/4. At 15000 circa £12000, 

Point is if we went back to a gold backed currency then all my available savings would be in cash/ sovereigns and interchangeable. Like you I would be happy if prices rise significantly/ money reset and sitting on a little stack currently when prices were being held down. 

“Nowadays people know the price of everything and the value of nothing.” Oscillate Wildly

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There are loads of people buying 1oz coins up to kilo bars so if they start struggling they could always start picking up sovs. 

Also many people are doing better than ever in the current climate even though some are having to tighten up.

I don't necessarily have a price that I wouldn't buy at. If spot has steadied off around £5k an Oz at some point in the future and £1300 is the going rate for a sov then that's what it is. Sure I'd like to buy some more in the low £200s like my first few... 

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I think its just balance for me, there's an upper transaction size ill make in my SIPP to ensure i dont have too much exposure to anyone equity/fund.  The same applies to PMs, except currently they are far more fractional.  If that fractionality disappears due to a single indivisible item being closer to the upper transaction size then my main concern would be how easy it is to sell and how much i would potentially lose in spread going direct to a liquid source like a dealer.  I would say that would start to become a consideration between 2.5 - 10k but I would be surprised if at that point in time 2.5 - 10k isnt deemed alot less than it is now.  

Also a consideration is the macro economy, is gold due a slowdown if we get deflation etc. whilst i wouldnt bet against it, i would stop going into it depending on factors.

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17 minutes ago, KevjustKev said:

Not so sure about the price of a Sov is really the right question, more like what else could you buy for the same money? You can buy a 2 bed hose in Hull for around 200 Sov's, going to need a bit of work, but nothing major. In X years that same house may cost 100 Sov's

In Venezuela 5 or 6 years ago, 60,000 bolivars would buy you a house, or 60 x 1oz gold coins, these days 60 x 1oz coins will still buy you a house, but 60,000 bolivars will buy you a loaf of bread (if you're lucky)

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@GoldDiggerDave  Awesome post.  
 

(1) There is a roaring trade in Sovs on TSF - more being sold than I have ever seen before.  

(2) I suspect that this is because of a shortage of Sovs in the market, which means Sovs are now regularly selling for 8pct over spot or more.  

(3) I think “too much” for me at least will be dictated by the price over spot.  Sovs could be bought for a little over spot a year or so ago, this is no longer the case.  1 Oz Brits are more becoming more attractive - for me at least. My long standing view is that gold is a very good long term bet, and I am still buying.

(4) I am not routinely buying Shields any more despite loving them.  The premium is too high for me unless I am buying one that I consider special in some way.  For example I bought an excessively copper colours Shield six months ago.

Gillicks are now my staple and will remain so unless the premiums go higher.

All the best

Dicker

 

Not my circus, not my monkeys

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I'm still looking to buy a couple of sovs this year but am becoming a bit more reluctant as I watch the price increase.  The premiums being charged bother me more than the increasing spot price. I think RM are now charging about 10% over spot for single coin purchases. 🤔

  I don't know at what point I'd back my truck up as I only started stacking in Sept 2021 and the cheapest sov I ever got (apart from my free one from the Chards competition) was £327 and I thought even that was pricey. I'll still buy this year on the basis that gold is holding it's value as it always has done and isn't really costing any more in real terms than it ever cost because it's fiat that is devaluing in reality as it gradually heads to it's inevitable true intrinsic value of zero and I don't see any changes in direction coming in the foreseeable future.

Edited by flyingveepixie
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I think for most folks more than a few hundred is something they have to plan for - £500 is a month's disposable income for a lot of people.  I'm a contractor so I'm cash rich when I'm working and have zero when I'm not, so I can (sort of) make hay while the sun shines.  

As sovs start overheating, I'm considering going to doubles or 1oz coins, and putting more into Indonesia, where the regulated price means you can buy 5g or 10g bars for around 5% over spot.  At the moment you can still get sovs for somewhat reasonable prices here and there, but I don't know how long that will last for.  Time will tell if we're seeing a panic buying episode triggered by the announcement of the new lower CGT threshold - I think the most likely outcome is that the market will cool down in due course.  RM aren't going to be shy about minting Brits to backfill demand for gold if they perceive there's a bob in it.

Edited by Silverlocks

The Sovereign is the quintessentially British coin.  It has a German queen on the front, an Italian waiter on the back, and half of them were made in Australia.

 

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1 hour ago, dicker said:

(2) I suspect that this is because of a shortage of Sovs in the market

More likely they try to cash the profit made, the buyers are just FOMO

Edited by theman73

More silver coins on my website

                dancu.co.uk

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Good question Dave.

I've been pondering this issue too, though perhaps from a different angle?

If you consider gold as a portfolio diversifier, then what weighting will you be comfortable with?

10%, 15% maybe?

What I'm suggesting is there may come a point where you are simply holding too much gold!

(Cue meme: one simply cannot hold too much gold!)

As other assets fall in price, real estate for example, then your gold holding will increase as a percentage of total asset portfolio.

I hope this makes sense, economics are not my trade. I would imagine there are a number of members here whose portfolio is overweight in precious metals and they are not aware. Or even bothered!

Not a bad place to be I guess.

Thoughts anyone?

Edited by Roy

Technically, alcohol is a solution..

'It [socialism] poses a growing threat, however unintentional, to the freedom of this country, for there is no freedom where the State totally controls the economy. Personal freedom and economic freedom are indivisible. You can’t have one without the other. You can’t lose one without losing the other.'

"There is no such thing as public money, there is only taxpayers' money"

Let not England forget her precedence of teaching nations how to live.

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1 hour ago, Roy said:

I would imagine there are a number of members here whose portfolio is overweight in precious metals and they are not aware. Or even bothered!

Not a bad place to be I guess.

Thoughts anyone?

I'm well diversified me - I got tins of soup galore..!😎

Edited by flyingveepixie
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There are no doubt a lot of people on here and elsewhere have probably said that they wouldn’t pay over £200 or so for any sovereign! As a pretty new person to this it seems only pretty recently I thought that over £400 was excessive, now it is not only the norm, but the cheaper end! Like some others, I just wish silver was going the same way, but that is for another thread😮🫢🧐

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1 hour ago, Roy said:

As other assets fall in price, real estate for example, then your gold holding will increase as a percentage of total asset portfolio

Could trim a position on gold selling a portion to then put the money into the asset that's dropped to rebalance If needed/desired. 

If you're at a stage where you're still adding to the pot just add a little more to whichever is lagging behind? 

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I was in the process of buying a property a bit ago. I had a nice lump tied up in sovereigns. They were selling for about £250 at that point. The guy that bought the sovereigns from me had been buying sovereigns for many years. We had a good conversation whilst the trade was being done. At the end and just before he went. He said thank you for these, but, its almost impossible to believe when I started I was buying Ounce coins for less than I've paid for each of these sovereigns. Just over £200 an ounce.

Sorry @James32 I recon his stack would bury yours, mine and most of us on here put together. It's hard to imagine a 1oz coin at £250. Not to coin a phrase, but I bet it took some metal to buy a sovereign for more than you were paying for ounce coins. 

I suppose my point is no matter what the price is £300 / £400 .............£600. As long as what you pay is not over priced for that time ie : if the average is £400 then £380 is a good price but £420 might be a bit much for bullion. I think my cheapest sovereign was £173.85. So it quite mad to think that I thought £300 was dear. It seems so long ago now. My heating oil was £270.00 for 1000ltrs just paid a little under £900.00. Store of value, I think so.

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When I hear people say, 'it's not that gold has gone up, it's the fiat that has depreciated'

I think back to 2015 when I was paying £180 a sov.....has fiat lost more than half its value in 7+ years?

Technically, alcohol is a solution..

'It [socialism] poses a growing threat, however unintentional, to the freedom of this country, for there is no freedom where the State totally controls the economy. Personal freedom and economic freedom are indivisible. You can’t have one without the other. You can’t lose one without losing the other.'

"There is no such thing as public money, there is only taxpayers' money"

Let not England forget her precedence of teaching nations how to live.

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16 minutes ago, modofantasma said:

Could trim a position on gold selling a portion to then put the money into the asset that's dropped to rebalance If needed/desired. 

If you're at a stage where you're still adding to the pot just add a little more to whichever is lagging behind? 

That's what @vand used to say. Don't sell an asset to balance, rather stop buying it and buy more of something else!

Technically, alcohol is a solution..

'It [socialism] poses a growing threat, however unintentional, to the freedom of this country, for there is no freedom where the State totally controls the economy. Personal freedom and economic freedom are indivisible. You can’t have one without the other. You can’t lose one without losing the other.'

"There is no such thing as public money, there is only taxpayers' money"

Let not England forget her precedence of teaching nations how to live.

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18 minutes ago, Roy said:

When I hear people say, 'it's not that gold has gone up, it's the fiat that has depreciated'

I think back to 2015 when I was paying £180 a sov.....has fiat lost more than half its value in 7+ years?

I bought 10 x 25kg bags of smokeless pellets from the coalman yesterday.   £15/bag. Total cost £150.  We also ordered some of the same stuff online from a different supplier when we couldn't get hold of the coalman last week - cost of that was £20/bag.   18 months ago the same amount cost me £85. I still have the receipt.  I would hazard a guess and say that 7 years ago it cost a bit less than that.   There are plenty other examples out there : cost of piped in energy has more than doubled in two years never mind seven, as has the cost of milk in the supermarket, cost of catfood (my personal fave), bogroll, beans, tins of soup, and many others.

Edited by flyingveepixie
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4 minutes ago, flyingveepixie said:

I bought 10 x 25kg bags of smokeless pellets from the coalman yesterday.   £15/bag. Total cost £150.  We also ordered some of the same stuff online from a different supplier when we couldn't get hold of the coalman last week - cost of that was £20/bag.   18 months ago the same amount cost me £85. I still have the receipt.  I would hazard a guess and say that 7 years ago it cost a bit less than that.   There are plenty other examples out there : cost of piped in energy has more than doubled in two years never mind seven, as has the cost of milk in the supermarket, cost of catfood (my personal fave), bogroll, beans, tins of soup, and many others.

Milk! and the dairy farmers still getting ripped off by the supermarkets!

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18 minutes ago, flyingveepixie said:

I bought 10 x 25kg bags of smokeless pellets from the coalman yesterday.   £15/bag. Total cost £150.  We also ordered some of the same stuff online from a different supplier when we couldn't get hold of the coalman last week - cost of that was £20/bag.   18 months ago the same amount cost me £85. I still have the receipt.  I would hazard a guess and say that 7 years ago it cost a bit less than that.   There are plenty other examples out there : cost of piped in energy has more than doubled in two years never mind seven, as has the cost of milk in the supermarket, cost of catfood (my personal fave), bogroll, beans, tins of soup, and many others.

I got a severe bollocking from Mrs Dicker when I bought five pallets of Smokeless coal before Covid.  I was away for work and the were left on the drive and she had to move them - sack by sack.  However I still have more than half left now and it was a good investment!

Not my circus, not my monkeys

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