gold sovereign or britannia

[gav999]

Hi all I was wondering what is everyone's opinion or what do you collect  ?

I am not sure if I should start collecting full sovereigns or 1oz britannias.

I am looking to hold on to them for a long time and then see how the market is then.

Thank you 

[Shep]

Whichever has the lowest premium above spot when you are buying.

Although sovereigns are a little easier to sell if you want to offload peer to peer down the line.

Edited February 14, 2023 by Shep

[Pete]

If selling to a bullion dealer it often makes no difference.
You get paid on the weight of gold and they don't care if you are selling a coin, bar or scrap.
Selling sovereigns to other stackers and collectors will likely get you a better price ( margin over spot ) however you will already have paid more to purchase a sovereign.
Atkinsons recently was buying sovereigns at 2% over spot but that suggests the demand was exceptionally high and therefore the likely selling price also high.

Look for the best deals at the time of purchase and remember to compare fine gold ( 24ct and not 22ct ) prices to spot to see how much extra you are paying for gold.

[GBStacking]

I've got a variety of 1oz, the Brits i bought for their CGT exemption status, the Krugs simply because i got a great deal and only payed about 2.5% over spot (were some of my earliest coins too), the others are mostly because i wanted some different pretty things in my stack. I've now largely switched to Sovs, this is due to a mix of reasons including CGT exempt, lower cost to sell therefore hopefully a wider secondary market that can afford them and their outstanding reputation for being globally recognised and desired (guess that's what 200 odd years of heritage gets you. 😁 )

As for my opinion for what to buy, i honestly cant see you going wrong with either, but it's mostly down to what your budget is comfortable with and how you plan on selling them at the other end? For what it may be worth, I'd advise against going "all in" and buying a load in 1 hit, spread out the purchases a bit. Cost averaging helps immensely when you buy something then watch spot take a nose dive half an hour later (don't ask me how i know!) 😂.

[LawrenceChard]

4 hours ago, gav999 said:

gold sovereign or britannia

Hi all I was wondering what is everyone's opinion or what do you collect  ?

I am not sure if I should start collecting full sovereigns or 1oz britannias.

I am looking to hold on to them for a long time and then see how the market is then.

Thank you 

I suggest you start by reading this:

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

Including:

"You should aim to buy at the lowest percentage premium within reason. It is important to compare percentage premiums, not prices to ensure you are getting the best deal.  "

The lowest premium I can see on "Investment Gold" is currently here:

https://www.chards.co.uk/1kg-gold-bars/gold-bullion-bar/one-kilogram/559

	Premium %	Price Per Item	Total	Est UK Delivery
1	1	£49,409.54	£49,409.54	£43.00
3+	0.5	£49,164.94	£147,494.82	£124.60

 

Other TSF members have already mentioned ease of selling, which may not be easy peer-to-peer on kilo bars, but:

Premiums on 2023 King Charles III Britannia 1 oz Gold Bullion Coin:

https://www.chards.co.uk/2023-king-charles-iii-gold-britannia-bullion-one-ounce-coin/17625

From 3.1% to 3.55%

2022 Memorial Gold Bullion Sovereign

https://www.chards.co.uk/2022-gold-bullion-sovereign-elizabeth-ii-memorial-coin/18111

From 6.9% to 6.55%

Does this help to answer your question?

😎

[Bratnia]

Pre 1931 and Sovereigns were money. There were Pound notes (paper money) and Sovereigns (legal tender £1 value). Interchangeable. "I promise to pay the bearer the sum of ..." is still written on present day paper (plastic) notes, in effect stating that paper notes can be exchanged for gold, but where that no longer actually applies (at least not directly such as banks being obligated to do so). In contrast a Britannia one ounce coin has a £100 legal tender value. Not that people will actually pay for a Pound Shop item with a Sovereign at its legal tender value nowadays, as that fixed rate gold/money convertibility ended in 1931 and since then the Pound note/currency has devalued (inflation).

The price of gold tends to be volatile. Buying and holding isn't really a good choice. Instead blend gold with stocks and periodically rebalance the two. 67/33 FCIT (a global stock fund) and gold for instance. If 67 stock value halves to 33, 33 gold value doubles to 66, then rebalancing back to 67/33 stock/gold weightings doubles up on the number of stock shares held. Not that you should particularly target that, rather simple periodic rebalancing suffices, in effect captures similar characteristic in a more opaque/gradual manner. With that in mind, a gold ETF/fund (such as SGLN) is a reasonable 'gold' holding, costs around 0.12%/year in fund management fees which compared to perhaps a 3.5% coin premium above spot, sell back at spot, and 3.5% / 0.12% = 29 years to break-even. However there are different risks/benefits to holding ETF/physical gold, so at some point, when coin spreads are narrow, migrate some of gold ETF over to Britannia (or Sovereign) coins. Sovereign and Britannia coins are exempt from capital gains tax so frees up some ISA/SIPP space for other assets.

Historically since 1965, if you maintained a yearly rebalanced 67/33 FCIT/gold asset allocation, you'd have ended 2022 with over 15 times more ounces of gold. Whilst the portfolio grew at a 13.4% annualised rate of return (7.4% in real (after inflation) terms). Gold by itself increased at a 8.5% annualised rate of return (nominal) BUT did so in a much more irregular manner. For instance 1980 to 2004 and broadly the price of gold remained the same, lost out in real terms. Physical in-hand gold is more for the bottom half of your total gold holdings, that is less inclined to be 'traded' (such as via yearly portfolio review/rebalancing). For that bottom draw/core gold holdings Britannia coins tend to have the narrower spreads, but if you periodically migrate some of gold fund/ETF over to physical gold then that is subjective as at times Sovereign coins might have tighter spreads than Britannia coins. All a question of ongoing supply/demand factors.

You can do the same/similar with FCIT. Sometimes that sells for a 10% discount to NAV (net asset value), sometimes it compares to NAV. Rotating out of FCIT and into a global stock tracker ETF when the price/NAV is near 0%, swap back again when FCIT is at a 10% discount to NAV ... and such 'trading' over time potentially adds to your overall portfolio rewards.

In short, start with a gold ETF such as SGLN, and then over time look to migrate some of that into coins, as and when the circumstances (spreads) look attractive.

Edited February 14, 2023 by Bratnia

[Skyfiller]

8 hours ago, gav999 said:

Hi all I was wondering what is everyone's opinion or what do you collect  ?

I am not sure if I should start collecting full sovereigns or 1oz britannias.

I am looking to hold on to them for a long time and then see how the market is then.

Thank you 

Sovereigns here. Always thought they would be much easier to liquidate when required. Just look at how many have been sold here already this year, must be in the 1000’s!

[LawrenceChard]

4 hours ago, Bratnia said:

Pre 1931 and Sovereigns were money. There were Pound notes (paper money) and Sovereigns (legal tender £1 value). Interchangeable. "I promise to pay the bearer the sum of ..." is still written on present day paper (plastic) notes, in effect stating that paper notes can be exchanged for gold, but where that no longer actually applies (at least not directly such as banks being obligated to do so). In contrast a Britannia one ounce coin has a £100 legal tender value. Not that people will actually pay for a Pound Shop item with a Sovereign at its legal tender value nowadays, as that fixed rate gold/money convertibility ended in 1931 and since then the Pound note/currency has devalued (inflation).

The price of gold tends to be volatile. Buying and holding isn't really a good choice. Instead blend gold with stocks and periodically rebalance the two. 67/33 FCIT (a global stock fund) and gold for instance. If 67 stock value halves to 33, 33 gold value doubles to 66, then rebalancing back to 67/33 stock/gold weightings doubles up on the number of stock shares held. Not that you should particularly target that, rather simple periodic rebalancing suffices, in effect captures similar characteristic in a more opaque/gradual manner. With that in mind, a gold ETF/fund (such as SGLN) is a reasonable 'gold' holding, costs around 0.12%/year in fund management fees which compared to perhaps a 3.5% coin premium above spot, sell back at spot, and 3.5% / 0.12% = 29 years to break-even. However there are different risks/benefits to holding ETF/physical gold, so at some point, when coin spreads are narrow, migrate some of gold ETF over to Britannia (or Sovereign) coins. Sovereign and Britannia coins are exempt from capital gains tax so frees up some ISA/SIPP space for other assets.

Historically since 1965, if you maintained a yearly rebalanced 67/33 FCIT/gold asset allocation, you'd have ended 2022 with over 15 times more ounces of gold. Whilst the portfolio grew at a 13.4% annualised rate of return (7.4% in real (after inflation) terms). Gold by itself increased at a 8.5% annualised rate of return (nominal) BUT did so in a much more irregular manner. For instance 1980 to 2004 and broadly the price of gold remained the same, lost out in real terms. Physical in-hand gold is more for the bottom half of your total gold holdings, that is less inclined to be 'traded' (such as via yearly portfolio review/rebalancing). For that bottom draw/core gold holdings Britannia coins tend to have the narrower spreads, but if you periodically migrate some of gold fund/ETF over to physical gold then that is subjective as at times Sovereign coins might have tighter spreads than Britannia coins. All a question of ongoing supply/demand factors.

You can do the same/similar with FCIT. Sometimes that sells for a 10% discount to NAV (net asset value), sometimes it compares to NAV. Rotating out of FCIT and into a global stock tracker ETF when the price/NAV is near 0%, swap back again when FCIT is at a 10% discount to NAV ... and such 'trading' over time potentially adds to your overall portfolio rewards.

In short, start with a gold ETF such as SGLN, and then over time look to migrate some of that into coins, as and when the circumstances (spreads) look attractive.

FCIT?

That's exactly what I thought when I saw your latest post!

😎

[WizardOfSov]

Fairly new to the game myself but as the name suggests I like sovereigns.

I'm not at that point yet where I'm looking to buy specific dates to complete a date run or collecting examples from all mints they were produced at for specific years I'm happily just stacking random year bullion sovereigns and that means low premiums.

If you want to get into the collecting side of things though and not just stacking I think it's a no brainer that sovereigns are the way to go simply because of the sheer variety.

[ShineyMagpie]

Ultimately its down to personal preference. People often say buy at cheapest price over spot, while the logic is sound its not quite as simple as that. While of course getting the weight of gold as cheap as possible makes sense, it's also dependent on how you intend to sell in the future. If something unexpected comes up selling one or two sovereigns maybe enough cash instead of selling a full 1oz coin. Likewise the premium you pay for the coin is often transferred when selling if on here.

[Bratnia]

9 hours ago, LawrenceChard said:

FCIT?

That's exactly what I thought when I saw your latest post!

😎

Used to be Foreign and Colonial (FRCL London Stock Exchange ticker) but in the modern day world that was deemed to be a offensive name so they changed to F&C investment trust (FCIT London Stock Exchange ticker). Originally established in 1868 and diversified globally, the first collective investment so that regular investors had access to holdings that otherwise would have been prohibitive. I do wonder if that ticker was selected in reflection of what those making the choice opined at the time in having to change the long standing name due to social 'circumstances'.

Why does a Sovereign £1 legal tender value coin contain the amount of gold it does? 0.235420 troy ounces. Because the inverse of that is near 4.25 i.e. £4.25/ounce gold price. Which was (near) what the "Official British Price" of gold from 1700 or so up to 1930 was set. The US$ was also pegged to that so for international trade currency was stable and Sovereigns (gold) were often used in international trade. Gold in being finite tended median inflation to broadly be 0%. Being pegged like that meant that the market price of gold remained around that price for centuries. The Pound Note paper currency was exchangeable for a Sovereign and vice versa. In 1931 however many were exchanging Pound Notes for Sovereigns and the Bank of England could only secure more gold in the open market at prices above the £4.25/ounce price, so convertibility was suspended. The US followed that lead in 1933 when it compulsory purchased all of Americans investment gold. Subsequent to that the US achieved international agreement that the US$ would be used for international trade settlement, and that the US would peg the US$ to gold. Fiat currency (rather than commodity (gold) currency) was born, and unlike gold that is finite, the US were tempted to periodically print/spend dollars, that devalues all other notes in circulation, such that unlike prior centuries were inflation broadly averaged 0%, instead we've broadly seen positive inflation (currency devaluation) since the 1930's.

Prior to the 1930's and most investors were content to buy/hold bonds, as that was lending their gold (sovereigns) to the state in return for interest (more gold in return) and where inflation broadly averaged 0%. FCIT up to then was predominately a bond fund. Subsequently it transitioned to being a more stock-heavier fund, as bonds transitioned from paying real (after inflation) rewards, to more being 0% real (after inflation and taxation). Prior to the 1930's and the state/banks had to borrow gold (money) in order to spend/lend. Since then however and nowadays the state can just print/spend as can banks just create money to add to the accounts of those that borrow from it. Cash you deposit into banks nowadays is no longer your money kept in safe keeping but becomes the banks money free to do with what it likes - such as heads it wins, tails and taxpayers bail them out type game-plays.

Gold is a competitor 'currency' to the US$ and events that drive up prices in dollars, such as dollar devaluation, inflation, tends to see the price of gold rise and vice-versa, in the broader sense. Such that gold is a reasonable hedge against stocks (and vice versa). Stocks however progress in a saw-tooth motion, spend more time progressively rising, inter-spaced with periodic sharper declines. Such that 67/33 stock/gold is a reasonable asset allocation. When holding that, if 66 stock value halves to 33, and 33 gold value doubles to 66, then rebalancing back to 67/33 weightings has you double up on the number of shares being held. Doubling up your stake (exposure) after a 'loss' is a Martingale betting sequence - that can yield positive gains even when there's been more tails than heads outcomes.

Stake 1, lose

Stake 2, lose

Stake 4, win

Overall outlay 7, return = 8, you're up despite there having been more losing outcomes than winning outcomes. In the context of stocks (with gold), you're up even though the price of stocks had declined.

 

[LawrenceChard]

11 hours ago, ShineyMagpie said:

Ultimately its down to personal preference. People often say buy at cheapest price over spot, while the logic is sound its not quite as simple as that. While of course getting the weight of gold as cheap as possible makes sense, it's also dependent on how you intend to sell in the future. If something unexpected comes up selling one or two sovereigns maybe enough cash instead of selling a full 1oz coin. Likewise the premium you pay for the coin is often transferred when selling if on here.

You ae right that some people do say "buy at cheapest price over spot", but my advice is slightly more refined than that "You should aim to buy at the lowest percentage premium within reason."

If you simply "buy at cheapest price over spot", you will probably end up with fakes, and sub-standard coins which you will probably lose out on when you try to sell them.

😎

[LawrenceChard]

1 hour ago, Bratnia said:

Used to be Foreign and Colonial (FRCL London Stock Exchange ticker) but in the modern day world that was deemed to be a offensive name so they changed to F&C investment trust (FCIT London Stock Exchange ticker). Originally established in 1868 and diversified globally, the first collective investment so that regular investors had access to holdings that otherwise would have been prohibitive. I do wonder if that ticker was selected in reflection of what those making the choice opined at the time in having to change the long standing name due to social 'circumstances'.

Why does a Sovereign £1 legal tender value coin contain the amount of gold it does? 0.235420 troy ounces. Because the inverse of that is near 4.25 i.e. £4.25/ounce gold price. Which was (near) what the "Official British Price" of gold from 1700 or so up to 1930 was set. The US$ was also pegged to that so for international trade currency was stable and Sovereigns (gold) were often used in international trade. Gold in being finite tended median inflation to broadly be 0%. Being pegged like that meant that the market price of gold remained around that price for centuries. The Pound Note paper currency was exchangeable for a Sovereign and vice versa. In 1931 however many were exchanging Pound Notes for Sovereigns and the Bank of England could only secure more gold in the open market at prices above the £4.25/ounce price, so convertibility was suspended. The US followed that lead in 1933 when it compulsory purchased all of Americans investment gold. Subsequent to that the US achieved international agreement that the US$ would be used for international trade settlement, and that the US would peg the US$ to gold. Fiat currency (rather than commodity (gold) currency) was born, and unlike gold that is finite, the US were tempted to periodically print/spend dollars, that devalues all other notes in circulation, such that unlike prior centuries were inflation broadly averaged 0%, instead we've broadly seen positive inflation (currency devaluation) since the 1930's.

Prior to the 1930's and most investors were content to buy/hold bonds, as that was lending their gold (sovereigns) to the state in return for interest (more gold in return) and where inflation broadly averaged 0%. FCIT up to then was predominately a bond fund. Subsequently it transitioned to being a more stock-heavier fund, as bonds transitioned from paying real (after inflation) rewards, to more being 0% real (after inflation and taxation). Prior to the 1930's and the state/banks had to borrow gold (money) in order to spend/lend. Since then however and nowadays the state can just print/spend as can banks just create money to add to the accounts of those that borrow from it. Cash you deposit into banks nowadays is no longer your money kept in safe keeping but becomes the banks money free to do with what it likes - such as heads it wins, tails and taxpayers bail them out type game-plays.

Gold is a competitor 'currency' to the US$ and events that drive up prices in dollars, such as dollar devaluation, inflation, tends to see the price of gold rise and vice-versa, in the broader sense. Such that gold is a reasonable hedge against stocks (and vice versa). Stocks however progress in a saw-tooth motion, spend more time progressively rising, inter-spaced with periodic sharper declines. Such that 67/33 stock/gold is a reasonable asset allocation. When holding that, if 66 stock value halves to 33, and 33 gold value doubles to 66, then rebalancing back to 67/33 weightings has you double up on the number of shares being held. Doubling up your stake (exposure) after a 'loss' is a Martingale betting sequence - that can yield positive gains even when there's been more tails than heads outcomes.

Stake 1, lose

Stake 2, lose

Stake 4, win

Overall outlay 7, return = 8, you're up despite there having been more losing outcomes than winning outcomes. In the context of stocks (with gold), you're up even though the price of stocks had declined.

 

TLDR!

😎