Newbies, how do you see the current bank turmoil and the effect on gold?

[danieldorkins]

As a relative newbie (summer 2022?) I have followed closely the discussion of the current banking situation on the Gold monitoring thread GB with great interest and have to say impressed by the knowledge that many posters have on this subject, this is the first time that many of us newbies, will have experienced a significant rise in the spot price and raises the same questions, buying, selling, waiting to see if it will dip - or not, the posts on the why's and wherefores  by the more experienced I have found really interesting and informative, thank you.

Not being interested in selling but still wanting to buy, the main question is when, I have decided that if things steady at say 1600 (or below ) to say 1620 then I will be happy to buy, if it regularly see saws say between 1600 and 1640 then I will hold off until it steadies does this make sense? 

I would love to know how all the other newbies out there are reacting to all of this, please share your thoughts!

[Tn21]

Hi, 

As you have previously purchased from yours truly I would like to offer my opinion. The price action between £1600 &£1640 is miniscule and I don't think should be the basis of your decision whether or not to purchase. 

If you don't mind me saying -

If I remember correctly when you purchased the items of me, spot dipped and quite significantly too.  

Right now the items are under spot. 

No one can time purchases, because there are quite a few variables in play such as spot price, exchange rate USD-GBP and premiums on coins, politics etc.

 

Depending on how much you want to buy I would suggest you average your purchases out during a period of time. 

Gold only popped off recently due to the SVB / banking issues. If this event did not occur there was a slight amount of negative sentiment towards the metals and I don't think prices would be anywhere near where they are now. 

In the grand scheme of things £100 here or there does not really make that much a difference. 

I simply take pleasure in the fact that I have a tangible asset which is away from the 'banking system'. 

Buy as and when you see fit 😉

Edited March 20, 2023 by Tn21

[James32]

11 minutes ago, Tn21 said:

Hi, 

As you have previously purchased from yours truly I would like to offer my opinion. The price action between £1600 &£1640 is miniscule and I don't think should be the basis of your decision whether or not purchase. 

If you don't mind me saying -

If I remember correctly when you purchased the items of me, spot dipped and quite significantly too.  

Right now the items are under spot. 

No one can time purchases, because there are quite a few variables in play such as spot price, exchange rate USD-GBP and premiums on coins, politics etc.

 

Depending on how much you want to buy I would suggest you average your purchases out during a period of time. 

Gold only popped off recently due to the SVB / banking issues. If this event did not occur there was a slight amount of negative sentiment towards the metals and I don't think prices would be anywhere near where they are now. 

In the grand scheme of things £100 here or there does not really make that much a difference. 

I simply take pleasure in the fact that I have a tangible asset which is away from the 'banking system'. 

Buy as and when you see fit 😉

Well said this man. 

Can't add anything to improve and agree whole heartedly. 

Every previous Time I think oops I've bought at the ATH, along comes another ATH and washes those fears away. Zoom out on the charts and it's a beautiful picture. 

[danieldorkins]

16 minutes ago, Tn21 said:

Hi, 

As you have previously purchased from yours truly I would like to offer my opinion. The price action between £1600 &£1640 is miniscule and I don't think should be the basis of your decision whether or not purchase. 

If you don't mind me saying -

If I remember correctly when you purchased the items of me, spot dipped and quite significantly too.  

Right now the items are under spot. 

No one can time purchases, because there are quite a few variables in play such as spot price, exchange rate USD-GBP and premiums on coins, politics etc.

 

Depending on how much you want to buy I would suggest you average your purchases out during a period of time. 

Gold only popped off recently due to the SVB / banking issues. If this event did not occur there was a slight amount of negative sentiment towards the metals and I don't think prices would be anywhere near where they are now. 

In the grand scheme of things £100 here or there does not really make that much a difference. 

I simply take pleasure in the fact that I have a tangible asset which is away from the 'banking system'. 

Buy as and when you see fit 😉

 

3 minutes ago, James32 said:

Well said this man. 

Can't add anything to improve and agree whole heartedly. 

Every previous Time I think oops I've bought at the ATH, along comes another ATH and washes those fears away. Zoom out on the charts and it's a beautiful picture. 

Thanks for your input which is much appreciated and understand where you are coming from, as someone new to this I had become used to seeing the prices, to start 1480/90 which then moved up into the 1520's/30's + very nice but not too dramatic and still comfortable to buy at but then this latest surge sort of takes me out of my comfort zone, if it stays at these levels for a reasonable period it would become the normal "comfort zone" but I would be happy to buy, at the lower end, certain pieces that I would be after but not sure of "ordinary" sovereigns - just yet, it got me thinking how do people just starting out see this? 

Could have phrased the title better, (tried editing it but not able to do so) I wasn't looking for an in-depth insight into the banking turmoil from people new to this game but more as to it how would affect their decisions to buy or not.

[Midasfrog]

"Gold outperforms everything" 

" We shouldn't think of it as buying or investing in gold , rather it is converting our Fiat currencies back to real money.

The banks don't want or like us doing that conversion from Fiat , they would rather keep it under their control so that it can be destroyed by compound inflation and compound charges. So you think your saving but in fact your Fiat is reducing over time.

[James32]

1 minute ago, danieldorkins said:

 

Thanks for your input which is much appreciated and understand where you are coming from, as someone new to this I had become used to seeing the prices, to start 1480/90 which then moved up into the 1520's/30's + very nice but not too dramatic and still comfortable to buy at but then this latest surge sort of takes me out of my comfort zone, if it stays at these levels for a reasonable period it would become the normal "comfort zone" but I would be happy to buy, at the lower end, certain pieces that I would be after but not sure of "ordinary" sovereigns - just yet, it got me thinking how do people just starting out see this? 

Could have phrased the title better, (tried editing it but not able to do so) I wasn't looking for an in-depth insight into the banking turmoil from people new to this game but more as to it how would affect their decisions to buy or not.

I get all your points, had all the same thoughts along the road myself. Do understand and agree with stability before going again, but think of it like this.

Do I think gold will ever be at £2.5k within 5 - 10 years, if the answer is a resounding yes that most think, then buying at £1600-£1700-£1800 etc will be a part of our strategies. 

We all say long-term plan, but you truly have to get comfortable with this.

[NGMD]

Totally agree with @Tn21. 

The majority of us are small fry financially to earn a serious living on Gold fluctuations. Buy for the long haul and have your eggs in lots of baskets.

[Gruff]

Something to ponder... if you feel that £1650/oz is too high, and you're sitting with £20k in the bank, how would you feel if you woke up one morning and overnight you'd been part of a bank bail-in and now you have £15k in the bank and a 100 shares in a worthless bank?

As @Tn21 says, average purchases over time even out the blips and dips and at least you have something to show for it. 

I put the below together for my missus' friends who had inherited some FIAT and were concerned about it sitting in the bank (This was in September/October last year). I know that there are several people on here that echo the same thoughts, keep enough FIAT in the bank to pay several months bills and then choose wisely what to do with the rest. Keep adding to your stack is one option, but even asking opinions, is simply that. What serves one, won't serve another. The banking industry is the wild west and we need to remember that. They play fast and loose with our deposits (that aren't ours once deposited, they are unsecured loans to the bank), so the current turmoil should serve as a warning and a reminder to not keep all your eggs in a FIAT basket.

Just my two pence worth
 

UK Bank regulations:
https://www.bankofengland.co.uk/paper/2021/executing-bail-in-an-operational-guide-from-the-boe
- Check out the PDF on this page "Executing bail-in: An operational guide from the Bank of England"
- This details basically how they banks can enact this scenario. However there is no mention of a limit or amount at which the bail-ins get taken. Eg: £85000 and above

https://www.bankofengland.co.uk/freedom-of-information/2021/questions-about-bail-in-and-customer-deposits
- Whilst they state that protected deposits are protected (FSCS Protection £85,000 per account per banking license**) and you wouldn't lose any money, you might not be able to access it for a period whilst the bank stabilises itself. As you could imagine, if a bank did perform a bail in, a lot of customers would want to move banks. This could trigger a further requirement for funds.
- I wouldn't take the above to mean that upto £85,000 or £170,000 on the joint bank accounts would be safe, we know how the Central Bank and Government like to change the rules to suit

** - FSCS determines that an individual can have upto £85,000 or £170,000 jointly protected by a banking license.
- https://www.fscs.org.uk/making-a-claim/customer-info/banking-licences/
- As of March 2020 (PDF below ~52 banking licences that cover over 350 Managed Financial Institutions)
- https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/authorisations/which-firms-does-the-pra-regulate/2020/fscs-banking-brands-march-2020.pdf

https://www.gov.uk/government/consultations/bail-in-powers-implementation-including-draft-secondary-legislation/bail-in-powers-implementation
- The Bank of England links above are backed up by the UK Gov website
- This does however state the following:

The BRRD also includes provisions regarding the ranking of deposits in the insolvency hierarchy in what is currently Article 98A (subject to renumbering). It requires Member States to ensure that:
“eligible deposits – that is, deposits of any amount that qualify for protection under the Deposit Guarantee Scheme (in the UK, the Financial Services Compensation Scheme)
– from natural persons and SMEs, have a higher priority ranking in insolvency than the claims of ordinary unsecured creditors
covered deposits – that is, deposits that qualify for protection under the Deposit Guarantee Scheme, up to the coverage limit (in the UK, £85,000) shall have a higher priority ranking in insolvency than the part of eligible deposits from natural persons and SMEs that exceed the coverage limit”

As outlined above, the government is seeking views in the consultation on the transposition of certain aspects of the BRRD. The government will consult on transposition of the remainder of the BRRD in due course.

As for stacking physical PMs, the best company in the UK to buy from is Chards.
https://www.chards.co.uk/

The majority of the PMs that we have purchased come from them. This is for larger bulk purchases.
https://tavexbullion.co.uk/

Tavex is a European PM dealer that has recently opened in the UK. We’ve made several purchases and their customer service is the best I’ve found. Their smaller volumes of coins are the cheapest in the UK.

European PM Dealers:
https://goldsilver.be/en/ (Recommended from a TheSilverForum.com member)
https://www.coininvest.com/en/ 
https://europabullion.com/ 

Stacking physical PMs won't make you wealthy or rich, it is however more over a hedge against inflation and better/safer than having all your net worth in a bank account that attracts no interest and bank sharks.

If you are wanting to stack Silver/Gold I would recommend starting with Britannia's/Sovereign's (Gold only) as they are exempt from CGT. Bars typically attract CGT on either PM, as do coins and bars minted outside of the UK.
Whilst both are legal tender (have an ascribed face value), silver is subject to VAT for whatever reason (I have a theory and happy to divulge if interested).

So with Silver, you'll effectively be in negative equity in the short term. But if you plan on holding for a longer period than you will more than make up that initial additional expenditure as base currencies are devalued by ever more QE and debt currency creation.
Gold Britannia's are VAT and CGT exempt, but obviously cost more.

For both, the more you buy the smaller the premiums, this is the dealer/seller markup based on market dynamics of supply and demand to a certain extent.

I would also suggest some smaller denominations less than 1oz. If we do find ourselves in a nightmare scenario (otherwise known as an SHTF) or an internet blackout (pray we don't) having smaller 1g/10g/0.5oz denomination silver might be useful for payment/barter as well having some cash on hand.
This should cover most of the bases should you need to buy goods, pay bills.

The below is a list of links from a friend of mine @HerefordBullyun. Thought I would share this list of the best financial related documentaries I’ve watched. I am listing them in my favourite order. If I can provide links I will.
1. The four horsemen (link to watch)
Great documentary and sums up (link in name) i actually believe that children should be taught this in their late teen's. Gives an overview how the world is today and correlation with war, economy, business and how the 1% work. If you’ve never watched this - you should and make your family watch it. But points to why you strongly why you should hold PM's.

2. The Century of Self  (link to watch) - Adam Curtis
Shows how the theory of how Freuds nephew applied psychological techniques to sell to the masses, and these techniques still work till this day. Intriguing and well researched. How Freuds nephew become a very rich man. Curtis Is great documentary writer.  Hypernormilisation and Bitter Lake are well worth a watch. The latter explains about how the birth of the mess in the middle east foreign policy and the mess we are in now.

3.  Inside Job - Rotten tomatoes review -98% but you can get on various platforms
An in-depth analysis of 2008 financial crash. The global financial meltdown, at a cost of over $20 trillion, resulted in millions of people losing their homes and jobs. Through extensive research and interviews with major financial insiders, politicians and journalists

4. The Big Short - on Netflix and Prime
How Deutchse bank got shafted by Goldmans in a nutshell.

5.  Overdose - the next financial crisis(link to watch)
Explains about how the bankers can continue to kick the can down the road by increasing debt.

6. Money for nothing - inside the federal reserve  Imdb review but you can get it various platforms
Shows all members of the fed in all their glory - NOT  Especially Alan Greenwankspangle

7. 97% owned(link to watch)
Really good UK docu. 97% Owned is a new documentary that reveals how the creation of credit and the mystery that surrounds it, is at the root of our current social and economic crisis. Referring to the 97% of the world’s money supply that is represented by credit this thought provoking film presents serious research and verifiable evidence on our economic and financial system and is the first documentary to tackle this issue from a UK-perspective.

Hopefully that is not an overwhelming amount of information for you in one go. I am more than happy to have a chat about this further.

 

[ZRPMs]

45 minutes ago, James32 said:

Every previous Time I think oops I've bought at the ATH, along comes another ATH and washes those fears away.

One of my mentors once said to me when I was worrying If I was about to over pay for the house I'm in. He said " I don't know why your worried. It may look a bit expensive in the moment but once a year or two have gone by. and you look back. The house will look cheap." I think is the same with gold. I remember my grandmother buying a sovereign for about £36 when I was young. the conversation in the car on the way home between my mother and her was along the lines of my mother telling her she shouldn't have wasted her money. I know the time scale is large but £36 from the 80's in gold or cash. Which would you choose.  

[Bigmarc]

8 hours ago, danieldorkins said:

, waiting to see if it will dip - or not

Nothing wrong with waiting for a dip but make sure you set some boundaries otherwise you will never buy. Pound cost averaging is mostly useful as it takes the emotion of it away which suits some but I don't have the funds to do this on a regular basis

[ZRPMs]

For a time I split my precious metal buying funds into two. I had one part for pound cost averaging. This meant that I set a period of time between purchases and stuck to that no matter if the price went up or down. Dependant upon availability I bought. This helped with the buyers remorse that crept in when price was high in the early days. Then the second part I used to buy the dip so to speak. Using my pound cost average as a guide. Buying when my purchase would lower my average cost (this approach only worked in the early days). Nowadays I buy a few when the price drops in relative terms.

After a while after my confidence in the PM's market had built up I have sold at times of high prices but always kept the funds and purchased back at a lower price points (sometimes it worked well, others just a little over even). I think that provided the fund you use are not needed for day to day expenses. My approach could serve you well. With the caveat that, I am not a financial advisor and that everybody's circumstances are different. You will have to tailor your buying to your own circumstances. 

[SidS]

Consider:

In 2002, I thought shield sovereigns were expensive at £120 per coin.

In 2006, I thought regular sovereigns were expensive at £120 per coin.

In 2012, I thought sovereigns were expensive at £250 per coin.

In 2016, I thought sovereigns were expensive at £295 per coin.

In 2023, I think sovereigns are expensive at £400 per coin.

 

There's a pattern I think. I wish I'd bought a gold £5 when they were £650 each.

Edited March 21, 2023 by SidS

[Bratnia]

The price of gold can/has declined for protracted periods at times, its difficult to stay the course under such conditions. One method that 'works' is to 50/50 2MCL/Gold, yearly rebalanced. 2MCL is a 2x FT250 stock index tracker, and 50/50 yearly rebalanced with gold will yield similar rewards to if you were 100% in a FT250 index tracker (total returns), whilst the yearly rebalancing will see the number of ounces of gold you hold wax and wane. Over prolonged declines in gold prices you'll tend to have more ounces of gold accumulated in your safe/wherever, when gold does well you'll tend to see ounces being held declining, to add more stock shares.

Hold 2MCL in a ISA (and/or SIPP), Britannia or Sovereign gold coins for the gold.

Nice having half of your portfolio outside of the regular financial system, in-hand (or under the mattress/wherever). When others are fretting about their bank deposited cash and there are bank runs, fear of their money not being returned (above the FSCS £85K amount - that whilst that may seem high when you're young, can become too little in your later years), you can just smile. Just keep it quiet though, rule 1 of owning gold is ... you don't own any gold, otherwise that risks its security.

Don't know of a UK equivalent of this US web site/data, but as a guide PV

For 2MCL/Gold 50/50 since the start of 2016 to end of 2022 and that yielded a 75% gain (£10,000 initial increased to £17,500 portfolio value), a 8.4% annualised rate of return/reward.

Keep at that until you get near to retirement, then sell perhaps half of the portfolio into cash deposits/Gilts before entering retirement, carrying on as before with the other half, and likely you'll do OK/well.

You'll likely hit problems when trying to buy 2MCL, as the rules are such that you have to declare/demonstrate that you're a "sophisticated investor". Usually the test/questions aren't that onerous - more a case of the broker being able to demonstrate that "you were warned" about the risks in order to cover their own backs.

[Bigmarc]

I am almost convinced we have an AI amongst us. 

 

 

Edited March 22, 2023 by Bigmarc
Deleted photo, a bit harsh

[Bigmarc]

I have noticed all the crypto friendly banks in the UK have now limited payments to an exchange to £5000 a month for our own protection. Seems a lot but part of me thinks that it's an attempt to stop it being used as a method of payment and to keep it more of a speculative asset. 

[Gruff]

27 minutes ago, Bigmarc said:

I have noticed all the crypto friendly banks in the UK have now limited payments to an exchange to £5000 a month for our own protection. Seems a lot but part of me thinks that it's an attempt to stop it being used as a method of payment and to keep it more of a speculative asset. 

Also to prevent people moving into another transferable means out of the bank. Easy to move £20k in BTC, bit harder to do that with silver or gold

[SimonD]

I have been a very small stacker/collector for a couple of years as I do not have a lot of spare cash for buying precious metals (if I had the money I would be stacked high!) but I do not really look at the cost at the time of purchase. I am buying for at least a 20 year investment and if I don’t need to sell will leave it to my kids.

Financial/bank issues do matter but I only buy what I can afford.

[danieldorkins]

Just a thanks to #Gruff for your post on Monday, lot of interesting reading and info.

[Gruff]

5 minutes ago, danieldorkins said:

Just a thanks to #Gruff for your post on Monday, lot of interesting reading and info.

My pleasure, I hope to one day be able to pay back for all the help on here