Worth buying £10,000 of gold in GBP whilst the USD is strong against it?

[Skyhawk747]

Hi all,

 

I was wondering if it's worth buying about £10,000 of gold in GBP whilst the USD is strong against it? Once the GBP strengthens won't that hugely affect the price of gold as the value of the USD will drop?

Cheers

 

Phil

[ChrisSilver]

I've split this into a new topic as will be better for you to get direct opinions/answers to your specific question and keeps the forum tidy also  

[Skyhawk747]

Many thanks

[Stuntman]

You have two factors in play: the underlying gold price in USD and then the GBP/USD exchange rate.  

Some people think that the pound is currently quite weak against the dollar, which, as you say would reduce the price of gold in GBP if the pound were to strengthen against the dollar.

Some people think that the spot price of gold is undervalued in USD terms, and may increase over the next year or two.

Personally I see more upside potential in the gold price compared to the downside potential on the exchange rate and would consider buying if (a) I had the spare cash and (b) didn't have an existing holding.

[Abyss]

Lets run through some hypothetical scenarios see how it impacts the number of oz of Gold you can accumulate having £10k (no premiums buying at spot)

1. Current situation £/$ 1.22 Gold $1848 = 6.60 oz

2. GBP stronger £/$ $1.50 Gold price same $1848 = 8.11 oz

3. GBP stonger £/$ 1.50 Gold Price weaker $1600 = 9.37 oz

4.Weaker GBP £/$ 1 Stronger Gold price $2000 = 5.00 oz

Anyone can run through additional scenarios but as you can see the most beneficial scenario for UK citizien holding GBP and buying Gold when $ price of Gold is falling and the exchange rate £ is getting stronger vs $. I have some ideas about the price of Gold in the short, medium and long term as well as the exchange rate £ vs $ but these just my opinions nobody can predict the future price of Gold or Exchange rates unless their name is Wonger.

[Skyhawk747]

Great reply Abyss and thanks...

So if you were me right now what you do? Hold off and wait for the GBP to strengthen or buy now?

[Abyss]

7 hours ago, Skyhawk747 said:

Great reply Abyss and thanks...

So if you were me right now what you do? Hold off and wait for the GBP to strengthen or buy now?

I have never been able to time the right time to pull the trigger to purchase Gold. When I started to accumulate in 2016 I thought I had about 10 years where the gold price would be stuck below $1400 level and I had plenty of time to accumulate in hindsight I was just lucky. Look at the monthly chart of Gold on trading view (free for anyone to do so)

https://www.tradingview.com/chart/?symbol=COMEX%3AGC1!

see triple top $2080 level. In my humble opinion the price Gold will slowly decline working its way towards $1700. I have a strong conviction the price leg created from $1625 to $ 2080 (monthly chart) will hold I would be looking to re-accumulate (confirmation obtained weekly chart) Gold between the price $1650 and $1700. As for the exchange rate £/$ sorry it is to hard to time both markets and pull the trigger for the purchase of Gold I have only looked at the price of Gold in $ and have purchased it based on that price.

But once you buy don't have any regrets and make sure your 10k is something that you can keep in Gold and not have to sell if something unexpected happened in life.

Edited October 2, 2023 by Abyss

[Bratnia]

13 hours ago, Abyss said:

Lets run through some hypothetical scenarios see how it impacts the number of oz of Gold you can accumulate having £10k (no premiums buying at spot)

1. Current situation £/$ 1.22 Gold $1848 = 6.60 oz

2. GBP stronger £/$ $1.50 Gold price same $1848 = 8.11 oz

3. GBP stonger £/$ 1.50 Gold Price weaker $1600 = 9.37 oz

4.Weaker GBP £/$ 1 Stronger Gold price $2000 = 5.00 oz

Anyone can run through additional scenarios but as you can see the most beneficial scenario for UK citizien holding GBP and buying Gold when $ price of Gold is falling and the exchange rate £ is getting stronger vs $

I opine that 3 is more the probable direction of travel, which yields the worst case if you bought in at recent levels. Expecting a $1.40 per Pound, $1500/ounce gold price. If so then averaging-in, a Sovereign/month for a couple of years rather than lumping £10K in today would work out better, with the reservation to lump in the outstanding remainder if/when the price dropped to less than £1100/ounce.

There's always the 50/50 lump-in/average-in choice so that you're neither fully wrong, or right.

[Skyhawk747]

Thanks, guys,

 

Some very useful advice, much appreciated.

I was gearing up to buy the Brittania Coin but maybe I will get some sovereigns too...

[JohnA1]

19 hours ago, Skyhawk747 said:

Hi all,

 

I was wondering if it's worth buying about £10,000 of gold in GBP whilst the USD is strong against it? Once the GBP strengthens won't that hugely affect the price of gold as the value of the USD will drop?

Cheers

 

Phil

Are you thinking as a trader or a stacker? Short or long term?

As a stacker, the answer is '**** yeah'. Why would you care if this paper or that paper is in vogue? (that's what strong dollar/weak pound means, right?)

As a trader (buying/selling frequently) you're at the whims of forces and winds greater than all of us. It's more luck than skill.

As a stacker the end-game is clear

[Skyhawk747]

I'm looking to invest so I can sell in 10-15 years' time.

[JohnA1]

1 minute ago, Skyhawk747 said:

I'm looking to invest so I can sell in 10-15 years' time.

That time-frame is more stacker-biased.  Irrespective of USD/GBP balance, gold is king in my eyes

[MonkeysUncle]

On 02/10/2023 at 11:27, Skyhawk747 said:

I'm looking to invest so I can sell in 10-15 years' time.

I would steer to buying now, as the alternative is to sit on the fence and waste time/ worry etc. I have a horrible history of sitting on fences. Sometimes it works out well, others badly.

On your timetrame I would suggest buying, putting it away somewhere safe and forgetting about it day to day. Look at the spot price onceca month or once a quarter or whatever. Or not at all.

The other alternative if you really do fret about short term ups and downs (I suffered terribly from this) is to buy small amounts frequently. So maybe go and buy a couple of Sovereigns or whatever and then repeat in a months time and so on until you've invested the cash.

[Paul]

On 01/10/2023 at 20:53, Abyss said:

. . . . . . .nobody can predict the future price of Gold or Exchange rates unless their name is Wonger.

    

[monkey]

On 07/10/2023 at 12:20, MonkeysUncle said:

I would steer to buying now, as the alternative is to sit on the fence and waste time/ worry etc. I have a horrible history of sitting on fences. Sometimes it works out well, others badly.

On your timetrame I would suggest buying, putting it away somewhere safe and forgetting about it day to day. Look at the spot price onceca month or once a quarter or whatever. Or not at all.

The other alternative if you really do fret about short term ups and downs (I suffered terribly from this) is to buy small amounts frequently. So maybe go and buy a couple of Sovereigns or whatever and then repeat in a months time and so on until you've invested the cash.

Where have you been uncle? I've been looking for some good advice on gold buying!

[Skyhawk747]

On 07/10/2023 at 19:20, MonkeysUncle said:

I would steer to buying now, as the alternative is to sit on the fence and waste time/ worry etc. I have a horrible history of sitting on fences. Sometimes it works out well, others badly.

On your timetrame I would suggest buying, putting it away somewhere safe and forgetting about it day to day. Look at the spot price onceca month or once a quarter or whatever. Or not at all.

The other alternative if you really do fret about short term ups and downs (I suffered terribly from this) is to buy small amounts frequently. So maybe go and buy a couple of Sovereigns or whatever and then repeat in a months time and so on until you've invested the cash.

Thanks Mr Monkey 🙂

I'm going to go very slow, today I just bought 3 Britannia 1 oz gold coins.

I did look at the King Charles Full Sovereigns but the premiums seem a bit high right now at around 5-10%

[Tipsmart]

What a call! 👍

[Chrissyblards1]

On 09/10/2023 at 12:54, Skyhawk747 said:

Thanks Mr Monkey 🙂

I'm going to go very slow, today I just bought 3 Britannia 1 oz gold coins.

I did look at the King Charles Full Sovereigns but the premiums seem a bit high right now at around 5-10%

Buying 3 1oz gold Brits is a nice “slow”pickup. Keep that up if you can when you can and you’ll be more than fine. 😁

[dicker]

It’s good to reflect on this one.

If you had bought on the day you posted this you would be up 575 by today.

One of golds “good”months.

[JohnA1]

2 hours ago, dicker said:

It’s good to reflect on this one.

If you had bought on the day you posted this you would be up 575 by today.

One of golds “good”months.

[RoughDog]

On 08/10/2023 at 10:15, Paul said:

    

I'll predict the price on Sunday.  Let you know Saturday.