Capital and profit

[Roy]

I believe there is a correct answer to this question!

Let's say a gentleman bought £10,000 of gold many years ago and recently sold it for £22,000. A tidy (CGT free!) £12,000 profit. Well, relatively, £10,000 was worth more 'many years ago' than it is now.

Should he reinvest the capital back into gold and spend the profit?

Should he invest the £12,000 profit in gold and deploy the capital elsewhere?

Should he put it all back into gold?

If you bought 13oz gold seven years ago and sold it today, you could buy...13oz of gold 😕

Edited November 27, 2023 by Roy

[BLOOMMAN101]

personally, I'd reinvest the profit in gold and use the rest to pay down any debt

Edited November 27, 2023 by BLOOMMAN101

[Tn21]

Out of the three options I would probably go for

"invest the £12,000 profit in gold and deploy the capital elsewhere"

 

 

[Earthmetal]

Can't really answer the question as:
a) We don't know the gentleman's reason for liquidity and the intended purpose for the 'cash'
b) We don't know what the real profit actually is once inflation is taken into account.

Anyway, my advice would be to blow the lot on 5kg bars of silver as it's going to the moon. I saw this on Youtube so it's deffo true.

[Orpster]

I would keep the gold, anything else I would say 'if you cannot hold it you do not own it'

[ZRPMs]

If he sold the gold but managed to get a good rate on the premium of the coin. For example, he managed to pick up a boat load of proof coins for the price of bullion when he bought. Then buy back the cheaper bullion gold coins He should increase his total gold weight. If there was a reason for the sale then anything left over put back in to lower premium gold. As has already been mentioned it's a little hard to choose as different circumstances would most defiantly dictate what would be best to do with the funds. If not needed. Why not leave as is and not sell, as once in fiat, it's loosing its spending power.

[ArgentSmith]

At least he's made use of his CGT allowance if he does buy back the gold assuming he had non exempt items.

Depends if hes bullish Gold or not tbh

[Anteater]

9 hours ago, Roy said:

I believe there is a correct answer to this question!

Let's say a gentleman bought £10,000 of gold many years ago and recently sold it for £22,000. A tidy (CGT free!) £12,000 profit. Well, relatively, £10,000 was worth more 'many years ago' than it is now.

Should he reinvest the capital back into gold and spend the profit?

Should he invest the £12,000 profit in gold and deploy the capital elsewhere?

Should he put it all back into gold?

If you bought 13oz gold seven years ago and sold it today, you could buy...13oz of gold 😕

Firstly, the history doesn't matter. It doesn't matter whether the £22k is partly previous profit from investing gold, or pay for work done saved over time, or a tip from a passing oil sheik. So it would be surprising if the "correct" answer happened to be based on how much of it was profit on the gold investment.

Secondly, clearly there isn't a single correct answer for everyone, so without knowing the gentleman's full circumstances any answer we give is wholly unreliable. Maybe he has a £22k tax bill coming up imminently and no other way to pay it, or £22k in high-interest debt eating his finances alive. Or maybe he has £10M but it's all already in gold. Or maybe he has £10M but none of it is in gold. Etc.

[Stuntman]

1 hour ago, ZRPMs said:

If he sold the gold but managed to get a good rate on the premium of the coin. For example, he managed to pick up a boat load of proof coins for the price of bullion when he bought. Then buy back the cheaper bullion gold coins He should increase his total gold weight. If there was a reason for the sale then anything left over put back in to lower premium gold. As has already been mentioned it's a little hard to choose as different circumstances would most defiantly dictate what would be best to do with the funds. If not needed. Why not leave as is and not sell, as once in fiat, it's loosing its spending power.

If the gentleman was indeed in the situation highlighted above, it would perhaps make sense to take the advice highlighted above.
Otherwise, one might question why the gentleman chose to sell £22,000 worth of gold if he was thinking of buying some gold with the proceeds.  Why did he not just sell the amount of gold that he wanted to turn into cash?

In answer to what to with the £22k, given that he has sold physical gold to that value - I would perhaps advise him to leave £10k in an easy access account earning about 5% interest, put £6k into an equity income stock and shares fund yielding about 5%, and put £6k into a Physical Gold ETF to keep some exposure to the metal unless he already had sufficient exposure.

[JohnA1]

17 hours ago, Roy said:

If you bought 13oz gold seven years ago and sold it today, you could buy...13oz of gold 😕

Isn't that the whole idea? (long-term locking of purchasing power)

[Bigmarc]

Of the top of my head out of the 22 grand I would probably spend 10 grand on a watch. 2 grand on crypto and 10 grand back into metals. 

Unfortunately at the moment this is my level. 

[dicker]

@Roy You are always a gent.  What are you doing with the 22k?

🙂

Best

Dicker

[richatthecroft]

@Roy take your capital back and reinvest the £12k by hoovering up as many Memorial and Coronation Proof Sovereign issues as you can find at the current depressed prices and tuck them away for a few years 😎

Nice profit by the way 👍 

[Paul]

20 hours ago, Roy said:

I believe there is a correct answer to this question!

Let's say a gentleman bought £10,000 of gold many years ago and recently sold it for £22,000. A tidy (CGT free!) £12,000 profit. Well, relatively, £10,000 was worth more 'many years ago' than it is now.

Should he reinvest the capital back into gold and spend the profit?

Should he invest the £12,000 profit in gold and deploy the capital elsewhere?

Should he put it all back into gold?

If you bought 13oz gold seven years ago and sold it today, you could buy...13oz of gold 😕

Spend the profit on hookers, cocaine and drink.

Waste the rest on something frivolous and unnecessary 

[Paul]

Or add some cash to your realised profits. Buy the very best in class and grade/ population old classic true numismatic gold proof coin. Retire it to safe deposit box for a decade and resale it again.

Despite cost of living crisis, nothing much selling. At the very highest end of the market, the best of the best is still going up

There's still lots of cash for the highest price pieces. Still lots of high wealth folk parking cash into the rarest gold, gold patterns and gold proofs

Spend a day or two browsing the heritage auction past platinum night auctions since 2010 and see the right bits are only heading one way 

Edited November 27, 2023 by Paul

[Gruff]

On 27/11/2023 at 00:25, Roy said:

I believe there is a correct answer to this question!

Let's say a gentleman bought £10,000 of gold many years ago and recently sold it for £22,000. A tidy (CGT free!) £12,000 profit. Well, relatively, £10,000 was worth more 'many years ago' than it is now.

Should he reinvest the capital back into gold and spend the profit?

Should he invest the £12,000 profit in gold and deploy the capital elsewhere?

Should he put it all back into gold?

If you bought 13oz gold seven years ago and sold it today, you could buy...13oz of gold 😕

What was the reason for selling all of it? 

If the FIAT wasn't all needed, why sell all of it? If some was needed, then I'd only be looking to sell what was required to pay down the expense.

[Roy]

I'll have to ask him, but I think it had something to do with storage, or rather lack of!

😇

[Gruff]

7 minutes ago, Roy said:

I'll have to ask him, but I think it had something to do with storage, or rather lack of!

😇

OK, so potentially no need for the underlying FIAT!? 
If so, then I'd be looking to reinvest it into other physical gold, and also perhaps keep £2k in cash out of the bankers dirty paws.

[CANV]

the gold punt was always ten per cent of your investments..  cant see any reason to change that..   

[ArgentSmith]

Roy... Bitcoin is going to have a great 18-24 months. Big inflows, halvening, so the seller should buy 0.67 of a Bitcoin and hodl tight.

Lets see how much 0.67 BTC or 6,700,000 Sats are worth in 18 months 👍

And this seller should absolutely avoid buying "crypto" unless he hangs out in betting shops.

[Bigmarc]

7 minutes ago, ArgentSmith said:

Roy... Bitcoin is going to have a great 18-24 months. Big inflows, halvening, so the seller should buy 0.67 of a Bitcoin and hodl tight.

Lets see how much 0.67 BTC or 6,700,000 Sats are worth in 18 months 👍

And this seller should absolutely avoid buying "crypto" unless he hangs out in betting shops.

With everyone singing from the same hymn sheet it almost seems too easy.

[HonestMoneyGoldSilver]

Regrettably you might be right @ArgentSmith. I have some BTC but not enough to make a material difference unless BTC goes to $1 million, which I bloody well hope it doesn't 😂

On the flip side BTC and most established cryptos are relatively old tech, if they were CPUs or GPUs they would be obsolete. Who is to say a new king doesn't rise in the next 18-24 months? If BTC has given up on being a currency and identifies as 'digital gold' (or digital toxic waste) then XRP has a clear run at being the 'payment solutions provider'. If the BRICS get off the ground then real gold would trounce the digital

[ArgentSmith]

1 minute ago, HonestMoneyGoldSilver said:

Regrettably you might be right @ArgentSmith. I have some BTC but not enough to make a material difference unless BTC goes to $1 million, which I bloody well hope it doesn't 😂

On the flip side BTC and most established cryptos are relatively old tech, if they were CPUs or GPUs they would be obsolete. Who is to say a new king doesn't rise in the next 18-24 months? If BTC has given up on being a currency and identifies as 'digital gold' (or digital toxic waste) then XRP has a clear run at being the 'payment solutions provider'. If the BRICS get off the ground then real gold would trounce the digital

Im sorry mate but the tech is layer 2, you are totally missing the point with Bitcoin. Bitcoin is a secure ledger. Money is the killer app. All tech advances ergo Etherium is old tech etc etc. To be clear Bitcoin is the ledger (money) and layer 2 is the tech which will continue to evolve.

[HonestMoneyGoldSilver]

2 minutes ago, ArgentSmith said:

Im sorry mate but the tech is layer 2, you are totally missing the point with Bitcoin. Bitcoin is a secure ledger. Money is the killer app. All tech advances ergo Etherium is old tech etc etc. To be clear Bitcoin is the ledger (money) and layer 2 is the tech which will continue to evolve.

I'm suspicious when folks start quoting jargon from the sales brochure

I think it's more likely you will be correct on price action than incorrect but I don't think it's credible to assert BTC is some sort of fundamental tech. It's trivial to create a 'new BTC' that is superior to the old BTC in every way apart from brand awareness. If my supposition is correct then it's inevitable a new 'secure ledger' that is more energy efficient, faster and cheaper than BTC will be produced, or perhaps it already exists. Why not Dogecoin instead of BTC?

BTC is only a thing due to its original killer app but it's already been replaced in this arena. Who's to say that any technology-based monetary system won't be surpassed multiple times in the near future? All it takes is Taylor Swift and Apple to promote AppleCoin on an incrementally better platform and it's game over for BTC. Or perhaps the Metaverse takes off and tokens used to purchase and secure digital IPRs used by AI, game and movie developers as an industry standard, usurp BTC. Perhaps a new AI-coin connected to the killer version of AI controlled by Microsoft and Google will take over

As @Bigmarc said it almost appears too easy. There is no reward without risk

[JohnA1]

33 minutes ago, HonestMoneyGoldSilver said:

.. There is no reward without risk

Wise words

Following the crowd you get where the crowd will be.

Remember the crowd clapping every Thursday 8pm?