Physical Gold

[ukmtk]

Slightly off topic but here goes.

According to wikipedia the Talmud components date from 200AD and 500AD: https://en.wikipedia.org/wiki/Talmud

As that is more than 1000 years ago - surely that counts as the plural millenia as opposed to a single millenium?

[Charlottesquare]

Just buy things your other half can wear, may not be as solid as an investment in gold coins etc but far more enjoyable.

No idea of the current value of anything I have bought her over the years but do know the solid gold Edwardian gate bracelet I bought her circa 1993 for £300 must have added something to its resale value over the last 30 years, and then you get in to diamonds, rubies, pearls etc as stores of value and also something attractive. (I wear no jewelry but do buy the odd picture instead, none worth fortunes but £500 here/£1,000 there gives cover for the walls and hopefully long term a store of value.)

I also tend to always buy her older pieces (except once she got a brand new ring) , usually Victorian or Edwardian, so she is unlikely to ever meet something with the exact same item. Not all investments need tucked away in drawers, some , maybe not as good investments, can offer utility.

And of course finally, auctions can be good fun- a grand day out.

[Lootman]

Just buy things your other half can wear, may not be as solid as an investment in gold coins etc but far more enjoyable.

No idea of the current value of anything I have bought her over the years but do know the solid gold Edwardian gate bracelet I bought her circa 1993 for £300 must have added something to its resale value over the last 30 years, and then you get in to diamonds, rubies, pearls etc as stores of value and also something attractive. (I wear no jewelry but do buy the odd picture instead, none worth fortunes but £500 here/£1,000 there gives cover for the walls and hopefully long term a store of value.)

I also tend to always buy her older pieces (except once she got a brand new ring) , usually Victorian or Edwardian, so she is unlikely to ever meet something with the exact same item. Not all investments need tucked away in drawers, some , maybe not as good investments, can offer utility.

And of course finally, auctions can be good fun- a grand day out.

Also if you need a dental crown, ask for a gold one (assuming it is for a molar). I have a few hundred quids worth of gold in my mouth and my kids have instructions to make sure they are extracted and given to them upon my demise. Their call whether or not to include those for IHT purposes

[1nvest]

Just buy things your other half can wear, may not be as solid as an investment in gold coins etc but far more enjoyable.

Adds a whole new dimension to the "I lost all my gold in a boating accident"

[richfool]

Just buy things your other half can wear, may not be as solid as an investment in gold coins etc but far more enjoyable.

No idea of the current value of anything I have bought her over the years but do know the solid gold Edwardian gate bracelet I bought her circa 1993 for £300 must have added something to its resale value over the last 30 years, and then you get in to diamonds, rubies, pearls etc as stores of value and also something attractive. (I wear no jewelry but do buy the odd picture instead, none worth fortunes but £500 here/£1,000 there gives cover for the walls and hopefully long term a store of value.)

I also tend to always buy her older pieces (except once she got a brand new ring) , usually Victorian or Edwardian, so she is unlikely to ever meet something with the exact same item. Not all investments need tucked away in drawers, some , maybe not as good investments, can offer utility.

And of course finally, auctions can be good fun- a grand day out.

Also if you need a dental crown, ask for a gold one (assuming it is for a molar). I have a few hundred quids worth of gold in my mouth and my kids have instructions to make sure they are extracted and given to them upon my demise. Their call whether or not to include those for IHT purposes

That's an interesting idea, but who would do the extractions, on a deceased body?

[Lootman]

Also if you need a dental crown, ask for a gold one (assuming it is for a molar). I have a few hundred quids worth of gold in my mouth and my kids have instructions to make sure they are extracted and given to them upon my demise. Their call whether or not to include those for IHT purposes

That's an interesting idea, but who would do the extractions, on a deceased body?

If someone dies in a hospital it is fairly common for the next of kin to ask for rings and other valuable items on the person of the deceased. In fact the hospital should ask the NOK if they want anything off the body, even a pacemaker and false teeth.

Some minor surgery on the corpse may be needed, and pulling teeth would be routine for the mortuary staff given that they do post mortems there. I know of one case where a gold wedding ring could not be removed due to body swelling and rigour mortis. The relative was asked for permission to chop off the finger to get it, which was granted.

Outside of a hospital the funeral director could be similarly instructed.

[richfool]

That's an interesting idea, but who would do the extractions, on a deceased body?

If someone dies in a hospital it is fairly common for the next of kin to ask for rings and other valuable items on the person of the deceased. In fact the hospital should ask the NOK if they want anything off the body, even a pacemaker and false teeth.

Some minor surgery on the corpse may be needed, and pulling teeth would be routine for the mortuary staff given that they do post mortems there. I know of one case where a gold wedding ring could not be removed due to body swelling and rigour mortis. The relative was asked for permission to chop off the finger to get it, which was granted.

Outside of a hospital the funeral director could be similarly instructed.

Well thank you for that. I didn't know that. It filled a cavity in my knowledge. Albeit a bit garish. Though I think I'll stick to loose fitting rings on my fingers.

One can buy gold and gold jewellery in Thailand (96% pure, and very soft). And whilst they will buy it back from you in Thailand, at only a slightly cheaper price, in the UK they will only give you scrap value on it.

[1nvest]

One can buy gold and gold jewellery in Thailand (96% pure, and very soft). And whilst they will buy it back from you in Thailand, at only a slightly cheaper price, in the UK they will only give you scrap value on it.

Britannia gold coins are 99.99%/24 carat gold, as are London Delivery bars. 96% is 'impure' and requires effort and nasty chemical reaction processing to refine to 99.99% - so as such 'scrap' value is fair.

[richfool]

One can buy gold and gold jewellery in Thailand (96% pure, and very soft). And whilst they will buy it back from you in Thailand, at only a slightly cheaper price, in the UK they will only give you scrap value on it.

Britannia gold coins are 99.99%/24 carat gold, as are London Delivery bars. 96% is 'impure' and requires effort and nasty chemical reaction processing to refine to 99.99% - so as such 'scrap' value is fair.

Noted re Britannia coins thanks. Though Thai gold isn't bad at 96.5% purity, that's 93 karat, considerably better than the 9kt and 18Kt gold rings generally available in the UK. That said, I believe Laos gold is 99.99% pure (24Kt).

[1nvest]

One can buy gold and gold jewellery in Thailand (96% pure, and very soft). And whilst they will buy it back from you in Thailand, at only a slightly cheaper price, in the UK they will only give you scrap value on it.

The same sort of issue might be said about Sovereigns. The smaller size (near quarter of a ounce for a full sovereign, eighth of a ounce for half sovereign) are popular as more can typically buy (sell) more regularly (monthly averaging in/out), but that typically command a higher premium/spread above spot due to being small amounts of gold. The common assumption there is that of also selling at a premium to spot, so maybe spot+6% purchase, spot+4% sell, if bought via a dealer, sold privately; Or both bought and sold at spot+4% privately. BUT where in some instances, such as more urgent cases, they might be sold for spot or even a couple of percent less than spot. Others prefer the larger size, a tube of 10 one ounce Britannia's for instance as the price will be closer to spot even from a dealership (spot+2% to buy for instance), but that are slower to sell privately (near £2K/coin recently), but where when a dealer is out-of-stock may offer spot+2% to buy those tubes, 0% round trip cost even though bought and sold via a dealership. Another advantage with Britannia's is that they're legal tender £100 coins, so for instance in August 1995 (IIRC) when gold was £160/ounce the conceptual maximum downside was -37.5%.

Gold is fungible so really its just a matter of preference, for instance mentally account something that is 96% as having 96% of spot gold value, give or take for actual gain/loss according to whether bought/sold at a premium/discount, where in a good case that overhead might be zero, in other cases perhaps 10%. Similar also applies to stocks, for instance some buy into a S&P500 total return accumulation index where the fund may levy a very low fee, perhaps 0.1%, but where they're actually tracking the S&P500TRN i.e. net of 30% US dividend withholding taxation. Historic 4% average dividend less 30% = 1.2%/year overhead (in a little over 8 years they've also 'paid' a 10% 'overhead').

In Asia/India where banks are few and far between gold lenders will typically lend hard currency for gold at a 8% p.a. type pro-rata rate, on up to 70% of the gold content value. Quick/common/easy to get hard cash for transactions and when the cash + interest is returned the borrower gets their gold bracelet/whatever returned. The lender is hedged via the 30% discount if the borrower defaults (assuming they hedge their exposure via the markets (short their existing exposure by the amount of gold they've had deposited with them)), or that otherwise have gold+8% rewards. Gold is gold, even if one individual buys just 50% gold content then they can still 'liquidate' that for 35% hard-cash perhaps a week before pay-day, and get that item back again a week later once they've been paid for relatively little cost (0.15% interest for the week, 15p to have borrowed £100).

[1nvest]

Gold is money, everything else is credit ... JP Morgan

Too many are fixated on fiat currency (that is inclined to be devalued over time) and CPI (or RPI). CPI tends to lag, is slowed by technology/science, where for instance a single man and machine can do the same work of prior many workers, more quickly, so consumer prices don't rise as quickly. Gold, land (house), stock prices reflect CPI + productivity, are inclined to rise faster/more than CPI, as more have surpluses so prices are bid up.

The common measure of nominal portfolio gains discounted by CPI inflation is appealing for its positive bias tendency, most people however are spending relatively little each day on CPI items, buy and hold is no different to the cost-less daily lumping all-in again, each/every day. Liquidate all your wealth and you might then spend that on a house, some stocks, maybe some gold, "liability matching" the inflation rate of those assets. When your inflation rate is house/stock/gold and you hold house/stock/gold assets the "real" growth rate is a flat line. Additionally you have imputed rent benefit from owning a home, and stock dividends from the stock holdings. As individually each of those assets prices are volatile, periodically rebalancing tends to yield a dividend. 1.1% proportioned imputed rent, 1.1% net from dividends, 1.1% from SWR ... income sources, and where the remainder portfolio real gain rate is closely aligned to 0% real with low volatility. And where that inflation rate is generally > CPI.

A third of wealth in a UK (£) home, a third in US ($) stocks, a third in gold - has three assets diversity, three currencies diversity, three income streams diversity, and where two thirds of assets are in-hand, no counter-party risk, and where the asset with counter-party risk (stocks) can typically be liquidated in T+2 time (couple/few days).

Yearly rebalancing your home value isn't viable, however non-rebalanced and rebalanced tend to broadly achieve similar rewards. With non rebalanced a initial 50/50 stock/gold might drift to being 70/30 in the best/worst performing asset after a number of years, time averaged 60/40 in the best/worst assets. Over more recent decades and the 70's had gold as being the decades best asset, 1980's and 1990's it was stocks, 2000's it was gold, 2010's was stocks. 2020's and .... ???

US data for 2000's, initial 50/50 stock/gold left as-is (stock total return/accumulation)

Source

A 6% annualised real return for a US investor. In that particular case that was better than 50/50 yearly rebalanced stock/gold. In other cases it swings the other way around (rebalancing was better than not rebalancing), but whichever is likely to be the best is ... a guess. Broadly washes (averages out). And better than a all-stock investor who saw -3% annualised total returns, where additionally drawing a income out of that was eating core capital. In other decades all-stock will do better than 50/50, basically higher extremes (more volatility = lower risk adjusted reward).

Should you hold all physical/in-hand gold? No. As ever diversification is a means to reduce concentration risk, and concentration risk is a major risk factor. Diversify both how its held (physical/paper-gold) and where its held.

Retirement can be as simple as initially loading thirds each into a home, a major/broad stock accumulation fund, gold. Thereafter spend using a credit card and a week or so before that bill has to be settled sell some of stocks or gold (or maybe some of both) according to whichever is the higher value at the time. Which in itself tends to be enough rebalancing. Count stock and gold as being 'currency notes' in a (e)wallet that you spend, but where there's a couple of days notice typically being required in order to convert that 'currency' into Pounds.

[Steveam]

Being U.K. tax resident it is useful to know that legal tender (so gold coins issued by the Royal Mint) are not subject to CGT. Most of the gold kilo coins (for example the Prince George birth celebration gold kilo) are marked as £1000.

Best wishes,

Steve

[richfool]

Which of the various Britannias is most easily traded?

[Lootman]

Being U.K. tax resident it is useful to know that legal tender (so gold coins issued by the Royal Mint) are not subject to CGT. Most of the gold kilo coins (for example the Prince George birth celebration gold kilo) are marked as £1000.

A kg of gold would be worth about £60,000. It might technically be legal tender but a little difficult to spend, I would think.

I would worry that there are not enough of them in circulation to maintain a liquid market. And dealers might need a healthy spread to trade them.

[1nvest]

Which of the various Britannias is most easily traded?

Don't know, but broadly would guess smaller size (< 1oz) silver Britannias, multiples more needed for the same £value amount being bought/sold.

[1nvest]

Being U.K. tax resident it is useful to know that legal tender (so gold coins issued by the Royal Mint) are not subject to CGT. Most of the gold kilo coins (for example the Prince George birth celebration gold kilo) are marked as £1000.

A kg of gold would be worth about £60,000. It might technically be legal tender but a little difficult to spend, I would think.

I would worry that there are not enough of them in circulation to maintain a liquid market. And dealers might need a healthy spread to trade them.

In a non-fiat era (gold and silver coins = money), Sovereigns £1 legal tender value and silver coins for pennies were the obvious preference. Being finite inflation broadly = 0%, 1718 to 1914 for instance, as did the Pound remained aligned to gold, a relatively consistent £4.24/ounce of gold. Hence a Sovereign being near a quarter ounce of gold (0.2354 ounces in a Sovereign x 4.24 = £1).

That correctly favours lenders, borrowers have to pay a real rate of return in order to borrow. Deposit money (gold sovereigns) into a bank account that paid interest = real rate of return and safe keeping of your gold/money.

The change over to fiat currency is inclined to just see debasement of the currency, tendency for the price of gold to rise over time, just inflation, no matching deflation, sometimes borrowers win, sometimes lenders win - but less so after taxation on nominal gains (that include a element of currency debasement).

In August 1992 the price per ounce of gold dipped to £170, so you could buy a Britannia one ounce gold coin with that, and where it has a £100 legal tender value. If instead that had dipped to a £100/ounce price then at that level you have the certainty that if the price fell further you still had a coin worth £100 as legal tender or if the price of gold rose you have metal worth >£100. Win/win. Fiat in contrast is more a case of lose/lose, is really just another form of taxation.

Under gold standard (British Empire days) in effect the Pound was aligned to gold, under (US) fiat the tendency is to direct the price of gold to the Dollar. That is achieved by the US treasury having bought up American gold in 1933 such that it has a 8000 tonne mountain of it, that it 'lends' to the fed at a $42.222 per ounce rate, so at a $2111/ounce market rate the Fed has 50x leverage, and see that leverage increase the higher the price of gold rises. In turn the fed can use that leverage in order to buy (or sell) leveraged products such as Futures/Options, and there's around 122 times more paper-gold (Futures) than there is physical gold, indicative of 122x leverage factor. So the fed conceptually has 50x122=6100 leverage factor on 8000 tonnes of gold, approaching the equivalent of 50 million tonnes of gold (more gold than in the whole world).

The West is foolishly letting physical gold move to Asia (China), in turn China prohibits gold exports. There are multiple claims to each ounce of physical gold, a queue of 122 with a claim on each 1 ounce of gold. Fort Knox is empty claims are in reflection of that. But how might that be settled if there was a gold-rush (rush for physical gold to be delivered), well possession is 9/10ths as they say - the holder gets to choose. Noteworthy is the the Bank of England secures 5000 tonnes of gold, around 400,000 bars averaging around 400 ounces each (have to be in the range 350 troy ounces to 430 troy ounces to be considered as being a London Delivery Bar).

Gold isn't a barbaric relic as some suggest, even the existing system is still fundamentally a gold based system, but where the Dollar is directed towards that in a more dynamic manner, not 1:1 and where debasements can and will periodically occur, sideways channel, periodic steps type price progression. Which is a useful diversifier, low/inverse correlation to fiat currency. Both gold and stock prices (price only) might be broadly expected to rise over time, as fiat currency is debased, approximating CPI + growth (productivity). Stocks additionally pay dividends, typically 3% net (4% gross), however 50/50 stock/gold along with a 1.5% SWR is inclined to yield much the same as 100% stock with 0% SWR, but where 50/50 stock/gold is inclined to yield that same overall reward with less volatility (due to the tendency for fiat/gold having a element of inverse correlation). https://www.portfoliovisualizer.com/bac ... yjvBBZ0lZc (US data) indicates 1972-2023 inclusive total returns and 50/50 stock/gold 10.22% annualised with a 12.96% standard deviation, versus 10.51% annualised for just stock with a 15.77% standard deviation, 50/50 provided the better risk adjusted reward (0.47 Sharpe Ratio versus 0.43).

If you can achieve a similar reward from multiples of assets compared to a single asset, then diversification helps reduce concentration risk (a major risk factor). Own a British home, some US stocks, some gold and you have land/stock/commodity assets, £/$/global (non fiat) currency diversification, imputed/dividends/SWR income diversification. Add in bonds such as via a state/occupation pension on top of that and its a adequately diversified portfolio. Better than being 100% stock and having to rely upon that to pay rent etc.

Holding physical gold better protects against if there is a gold-rush, desire by many (122x paper gold to physical gold ratio) to be delivered "their gold".

[1nvest]

Recent dealership spreads (snapshot taken at 3:45pm on a Friday)



So that's a 3.3% instant round trip spread (buy and immediately sell back again)
1.47% above spot purchase spread
-1.77% below spot sell-back spread
https://auronum.co.uk/gold-coins/gold-britannia-coins/

Elsewhere where individuals trade between themselves (and where some have a history of high trust) you can often buy and sell for 0% overall spread, both buyer and seller might be content to trade at spot+1% (both happy).

Buy/sell in bulk, 10 at a time, and some dealers further narrow their spreads. Depending upon timing maybe down to 1% (sell at spot+1%, buy at spot) i.e. according to whether they have too many or none of their own stock.

[richfool]

Recent dealership spreads (snapshot taken at 3:45pm on a Friday)



So that's a 3.3% instant round trip spread (buy and immediately sell back again)
1.47% above spot purchase spread
-1.77% below spot sell-back spread
https://auronum.co.uk/gold-coins/gold-britannia-coins/

Elsewhere where individuals trade between themselves (and where some have a history of high trust) you can often buy and sell for 0% overall spread, both buyer and seller might be content to trade at spot+1% (both happy).

Buy/sell in bulk, 10 at a time, and some dealers further narrow their spreads. Depending upon timing maybe down to 1% (sell at spot+1%, buy at spot) i.e. according to whether they have too many or none of their own stock.

Thanks for that 1nvest.

I note the Royal Mint often offers (special) deals. Are they a preferred source to buy from?

E.g. Atkinson Bullion's 1oz gold coin and the Royal Mint's 1/4 oz Gold proof coin, or 1/40oz gold proof coin from here (I take it the proof coins are at a premium):
https://www.google.com/search?q=where+c ... d=uvpv-713

[1nvest]

I note the Royal Mint often offers (special) deals. Are they a preferred source to buy from?

For investment purposes, bullion value, the Royal Mint price in a manner that promotes other dealers i.e. tend to have the highest spreads. You'll likely get a better price with one of the other major/trusted dealers and get the best price by shopping around at the time. Don't buy from ebay. For numismatics paying a premium for 'Royal Mint' purchases may be preferred, commemorations/proofs. I personally wouldn't buy from the Royal Mint, as for me gold is fungible, only interested in the bullion value as a investment, not concerned about the quality/appearance of that gold. I also live within the London tube region so for me buying/selling in person is nicer than conveyance via special delivery/post (not a great fan of the Royal Mail either, i.e. 'Royal' branding doesn't seem as trustworthy/secure as it once did).

[1nvest]

For retirement a single purchase of 50/50 broad/major stock index accumulation fund and gold at a single point in time (retirement), and thereafter just spend using credit cards and pay that off each month by selling some of either stock or gold (maybe some of both) to direct back towards 50/50 (sell whatever is the higher value at the time). One big purchase, many smaller sales over many years. Selling a week or so before the credit card payment date is enough for the T+2 trade sell time and to transfer the sale proceeds into your regular bank account (that your credit card payment is taken from). As though stock and gold where currency "notes" in your ewallet. Unlike actual notes (£20/whatever) those notes are inclined to see purchase power increase over time rather than being deflated.

Generally a lifestyle choice of using leverage when young (buy a house using a mortgage). Adding stocks to that in mid years. Adding gold as you approach/enter retirement. Preferably with also having accumulated a state/occupational pension. Where the house sale proceeds value might cover late/end of life nursing home costs. Averaging in and out of stocks (gold) over many years naturally averages the purchase/sale values (some will be bought at highs, and lows, broadly averages out and 'average' is generally "good-enough").