December Deliveries
In early December 2008, we have sold out our most recent 3,000 x 1 ounce gold coins, but have more to follow in a week or two. We still have some one kilo, 10 ounce, & 1/2 ounce Australian gold coins in stock, but going fast.
Our 5,000 x 2008 "bullion" sovereigns arrived in stock, as at Friday 5th December. We sold out within days. We have a further order in place for 5,000 x 2009 "bullion" sovereigns for January 5th 2009.
We have also got further 2008's on order, but expected late January 2009.
December
The mad stampede we saw in September and October calmed slightly during November. Supplies of secondary market bullion sovereigns and Krugerrands have improved very slightly, but are still outstripped by demand. Most investors are now being quite sensible and opting for available coins. Our direct links with Perth Mint have proved very important to us, as we are able to secure supplies direct from one of the best sources around. Even for these, we have to wait, as everybody in the world seems to want gold coins now.
Steady Premiums
After slight increases in some of our premiums in the past two months, we have kept these steady in November and December. If demand stays strong, we expect the premium differential between old and new coins to narrow, but we are surprised that recent price fluctuations have not flushed larger quantities of secondary market bullion coins onto the market.
No New Krugerrands Nor Britannias
We had originally been expecting to take delivery of new 2008 one ounce gold Britannias and Krugerrands, which we normally source from a major international bank. We booked flights well in advance to be able to collect these in late October. We are told that they we only receiving relatively small batches (several thousand) against orders 10 times larger, and had no spare coins available for us, as they needed them all to supply their own domestic demand. We also offered to take 1,500 Britannias direct from the Royal Mint, but our bid was declined. We declined a counter-offer, at a higher premium than we normally pay, as we can continue to source the superb Perth Mint products at more competitive prices, with a wider selection of designs, more flexible quantities, gold pricing, shipping, insurance, and service.
We are hopeful that the supply situation will ease towards the end of the year, as mints have increased their production capacities. Perth Mint, for example, have doubled their production already this year.
Silver Lining?
In October, we noted that the gold silver ratio was unusually high at over 77. This compared with a 2008 mean average of about 55, therefore at 77/55, silver looks 40% underpriced compared with gold.
Since then, it rose further to about 83, been back down to 72, and is currently at 82.
This compares with a 2008 mean average of about 55, therefore at 77/55, silver looks 40% underpriced compared with gold.
We have also compiled a historic gold silver ratio table from 1970 to 2007, which shows its mean value ranging from a low of 20.35 in 1970, to a high of 89.31 in 1991. In 2006 and 2007, it averaged just over 52. Whenever ratios like this diverge significantly from the norm, there is a strong tendency for them to revert back towards the longer term average. On this basis, therefore, we would suggest investors buying silver, despite its VAT loading, rather than gold, at least until the ratio drops.
Putting our money where our mouth is, we bought over 100,000 ounces of silver bullion coins (over 3 tonnes), and over a tonne of silver kilo bars. This has now arrived here.
That means we have over £1 million worth of silver bullion in stock.
We can offer from stock or near availability, a selection from 1 ounce, 2 ounce, 10 ounce, half kilo, and 1 kilo silver bullion coins. These are a mixture of Kookaburras, Koalas, and Lunar Australian bullion coins produced by the Perth Mint. We are offering these at special rates for quantity, especially for "Our Choice" of design. Larger sizes are at lower premiums than smaller sizes. Obviously then the 1 kilo size offers the best value. Our bulk prices on these are only slightly higher than for kilo silver bars, and they are far more attractive. When resold on the secondary market, their legal tender status means they can be treated as "Special Scheme" for VAT, whereas silver bullion bars have to have VAT charged in full on resale, even though they are second-hand, and have already carried VAT once when new. This means that most dealers will prefer coins to bars, and pay higher prices for coins than for bars.
Investors wishing to collect silver bars in person will be very welcome to visit our showroom. You can buy on the spot, or purchase in advance and collect when convenient.
VAT Reduction in Silver
The reduction of UK VAT rates from 17.5% to 15% will help any investor buying silver coins or bars for investment. Although we have not necessarily changed our prices on purchases of single small silver coins, we have changed all our costing formulae to calculate VAT at 15% as from December 1st.
Devaluation
We believe the recent drops in the exchange rate of the pound constitute a devaluation. It may be worth reading our page about this before considering the next paragraph which we have copied from the end of our devaluation page, but reproduce here for convenience.
New Gold Forecast - £600? £700? £1300?
We tend to be reluctant to forecast future gold prices, but do try to comment on matters which may affect them. Any significant change in the exchange rate of one currency is almost certain to strongly influence the value of any commodity measured in that currency.
Because the pound sterling has recently dropped by over 25%, then we need to revise some of our previous thinking about gold prices.
It is worth looking at our record high gold prices, which we publish in three different currencies:
These are all based on London Gold Fix prices.
The highest fix in pounds sterling was £542.810 on the morning of the 10th October 2008. At the time gold was "only" $918. The dollar sterling exchange rate was therefore $1.69 = £1.
Today (3rd December 2008) the afternoon fix for gold was $766.25 and £519.280, giving the exchange rate of $1.4756; if gold were to return to its 10th October dollar price of $918 at this same exchange rate, this would make gold £622.12!
Further, if we take the record highest price in dollars, $1,023.50 on the morning of 17th March 2008, at today's sterling exchange rate, gold would be £693.62!
If you believe the forecast of the Citibank's expert for gold to hit $2,000; this would put gold at £1,355.38 per ounce.
Mint Spies
As many of our readers know, we all often struggle to get information from the Royal Mint. We are hoping in the next few weeks to learn whether our attempts to infiltrate a couple of informants or moles into the Mint have been successful.
Is so, we confidently predict having Mint Spies this Christmas.
(Should we ask for a refund on our Christmas crackers?)
August Slowdown 2008
How annual European holidays affect the physical gold bullion market.
September Silly Season 2008
In recent years, it has taken longer for supplies to return to normal after the break.
October Goldfest 2008
In October 2008, it already looks like gold buyers are in a festive and merry mood.
November News 2008
Nearing normality in November?
January Junket 2009
We also have an order for a further 5,000 new "bullion" sovereigns, which we believe will be ready for us on 6th January 2009.
February Fasnacht Festival 2009
Including news from the World Money Fair in Berlin.
March Mayhem? 2009
The 1st of March 2009 should see the launch of the new one ounce "Pacific Sovereign" made for Fiji by the New Zealand Mint. We expect to receive one of the very first deliveries.
We also have good news about important new distributorships.
Please watch this space.
April Arrivals 2009
The 1st of March 2009 should see the launch of the new one ounce "Pacific Sovereign" made for Fiji by the New Zealand Mint. We expect to receive one of the very first deliveries.
We should also receive our first delivery of one ounce gold bullion Britannias direct from the Royal Mint.
We should be able to place our first direct order for one ounce gold bullion Krugerrands fro the Rand Refinery, but will probably not receive delivery until May.
Please watch this space.
Flexibility
We would remind potential investors to read our "flexibility" page, part of the gold investment advice section of our website.
Investment Advice
You may wish to look at our gold investment advice page.
Identification
Please be aware that for callers to our showroom hoping to buy Investment Gold we must see two forms of identification. Please see our identification page for further details.
Gold Prices
There are now live spot gold prices available on this website, please see our gold prices page.
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Forget the Frankincense and Myrrh - Wise Men Bear Gifts of Gold
Half a Million Pounds Worth!
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