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Silver! Gold/silver Ratio

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Hi all,

I'm not a PM bug, but have to face up to the fact that insuring myself with some metal may well be a good idea.

I have been checking out sovereign, but not keen. Then I started researching silver.

Not I have noticed that the gold to silver price ratio it quite good.

gold_all_data_silver.png

I could afford to stash a kilo away at the moment it would cost around around £1k. Compared to silver, gold looks overbought.

How would silver weight up in a currency shock situation?

In your option (try and persuade me) would it be better to buy £1k of gold or £1k of silver?

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Hi all,

I'm not a PM bug, but have to face up to the fact that insuring myself with some metal may well be a good idea.

I have been checking out sovereign, but not keen. Then I started researching silver.

Not I have noticed that the gold to silver price ratio it quite good.

gold_all_data_silver.png

I could afford to stash a kilo away at the moment it would cost around around £1k. Compared to silver, gold looks overbought.

How would silver weight up in a currency shock situation?

In your option (try and persuade me) would it be better to buy £1k of gold or £1k of silver?

both are a good investment..

the only drawback with silver is you have to pay VAT on it.

still a good bet though....dow:gold ratio is still only about 8:1...when this is done it should be about parity.

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In your option (try and persuade me) would it be better to buy £1k of gold or £1k of silver?

Why not buy half and half if you cannot decide? Gold is the ultimate monetary metal, silver is a bit of a wild west show at the minute. The more stable mover is Gold but I suspect the highest returns will come from Silver when the end game plays out.

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Because silver is an industrial metal and actually has some uses, one can argue that it has more intrinsic value than gold.

On top of that , because it has uses, it has been used up and some are now claiming that there is less available silver than gold and that silver is actually the rarer of the two metals and continues to be used in industry. If you are doing your homework, you will soon find out about these. Historically silver was used in photography, coins, jewellery, and cutlery. These days it is used in optics, semiconductors, solar cells, catalysts, antimicrobials, medical devices, computers, touch screens, kitchen utensils, sports clothes, light sensors, and 101 other applications. In each of these applications it is used at such a low amount that even if the price went up 1000x it may not stop its use in those applications.

There is also much speculation that the silver price is being manipulated to the low side by the likes of JP Morgan. Do your research on that to understand what the true price ought to be. It seems that the holders of physical are on the cusp of overwhelming JPM's shorts and all hell will break loose with the price to the upside. But then it's seemed like that since late last year.

In theory, one way to avoid tax with silver is to buy Brittanias, but you'll end up paying a premium more than equal to VAT anyway and/or dealers still add it on.

Another way is to buy second hand silver. At the end of the day, silver is silver. British coins pre-1920 (i.e. up to 1919 inclusive, but not 1920) are sterling silver, i.e. 92.5%. This is still considered bullion grade and can be bought/sold by weight based on the silver content. You can buy coins on eBay, but do not be tempted to pay more per gram than you would for a 1kg bar. You can always resell the coins on eBay (less eBay's fees, about 10%) for a smaller loss than the VAT and commission on a bar (about 30%), and coins are something you can show off, whilst a kilo of silver does not really hold much more interest than a small housebrick. Regarding coins, before they are worn away, a crown = 1 imp Oz (28.3g), whilst silver is priced by the troy Oz (31.1g). And don't forget the crown is only 92.5% pure, so when costing it up, a crown contains 28.3 / 31.1 * 0.925 troy Oz. (or slightly less as the peaks of the design may be worn off).

By weight, 1 crown = 1.25 double florins = 2 half crowns = 2.5 florins (two shillings) = 5 shillings = 10 sixpences = 20 threepences

pre-1920 coins on eBay

Edited by BlinkTooFast

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In theory, one way to avoid tax with silver is to buy Brittanias

Are you sure? When I tried to buy some all the dealers I found applied VAT. HMRC VAT notice 701/49 has this to say:

2.6 Dealing with numismatic and investment coins

If you sell bank notes or coins, whether or not they are legal tender, as:

collectors' pieces

investment articles

items of numismatic interest,

supply is normally taxable on the full selling price, whether or not they are sold for more than their face value. Examples include:

bank notes

proof coins

Maundy money

precious or base metal coins.

However, if you make supplies of collectors' items of numismatic interest, you may be able to use the special scheme explained in Notice 718 Margin Scheme for second-hand goods, works of art, antiques and collectors' items. Sales in some gold coins are exempt as investment gold. Further information is provided in Notices 701/21 Gold and 701/21A Investment gold coins.

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Another way is to buy second hand silver. At the end of the day, silver is silver. British coins pre-1920 (i.e. up to 1919 inclusive, but not 1920) are sterling silver, i.e. 92.5%. This is still considered bullion grade and can be bought/sold by weight based on the silver content. You can buy coins on eBay, but do not be tempted to pay more per gram than you would for a 1kg bar. You can always resell the coins on eBay (less eBay's fees, about 10%) for a smaller loss than the VAT and commission on a bar (about 30%), and coins are something you can show off, whilst a kilo of silver does not really hold much more interest than a small housebrick. Regarding coins, before they are worn away, a crown = 1 imp Oz (28.3g), whilst silver is priced by the troy Oz (31.1g). And don't forget the crown is only 92.5% pure, so when costing it up, a crown contains 28.3 / 31.1 * 0.925 troy Oz. (or slightly less as the peaks of the design may be worn off).

By weight, 1 crown = 1.25 double florins = 2 half crowns = 2.5 florins (two shillings) = 5 shillings = 10 sixpences = 20 threepences

pre-1920 coins on eBay

Very interesting post, thanks.

Especially regarding the pre-1920 coinage - so what sort of price difference should there be on ebay between an imperial oz of 925 (in any of the combinations you mentioned above) and a troy oz of 999? Or to put it another way, can buying such coins offer better value than buying eagles or maples etc?

Cheers.

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Very interesting post, thanks.

Especially regarding the pre-1920 coinage - so what sort of price difference should there be on ebay between an imperial oz of 925 (in any of the combinations you mentioned above) and a troy oz of 999? Or to put it another way, can buying such coins offer better value than buying eagles or maples etc?

Cheers.

With all the money going towards PM does this not make for a more deflationary environment and actually weaken the case for PM, strengthening the position of cash?

So what is the entry & exit strategy for PM?

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Because silver is an industrial metal and actually has some uses, one can argue that it has more intrinsic value than gold.

On top of that , because it has uses, it has been used up and some are now claiming that there is less available silver than gold and that silver is actually the rarer of the two metals and continues to be used in industry. If you are doing your homework, you will soon find out about these. Historically silver was used in photography, coins, jewellery, and cutlery. These days it is used in optics, semiconductors, solar cells, catalysts, antimicrobials, medical devices, computers, touch screens, kitchen utensils, sports clothes, light sensors, and 101 other applications. In each of these applications it is used at such a low amount that even if the price went up 1000x it may not stop its use in those applications.

There is also much speculation that the silver price is being manipulated to the low side by the likes of JP Morgan. Do your research on that to understand what the true price ought to be. It seems that the holders of physical are on the cusp of overwhelming JPM's shorts and all hell will break loose with the price to the upside. But then it's seemed like that since late last year.

In theory, one way to avoid tax with silver is to buy Brittanias, but you'll end up paying a premium more than equal to VAT anyway and/or dealers still add it on.

Another way is to buy second hand silver. At the end of the day, silver is silver. British coins pre-1920 (i.e. up to 1919 inclusive, but not 1920) are sterling silver, i.e. 92.5%. This is still considered bullion grade and can be bought/sold by weight based on the silver content. You can buy coins on eBay, but do not be tempted to pay more per gram than you would for a 1kg bar. You can always resell the coins on eBay (less eBay's fees, about 10%) for a smaller loss than the VAT and commission on a bar (about 30%), and coins are something you can show off, whilst a kilo of silver does not really hold much more interest than a small housebrick. Regarding coins, before they are worn away, a crown = 1 imp Oz (28.3g), whilst silver is priced by the troy Oz (31.1g). And don't forget the crown is only 92.5% pure, so when costing it up, a crown contains 28.3 / 31.1 * 0.925 troy Oz. (or slightly less as the peaks of the design may be worn off).

By weight, 1 crown = 1.25 double florins = 2 half crowns = 2.5 florins (two shillings) = 5 shillings = 10 sixpences = 20 threepences

pre-1920 coins on eBay

Thanks for the info, I had read about some of the industrial use and the fact that there was around 1 years supply of silver and 5 years supply of gold for industrial uses.

We are now using silver to place our PCB's because gold has become too expensive. So the higher gold goes the more PCB manufactures you are going to see switch to silver.

With all the money going towards PM does this not make for a more deflationary environment and actually weaken the case for PM, strengthening the position of cash?

So what is the entry & exit strategy for PM?

I have no exit strategy. I can afford to loose a grand I must spend that in the Casino every year and have lost more betting on shares. At least I will have a lump of 'worthless' silver I could sell at the car boot if the price of silver collapsed sown to £10 per kilo (not that it will because it is not particularly cheap to extract)

Really my desire to get into PM's is an insurance policy against more QE debasing the currency further. Like I always do I expect to loose 50% of my investment/insurance.

The reason for not choosing Bulion vault of ETF's it that I am assuming that when shit hit's the fan CGT on PM's will be 100%.

What type of gold coins do you not pay VAT on?

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What type of gold coins do you not pay VAT on?

2.1 What is an investment gold coin?

An investment gold coin is:

a. gold coin minted after 1800 that:

is of a purity of not less than 900 thousandths

is, or has been, legal tender in its country of origin, and

is of a description of coin that is normally sold at a price that does not exceed 180% of the open market value of the gold contained in the coin, or

b. a gold coin on the lists in section 3.

A coin not on the lists can still be exempt from VAT if it falls within the description at a. above. But you must be able to show from your business records that any such coin meets the criteria.

You should treat coins that do not fall within a. or b. above as subject to VAT at the standard rate.

VAT Notice 701/21A

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The reason for not choosing Bulion vault of ETF's it that I am assuming that when shit hit's the fan CGT on PM's will be 100%.

The only ETFs which I would buy would be the Sprott Physical Gold or Silver Trusts which could be bought within a share trading

(tax free) account. I would not touch, for example, SLV or GLD ETFs.

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With all the money going towards PM does this not make for a more deflationary environment and actually weaken the case for PM, strengthening the position of cash?

So what is the entry & exit strategy for PM?

When someone buys an asset, in this case PMs, for paper money, someone is taking that paper in payment and the money is still in the system. If anyhing gold and silver are still behind the curve in relation to the amount of money in circulation.

Ben Bernanke has indicated, this week, that he is going to continue with accommodative monetary polices.

My own buying and selling strategy is to average in and then average out.

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The reason for not choosing Bulion vault of ETF's it that I am assuming that when shit hit's the fan CGT on PM's will be 100%.

Also should they outlaw the barbaric relic then these types of places will be first to be shut down leaving you screwed.

Other problem is the ease of which big brother can spy on your gains. They cannot do that with Gold bought for cash and sold back on for cash. They don't know when it was bought, who is was bought from or what price was paid, no way to even calculate CGT on that let alone collect it.

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Are you sure? When I tried to buy some all the dealers I found applied VAT. HMRC VAT notice 701/49 has this to say:

2.6 Dealing with numismatic and investment coins

If you sell bank notes or coins, whether or not they are legal tender, as:

collectors' pieces

investment articles

items of numismatic interest,

supply is normally taxable on the full selling price, whether or not they are sold for more than their face value. Examples include:

bank notes

proof coins

Maundy money

precious or base metal coins.

However, if you make supplies of collectors' items of numismatic interest, you may be able to use the special scheme explained in Notice 718 Margin Scheme for second-hand goods, works of art, antiques and collectors' items. Sales in some gold coins are exempt as investment gold. Further information is provided in Notices 701/21 Gold and 701/21A Investment gold coins.

I am sure the dealers will apply VAT.

However, perhaps you should note 2.6 includes what could be a very big "if" in certain circumstances.

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cant be arsed reading another thread going over the same ground as we do weekly and wont appologise for missing comments but my short version is this....

Silver is not a store of wealth.

I like silver but it is a punt like betting on a favourite.

Silver does well when the economy and outlook does well.

Silver gets smashed when things go pete tong.

If you want a hope with silver then buy pre '20 stuff or hallmarked stuff, no vat and no premium.

Silver is the canary in the cage, like copper.

Silver bugs that post a lot about silver dont have the balls to put their money where their mouth is and make a call or trade it.

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cant be arsed reading another thread going over the same ground as we do weekly and wont appologise for missing comments but my short version is this....

Silver is not a store of wealth.

I like silver but it is a punt like betting on a favourite.

Silver does well when the economy and outlook does well.

Silver gets smashed when things go pete tong.

If you want a hope with silver then buy pre '20 stuff or hallmarked stuff, no vat and no premium.

Silver is the canary in the cage, like copper.

Silver bugs that post a lot about silver dont have the balls to put their money where their mouth is and make a call or trade it.

if they lowered or got rid of vat i'd be buying silver.

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Silver gets used / consumed gold dosent

http://www.marketoracle.co.uk/Article29593.html

Silver Backwardation a Result of COMEX DEFAULT RISK

Backwardation in a commodity can be caused for 2 reasons. Either traders want out of the currency (they have no wish to receive US dollars when future contracts expire as they fear those dollars will be worthless) OR they fear that the physical commodity will not be available for delivery when the contract matures. If a lack of confidence in the US dollar was the PRIMARY cause of backwardation in silver, clearly we would see a significant backwardation in the GOLD MARKET AS WELL! The lack of coinciding backwardation in gold indicates that major players are concerned about the SUPPLY OF PHYSICAL SILVER!

This means that the primary reason silver remains in backwardation is due to risk of COMEX SILVER DEFAULT!

Last week we reported that silver backwardation had increased by 36% in the past week.

COMEX Registered Silver Bullion Inventories Fall Sharp 38.5% in Two Weeks – Risk of COMEX Silver Default Remains

Registered COMEX silver inventories have fallen to multiyear lows at 29,631,268 ounces. In the last 5 days they fell from 32,132,903 ounces to Tuesday’s holdings of 29,631,268 ounces. As can be seen in the table below registered silver inventories fell every single day last week leading to a sharp fall of 8.4% in 5 days.

Registered metals are those metals which meet the standards for delivery under the silver futures contracts and for which a receipt from an Exchange-approved depository or warehouse has been issued. Eligible metals are those which meet the delivery standards as stated in the rules for which no receipt from an Exchange-approved warehouse has been issued.

This is a long term trend that has been seen since the early 1990’s when total COMEX silver stockpiles were over 101.45 million ounces.

However, the scale of the drop in inventories since early 2008 is significant and the trend has accelerated in recent weeks.

Registered silver inventories are down a sharp 38.5% in just two weeks – from 41,044,280 to 29,631,268

Read more: http://www.businessinsider.com/comex-registered-silver-bullion-inventories-fall-sharp-385-in-two-weeks--risk-of-comex-silver-default-remains-2011-6#ixzz1U8PhUvuw

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