Investing in gold

Options
Penn_1969
Penn_1969 Posts: 8 Forumite
in Savings & investments
When you buy gold from these online companies, are you paying for the complete weight of that bar or coin, or the pure gold content?

In case that is confusing, I have some gold quadruple sovereigns which each weigh 39.94 g. However, the pure gold content is something like 36.8 g. I'm just a little confused to whether or not you would not pay for the extra none gold content in the coin and just pay for the real pure gold.

Comments

  • Malthusian
    Malthusian Posts: 10,956 Forumite
    First Anniversary First Post Name Dropper Photogenic
    Options
    Why would they give you 3.14g of copper / silver / other valuable metal for free?
  • ColdIron
    ColdIron Posts: 9,115 Forumite
    First Anniversary Name Dropper Photogenic First Post
    edited 12 October 2016 at 1:06PM
    Options
    For practical purposes you are just paying for the gold content. Sovs are 22k or 22/24 = 91.6% gold so your figures are consistent with that

    If you bought a 1oz krugerrand it would contain 1 troy ounce of gold or 31.104 grams but weigh 33.93 grams because it is also a 22k coin
    I'm just a little confused to whether or not you would not pay for the extra none gold content in the coin
    Well obviously you will be paying something for the copper, tin etc that it contains but not at £1,000 per ounce, pennies or a quid or two

    Edit:
    Let me put it another way, if you strip out factors such as desirability, availability etc a 1 troy oz 22K krugerrand with 31.104 grams of gold in it that weighed 33.93 grams would cost the same as a 1 troy oz 24K Canadian maple with 31.104 grams of gold in it that weighed 31.104 grams
  • Penn_1969
    Penn_1969 Posts: 8 Forumite
    Options
    Okay, so these companies are going to actually use the figure of 36.6 grams instead of 39 g when calculating how much to pay me. Basically because they are going to be buying the gold content off me and not the extra metal?
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Name Dropper First Post First Anniversary Post of the Month
    Options
    Penn_1969 wrote: »
    Okay, so these companies are going to actually use the figure of 36.6 grams instead of 39 g when calculating how much to pay me. Basically because they are going to be buying the gold content off me and not the extra metal?

    Yes.

    I mean, you could say they are paying for the whole chunk of metal at a slightly lower price per gram than the price per gram of buying pure gold. But basically they (and whoever buys it from them next) are only really looking to get their hands on the Troy ounce of gold within it, which is the valuable stuff that has global price auctions daily, not the relatively worthless alloy that's mixed in and makes the whole thing weigh more than a Troy ounce.

    In other words don't just weigh a 22 carat coin and think you can cash it in for its weight times the spot gold price as if it was over 0.999% pure, when it's actually only 0.917% pure or whatever.

    In reality, different gold coins have different levels of desirability, for reasons of tax treatment/collectibility / volumes in circulation etc. So a gold dealer will have a different discount or premium to the current spot gold price when dealing in a one ounce Britannia vs a Krugerrand vs quarter Maple or Sovereign or half Panda or whatever
  • Penn_1969
    Penn_1969 Posts: 8 Forumite
    Options
    thanks for the information, that was actually very helpful indeed.

    I paid just over £4300 for them. I wished I hadn't now, I've now realised that making money from gold isn't quite as easy as it may sound. I got an offer of just over £4600. I think I may just take that, at least I get my money back and a little bit. I think I'll be waiting for a very long time before I get an offer that far exceeds what I've already had. The gold price will have to rise dramatically before this happens.



    Weight (grams): 39.94
    Pure gold content (grams): 36.61300
    Fineness: 916.7
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
    Name Dropper First Post First Anniversary Post of the Month
    Options
    Obviously a dealer is going to want to make money to live off, so he can't offer you £x to buy if he is only going to get £x when he sells it again tomorrow. So it will always cost you more than the "pure gold value" to buy, but you'll never find a dealer who'll pay as much as the pure gold value when you want to sell it. If you don't think the gold price is going through the roof anytime soon, and you have other ways to use or invest the money, might as well take the money and run.

    As coins from a particular year and denomination will have a well-known standard weight and gold content, there's no point weighing yours unless you're concerned it might be a fake. Just check a few dealers to see what they will each pay for that coin type and pick the one with the highest price or least hassle or some combination. At mentioned, the type of coin is important not just the weight, so a quadruple sov won't necessarily be 4x a sov or 8x a half.
  • DiggerUK
    DiggerUK Posts: 4,992 Forumite
    First Anniversary Name Dropper Photogenic First Post
    edited 12 October 2016 at 4:31PM
    Options
    Hoping to make a quick profit with gold is midway between risky and a fools errand. Minimum of five years buy and hold if anyone thinking of saving up.

    As you have purchased, why not put them by for retirement, seems daft selling out at a loss..._

    Edit, they are known as quintuplet sovereigns, i.e., x5 sovereign.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.4K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 449.8K Spending & Discounts
  • 235.5K Work, Benefits & Business
  • 608.4K Mortgages, Homes & Bills
  • 173.2K Life & Family
  • 248.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards