UK silver/gold prices

[Martlet]

 

32 minutes ago, Thelonerangershorse said:

So basically, the delay is because the coins we want delivered to Britain are still in Britain.

So this prompted me to follow up a question.  It's been my observation that prices in the UK are far higher than continental dealers before VAT.  This even applies to gold, apart from sovereigns, where some coins I could cover the cost of delivery and beat local dealers. Why are they so uncompetitive? 

I have paid the VAT rather than wait for a large enough order for the european suppliers, would do so more often if the prices were nearly the same, but often they are several pounds higher.  example, 2018 Brit would be £17.39 from gs.be adding 20%, cheapest I find in UK is £18.36, though that does fall to 17.81 if I order 10, and delivery is cheaper (would probably be worth it).  Move away from Brits and the very cheap bullion and the premiums here go up quickly.  Is it simply volume is that much larger abroad?  Or we have so much higher overheads (hard to believe Brussels vs Blackpool)?  I want to buy local if i can, but the dealers making it very difficult.

[Pete]

We Brits are ripped off all the time but with the weaker pound it is less than it used to be.
In the past what cost a £1 here was $1 in the USA and at one time exchange rates were closer to £1 = $2

I even remember a good friend of mine who wanted to buy a new jaguar car about 20 years ago.
He lived in walking distance of the factory making the car but it was cheaper to buy the car in Japan and have it shipped over from Japan than buy at the nearest dealership next to the factory where the car was built. I joked with him saying he could watch his car leave the plant, get put onto a ship and sent to Japan where it would be rigorously inspected and the dealer in Japan would take a cut, freight it back to the UK and even after all the paperwork etc etc it was still cheaper.

When I bought my first new Audi A6, I had a work associate living in Los Angeles that bought exactly the same car as mine but he paid 40% less.
Shipping from Germany to the West coast of the USA would have been considerably more than a road transporter driving from Germany to the UK.

There are many more examples I can give on rip-off Britain but to repair my Seiko kinetic watch the best price I could get in the UK was £110 and in the USA $40 and at the time the exchange rate was around 1.70 so only £23.

My business 20 years ago paid over £100k rent and about £50k business rates working out at £18+ per square foot for the premises which was an empty shell when we leased it.
In silicon valley California for superior premises, fully fitted with air-con, carpeted, partioned, ceiling lighting, phones, network cabling etc and a large car park would have cost less than one third of this.

[Roy]

@Pete, (as a joke and not a wind-up)

Why do you still live there?! 

[Pete]

40 minutes ago, Roy said:

@Pete, (as a joke and not a wind-up)

Why do you still live there?! 

I used to ask myself exactly that question over the years and had many opportunities to live & work in California, New England, New Jersey and Bavaria / Munich area.
The USA is a lovely place to visit but I couldn't live there now - their TV really sucks and you get more coverage of football / basketball than world events.
Southern Germany has a lot going for it but being British I would always be a foreigner ( less so in the USA ).
The grass may appear greener from time to time but at the end of the day if you need the NHS it is there for you and the UK ain't that bad even if things cost a bit more.
 

Sorry forum - heading off topic so will avoid continuing the discussion 

[Alex]

Since brexit the pound has fallen.Have a look at the 10 years gold price chart in dollars,euros and pounds.The dollar has not been affected much by brexit.

The gold price in pounds is nearly the same as it was in the Great Depression.The pound should recover but ...

[Xander]

Exports are booming...swings and roundabouts.

[KDave]

Exports are booming - translates to - one part of the economy is benefiting at the expense of the rest, who are paying more for less of every good you can think of. I agree it's swings and roundabouts, UK industry has been benefiting and that is a rare and good thing at least. We will need more of it when we leave Brussels behind. 

On the subject of why UK metals dealers want to give custom to the Europeans, I think Pete hit the nail on the head. The UK is treasure island, the population are easy pickings and if you ask someone paying for our booming exports with their recent purchasing power cut if it's a good thing they will say yes without any thought on the matter. They are right of course but not for the reasons they think they are, and if you explained that they are paying for this success with their pay cut, they would tell you it's a bad thing, in which case they would be wrong again. 

 

[sixgun]

The price of silver is lower in some parts of Europe but certainly not everywhere in the EU.

We are talking about Estonia with zero VAT on coins, then there is Germany who uses a dodge to sell 'second hand' silver coins at lower rates as i expect Goldsilver.be does. They can then also drop their prices b/c they are selling volume. The UK dealers cannot undercut the silver being sold out of Germany so there is no point getting into a price war, it is unwinnable and would end in tears. Better to sell some coins at a profit to those who want to buy in the UK rather than sell some coins at a much lower profit when all the time the canny buyers are taking their business to dealers whose coins are coming through Germany.

[Pete]

I still find it strange that sellers like Atkinsons can undercut the Royal Mint who make the coins.
How can a new 10oz Queen's Beast silver coin be sold from a mainstream dealer in the USA for considerably less than the Royal Mint charges buying direct ?
And no this is not due to VAT as I have factored this in comparing prices.
When I called the Mint they informed me that they do not set the price of other sellers - ha..ha.. so guess who is ripping you off even before we add the 20% tax !

[Martlet]

12 hours ago, sixgun said:

The price of silver is lower in some parts of Europe but certainly not everywhere in the EU.

We are talking about Estonia with zero VAT on coins, then there is Germany who uses a dodge to sell 'second hand' silver coins at lower rates as i expect Goldsilver.be does. They can then also drop their prices b/c they are selling volume. The UK dealers cannot undercut the silver being sold out of Germany so there is no point getting into a price war, it is unwinnable and would end in tears. Better to sell some coins at a profit to those who want to buy in the UK rather than sell some coins at a much lower profit when all the time the canny buyers are taking their business to dealers whose coins are coming through Germany.

I'm taking into account VAT, I wouldnt expect them to be able to soak up all 20% (though i remain confuse why they dont use the same loop hole, notice Irish dealers doing the same thing).  The UK dealers seem to just charge a far higher premium before VAT.  So much so that only 4-5 coins absorb the delivery.  What is noticeable is the deliver is usually included and they have price decrements for quantity.  Perhaps this is part of the issue, the Europeans tend to go a flat rate and charge delivery.  On further investigation one supplier that charges delivery separately is keeping the premiums down to a gap less than VAT. 

 

[sixgun]

6 hours ago, Martlet said:

I'm taking into account VAT, I wouldnt expect them to be able to soak up all 20% (though i remain confuse why they dont use the same loop hole, notice Irish dealers doing the same thing).  The UK dealers seem to just charge a far higher premium before VAT.  So much so that only 4-5 coins absorb the delivery.  What is noticeable is the deliver is usually included and they have price decrements for quantity.  Perhaps this is part of the issue, the Europeans tend to go a flat rate and charge delivery.  On further investigation one supplier that charges delivery separately is keeping the premiums down to a gap less than VAT. 

 

The German dealers import silver from outside the EU - mainly the USA. They are charged 7% VAT on this as it comes in. This is a leftover from when silver coins had 7% VAT in Germany.

Now what would normally happen is the dealers would reclaim the 7% VAT and charge VAT to the customers, but this time it would be 19% VAT. So they don't reclaim the 7% VAT, they sell the coins as second hand. The 7% is incorporated into the price and so the coins are still sold with VAT levied except it is a much lower rate. These coins are not VAT free but as they are sold second hand it appears as though they are. There is tax on the dealers mark up however.

The UK dealers get charged 20% VAT on silver coins by customs so there would be no point in the German exploit of not reclaiming VAT.

Now IMO imported silver coins and medallions are primarily not bullion. They are sold at a far bit above spot price even if you deduct VAT. This extra price is for the coin and the collector value of the coin. The coins have collector interest. Virtually every silver coin that is sold on this forum, even the blighted Maples are to some extent collector coins. We are all collectors here so we know this is true. That being the case HMRC should not charge 20% VAT on non EU imports, it should be 5%. There is a chap - not here who has taken this quite a long way. Perhaps one day we will get justice and the pirates will only steal 5% of our money instead of 20%. 

I do not believe UK dealers are making a killing - for anyone who has run a business there are so many costs and charges you have to be running quite fast to even stand still. i have had a number of businesses and i have wondered who i was working for, the council, the VAT man, the tax man, the utilities...... or myself. It is rip off Britain and everyone is getting ripped off.

[Cornishfarmer]

I’m the past I’ve bought 1oz gold coins from Europe and they are usually about the same price as the U.K. but from Europe would add £15+ shipping and £8+ currency conversion.      Chards, Atkinson’s  etc aren’t daft they see what is charged and price accordingly 

[ilovesilverireallydo]

11 hours ago, sixgun said:

I do not believe UK dealers are making a killing - for anyone who has run a business there are so many costs and charges you have to be running quite fast to even stand still. i have had a number of businesses and i have wondered who i was working for, the council, the VAT man, the tax man, the utilities...... or myself. It is rip off Britain and everyone is getting ripped off.

I spoke to a couple of dealers in Birmingham - they sell bulk stock to people like BullionByPost etc - the main argument here is their margins are too low - the overheads in the UK seem to be much much higher, from rent to rates etc. He gave me this example: 

Buy silver at 3% less than the spot, and sell it at 3% over spot. Roughly gives them 5% profit margin as a B2B. Organisations that have heavy marketing costs cannot operate with profit margins that low - most retail businesses operate at 40-70% profit margin, which makes bullion sales less attractive. As a result, not many players come to the market, less competition which allows them to carry on charging more.  The reason they offer volume discounts is to make up the difference between loss of margin but gain in volume revenues. 

Royal Mint itself has to operate on a high profit margin on retail sales - which is why its own site is more expensive than buying from other bullion dealers. 

In the US, big bullion dealers get a large portion of their inventory below spot, and often "margin" trade - placing large orders when spot is low, stockpiling and selling when spot is high. 

[Pete]

16 hours ago, sixgun said:

 

I do not believe UK dealers are making a killing - for anyone who has run a business there are so many costs and charges you have to be running quite fast to even stand still. i have had a number of businesses and i have wondered who i was working for, the council, the VAT man, the tax man, the utilities...... or myself. It is rip off Britain and everyone is getting ripped off.

Perfectly put - I too ran businesses in the UK and overheads are substantial compared to other countries. You pay business rates for example that can be 50% of an already very high rent but get absolutely nothing back from the council and even have to pay a contractor for bin collections. As soon as you hire staff you pay employers national insurance which is a tax on jobs. You have to jump through a lot of hoops and regulations costing time and money. If you run a company with employees and commercial or industrial premises you will understand.