A few newbie questions

[Stevie]

Hi, I've just recently started buying silver and gold in small quantities and have a couple of basic questions.

 

1. I'm a UK buyer, which means that I have to pay 20% VAT on silver purchases! I was thinking about buying my silver from foreign sites instead. Will this get around VAT or will I be hit with custom fees?

 

2. As a UK citizen I have to pay Capital Gains Tax on profit above 10k I believe (yup, the government takes a massive 18-28% cut of our profit for doing absolutely nothing). If however, I buy British silver and gold coins, these are exempt from CGT (but these cost more on average than non minted metal of the same weight). Is there any way to avoid CGT tax on silver and gold other than buying British coinage or should I just keep on buying coins. How likely is it that the UK government would remove CGT in a monetary crisis?

 

Many thanks for reading, Steve

[Keithoil]

Hi Steve

 

Q1.      As I an awful lot of people on here do, buy your silver from STG in Germany the VAT is reduced and included.

 

https://www.silver-to-go.com/en/?change=1&curRate=pound_rate

 

They are very good.

 

Q2.      Your guess is as good as ours they can change the law as they see fit. I guess under extreme circumstances anything can happen. 

[Stevie]

Nice one, thanks Keithoil

[Stevie]

I was just on that site you recommended. Are those prices genuine? They seem incredibly low.

 

I usually order from a UK site where today 25 x silver 1oz Britannia coins are £450 (once you include VAT and shipping), yet this site shows £360 for everything. That includes VAT, customs, shipping etc...? Seems incredibly low!

[lightjaw]

Keiths right, Those prices are genuine. Because they come from Germany, they can use german VAT instead of UK VAT. If you import something into the UK from the EU you dont have to pay vat twice, the vat is charged in the country you bought it from and customs cant sting you again.

 

Bear this in mind when buying stuff off ebay or online---buy from outside eu, you could get hit with charges.

 

Notice on the STG site they dont sell bars. There is some complicated thing that i dont really know about which means that if you buy coins that are legal tender with a face value from them you wont get hit with the vat.

 

Lots of people here use them, with no real issues.

 

cheers

[Kman]

If however, I buy British silver and gold coins, these are exempt from CGT (but these cost more on average than non minted metal of the same weight).

 

This is the classic trap I think

 

People look way too much into what they're paying, rather than what they can sell it for

 

Gold and silver aren't just tied to spot, there's collectible/numesmatic value too with coins (and some bars)

 

Personally I like Victoria shield sovereigns and thankfully I have a good place to buy them from for 15% over spot (which is quite high on the face of it), but I know If they're in good condition I can instantly sell them for a profit

 

So would I rather buy a lump of gold at spot where I'm at the mercy of the market, or a collectible coin (& piece of history) that will always be worth something and I could sell for an instant profit if needed..

 

For me it's not a tough one. 

[lightjaw]

another thing to point out, you mentioned CGT as being an issue, but in reality, it probably (!) never will be.

 

Lets use an example, please excuse my shitty maths

 

Ok, so you buy some maples at £14 each, and you buy 1000 of them

 

cost to you £14,000

 

For you to have to pay capital gains tax then the price you would need to sell them at would be £25,001

 

You get a 11k tax free allowance anyway, so you would only pay CGT on the £1. In this scenario the cost that you have managed to sell your 1000 maples for is £25 an ounce.

 

Are you planning on selling more than 1000 ounces of silver in one go at any point? Could happen, but for most people i dont think they will. Your £11000 CGT threshold starts anew each year too, so sell 999 ounces of silver in march, then another 999 in may, and jobs a good one. 

 

Personally, i would love to be in the situation where CGT on my stack was an issue!

 

Cheers

 

edited to changes brits to maples doh

[lightjaw]

edited my last post for some really bad figures!

[HawkHybrid]

to turn a profit, you could buy coins based on your

ability to sell them. semi numismatic coins like

pandas are more expensive but look better

than many other coins and attract attention from

buyers. I would not place much weight on it

being cgt free. buy britannia's if you like it and/or

believe that it gives you an advantage when the

time comes to selling it.

 

HH

[Stevie]

Thanks for much for the replies folks, it's been very helpful. Especially that German silver site... amazing. Can't believe what I've been paying for UK silver!

 

I've been looking at monetary history and realised that silver and gold usually level out at a 12:1 ratio via the usual price discovery mechanisms. Currently it's around 70:1 which is astonishing. I'm confident that when the market corrects itself, silver will increase in value quite significantly making Capital Gains Tax a genuine issue.

 

I know gold is apparently overpriced, but I believe it's actually underpriced due to fraction lending and will increase even further as the global economy loses confidence in the dollar.

 

Anyway, thanks for your advice folks

[HighlandTiger]

Thanks for much for the replies folks, it's been very helpful. Especially that German silver site... amazing. Can't believe what I've been paying for UK silver!

 

I've been looking at monetary history and realised that silver and gold usually level out at a 12:1 ratio via the usual price discovery mechanisms. Currently it's around 70:1 which is astonishing. I'm confident that when the market corrects itself, silver will increase in value quite significantly making Capital Gains Tax a genuine issue.

 

I know gold is apparently overpriced, but I believe it's actually underpriced due to fraction lending and will increase even further as the global economy loses confidence in the dollar.

 

Anyway, thanks for your advice folks

 

Ignore that historic 12:1 ratio. It will never match that figure again. The uses of gold and silver, and the amounts mined and now above ground have changed from the time those figures existed. 

 

 

A more accurate range in my opinion is one between 40 and 80, with 60 being the mean. 

[JayB]

I'm a newbie too Steve and I totally agree with HT here.

 

I don't think CGT will affect anyone on this forum (except Keith perhaps  ) because we're all too careful to let that happen!

[Stu]

Ignore that historic 12:1 ratio. It will never match that figure again. The uses of gold and silver, and the amounts mined and now above ground have changed from the time those figures existed. 

 

 

A more accurate range in my opinion is one between 40 and 80, with 60 being the mean.

Not sure about your numbers HT

The world gold council state total mined/ above ground gold stock at 177200 tonnes up to 2013. Remaining silver supply above ground is estimated at 777275 tonnes. This being the case, gives a ratio of approximately 4.5 units of silver to 1 of gold.

http://demonocracy.info/infographics/world/silver/silver.html

Obviously the ratio remaining in the earths crust remains around the same15:1 but it will depend on what can be extracted economically in the years to come.

Not looking for an argument, just crunching the best available numbers to me.

[JayB]

Cool, but silver is disposable. It ends up in landfill every day.

[sovereignsteve]

Not sure about your numbers HT

The world gold council state total mined/ above ground gold stock at 177200 tonnes up to 2013. Remaining silver supply above ground is estimated at 777275 tonnes. This being the case, gives a ratio of approximately 4.5 units of silver to 1 of gold.

http://demonocracy.info/infographics/world/silver/silver.html

Obviously the ratio remaining in the earths crust remains around the same15:1 but it will depend on what can be extracted economically in the years to come.

Not looking for an argument, just crunching the best available numbers to me.

Amount of metal availability, mined and what's left in the ground has very had very little bearing on the price, historically and certainly in recent years.

I don't think anyone really has a true grasp of these things, it's so bloody complicated, depends so much on the fickle state of the human mind and has been open to the influence of vested interests for so long. Nobody knows how the ratio will pan out long term, but whatever happens correction wise, it may well be VERY long time before an major effect is seen.

[Stevie]

That's very similar to the numbers I've researched.

 

Also, silver is more commonly used in industrial processes and products (certainly much less so that gold). It's also so cheap by comparison that it's rarely recovered as it's not usually economical to do so. There's also much less silver available to buy than gold currently, and costs are so low that it's barely profitable to mine it at the moment, further restricting supply.

 

All of these things, although open to debate, all lead towards what I expect will be a rather large silver price surge within the next year or two...

[JayB]

Stevie, are you related to Ted Butler? 

[sovereignsteve]

If there is any justice or logic in the world then you should be correct.

[HighlandTiger]

 For those who think we will one day get a silver v gold ratio of 15-1 you are living in a dream world

 

In the last 100 years the ratio has dropped below 15 for ONE solitary month in 1979, and that was due to the exceptional situation when the Hunt brothers tried to corner the market.

 

In the last 100 years the ratio has been below 30 for around 12 years in total.

 

In the last 100 years the ratio has been above 40 for around 60 years in total

 

In the last 30 years the ratio has been above 50 continuously except for around 6 months in 2011 when dipped slightly in the 40's

 

 

A more accurate range in my opinion is one between 40 and 80, with 60 being the mean. 

 

 

 

I think my figures have a lot common sense behind them, considering what we have seen in the last 100 years

[Stu]

@HighlandTiger

There is no dispute over the financial market figures of the g to s ratio over 100 years or so. The point that I am making is that the above ground stocks, silver is a lot more scare than most people assume. If as my example given , the rate of 4.5 to 1 is in the correct ballpark area, given silvers industrial NEED and other aforementioned attributes, £ for £, over my life time at least, It is my option that silver will eclipse gold as the ultimate pm.

[HawkHybrid]

the above ground stock is only a good indicator if

silver were to resume it's precious metal stockpiling

status. which banks/investment body do you know that

stockpiles large quantities of silver?

 

low warehouse stock means little if there is no immediate

danger of it running out and orders not being filled.

 

a gsr of 35-30 is realistic in maybe sometime in the next

5 years, for those wanting 15:1 it could be a long wait.

many underestimate the time frame it takes for cycles

to happen and let their impatience for things to happen

distort their timing of things.

 

HH

[Stu]

The psychology of silver in the west/us I believe is that it is a vastly inferior metal. The reasons being;

The USA has given away its massive stockpile of silver at rock bottom prices. As the US accumulated silver for over 60 years, the view was/is that silver is worth next to nothing and they sold it for next to that. They now have NO surplus to flood the market with. They do however have paper though, contracts and dollars.

The US terminology for their real coins which contain precious metal is "junk silver"

Not forgetting the massive manipulation of the market using naked short selling, endorsed by the the banksters and the federal reserve (read commercial banks/Rothschild)