Here's the problem with 1/10 oz gold

Discussion in 'Bullion Investing' started by Jason.A, Jun 27, 2017.

  1. Jason.A

    Jason.A Active Member

    I was very interested in adding 1/10 Gold Britannia to my collection/investment. It's absolutely gorgeous. Adding some variety would be nice.

    However, here's the problem with this coin.

    Gold spot: $1250 ($125 per 1/10)
    Cost for the 1/10 gold Britannia $140.00
    Cost over spot: $15. Percentage over spot: 11%
    Buy back price: $127. Money lost: $13

    https://www.providentmetals.com/2017-1-10-oz-gold-britannia-british-royal-mint.html


    Coins like the 1/10 oz AGE or Maple are more reasonable buys with much higher buy back prices (For instance the AGE is $131 and the Maple is $131)

    My advice, if you MUST buy fractional go with the big two.
     
    Tater likes this.
  2. Avatar

    Guest User Guest



    to hide this ad.
  3. Blissskr

    Blissskr Well-Known Member

    Buy back spreads change all the time with the same dealer and often vary even greater from dealer to dealer. And you're not really losing anything or gaining anything until you sell.

    Case and point on the spreads below is the current 1/10 ASE and maples and it's really not any better.

    Using your logic above regarding the Britannia you'd 'lose' $11.51 and $14.62 with the AGE and maple when buying. The Britannia spread is currently $12.76 so it's even fairing better than the maple.

    mapleleaf.png


    As someone whose bought and sold a lot of gold and silver most everyday dealers treat anything but AGE/ASE as generic gold/silver bullion. I'd stick with those only AGE/ASE's if maintaining a premium is the biggest concern over appreciation of the innate metal value
     
  4. rooman9

    rooman9 Lovin Shiny Things

    I think the real problem is how small they are. Anyone could eat them!
     
    FBLfinder and Johndoe2000$ like this.
  5. Jason.A

    Jason.A Active Member

    My numbers above were from "random date" age and maples. Sale prices were lower and buy back price higher than on 2017 Maples.


     
  6. Jason.A

    Jason.A Active Member

    My numbers above were from "random date" age and maples. Sale prices were lower and buy back price higher than on 2017 Maples.


     
  7. Blissskr

    Blissskr Well-Known Member

    And you don't see if that's how your comparison is made it doesn't really hold merit as you are comparing a new year very popular product with an old dates of choice one? When making a comparison using comparable products i.e. all new dated 2017 the premium and spread for Britannia's is pretty average based off what brand new AGE's and Maple's sell for.

    Almost any 'our choice' type bullion is going to be cheaper as you generally get picked through dreck that wouldn't grade 69/70.

    Even using the 'our choice' based on your logic above you'd 'lose' $10.60 on random date 1/10th AGEs and $5.90 on random date 1/10th Maples versus 'losing' $13 getting a brand spanking new 2017 Britannia.

    randomdatecomparision.png
     
  8. sakata

    sakata Devil's Advocate Supporter

    Why is the buy back price a concern? Are you thinking of selling it right back? No one should be buying gold or silver unless they plan to hold it for a profit. The prices now have no bearing on the prices in five years. Buying an investment coin because you like it makes some sense if you want to enjoy the coin while you hold it, in the expectation of a nice profit when you eventually sell.
     
    Johnnie Black likes this.
  9. Jason.A

    Jason.A Active Member




    Couple points:
    One, yes, buying random dates is cheaper (lower risk) and buy back margins are more in your favor. Why is this an issue? That's my entire point and why you SHOULD buy this way. You should NOT buy gimmicky koalas, kangaroos, britannias, etc because the buy back margins are terrible.

    Point two: buying 1/10 oz Maples means getting a sealed coin most of the time. So your "poor grade" argument is moot if you buy maples vs eagles. Not to mention, grades on fractional eagles or maples are superfluous anyway for 99% of buyers.

    Then again, what do I know? I think fractional buying is unwise anyway, and I own only two of these baby pieces in my entire stack.
     
  10. Blissskr

    Blissskr Well-Known Member

    Lol the buyback on all those coins you mentioned are comparable to maples. As I stated before most dealers treat maples as generic gold bullion and you'd be lucky to get spot when selling. And just because maples come individually sealed doesn't mean they haven't been picked through to remove the gems and sell the sub par coins.
     
  11. ddddd

    ddddd Member

    If you search for the deals, you can get good prices for fractionals. Currently MCM on ebay has the 2017 gold Britannia for under $139 (which is Credit Card pricing):

    http://www.ebay.com/itm/142426887705

    In my experiences, one's target selling audience should play a role in what type of gold to buy. If one plans to sell at a Local Coin Store, Eagles are the way to go since most dealers consider everything else generic. However, if one can sell to a collector (via ebay, instagram, the for sale threads on various forums, etc) then foreign gold can do much better. The Britannia, Kangaroo, Panda, and Lunars are popular and many have designs that change yearly. Plus most have much lower mintages than Eagles. This makes them very collectible and one can find examples of prior year coins yielding good returns (often higher than the same year Eagle coin). More people are able to afford the 1/10 coins, so that also makes it easier for their premiums to go up more as compared to a 1 oz coin (i.e. people will pay $150-$200 for a popular 1/10 oz).
     
    Last edited: Jun 27, 2017
    sakata and Jason.A like this.
  12. mpcusa

    mpcusa "You break it you buy it" Supporter

    Ok, understood however you are looking at the turn around right at
    That moment, you invest in bullion long term what ever the size
    You will pay a premium of some kind in most cases, your goal is to
    Hope the market goes up to cover the costs plus profit however long
    That should take.
     
  13. Garlicus

    Garlicus Debt is dumb, cash is king.

    The upside - seeing the smile on my nephew's face when I gave him an MS-70 for his graduation present last weekend.
    Don't have to worry about losing it when it is in a big ol' slab.
     
  14. sakata

    sakata Devil's Advocate Supporter

    Very true. All you have to worry about is losing the money invested in it. :D
     
    mpcusa likes this.
  15. Jason.A

    Jason.A Active Member

    It must be wonderful to live in such a blindly optimistic world where you just ASSUME gold will go up in price in the future. While it likely will, there is no guarantee, hence: what premium you pay matters.

    There is also no guarantee or even high probability that if it goes up it will go up enough to surpass the rate of inflation. If it does not go up past the rate of inflation, paying a higher premium today is just losing more money.

    Don't be a sucker and pay high premiums.
     
  16. ddddd

    ddddd Member

    It is true that gold doesn't always go up. This actually makes the case for fractionals more compelling. For example, with spot falling $50 dollars, your 1 oz coin falls at least $50 dollars; meanwhile, your 1/10 oz coin falls $5 (it's the same per oz fall, but losing $5 is less painful than taking the entire $50 loss at once). Also, falling spot prices tend to mean premiums increase. If you notice how most big dealers operate, their sell prices rarely fall by the entire spot decrease. In fact, I have seen dealers just increase the premium to basically make the coin sell for the same as before the spot fall.

    Then consider my previous comment of how the 1/10 size is much more affordable for collecting a set. Some of the foreign gold coins have very low mintages. Even with lower spot prices, prior year examples can sell for more than original prices. I have personally sold a few Lunar 1/10 oz gold coins for above my initial cost a few years later when spot had decreased. These coins gained an additional premium due to their low mintages and increased collector base.
     
    Blissskr likes this.
  17. Jason.A

    Jason.A Active Member

    Huh?

    That makes no case whatsoever. You're comparing apples (a 1/10th piece) to oranges (a 1 ounce piece).

    If this is a fair apples to apples comparison we'd be comparing 1 oz total of fractional gold (so 10 1/10 oz pieces) to a single 1 oz coin. For a fair comparison, we must compare equal amounts of gold.

    In that case, your argument falls apart. You'd pay around $15 over spot for each 1/10 oz (or $150ish total for a full ounce worth of 10 pieces) and you'd pay around $40-$50 over spot for the 1 oz gold coin.

    So, in a scenario where gold did not go up or it went up less than inflation, you would be WORSE off owning high premium fractional gold because you put so much more money in at the beginning.


     
  18. ddddd

    ddddd Member

    My case is for buying a single 1/10 coin as opposed to saving and buying a single 1 oz coin. Many recommend not buying the 1/10 and saving for the 1 oz. I don't agree with that premise in most cases.

    Yes if you buy the 10 1/10 oz vs the 1 1 oz then both go down by $50 when spot falls $50. However, if you buy 10 various 1/10 oz coins (say 3 Pandas, 3 Lunars, 2 Kangaroos, 1 Eagle, and 1 Maple) you have a better chance of recovering your premium and even making a profit when spot goes down compared to buying a single 1 oz coin. If spot goes up, then both go up (the 10 1/10 might see a slight drop in premium, but they tend to still retain most of the premium).
     
  19. mpcusa

    mpcusa "You break it you buy it" Supporter

    So what kind of coin is it, if I may ask ?
     
  20. mpcusa

    mpcusa "You break it you buy it" Supporter

    Why would you invest if you think the price is going to go down ?
    I invest on the premise of price going up so of course I am optimistic
    If I wasent there would be no point in the first place !
     
  21. mpcusa

    mpcusa "You break it you buy it" Supporter

    Here again we are talking present day scenarios, and of course each persons
    situation is different, since I invest in many different PM.S, there is only
    So many investment $$$$ to go around though I did just recently purchase
    a 2017 1 OZ gold Krugerrand w/privy, I would much rather by smaller with
    More variety. :)
     
  22. mpcusa

    mpcusa "You break it you buy it" Supporter

    I can get 1/10 OZ AGE,S at close to spot around $135, so I try and get as
    Many of those as I can but he runs out very quickly for obvious reasons.
     
Draft saved Draft deleted

Share This Page