British Sovereigns or Krugerrands?

[karim0028]

Hey Guys,

Which coin do you guys recommend? Is there any real difference when buying gold? I already have Krugs and small bars and im kind of looking to diversify and seeing that sovereigns are smaller and more divisible as its smaller amounts...

An internet dealer has Sovereigns at about Spot +35/oz, which is about the same as Krugs at my local dealer....

Is there any downside to Sovereigns? I know in other parts of the world for instance sovereigns are very well known and everywhere....

Since they are older are they usually scratched up/chewed up? Does it matter that they are pre 1933?

Thanks!

[c1ue]

Re: British Sovereigns or Krugerrands?

Karim,

I'm not a gold bug, but one safety factor with coinage is face value of the currency.

This has several potential benefits:

1) Not being bullion, maybe won't be confiscated at first
2) If gold really goes to crap - i.e. transmutation perfected, it is still worth something
3) coinage should have much better standardization than bullion - i.e. less chance of tungsten cores

In the case of Sovereigns vs. Rands - given the UK situation I'd probably stick with the Rands as all other factors are equal.

Let me put it another way: if you had to buy 1000 dollars worth of Pounds or Rand, which would you choose?

[karim0028]

Re: British Sovereigns or Krugerrands?

Karim,

I'm not a gold bug, but one safety factor with coinage is face value of the currency.

This has several potential benefits:

1) Not being bullion, maybe won't be confiscated at first
2) If gold really goes to crap - i.e. transmutation perfected, it is still worth something
3) coinage should have much better standardization than bullion - i.e. less chance of tungsten cores

In the case of Sovereigns vs. Rands - given the UK situation I'd probably stick with the Rands as all other factors are equal.

Let me put it another way: if you had to buy 1000 dollars worth of Pounds or Rand, which would you choose?

Clue,

I'm no gold bug either; just see that dollar isnt going to give any interest for years and as such over the next couple of years will lose vale, so dont see much benefit in holding it right now...

I dont follow... What does face value have to do with it? Its .2354 oz gold bullion per coin at ~+$35/oz, right?

I know in egypt sovereigns are always used in necklaces (center piece) and stuff like that... The thing is i am also looking at holding liquid savings in gold and if i ever need to sell i am kind of wondering if i want to sell 1K at a time.....

[c1ue]

Re: British Sovereigns or Krugerrands?

Karim,

If you consider sovereigns and kruggerands to be just bullion, then you should just buy bullion and not pay the premium.

The reason there is a premium on these coins - besides relative scarcity - is the combination of reasons I listed above.

Since both gold sovereigns and kruggerands have identical characteristics other than face value, then face value would be the tie-breaker.

[karim0028]

Re: British Sovereigns or Krugerrands?

Karim,

If you consider sovereigns and kruggerands to be just bullion, then you should just buy bullion and not pay the premium.

The reason there is a premium on these coins - besides relative scarcity - is the combination of reasons I listed above.

Since both gold sovereigns and kruggerands have identical characteristics other than face value, then face value would be the tie-breaker.

Oh, i didnt get what you were saying at first... I think i got it now... But, there is always a premium.. For a 20 dollar diff it doesnt quite make sense to not go with coins... Its that they are world known...

You go anywhere and both soveriegns and krugs are known, so are you advocating one over the other?



I am leaning to Soveigns bc of the smaller size and the premium seems to be about the same as krugs...

I am asking if there is any downside to choosing one over the other? Worse comes to worse they are both a certain amount of gold and i would pay the same premium for both (on an oz to oz basis)...

I am wondering if sovereigns some how sell for less or usually come with more wear, etc...

If you can get them for the same price, why wouldnt you buy the sovergeins?

Edit: Just noticed i became a "senior ituliper" 300 posts is apparently the magic number

[dummass]

Re: British Sovereigns or Krugerrands?

Hey Guys,

Which coin do you guys recommend? Is there any real difference when buying gold? I already have Krugs and small bars and im kind of looking to diversify and seeing that sovereigns are smaller and more divisible as its smaller amounts...

An internet dealer has Sovereigns at about Spot +35/oz, which is about the same as Krugs at my local dealer....

Is there any downside to Sovereigns? I know in other parts of the world for instance sovereigns are very well known and everywhere....

Since they are older are they usually scratched up/chewed up? Does it matter that they are pre 1933?

Thanks!

There is a place here, in Panama City, that buys and sells "junk gold" by weight. The calculation for the price of Sovereigns, per your example, would be as follows:

The weight of the coin at 7.9881 grams
Times the coin's purity at .9167
Equals actual gold content of 7.3226 grams
Divided by a Troy ounce 31.1045
Equals coin's gold content .2354 oz Troy
Times current gold price of $1,100.00 oz Troy
Equals coin's market value $ 258.94

They also have a 5% commission: $12.95 in the above example.

As you can see, any imperfections (scratches, chips or holes) would reduce the weight of the coin and therefore the price paid; likewise, as the spot price of gold fluctuates, so does the price of the coin. By this method, coins are grouped by purity and weighed in bulk. It seems reasonable to me :confused:

http://en.wikipedia.org/wiki/Sovereign_(British_coin)

[LorenS]

Re: British Sovereigns or Krugerrands?

As far as premium goes it's also instructive to look at the buy/sell spreads. You'll usually pay less premium on the Kruggerands but you'll usually get less in return for them as well and the spread is quite similar to Eagles. Most others have a higher spread.

While I've never seen less than 1oz Krugs there are 1/10, 1/4 and 1/2 oz maples and eagles with similar premiums as the Sovereigns. I even saw a 1/20 ounce Panda once.

There are also all the old European 20 franc coins like Roosters and such.

My preference would be the Sovereigns. Both are 22 carat and the Sovereigns are a quite convenient size. If you want to maximize face value to metal go with 40% silver or junk silver bags.

[Master Shake]

Re: British Sovereigns or Krugerrands?

Hey Guys,

Which coin do you guys recommend? Is there any real difference when buying gold? I already have Krugs and small bars and im kind of looking to diversify and seeing that sovereigns are smaller and more divisible as its smaller amounts...

An internet dealer has Sovereigns at about Spot +35/oz, which is about the same as Krugs at my local dealer....

Is there any downside to Sovereigns? I know in other parts of the world for instance sovereigns are very well known and everywhere....

Since they are older are they usually scratched up/chewed up? Does it matter that they are pre 1933?

Thanks!

One advantage of Krugs is that they have the amount of gold on the coin, and are probably more well-known, at least in the US, than sovereigns. An advantage of the sovs is that they may have numismatic value above the value of the gold. Plus, they are cooler than krugs, especially for us Anglophiles.

[Nero]

Re: British Sovereigns or Krugerrands?

If in the USA Pre-33 Sovereigns or Pre-33 Swiss/French Francs are much safer to hold than bullion.
Unless you believe that the Government wont confiscate Gold for the 4th time in our country's history.

[Starving Steve]

Re: British Sovereigns or Krugerrands?

Before 1974, gold was illegal to transport into or out of the U.S. unless it was an old collectable: meaning especially old, meaning pre-1934, different years, especially in a series, especially with mint marks, etc.

To-day, the nazis at the U.S. border would associate krugerrands and other straight bullion items with money-laundering, drug-profits, terrorist financing, tax-cheats, etc. So, always error in favour of being an eccentric coin-collector and not just being a gold-bug. In other words, always try to keep a low profile, and you collect OLD coins, not just gold coins. You like the old kings and queens on the coins, the old mint marks, not just the four letter word to the IRS: "gold".

And DECLARE, DECLARE, DECLARE, always at the U.S. border. Never hide anything. Otherwise, they see you as a tax-cheat, money-launderer, drug-dealer, etc.

If you are carrying over $10,000 U.S. worth of gold coins or any negotiable item, you have to fill-out a form at the border. Be sure to do that. You will get your money-laundering audit from the IRS if you live in the U.S, but a money-laundering audit is not the end of the world---- unless you really are a racketeer or a drug-dealer. (In that case, to hell with you.)

As far as the future is concerned, the U.S. might outlaw gold again. Anything is possible, so old gold sovereigns would be much better to have than straight bullion coins. The old gold coins would probably stay legal because they are antique and a collectable.

I never pay a premium anymore for old collectable gold coins, but I still favour old collectable gold over new bullion coins. I want to be into gold at or below gold-content price, not over gold. And I want to buy low markets (the dips), and try not to buy into spikes.

As far as tungsten is concerned, stay with the old circulated gold-coins and be suspicious of the new coins. Be suspicious of large gold bars, especially. Be suspicious of super deals for one specific date being offered, by the roll.

Tungsten counterfeits would tend to be struck shallow. They would be generally one date, only. They would not ring beautifully (deeply) when spun on a granite counter. The counterfeits might be off in weight by about 1/1,000 of an ounce, either over or under-weight. The lustre on the counterfeits would be somewhat wrong too, maybe too bright or maybe too dull. All of the coins being offered would have this strange lustre difference. The reeding on the edge of the coin might not be exactly right with the reeding used for the year of issue, so that might be "a tell" too. Tungsten fakes would tend to be a bit white, especially in the wear spots ( the high points ) on the coin. Each reed on the edge should have (a) scratch line(s) where it was punched-out of the die at the mint, but tungsten fakes would probably not have this/these line(s). There are lots of little tells that would tell the story with the coin's origin.

Some years of coins have two different reeding-patterns. You should know the patterns used by the mint for each year. The tungsten counterfeits would likely have their own unique reeding pattern. That would be "the tell".

U.S. five dollar golds have fine reeding and also bold-wide reeding. If I re-call, 1881 U.S. five dollar golds come with both reedings. You have to know the reedings. Your dealer would help you become familiar with reeding patterns used by the mints.

Always get a receipt when you buy, otherwise you might be buying into head-aches such as stolen goods. Be careful. Know your vendor and get some written proof of the purchase. If there is a tax problem with a receipt, then horse-trade with your dealer; buy the coins as an off-set for other coins you bring in. You can be legal and proper in your transaction. Work with your dealer, and he/she would love to work with you. This is a really fun business to be in, almost as much fun as substitute teaching.

S.S. ;)

[karim0028]

Re: British Sovereigns or Krugerrands?

I never pay a premium anymore for old collectable gold coins, but I still favour old collectable gold over new bullion coins. I want to be into gold at or below gold-content price, not over gold. And I want to buy low markets (the dips), and try not to buy into spikes.


S.S. ;)

How do you buy w/o premium or at spot? Everywhere i go has a premium to current market spot...

[Starving Steve]

Re: British Sovereigns or Krugerrands?

How do you buy w/o premium or at spot? Everywhere i go has a premium to current market spot...

If at $1100+ gold the market is still shoving a gold premium in your face, you might just decide not to buy. You can wait for a much better market to pay a premium for gold coins. Maybe wait for a big dip, like a crash.

When I was in the coin biz, waiting paid big dividends. Sometimes, you have to wait many years, but big crashes do come. Nothing has changed.

We do not have hyper-inflation yet, especially when you can buy one-inch thick T-bone steaks for under $5 per T-bone at the grocery store here in Victoria, BC Canada..... I am not quite convinced of the hyper-inflation story in the short-term or medium-term. The whole story seems like hype.

And if this is a slow and orderly DE-flation, then you do NOT want to go anywhere near gold. <-------period!

[CanuckinTX]

Re: British Sovereigns or Krugerrands?

I had a similar decision recently when I bought some more coins from Apmex. I decided not to buy anything less than 1 oz coins because the extra premium just doesn't seem worth it for the smaller size. I figure I can hold some silver if I need to exchange smaller amounts.

Also, as for which country of origin to hold, I spread it out among Eagles, Maple Leafs and Krugerrands (I don't even think APMEX has sovereigns, but not sure). I looked at which had the lowest premium over spot but in the end, like someone else mentioned, the listed 'buy it back' price from APMEX took the higher premium into account so if I sold it back to them it wouldn't matter at all.

I just make sure that
a) it's a known coin so I stick with the big countries,
b) APMEX will buy back whatever I purchase (ie. they quote a buy and a sell price) and
c) that the premiums are consistent with the buy prices.

[Rotwang]

Re: British Sovereigns or Krugerrands?

Another thing you might want to consider is legal tender status. I.e. is the coin recognized as money under the sovereign laws of any nation.

As far as I know the Krugs' are not.
Maples, Eagles are.
Philharmonics were, but the Euro might have thrown a wrench.

Reverse arbitrage is not for everyone.
Reverse arbitrage occurs when you circulate these coins at their face value.

[Marek]

Re: British Sovereigns or Krugerrands?

Krugerrands are, and always have been, legal tender.

Their legal tender value is the value of one ounce of gold. So whereas as legal tender your Eagle is worth $5 and Maple $50, in theory your Krugerrand is worth $1100 (today) when confiscation starts.

To offer a point of comparison; I happen to know that at a spot price of $1105 today, you could have bought a Krugerrand for $1156 or a PAMP Suisse 1 oz bar for $1150. Those are small quantity prices. In my experience, a 3% premium is an asymptote (again, small quantities).

I have never seen premiums on Sovereigns or other fractional coins that low. A $20 premium on a Sovereign seems to be typical. I have heard of lower but never been able to find it.

Ducats are another great, small, liquid coin. But premiums always seem to be worse than Sovereigns.

10oz silver bars from a well-known mint are my current favorite small value vehicle. Those can be readily found at a premium comparable to a Krugerrand. Though I am eager to hear of others suggestions.