Overview of gold and currency

My commentary, an average joes perspective:

Gold and fiat currency

It is common knowledge that gold has been used as currency for more then 5,000 years. This precious metal does not decay physically or monetarily, regardless of the common, corrupt tricks that have been weaponised and applied against regular currency. 

Speaking of the British pound as an example, £100 in around 1900 is equivalent in purchasing to about £15,500 today- that’s in 2024 to be more precise. At the average inflation rate of approximately 4.15% per year between the period of 1900 and 2024, the cumulative price increase looks worrisome.

In simple terms a pound today doesn’t buy diddly-squat.

The USA:

During 1971 America came off the gold standard which in simple terms means a currency backed by gold. This move was to fund the Vietnam war with regular printed money. This move resulted in a fall of purchasing power against the dollar by around 95%. Unfortunately all other currencies suffered a similar fate.

Fiat currency (paper notes) is really just a paper note underwritten by corrupt politicians. With corruption comes decay. Cast your mind back to a random year, any year, 20+ years ago and try to remember what the cost of a can of Pepsi was.

Gold: investment or not?

Gold isn’t really an investment like a piece of real estate or a company stock is. Gold is simply just a preservation of wealth. In the minds of some, those better informed then the average saver, gold coins are a viable option to strap in the purchasing power of their savings for the long haul.

Physical gold:

The UK gold sovereign is especially attractive for uk savers. This form of gold is still considered a form of currency (legal tender) within the UK these coins are exempt from capital gains tax and VAT.

Silver coins (silver sovereigns) are not treated the same. Sadly, with silver coins, savers are charged VAT at the rate of 20% on delivery. Without a price increase of 20% within the short or long term it is unlikely to break even. To add to injury selling fees are also a negative factor. The truth is, silver is not a viable option for UK based savers, other countries may have more favourable rules which can benefit the individual saver of that territory.

Fundamental rules for gold coin purchases:

Except delivery from a reputable bullion dealer if possible. If this isn’t possible because of your circumstances, find a reputable safe deposit house. There are many in large towns and cities.

Do not purchase any of the collectible stuff, you’ll only waste money. Purchase coins for tax benefits and spending power protection. Look for- per owned (best value)

Make sure the spot price is as close to the gold coin price as possible, premiums are expected but not high premiums.

Do not trade (buy/sell) in the short term. 

Remember, the bigger the purchase, a better overall price will be offered.