Loading... Please wait...
  • CALL US ON 020 3808 5855

Gold outlook and Semi-collectable gold coins | The Coin Cabinet Webinar #1 | 27 March 2020

Posted by

Here is the registration link to Webinar #2 on Friday 24 April, 8PM UK time, again on Zoom.

A big thank you to all of you who made our first webinar a huge success! Special thanks to the Silver Forum members who had lots of questions and kept the chat active. We hope all participants got some good information from it. For those who did not make it, here is what was said about the gold market and price expectations in the short and long term. 

Although this was now almost a month ago, it is still highly relevant as we are all still in lockdown in the UK, equity markets still seem to be discounting the full economic impact of the crisis and at the time of writing gold price is £1,386 per ounce and range-bound in the last month.

For those who prefer to read what was said, here are some of the questions and answers we had

Q: [Related to the fall in the gold price during the COVID-19 crisis] Why is the gold price currently not around $1800? Why have there been such fluctuations in the gold price recently?

A: One of the reasons that gold is not higher is because of the sharp dramatic fall in the oil price recently. The Russian Central Bank has actually been selling some gold at these highs, which has put a little bit of a lid on the ceiling of gold price on the very short-term horizon, because they're trying to get revenues from the increase in the gold price, because they're suffering revenues from the oil price sharp decline that the OPEC narrative that's going on at the moment.

Another thing to mention is that the value of the dollar is very important. So, there's been a crisis for funding, which I won't get too technical for people, but basically there's been a real demand for US dollars in terms of liquidity from other foreign central banks, and that squeeze for liquidity causes dollar shortages. And so people sell assets which are liquid to raise dollars. And one of those is gold. So that's why you've had some sharp declines in the gold price on one day activity.

Another reason why gold for example fell very sharply in February was there were margin calls for people that were trading equities. People that were trading equities need to pay for their leveraged trades at the end of the month, which is why at the end of February there was that very sharp one-day decline in the gold price. And then it bounced back sharply and back in early March. And in fact we've made fresh highs.

So gold is also susceptible to what goes on in the equity markets on the short-term time horizon, because particularly sensitive to the time in the month, if it's near the end of the month, don't forget the end of March is the end of the financial year, so I wouldn't be surprised to see quite a bit of volatility in gold price in the next few days, as we reach financial year end.

For example, there's huge repatriation flows from Japan, where you see currencies going back, so there's going to be a lot of volatility in the gold price. But that said, I think if you take a more strategic view of the gold price, there is a physical shortage, there is crisis, and from my point of view one of the interesting factors is the broadest money now being generated and pumped up from the US Federal Reserve increasing their balance sheet, that in time will put a huge stress on the financial system. And that's another reason I've been very concerned about the financial markets going forward. And I would look for gold as a classic safe haven play against any problems in the financial that'd emerge in the next coming two to three years.

Q: Are Sovereigns tax free?

A: All coins listed on the EU Commission’s List as well as the UK’s list of exempt gold coins [“investment gold coins”, editor’s comment] are VAT exempt. Almost every gold coin that has been made since 1800 is exempt in the UK for VAT. However, capital gains tax is only free for coins that are seen as legal tender, and that is Sovereigns, Britannias, plus some additional gold coins that were added in recent years to service the investment markets (e.g. 100 pounds coins, one ounce, 200 pounds, two ounce, and 500 pounds, five ounce coins).

Q: Do you see any government making a move like during the war of [gold] confiscation?

A: No, such extreme levels haven’t been reached yet. Depending on what will happen in the next 3 to 4 years, governments might take a different view on the gold market in general, but that remains to be seen.

Q: How is the US dollar spot being maintained or suppressed to dissuade the general public from seeing real money value?

A: There are 2 types of dollar indexes, one Latin America-based one European-based (DXY). In recent times the DXY went very strong, which means the dollar got very strong. The dollar like any currency is subject to central bank and other bank activity. So the rising demand for dollars from other central banks in the last few weeks meant that the dollar increased in value because of its scarcity. In times of scarcity people tend to sell their most liquid assets to raise funds. This was one of the reasons why people were selling gold in the recent weeks. 

Another reason was the sharp fall in the oil price. And that's why the Russian Central Bank in recent times, I may have said it earlier on in the presentation, was selling a bit of gold because of the sharp decline in the oil price.  

But there's been a huge demand for dollars from foreign central banks for their funding needs, for their business needs. But pumping all this liquidity into the system sort of calms the market. And I would actually argue from a long-term structural point of view, I think the dollar is actually going to weaken long-term now. There's a much more technical reason for that which I won't go into too much detail into but basically, I think structurally the dollar will weaken which as we know a weaker dollar is good for the gold price typically on a trend basis as well.

What's really curious is we've had a period of low inflation and gold has gone up. And everyone always perceives that gold is a hedge against inflation. Well, we've had years of little or no inflation, and gold has still gone up. So that's not necessarily true. It's more for me a haven play.


Gold hit the highest level in USD terms in over 7 years last week at $1,747.36, and more to go...I will go into more detail about below in our upcoming webinar Friday 24 April 8 PM UK time. Click here to register. The IMF (International Monetary Fund) is looking for a global contraction of 3% this year as [...]

Read More »

Auction 15 Lot 7 1853 Half Sovereign Proof PCGS PR65 DCAM single finest

Our top lot in auction 15 is lot 7, the extremely rare Queen Victoria 1853 gold proof half sovereign, graded and authenticated by PCGS as Proof-65 Deep Cameo (DCAM). This is the single finest graded with only 1 other coin graded 65, this NGC and without a Cameo designation.The auction is on Sunday 29 March [...]

Read More »

Why is gold price dropping and not making all-time highs?

Recently we have seen gold price pushed down alongside equity markets and many investors now ask why the price of gold is going down and not up? Regarded as a safe haven and in this previous article labelled as a 'recession proof' investment, should gold not be going up now?! Going back to the 2007-08 financial [...]

Read More »

Coronavirus and Gold update

Well stock market turmoil in recent days had produced some of the biggest moves in history (EUROSTOXX) and for others (S&P500) since the 1987 crash. The S&P500 for example losing at its worst 26.9% from all time highs made only a few weeks ago. Gold in this context has also had one day big declines most [...]

Read More »

A golden decade lies ahead

The start of a new decade sees Gold in US Dollar terms at 6 year highs. Geo-political tensions triggering a flight for safe haven assets such as the yellow metal. Even if this had not been the boost to the start of this year, there are many reasons why gold should do well, not only this year, but [...]

Read More »

3 amazing things about our new auction platform

This weekend we listed Auction 11 on our new auction platform, on a subdomain on our website, https://auctions.thecoincabinet.com/The new platform allows us to do some amazing things, all aimed at providing our customers a better service and making their life easier. How so? 1. The Buyer Premium is 0 %. Our 'eBay style' auctions are going [...]

Read More »

Top 3 risks of selling gold Sovereigns on eBay

Selling gold Sovereign coins on eBay £1 listing offers? What looks like a great opportunity to flog gold coins at minimal selling costs may end up a costly lesson. I learned the hard way that eBay is NOT a safe place to sell gold coins online.During the course of 2019 many gold sovereign collectors became [...]

Read More »

​Valuation of semi-collectable and QEII proof gold coins

I often get asked,How does an increase in the value of gold (bullion) affect the value of semi-numismatic or proof sovereigns?So called semi-numismatic or semi-collectable sovereigns, such as Victorian sovereigns or QEII proof sovereigns, have a collector value on top of the bullion value. Although referred to as a ‘premium’, this is different than the premium paid on a [...]

Read More »

Inversion of yield curve brings gold to GBP all-time high

Tom Pelc Investment Director - The Coin CabinetWell stock market turmoil in recent days with the S&P500 losing just over 6% since the July all time highs. Gold remains a safe haven play at present as the US 2s10s yield curve inverted (10 year yield below 2 year yield) this week, and historically has [...]

Read More »


Recent Updates

Connect with us