Wednesday, June 9, 2010

Premiums For U.K. Sovereigns Rising

As reported by Bloomberg, the premiums for sovereigns are jumping up as demand overwhelms supply.
Demand for gold coins is tightening supplies and boosting premiums as mounting concern over Europe’s debt crisis and a proposed increase in U.K. capital-gains tax spur purchases, according to GoldCore Ltd.

Wholesale premiums on British sovereigns, added to the price of immediate-delivery bullion, have jumped to about 7 percent from as little as 2.5 percent in early May, the broker and dealer said. For the more popular Krugerrands, they have risen between 1 percent and 1.5 percent in the past month. May bullion sales almost tripled from a year earlier, GoldCore said....

“We’re finding it difficult to get sovereigns in large volumes,” Mark O’Byrne, executive director of GoldCore in Dublin, said yesterday by phone. “People see the crisis getting worse, not better, and demand is increasing. There’s still a bit of doubt in the market about the capital-gains tax, and sovereigns are exempt” from the levy, he said.

Although prompted in part by an exemption from capital-gains tax for U.K. legal-tender bullion coins, the current buying frenzy is concurrent with others in Europe - particularly, Greece and Germany.

A puckish point: the U.S. government seems eager to copy the U.K.'s National Health service, but is quite uninterested in lifting the cap-gains-tax exemption from U.K. shores. Hmm...


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