Gold Investing: Mortgage buyers are miffed. At least that seemed to be the overall impression from callers to a radio programme I was listening to the other night, writes gold bullion expert Oliver Temple.
Some listeners appeared positively cross with Governor of the Bank of England, Mark Carney.
It was only a few months ago that the Bank of England had hinted that the first UK interest rate rise would happen in 2016. A rise would be a sign that the economy is beginning to head in the right direction.
Interest Rate Rise
Carney now says that an interest rate rise is not now immediately on the table. Callers to the radio programme, however, had taken the Bank of England’s advice by fixing their mortgage rates; some for the next four or five years rather than relying on the variable rate. Those in that position will now be paying more for their mortgages every month.
The Chancellor pointed out at the start of the year that because of global markets, the UK’s own economy is far from out of the woods. He said that 2016 could be very difficult economically. The International Monetary Fund (IMF) has downgraded its global growth forecast for this year.
We are now seeing panic selling in markets. Global shares on Wednesday slipped to its lowest level in more than two years with the German DAX falling to 2.8pc and the CAC in Paris dropping to 3.5pc. More than 400 points were lost from The Dow Jones Industrial Average.
China’s economy has slowed from a 10% average growth to 6.9% in 2015. It’s not so much the downward curve that is worrying investors but how rapidly the drop has happened.
Then there is over production of oil. Since 2014, oil has dropped by 75%.
Economists such as Albert Edwards – speaking at the Société Générale conference recently – fears an economic storm is coming. He is concerned that quantitative easing (QE) during the last economic downturn, rather than pushing growth in the UK and US, has actually inflated commodity prices “into the stratosphere”.
The US interest rate rise in December could also be worrying investors. For many emerging economies, higher interest rates have come at a bad time. This is particularly hard on those countries relying on exporting commodities.
Investors, it seems, are now beginning to feel nervous. I believe this is why we are seeing the precious metal becoming more attractive – gold is traditionally seen as a safe haven during economic uncertainty. During the last economic downturn, for instance, demand for the yellow metal grew.
If we are on the precipice of another global downturn, gold investing for those with any size of budget – could be even more attractive. We are already seeing spot prices generally rising.
I would advise those new to investing in gold to have a chat with us first. We’re one of the oldest bullion houses in the UK and have been buying and selling gold for over 30 years.
We would be happy to share our expert knowledge with investors over a tea or coffee if they would like. We can be reached on:
Tel: 020 7283 7752
Fax: 020 7283 7754
Gold Investments Limited
88 Gracechurch Street
London EC3V 0DN
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