Married father of three Joe Wadsmith (47) from Richmond talks about why he is taking the long-term view of investing in gold. He explains that he was unfazed by the precious metals’ performance last week which climbed to $1,337 an ounce before settling back down again.
“I am part owner of an IT company in London and am fully aware that my pension provision in the past has been inadequate. I have three sons in their 20s from a previous marriage and two younger children so I want to provide for their futures if I can.
“I turned to gold originally as a way of protecting my small portfolio when the financial downturn began. Although I did not know what would happen with the economy then, the investment appears to have been a good move. Since then I have incorporated gold into my SIPP.”
Joe says he feels like the country is still recovering from the financial crisis.
“When I look around, it does feel like there is still uncertainty. It does not seem to take much for markets to be turbulent. I know that commodities can always be volatile but gold has provided me with a reasonable return on investment. I am taking a wider view of gold,” says Joe.
Senior bullion dealer at Gold Investments, Oliver Temple, say one of the reasons for last week’s drop in gold prices may have been because of a promise made by Trump.
“Trump has said there will be a $1trn (£800bn) worth of investment made on infrastructure. This would impact inflation and add pressure for the Federal Reserve to raise interest rates. Gold tends to do better when interest rates are lower.
“The Indian Prime Minister, Narendra Modi, also directed that 500 and 1000 rupee notes be banned. These notes have been used to fuel the black underground economy there.
"One way of converting these notes into ‘white money’ is to buy physical gold. Now that these larger notes used to buy gold are worthless we are expecting demand for physical gold in India to decline. This may have also had an impact on last week’s drop,” says Temple.
Medium To Long-Term View
Temple explains that investors such as Joe are right to take a medium to long-term view of investing in gold.
“We have seen some people snapping up gold and then selling it quickly after last week’s Presidential results. It was the same after Brexit. We advise against this practice as gold prices can go up and down – investing in the metal should be viewed as more like an insurance policy.
“Gold prices could well start increasing. We still do not know the impact from Trump’s win or indeed Brexit. On Brexit, we’re expecting the Chancellor Philip Hammond to say that there has been the largest deterioration in British public finances since 2011 in next week’s Autumn Statement. The official projection will show the UK faces a £100bn bill for Brexit within five years.
“It is worth, therefore, always remembering that historically gold has performed well during economic uncertainty. It seems that not only ours but the global economy as a whole is continuing to tread a fine line. While prices are low it could be wise for investors to spread some of their portfolios by buying gold like Joe has done with his SIPP.”
Gold Investments offers some of the cheapest quality bullion on the market. You can see different options for buying gold here.
Oliver Temple and his team are always happy to help as well if you are thinking of gold investing. They can be reached at:
Gold Investments Limited
88 Gracechurch Street
London EC3V 0DN
Tel: 020 7283 7752
Fax: 020 7283 7754
Case study for illustration purposes only.