Looking to invest in gold but not sure how to go about it? Oliver Temple gives important advice for those buying the metal for the first time.
People often buy gold as a way of protecting their assets. This is especially true in times of economic uncertainty.
There are many reasons why the price of gold increases. For instance, prices have been low recently and this is probably because of the US Fed hiking interest rates up. It’s not always the case but generally gold does less well when interest rates are higher. The reason for this is that investors feel there are better returns to be had elsewhere and so there’s less demand for the metal.
In the UK, the Bank of England is coming under increasing pressure to push interest rates here up, possibly in the Autumn. Again this would dampen how well gold performs.
But gold reacts to political events. We’ve seen it time and time again, mostly recently after the Brexit referendum and this year’s snap election result. In both case gold prices climbed sharply. We also saw it when Trump won the Presidential race.
What analysts are watching closely are the events unfolding on the North Korean Peninsula. Seoul is a key global financial centre and is close to its North Korean neighbour. Should this market place be affected, it would have a major effect on world economies. If this does become the case, we would expect investors to buy gold quickly as a way of protecting their portfolios.
No one also knows what will happen when the UK does leave the Eurozone. If there is turmoil in the markets, it’s probably that there would be increasing demand for the metal.
Other investments Can Be Risky
As you can see gold prices can be very volatile. This is what puts some investors off – they simply feel that backing the metal is too risky. Yet actually other investments can be just as vulnerable.
One area which should be looked at closely is the car loan business. Around 90% of cars on the market are made through higher purchase agreements. In other words, people pay a certain repayment amount after each month. In the end the total cost is usually a lot more than the original price of the vehicle. Buyers then have the option of purchasing the car or going onto another monthly agreement plan.
This is all fine in principle but there are issues which are concerning. Recent reports have suggested that some dealers are encouraging those not in a strong financial position – such as low paid workers and even the unemployed – to sign up to these agreements. What happens if they can’t meet their monthly repayments. It could be the subprime mortgage crises over again. This would have a knock-on effect on global stocks and share prices.
That’s why it is always better – in our view – to spread the risk. We suggest that investment portfolios should have a mixture of stocks, shares, property and gold. As a responsible dealer we would advise that gold should make up no more than between 10-15% of an investment portfolio.
We would also suggest taking a wider look of gold – historically gold has always performed well – so buying the metal for the medium to long-term.
Buying gold is relatively easy if you go to a reputable dealer. We offer a range of gold coins and gold buys – typically are quality bullion is some of the cheapest on the market. We also have some of the cheapest storage solutions – our vaults are at the famous London Silver Vaults.
It is worth remember that there is no VAT on gold and that Britannia and Sovereign coins are exempt from Capital Gains Tax. The metal can also be used as part of your self investment pension portfolios (SIPP).
What makes us different from other dealers is that we’re still family-run and are one of the oldest bullion dealers in the UK.
We feel it’s important that customers can talk to us. It’s why we have offices conveniently located next to Leadenhall market in the City. We’re also happy to chat through options and pass on our extensive knowledge on the phone, by email or through instant messaging through our site.
If you are thinking of buying gold – we also buy gold – then do get in touch with either me or my team:
Tel: 020 7283 7752
Fax: 020 7283 7754
Gold Investments – trading since 1981. You can trust us.