Gold

[CliveH]

Interesting article re investing in Gold from one of the “Pinks”.

 

As this has been discussed n the past I thought it may be of interest.

 

You can either hold Gold directly or via a “fund”. Holding it directly is problematic in that selling and repurchasing is expensive and can lead to getting your fingers burnt if you get the timing wrong.

 

Something that many may not appreciate is the size of some of the Gold Holding funds. Hence this sentence from the article below rather puts this into some sort of perspective:-

 

“In fact, if the largest physical gold tracker were a country, it would be the sixth largest holder of gold in the world.”

 

With todays low interest rates, and the general financial uncertainty – gold is attractive. Investing even a few hundred £ in a Gold fund is possible and via an ISA the gains are tax free. And you do not have to worry about timing as the fund manager does that. There will be a management fee, but it is not a lot in the scheme of things and “you get what you pay for” is a truism here.

 

 

 

“Investing in Gold - May 2013

Published by Investment Adviser | May 07, 2013

 

Gold is back in the headlines as the commodity recently suffered a daily sell-off unseen since the 1980s.

Major investment banks have turned negative on the commodity as it continues to prove itself a ‘Marmite’ investment, one investors seem to either love or hate.

 

Nevertheless, at times like these it is crucial to sift through the noise, identify misunderstandings and maintain a level longer-term outlook.

 

With this in mind, certain risks have been overstated, while gold’s short-term direction remains as unclear with multiple moving parts determining its price. Given the choice between gold equities or physical exposure, the former is preferable on yield and margin protection.

 

Traders are creating short-term noise while governments are looking long-term strategically. The biggest misunderstanding currently by investors is that European Central Bank (ECB) selling is significant and could provide downside risk to the gold price.

 

Firstly, the country at the centre of these claims is Cyprus, which holds a minimal amount of the world’s gold reserves. Secondly, the ECB is limited by an accord to only sell 400 tonnes each year. Finally, with the current uncertainties, banks are more likely to keep their gold as collateral.

 

Following on from this point, while the economic environment remains shaky, the ‘era of easing’ is likely to continue for the medium term.

 

Leading to inevitable currency devaluation, countries will again be looking to the commodity to protect value. Emerging markets in particular need to diversify their foreign reserves, in some cases holding single-digit percentages in gold versus roughly three-quarters for the US. Sri Lanka, most interestingly, came out seeing a buying opportunity at these price levels.

 

Nevertheless, if given the choice between maintaining exposure via gold equities or physical, the former is the choice de jour. With the increased access offered by tracker funds, the rise of the retail investor in the market means volatility is likely to remain high. In fact, if the largest physical gold tracker were a country, it would be the sixth largest holder of gold in the world.

 

Furthermore, as capital controls ease, emerging market investors may move into more productive assets instead. Crucially, in a yield-starved environment, the dividends offered by equities are attractive. In terms of gold miners, while their budgets account for further price falls, they have been focused on making substantial cuts to capital expenditure. This enables them to protect margins regardless of the gold price.

 

It is often more useful to be a psychologist rather than an investor when deciphering the driving forces behind the gold price. Opportunities remain but multiple turning cogs must be assessed.”

 

 

 

[Guest pelmetman]

By ek Clive 8-)..................having money must be a real worry :-S ..............Glad I ain't got none :D.........

 

 

Maybe I should set myself up as a thrift adviser? (lol)...........or we could be a double act ;-)

 

Gold Standard & Poor....................... :D

[CliveH]

Hi Dave - the point was that regardless of how much you have, currently interest rates are so low that inflation being considerably higher means that whilst some like having money on deposit because they perceive that the capital is "safe".

 

If it is "safe" - it is losing buying power "safely".

 

So alternatives are being sought. Gold is one of them.

 

And if you want access to tht sort of investment - then you used to have to have pots of money.

 

Now you don't.

 

You can access a good Gold Tracker via an inexpensive ISA - and most have very low minimum investments.

 

 

 

 

[Guest pelmetman]

CliveH - 2013-05-11 6:26 PM

 

Hi Dave - the point was that regardless of how much you have, currently interest rates are so low that inflation being considerably higher means that whilst some like having money on deposit because they perceive that the capital is "safe".

 

If it is "safe" - it is losing buying power "safely".

 

So alternatives are being sought. Gold is one of them.

 

And if you want access to tht sort of investment - then you used to have to have pots of money.

 

Now you don't.

 

You can access a good Gold Tracker via an inexpensive ISA - and most have very low minimum investments.

 

 

 

 

Sorry Clive.................I was just making another naff joke :$.............did you not twig it? :-S.........."Standard & Poor?................

 

Although I think my approach to retirement has merit :D...............for us poor people ;-)

[CliveH]

Is that where I am going wrong????????

 

Treating you seriously Dave??

 

(lol) (lol) (lol)

[Guest pelmetman]

CliveH - 2013-05-11 7:56 PM

 

Is that where I am going wrong????????

 

Treating you seriously Dave??

 

(lol) (lol) (lol)

 

Well I don't take myself seriously Clive 8-).......................so why should anyone else? :-S.............anno domini and all that ;-) ..............

[Mel B]

CliveH - 2013-05-11 7:56 PM

 

Is that where I am going wrong????????

 

Treating you seriously Dave??

 

(lol) (lol) (lol)

 

Dave definitely needs treating Clive ... it's just that no-one has found out with what!!!!! (lol)

[Syd]

 

Without doubt Gold is a great investment and will soon be getting a great deal better but currently silver is the better investment of the two

I am 85% silver 15% gold but gradually decreasing silver and increasing gold.

I only go for the actual metal because I prefer not to make any of the dealer thieves rich with their risky plans plus I do not believe that all the gold supposedly covered by these paperwork plans is actually there

[Guest 1footinthegrave]

It's strange that as a species we value something that has very little use. ;-) If ever the bomb went of the last thing we'd be looking for was our stash of gold. :D I'd be over to Daves to see if he has any spare spuds. :D

[Guest pelmetman]

1footinthegrave - 2013-05-12 6:05 PM

 

It's strange that as a species we value something that has very little use. ;-) If ever the bomb went of the last thing we'd be looking for was our stash of gold. :D I'd be over to Daves to see if he has any spare spuds. :D

 

You keep yer hands of me Charlotte's 8-)...............had our first pick of Asparagus today with our roast lamb B-).........

[Guest 1footinthegrave]

Oh I forgot, he has a habit of hanging on to things, :D

[CliveH]

It only has a use because we give it one - tho in technology (space exploration and medicine in particular) its technical usage is increasing.

 

Its primary use is as a backstop for our financial system. Without our using it for this such that countries in particular have to keep vast amounts as their gold reserve it would have little value at all other than a pretty and easily workable metal.

 

What is happening in the Eurozone is pretty scary - as I have said before.

 

This article is good (if a bit old now) and I have to cut and paste it as it is behind a paywall. But it sums up the issues quite well - in particular the fact that for all that Germany says in public - it is planning for the big event!

 

...............................

 

Germany Repatriating Gold From NY, Paris 'In Case Of A Currency Crisis'

 

Germany’s central bank announced Wednesday it will repatriate gold reserves held at the New York Fed and the Banque de France in order to have “the ability to exchange gold for foreign currency […] within a short space of time.” Officials at the Bundesbank indicated they have no intention of selling gold, but acknowledged the move is “preemptive” in case a “currency crisis” hits the European Monetary Union. While they tried to minimize the importance of the move at the Bundesbank, repatriating gold is a clear indication of public loss of confidence on foreign central banks and the integrity of the monetary union. Over the past few years, Venezuela, Libya, and Iran have also repatriated their gold holdings.

“No, we have no intention to sell gold,” a Bundesbank spokesman said on the phone Wednesday, “[the relocation] is in case of a currency crisis.” The argument is mildly paradoxical: the officially stated reasons for the repatriation of part of its gold holdings is to build trust and confidence domestically, and to have the ability to sell gold quickly If needed.

 

Specifically, the Bundesbank will be bringing to Frankfurt all of its 374 metric tons stored at the Banque de France (11% of its total reserves), and 300 metric tons held in the vault of the New York Fed, reducing its share in the U.S. from 45% to 37%. At market prices, that’s about €27-billion ($36 billion) worth of physical gold bars. According to the Financial Times, it will be the biggest planned gold transport on record.

 

The German central bank is looking to relocate 50% of its total reserves to Frankfurt by 2020; the EU’s largest economy is the world’s second largest holder of gold reserves, trailing only the U.S. Why 50%, one may ask? “It’s just a benchmark that makes sense,” a spokesman explained.

 

In a statement, the Bundesbank justified its relocation of gold reserves held in France as a natural consequence of the adoption of the euro, noting that as they hold the same currency, there is no need to keep the bars there if the situation arose where they would need foreign currency quick. Reserves in London are to remain steady at 13% or 445 metric tons. It’s repatriation of U.S. reserves are just part of their plan to keep 50% at home; the Bundesbank will keep more than 1,200 tons in New York.

 

Germany hasn’t bought or sold gold since 1973, and tried to keep its reserves “as far west as possible” during the Cold War, according to Bundesbank board member Carl-Ludwig Thiele, who prepared an important presentation (in German) on the matter. Frankfurt brought back 940 tons from the Bank of England in 2000/1 in order to avoid storage costs, according to the FT, and has sold about 5 to 6 metric tons a year to the finance ministry to mint coins. Interestingly, neither the New York Fed nor the Banque de France charge Germany to store its gold.

 

The move appears a response to public outrage over the Bundesbank’s oversight of its gold holdings. Last October, federal auditors questioned the Bundesbank surveillance of its gold bars, asking whether officials had actually verified the existence of their holdings. The Bundesbank insisted this was an independent decision and that there was “no loss of confidence” in fellow central banks, the spokesman told Forbes. Yet the timing, and the fact that only Venezuela, Iran, and Libya have recently repatriated gold, and in their case over fears of asset seizures, casts doubt over the Bundesbank’s move.

 

While Thiele didn’t speak of how it would be transported for security reasons, the gold coming from the U.S. will probably have to be flown in. This will probably have to be done in 3 to 5 ton shipments, the maximum insurance companies will cover, meaning it will take between 60 and 100 flights. In 2011, Venezuela’s Hugo Chavez brought 160 tons of gold from New York to Caracas at an estimated cost of $9 million. Gold from France could easily be moved by truck.

 

It was unclear whether the move would have a direct impact on gold prices, which were down 0.2% to $1,679.90 an ounce by 12:47 PM in New York. Major gold miners were all in the red on Wednesday, with Goldcorp, Barrick Gold, Freeport McMoran and Newmont Mining all down between 0.7% and 1.5%, while silver slid 0.4% to $31.40.

 

Germany’s gold repatriation raises questions as to their belief in both the strength of the global economy and the European Monetary Union, and their trust of fellow central banks. It also suggests the Bundesbank, with a reputation for independence, has felt the pressure of the public, and those federal audits.

...................................

[Guest 1footinthegrave]

I've heard my bank is in trouble, It's the Coop bank, should I be buying gold I wonder.

 

[Syd]

 

When Germany asked for it's gold back from France and the UK it received it straight away but when it asked for gold back from the USA the delivery is to be spread over seven years.

Now that makes me wonder if that gold is really there or if the Germans have to wait until the Yanks get some more into their stock

[Guest 1footinthegrave]

1footinthegrave - 2013-05-12 9:56 PM

 

I've heard my bank is in trouble, It's the Coop bank, should I be buying gold I wonder.

 

Perhaps I'm worrying for nothing, well Mr Richardson got his cash :-S

 

Mr Richardson left the Co-op Bank in 2011 with a package worth £4.6m, including a £1.4m payment for “loss of office”, as well as £1.39m in “compensation” for leaving.

 

The move follows the six-notch downgrade by Moody’s of the Co-op Bank’s credit, which was relegated to junk status. :-S

 

Funny old world, I just thought you got the sack for doing a crap job >:-( what effin planet are these people on, not the same one as me that's for sure.

[CliveH]

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

[Guest pelmetman]

CliveH - 2013-05-13 7:58 PM

 

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

 

Oh no.......................I've got 62p in an ISA 8-)...............and several £100 on a credit card >:-)

[Guest 1footinthegrave]

CliveH - 2013-05-13 7:58 PM

 

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

 

I thought there was statutory protection up to 85k ?

[Guest pelmetman]

1footinthegrave - 2013-05-13 8:11 PM

 

CliveH - 2013-05-13 7:58 PM

 

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

 

I thought there was statutory protection up to 85k ?

 

You didn't read the small print...........85k....except for 1footinthegrave 8-)...................... :D

 

The Coop's not owned by HE is it? :-S

[Guest 1footinthegrave]

pelmetman - 2013-05-13 8:23 PM

 

1footinthegrave - 2013-05-13 8:11 PM

 

CliveH - 2013-05-13 7:58 PM

 

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

 

I thought there was statutory protection up to 85k ?

 

You didn't read the small print...........85k....except for 1footinthegrave 8-)...................... :D

 

The Coop's not owned by HE is it? :-S

 

Or any one of a few on here, only bothered because my state pension gets paid in to the Co-op, if all else fails I'll claim asylum and get a free house in Mayfair. ;-)

[CliveH]

1footinthegrave - 2013-05-13 8:11 PM

 

CliveH - 2013-05-13 7:58 PM

 

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

 

I thought there was statutory protection up to 85k ?

 

Yes there is - but do you want to have your money tied up until someone within that scheme says you can have it?

[Guest pelmetman]

1footinthegrave - 2013-05-13 8:34 PM

 

pelmetman - 2013-05-13 8:23 PM

 

1footinthegrave - 2013-05-13 8:11 PM

 

CliveH - 2013-05-13 7:58 PM

 

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

 

I thought there was statutory protection up to 85k ?

 

You didn't read the small print...........85k....except for 1footinthegrave 8-)...................... :D

 

The Coop's not owned by HE is it? :-S

 

Or any one of a few on here, only bothered because my state pension gets paid in to the Co-op, if all else fails I'll claim asylum and get a free house in Mayfair. ;-)

 

Good move ;-)..................I've been there and they have indoor baths............some so big you have to swim to reach the taps 8-)

[CliveH]

Indoor toilets Dave?

 

I remember when a friend, years ago, boasted about his new BBQ and his en suite bathroom.

 

I said (strictly as a laugh)

 

"wow mate you have come far - in my first house we were pleases to cook inside and have an outside lav. Now you cook outside and sh!t in your bedroom"

 

(lol)

 

 

[Guest 1footinthegrave]

CliveH - 2013-05-13 8:50 PM

 

1footinthegrave - 2013-05-13 8:11 PM

 

CliveH - 2013-05-13 7:58 PM

 

If anyone has savings in the CoOp Bank - you may want to move it out - NOW!

 

I thought there was statutory protection up to 85k ?

 

Yes there is - but do you want to have your money tied up until someone within that scheme says you can have it?

 

Perhaps better under the mattress, and there's me thinking these banks were run by intelligent folk to justify their million pound plus salaries.

[CliveH]

With interest rates so low and inflation far higher - under the mattress is on a par with most deposit based savings accounts.

 

Which is why I flagged up that even small sums can be invested in things like Gold to get a better return.