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Past, Present & Future
Past, Present & Future, The Great British Pound and Gold Coins or Gold Bullion
PAST, PRESENT & FUTURE
The past is easy, even I can tell you what happened. With the help of our friends at Google I can even tell you what happened in any region of the world on any particular day. Historians however, will tell you that we can learn from the past. Indeed they are right. The price of gold and silver does have an historical past and we must try and learn from that.
The recent high price of gold back last autumn was reached when there was a distress and panic about the Euro area and the thought of Greece defaulting. Well Greece did default, although you know who didn’t quite call it a default. As Billy Connolly once said, “What’s in a name?”. About 600 billion euros, that’s what’s in a name. In fact I read on Sunday, with thanks to Liam Halligan in the Sunday Telegraph, that through something called the T2 (target 2) banking figures, the Bundesbank is owed about 620 Billion Euros by the rest of the Euro area and the German public is not aware of this. Oops!
So that was then and what does it tell us about the now and the next? It tells us that another major worry in Europe will probably cause another lift in the price of gold. I can see those Spanish matadors riding across the horizon, can you? Here they come, dressed in suits. What, suits, oh no they are actually bankers weighed down by mortgages on those houses they built, on land that didn’t belong to them, to sell to unsuspecting Brits who were trying to escape the weather. Their horses are slow however, so be patient my friends. Slowly, slowly they come.
THE POUND - Still One Sovereign coin.
The Great British Pound seems to be having a bit of a rally on the currency markets at the moment. I am sure you understand that this will also have a lowering effect on the price of gold for us here in dear old Blighty. Mind you even Sterling must look promising when you weigh down the burdens even the USD is facing. So we can’t have it all ways. You can’t have gold up, Sterling down, crisis in Europe, USA realising it is broke, all at once. Don’t be greedy, just enjoy those blips when it’s time to take a foreign holiday knowing that the Pound buys you more dollars or Euros for a change.
Be careful what you wish for, as it might just appear all at once.
GOLD COINS or GOLD BULLION
Gold coins or Gold Bullion is an often asked question when clients first speak to us here. There are a few reasons you might wish to choose one over the other; such as the Capital Gains situation on British Legal tender coins. As far as we are aware there is no CGT on the profit made when you sell British Legal tender coins. You must remember that you can currently make a profit across your investments of £10600.00 before you pay any CGT anyway so you have to have a sufficiently large investment to make this part of your decision making process.
So Sovereigns and Britannias are thus our recommendation for those people who would like to play safe. Gold bullion is a great product and easily disposed of around the world. It also allows different entry points in respect of there being a larger choice of weight products.
Our prices across the spectrum of Gold Coins and Gold Bullion are excellent anyway, so either way you won’t pay much more pro rata for a good mixture of products to own from Gold Coins or Gold Bullion.
Take your pick and make your choice. Our advice is free.
Thanks and ‘till the next time.
Paul
My comments begin with China, one of the few countries remaining with enough clout to stop the USA trampling over the entire globe. Many are drawing a parallel between the potential demise of the USA and the fall of the Roman empire. It is regrettable but we all suffer as a result of the struggle for world domination and what we are going through now is part of it. China's economy is gaining in strength as that in the USA is becoming weaker. Therefore in spite of any slowdown in China, I should expect it to be more resilient in the face of obstacles. The encouragement given to the Chinese public to embrace gold contrasts strongly with the West in general and USA in particular. The West (read USA and British bankers) wants to run the money system with no competition from gold, but appears to have suffered a setback and the rise in the price of gold has obliged the central banks to backstop. Instead of selling 400-500 tons per year they are now buyers of a similar amount or more, representing a swing in the annual supply/demand balance of around 1000 tons a year. There are numerous factors including these, that are likely to propel the gold price higher, not least the prospect of much more money printing by governments having nowhere else to go. It would be interesting to dig up some figures in support of these trends. I may have a go at that.
Regards, Christopher.