UK's Pain, Gold Owner's Gain

By: Adrian Ash | Wed, Dec 10, 2008
Print Email

"...For UK investors choosing to Buy Gold in 2008, the metal discharged itself without a word of complaint..."

WITH THE BANK OF ENGLAND hitting the panic button, slashing the returns-paid-to-UK-savers down to three-century lows at the start of December, the clear winners from its campaign to reboot the bubble so far have been gold investors stuck with Pounds to earn and Pounds to spend.

Since the Old Lady began cutting interest rates exactly 12 months ago, the number of UK investors choosing to own gold through our service here at BullionVault, for instance, has risen by more than 130%.

And so far, at least, they look to have made a wise choice...

Manufacturing output, meantime - a key target for the Bank's devaluation policy - has contracted by around 10% (says the PMI index), even as the Pound in your pocket lost one-fifth of its international value on the currency markets.

Here at home, the Pound has lost 3.7 pence of its purchasing power since Base Rate began its descent from 5.75%...down at a near-record pace to just 2.0% today.

Cash savers have been hammered by Bank of England policy, in short. Just like they're being hammered by sub-zero real rates of interest worldwide. And now, like pretty much all government wonks everywhere too, the "business-friendly" socialist authorities are planning to borrow the nation out of its debt-led deflation on top.

That will only hurt government bond investors in turn, of course, even if it takes hedge fund managers (or rather, their clients) a few months to catch on. Most especially those hapless fund clients being fed into 5- and 20-year gilts at near-record low yields will soon wonder how on earth their "safe haven" gilts came to destroy their wealth. And meantime, it's little wonder so many private individuals are opting out of official paper entirely, choosing un-inflatable, un-indebted gold as a bolt-hole for a portion of their wealth.

Will it continue to gain vs. the Pound in 2009...? Nothing is certain beyond volatility. But Bank Rate now stands at its very lowest level since the Bank of England was founded in 1694. Measured against the Retail Price Index (Oct. data), the Bank's key lending rate now offers an annual loss of 2.2 pence in the Pound - the worst loss of purchasing power since May 1980.

In the last two months alone, and on a proportional basis, the Bank of England has slashed the returns paid to savers at the fastest pace since 1858.

Gold, on the other hand, has discharged its key duties for UK investors without a word of complaint in 2008 - defending them against a collapse in the currency and a fresh outbreak of idiocy in Westminster.

It is just a lump of metal, after all.

 


 

Adrian Ash

Author: Adrian Ash

Adrian Ash
BullionVault.com

Formerly City correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the head of research at BullionVault, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

About BullionVault

BullionVault is the secure, low-cost gold and silver exchange for private investors. It enables you to buy and sell professional-grade bullion at live prices online, storing your physical property in market-accredited, non-bank vaults in London, New York and Zurich.

By February 2011, less than six years after launch, more than 21,000 people from 97 countries used BullionVault, owning well over 21 tonnes of physical gold (US$940m) and 140 tonnes of physical silver (US$129m) as their outright property. There is no minimum investment and users can deal as little as one gram at a time. Each user's unique holding is proven, each day, by the public reconciliation of client property with formal bullion-market bar lists.

BullionVault is a full member of professional trade body the London Bullion Market Association (LBMA). Its innovative online platform was recognized in 2009 by the UK's prestigious Queen's Awards for Enterprise. In June 2010, the gold industry's key market-development body the World Gold Council (www.gold.org) joined with the internet and technology fund Augmentum Capital, which is backed by the London listed Rothschild Investment Trust (RIT Capital Partners), in making an $18.8 million (£12.5m) investment in the business.

For more information, visit http://www.bullionvault.com

© BullionVault 2006-2014

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events - and must be verified elsewhere - should you choose to act on it.

All Images, XHTML Renderings, and Source Code Copyright © Safehaven.com

SEARCH





TRUE MONEY SUPPLY

Source: The Contrarian Take http://blogs.forbes.com/michaelpollaro/
austrian-money-supply/