How and Where Do I Sell Gold?

How and Where Do I sell Gold? – Our Top Tips

“How do I sell my gold? Where can I sell gold? I have gold chains, gold coins and a small gold ingot but how do I sell it?”. These are the types of questions we get asked the most. We all have those gold items that we inherited or bought all those years ago and now they sit in a drawer. So how do you sell gold and what should you look out for.

Where to sell gold?

Firstly, sell the item to the right place. Typically if you have coins, bars or bullion grade items, you want to sell those to a Bullion Dealer. Bullion dealers such as ourselves make money on volume and will usually offer better prices on gold coins or gold bars. This is mainly because a bullion or coin dealer is looking to resell that item back out to customers. Therefore they are more likely to offer a closer spread to the spot price to secure getting the coin or bar, with an eye on reselling it soon after.

 What if I want to sell gold Jewellery?

With jewellery and scrap gold I always recommend customers to do as much of the work as possible. If you are going to be selling gold, do your homework. I would start by having a look for any hallmarks. Usually on jewellery the hallmark will be either near the clasp of the necklace or bracelet on the underside of the mount. Sometimes this is hard to find but do persevere. So what is it you are looking for?

Below are the hallmarks you need to look for:

The standard Hallmarks used in Britain – a guaranteed standard of fineness

Sometimes no matter how hard you look you still can’t find the hallmark. Or more often than not, especially with old items of gold jewellery, it is impossible to make out what the hallmark is. If that is the case, you can still give yourself a rough idea of the value.

How to work out the value of  the gold you want to sell?

So hopefully you have found the hallmark. Even if you haven’t I am going to take you through how to at least give yourself a rough idea. This isn’t full proof and is only meant to be indicative. The bullion dealer is always going to need to see the items – but at least you will have an idea.

Firstly – weigh the item – you can use kitchen scales, simply take down the gram weight. Remember, this won’t be 100% accurate but it will give you a reasonable idea. Please do be aware that if your jewellery has stones or pearls in it, that will effect the weight.
Secondly – calculate the price – so you have the weight in grams, what next?

Well on our site you will find the spot price of gold in troy ounces (31.1035g) and the gram weight. The spot price is 24 carat or 999 fine. What you will need to do is calculate price by the purity of the item.
Example A
I have a necklace. I’ve found the hallmark and it says 750 so it is 18 carat. The necklace weighs 10 grams. The current gold price on the website is £900, this is a gram price of £28.93. The £28.93 is the 999 or 24 carat. To find out the 750 or 18 carat gram price, I multiply the 24 carat gram price by 0.75.

So 28.93 x 0.75 = £21.69

The 18ct gram price is £21.69. I then multiply this by the weight of my necklace.

21.69 x 10 = 216.90

We can see from this that my 18 carat 10 gram necklace approximately is valued at £216.90. A dealer or jeweller would then take a premium on this. This is how we would make our money and factors in the refining cost etc. Usually a dealer or refiner will take anywhere between 95% – 85% of the value depending. On that basis £219.60 x 0.90% = £197.64 is the likely value you are going to receive.

As I said earlier this should be used as a guide only. It will still be dependent on an inspection of the item. Either way, by using that example you can work out 9 carat, 18 carat, 22 carat gold etc. At the very least, this should help you to sell gold with some knowledge. It shouldn’t be a mystic art!

Finally should I clean the gold coins and gold jewellery?

I always recommend to clients not to clean the coins or jewellery! Sometimes even the softest of cloths and most delicate of soaps can cause scratching or tarnishing. It is always better to leave any dirt or grime on a coin and bring it in as it is. We can then provide guidance when you are here. It is tempting when selling something to spruce it up. As a dealer there is really no need, we aren’t going to be overly fussy. We will give the coin or item an inspection.

We hope this goes some way in helping you to sell your gold with confidence. If you get stuck or don’t understand, you can always ring a dealer. We are more than happy to help and can advise you on the best way to sell gold.

ATS Bullion Gold News Round-Up

Finally, a news article, I hear you cry. It has been some considerable time since my last blog/article post. So where have I been? Well in truth, nowhere; certainly nowhere exciting and I don’t have an excuse for why I haven’t published anything about gold for a while. If I can be candid, here at ATS Bullion we have been quite busy. The increase in sales from last year have continued and have not really abated. I’ve been under the cosh, as have been the incredible ATS Bullion Team. I now feel it is my duty to say a congratulations to them. Anyway, aside from that, I had been getting a little tired of writing about gold and its relationship with Brexit and the dollar. So I felt a little hiatus was in order to allow me re-sharpen my stylo. Nevertheless, enough of the preamble, let me start this service game with a brief analysis of the gold market this year. (I apologise for any of the tennis quips in this article – it is Wimbledon season).

ATS Bullion: Gold Analysis for the Year to Date

Gold opened this year on the 3rd January according to the London Bullion Market Association‘s (LBMA) Fix at: £932.120 / $1148.65 / €1103.28 respectively. This morning the LBMA AM Gold Fix was: £940.540 / $1218.95 / €1067.920. This is a difference of + £8.42 / + $70.30 / – €35.36.

The gold price, unlike in other critiques I’ve published has a really interesting split between the three currencies, which I haven’t seen for a quite a while.

Let’s now have a quick look at the currency exchange – see the below chart:

From both sets of data there is quite an easy answer to attribute to them. In the first instance you can see the relationship between commodities and currency. The dollar has lost a bit of ground this year against both sterling and the euro. This change has of course given way to a moderate increase in the dollar price of gold. Likewise we can see the biggest loser in gold this year has been in euros.

In percentage terms, sterling against the dollar has increased + 5.8% whilst the gold price in sterling has changed a negligible +0.90%. Whilst the dollar has slipped against GBP – 5.8%, the gold price in dollars has changed by + 6.12%. Furthermore, looking at our European cousins, the year of voting has almost abated and since the appointment of President Macron and the defeat of Geert Wilders, the Euro has settled. It has posted a + 9.42% increase against the dollar and gold in Euros has fallen – 3.2%. The European investors haven’t quite left the safety of gold and no doubt much attention will turn to the German vote later on this year.

The relationship between the sets of stats really only again point to the same circumstance. The reality is that the US economy has begun to lose a little bit of ground. Hardly surprising news considering sterling had 30 year lows last year after Brexit. It was never going to last forever at those lows, however much will be made of the negotiations as they are on-going.

Well, that has been a long time coming. I feel refreshed. It is nice to be writing again for ATS Bullion- thankfully I didn’t put many terrible tennis puns in the article. You’re welcome.

Michael Cooper

Gold Forecast 2017: A Round-Up of 2016 And The Year Ahead

Well I think it is probably safe to start this article by saying, thank goodness 2016 is over! That was quite the year. We had the tumultuous events of Brexit, the rise of soon-to-be President Donald Trump, another Star Wars was released (I’m making no parallels between the Rise of Darth Vader and aforementioned Mr President) and a whole host of celebrity deaths. It left us all quite tuckered out by the end of the year. It seemed to be a never-ending feast of news with everyday bringing something else. Thank god that is over. So what has happened to the gold price and what is the gold forecast for what’s happening in 2017.

What did we learn from 2016
The first Gold Fix of 2016 was on the 4th January at £725.019, $1072.70, €982.299 respectively, with the final fix of the year published at £942.580, $1159.10, €1098.360. The Gold Price across the year moved £217.561 (+30%), $86.4 (+8.05%), €116.061 (+11.81%). The gold range in sterling was £335.06, in dollars it was $297.30 and in euros €257.414. The dollar and euro price is fairly consistent with a difference of 27% and 26% of fluctuation, whilst in sterling it is a whopping 46% movement – which is a tremendous amount of swing.

Without being Milton Friedman, it is fairly easy to point towards currency as being one of the destabilising factors for the gold price in 2016. For Sterling of course this is down to Brexit, I don’t think we need to look much further than that. But for the sake of all of you wanting more stats: the sterling price against the dollar started the year at 1.46 and ended at 1.23 – a loss of 18.69% which was well documented as a 31 year low. The combination of Brexit and FED rates rises put a lot of downward pressure on Sterling. The gold price benefited and performed very well throughout the year with it being listed as the best performing asset class after the first quarter. The gold price continued riding the uplift until just after the presidential election and has since had a moderate retraction.

Gold Forecast 2017: The Year Ahead
In the past I’ve written a huge block of my predictions for the year ahead. After reviewing my last years auguries; I must confess I was reasonably pleased with it – I’m going to write it slightly differently this year. Stay with it.

America
Before we look any further, we have to be looking at America. Trump’s election victory has so far been taken as fairly positive in the markets, with the indices posting strong results. Trump’s business background and promises of de-regulation in the banking industry and the repatriation of offshore cash, seemingly are buoying investor confidence. Ford have already taken heed and scrapped their plan for a $1.6 billion dollar manufacturing plant to be built outside the US (across the border in Mexico). The markets at least have so far been in favour of his appointment.

The other aspect of the US we have to look out for is the Federal Bank raising interest rates. The FED have expressed a desire to continue to raise rates in 2017 with three rates rises being touted. Janet Yellen stated the rates rise were a “reflection of the confidence we have in the progress the economy has made and our judgment that that progress will continue”. Naturally as we have the incremental interest rates rise, we will see a retraction in the equities markets as investors begin to shift monies back to high interest cash accounts. In all, a lot of this economic year is going to sit on how the Trump Presidency is going to pan out. Optimism may well give way to a year of underwhelming events, but if one thing is for sure, Trump at the very least talks first and thinks later – a recipe for unpredictability.

China
Over the last year, I almost began to forget that China existed. With all the headlines being dominated by Brexit and then subsequently Trump, I can’t actually remember anything about China from the last year. The bubble associated with China, although thought to be about to burst last year, didn’t. China grew approximately between 6-6.5% depending on what statistics you read. That was primarily due to the commodity drive last year. An economy strongly reliant on commodities saw Chinese manufacturing recovering from a four year deflation helped by a slight fall in the Yuan. The constant strengthening of the dollar comes with its benefits but also with its negatives.

This year I think we need to focus attention a bit more on China and watch out for that bubble. With China seeking to obtain another year of 6.5% growth, at some point they will come unstuck. They have a huge increase in the middle class and over the last couple of years a shift towards a more service based economy to help head off any seismic problems with manufacturing. These factors combined with any slow-down in commodities, China’s ever growing debt, it will come to a head – the question is when. With the Chinese, it is likely they’ll more likely hit stagnation than a complete collapse. It is a machine well-oiled and the leadership know how to control it sufficiently. It will be the BRIC countries such as Brazil and India who will be more greatly effected.

UK and Brexit
Sadly for you the reader and me the writer, Brexit is going to dominate our headlines for a while (I pretty much refused to write anymore about Brexit last year). As of writing this we are allegedly set to be triggering article 50 in March this year with us potentially leaving in 2019. Let me put this supposition to you: – with the resignation of Sir Ivan Rogers, deemed one of the UK’s most experienced EU ambassadors, with Rogers himself calling the line of argument put forward to him as “muddled”, it doesn’t bode well. The government have now appointed Sir Tim Barrow, a well-seasoned negotiator, it only makes me feel things are going to get entrenched. I happen to echo Sir Ivan Rogers’ belief that our exit is going to be a long drawn out affair. I think this will have an effect on sterling. A failure to trigger article 50 will send the wrong messages to the markets and will probably delay an interest rates rise in the UK. If they do trigger it, it will likely settle currency down but it won’t last if negotiations stall in the mid to long term. Any hesitation will cause a currency wobble and we will hear the same sort of fear-mongering about companies relocating – which may well happen if we flounder.

Gold Forecast 2017
So as you can probably tell, there are a hell of a lot of variables that will play on the gold price in 2017. Last year it was fairly easy to predict that the dollar would strengthen. This year it isn’t at all clear cut. On the face of it, the dollar looks to have another strong year, this will put downward pressure on the price. Sterling will be dependent on negotiations with the EU and whether the Bank of England will raise interest rates, which they will likely have to do at least once in 2017. This may mean a resistant gold price in sterling. Ultimately, I think the gold price will have some significant pressure but it isn’t going to take much for an uplift in the price. Given the lack of belief in the financial institutions, the Brexit Saga and the new President, I think 2017 is going to be a tinderbox – let’s hope Mr President doesn’t bring that torch.

Thanks for reading this year’s gold forecast! Remember this article is to be used as an article and should not be used as investment advice. Please seek professional investment advice before investing.

How to invest in gold in 5 simple steps

Investing in gold is a great way to diversify your portfolio while delivering a stable alternative to property and stock.

High demand means the investment remains secure long-term, and the value of physical gold is protected from inflation-induced fluctuation – nobody can predict the future price of gold but it is a traditional safeguard.

Once you understand why to invest in gold, it’s time to think about how. What are the next steps?

http://www.atsbullion.com/investment-guides/why-invest-in-gold/

In this post, we’ll look at how to invest in gold – step-by-step.

Step 1 – Consider your purchase capacity
Investing in gold offers a great deal of flexibility, so the first step is to determine your purchase capacity. Whether you’re looking to invest hundreds or thousands, there are plenty of options.

For example, gold coins and sovereigns can vary from a couple hundred to several thousand pounds – so building up a collection can mean investing gradually over time. On the other hand, if you’re looking to make a larger one-off investment, you may get better value for money if you buy several bars at once.

The first step is therefore considering how much you’re looking to invest and over what time frame.

 Step 2 – Find a reputable source
Legitimacy is key to making your investment in gold worthwhile. While it is illegal to reproduce coins, forgery is still a risk.

The threat of being conned with impure gold is present if you deal with the wrong source, so it genuinely pays to do your research. You should always buy from a reputable dealer who offer certificates of authenticity and connections with similarly reputable trade associations.

For example, the British Numismatic Trade Association have a strict code of ethics that members must adhere to when selling gold, ensuring purity is always as advertised and historical accuracy is thoroughly considered. The London Bullion Market Association is a reputable wholesale over-the-counter market for the trading of gold and silver, so look out for dealers who sell their ‘good delivery’ standard bars.
www.lbma.org.uk/good-delivery
Step 3 – Coins, bars or jewellery?
You’ve decided how much you’re looking to invest and where to buy from, the next step is deciding the type of gold to invest in.

Coins, bars and jewellery are the three main options – although, if you’re looking at an investment in gold from a purely financial perspective, bear in mind that with jewellery, you’ll be paying a premium for craftsmanship, style but you will also have to VAT whereas investment gold has a VAT free status.

With bars, you can typically expect 24-carat purity, sealed and attractive packaging, and when buying larger sizes, the premium can be significantly lower than coins as the production costs are lower. It may also be possible to purchase some bars through your pension provider – However this is dependent on the pension provider themselves, if in any doubts check with them beforehand.

On the other hand, the benefits of investing in coins include:

1) Lower market risk as you can spread investment over longer periods

2) Collectible value; buying for gold price and numismatic value

3) Some date stamps mean coins can make great personal gifts

4) Abundance of aesthetic choice

5) Storage can be a lot easier

6) Some gold coins are Capital Gains Tax Free
As with any purchase, there are positives and negatives to consider; bullion bars can offer the highest value of gold for your budget, but coins provide potential collectability, pleasing aesthetics and historical significance.
Step 4 – Buy under current market value
As with any investment, the key is to buy low and sell high. When investing in gold, you can keep up with the latest prices through most daily newspapers, or shop around online for the latest value. Over the last quarter, the value of bullion has fluctuated from around 26,500 GBP/kg to 34,000 GBP/kg – so if it’s crucial to buy and sell when the time is right.

Alternatively, we’re happy to give you an idea of the current price over the phone – whether you’re buying or selling.
Step 5 – Ensure your delivery is insured and safe
Investing in gold brings an additional consideration to investing in the stock market – you need to be certain that the gold itself will remain safe and secure.

Even before it arrives, ensure that wherever you order from, your delivery is fully insured and your investment is protected. You’ll also need to consider how you will be safely storing your investment – will you also need to invest in a home safe or use a bank’s safety deposit box?

Although they are comparatively minor, insurance and security costs should be factored into your expenditure – but certainly worth every penny.
Conclusion
From considering the extent of your investment to the means by which you’ll store your bullion, these valuable steps will help you understand how to invest in gold.

There are a lot of considerations when planning a financial investment of any kind, so if you have any further questions about buying or selling gold, get in touch with our expert team today!

This Week’s Gold Price Drop

What made the gold price drop this week?

What I love about my job is knowing that in a blink of an eye, the gold price can completely change. Like all things if you are unprepared it can catch you completely off guard and as a bullion dealer you begin eating losses. On the flip-side the price can soar and everything we bought yesterday can suddenly be worth exponentially more. That I suppose is the fun of it. As my CEO always says to me, “we live and die by our decisions” and like most things in life that is fundamentally true. It is about being pragmatic and knowing when to turn a profit and not trying to play the market – that is when you can get caught and badly. As with gold’s volatility and most of life’s circumstances we are faced with, there is a chain of causation. Sometimes the action and result cannot be pinned down to one set of reasons. Unlike a legal arena where causation isn’t necessarily sufficient to create a legal liability, the gold price and most specifically being caught on the wrong side when price collapses, will goad you into thinking you should have known better and “why didn’t I wait to buy” but the reality is, to pin a cause to the result of a gold price drop is not always an easy judgement.

The Gold Price Drop Analysed

On Monday the LBMA AM Fix was £860.886/$1250.40/€1115.840 and yesterday’s PM Fix was £829.520/$1220.60/€1094.769 – in sterling that is a drop of 3.64% in four days. Currencies likewise GBP to USD opened on Monday at 1.4497 and closed yesterday at 1.4704 – in sterling a rise of 1.43%. Sterling is now sitting at it’s highest since early Jan this year.

Why the sudden gold price drop?

Typically when sterling increases against the dollar, the gold price moves lower here due to the conversion from the gold price in dollars to the pound. The dollar price has been strengthening this year which I have mentioned previously in my 2016 Gold Forecast at the start of this year. Solidifying the dollar has been on the FED’s agenda from last year and inevitably it will continue. Despite this week where it has softened for sterling, USD against CNY (Chinese Yuan Renminbi) has strengthened considerably and is back up to the strength we saw in February. I wouldn’t be at all surprised if the March on Beijing/Hong Kong (economically) continues especially after announcements that the FED are looking for further interest rates rise – possibly in June.

Having said all that, a large Chinese ICBC Standard bank have just bought a vault in London from Barclays, that can hold up to 2,000 metric tons of gold, silver, platinum or palladium. Furthermore, the Chinese Central Bank are also heavily topping up their own reserves and will likely continue doing so. As has always been the case, gold is always part of the bigger picture, it may well lose skirmishes along the way but in the long term, the causation of currency volatility and recessionary cycles, will mean that gold as always will be the haven that investors and the prepared turn to.

Article by Michael Cooper
email:-Michael Cooper

Brexit: What will happen to Gold if we leave the EU?

Brexit: What will happen to the Gold Price if the UK leave Europe?

Several years ago, I reluctantly remember I hasten to add, glumly staring down at a heavy EU Constitutional law book with an image of a faded blue Brussels and a rippling EU Flag. EU law was one of my least favourite lectures of my law degree. It was filled with pages of bureaucracy, everything minutely documented in giant statutes. The only moderately interesting aspect was in the first and second lecture to do with the evolution of the EU and subsequent aspects of Human Rights. Other than those pockets of interest, those four hours every Thursday for a year was eye-poppingly boring. It was probably one of the sole reasons I didn’t pursue a career in law. Despite this damning account of EU law that I’m certain every student-lawyer lives through at some point (if it’s not EU Law, it’ll be Equity and Trusts, or perhaps Land Law – the woes of a law student), I still haven’t quite picked a camp yet. With Brexit it really is a case of: Do we stay with the devil we know? Or do we take this opportunity and venture out alone? – I’m none the wiser.

Brexit & Gold

What is Brexit and are we likely to leave?

On the 23rd June, we will be voting to stay in the EU or we will be voting to leave it. I haven’t looked at many polls but from speaking with clients and friends alike, it is rather split and it isn’t easy to tell who picks what. The FT have a Brexit poll running which currently has 46% Stay and 43% leave with a margin of undecided voters in the middle. Whatever the outcome is, the sentiment to the run up is going to be one of uncertainty. For Business leaders and those in management trying to plan ahead, uncertainty is a devil and contingency planning is going to be robust for Brexit.

What will happen to the Gold price?

As the Bank of England warned yesterday, an exit from the EU carries with it the likelihood of a recession. With the fear/jubilation of Brexit mounting as we get closer, it is likely the markets will respond according to the polls and sentiment. The sterling currency is likely to be weakened/strengthened depending on what the polls are reporting. My guess is the polls are only going to be move by two or three basis points in either direction. I don’t think there is going to be much science involved. With that in mind, the pound will probably weaken, something that has already begun to be factored in. If we leave the EU altogether, Sterling may well fall considerably.
In this event, the gold price in sterling will potentially go higher. Usually in this instance, when sterling falls against the dollar, the gold price moves up for us as the gold price is set in dollars. I wouldn’t be surprised if to counter this, the gold market will be buoyant up until the vote. We’re already having people ask us for Kilo Bars and hundreds of Krugerrands in preparation.

Verdict: Brexit is hovering and its uncertainty is beginning to be felt in the markets. Currency has already begun to feel downward pressures. The Bank of England have also given a sharp warning that in the even of a Brexit we will likely fall back into recession. Bank of England Growth Forecast has been revised down to 2% which reflect this sentiment. In times of uncertainty as with 2007 & 2008, to remain with strong purchasing powers and to stablise their capital, investors flooded into gold. I call it the “law of the yellow metal” and Britain for the next few months is in the Dock.

Article by Michael Cooper
email:-Michael Cooper

Diversify Your Wealth

Gold: Why Diversify Your Wealth?

I was sitting on my train this morning and I heard three separate banal idle commuter conversations all about the same topic. It actually made me laugh. Which topic of conversation do Brits love to talk about the most? The Weather. I’ve actually just come back from Lisbon where the weather ranged between 20 and 25 degrees, so I suppose I was catching up on the weather news I so longingly missed. By the sounds of things it has been sunny, clear, rainy and snowy. Typical good old British weather. Leave the house in the morning in a rain jacket, only to find the weather turns surprisingly warm by the afternoon and before you know it in the evening, you’ve got sleet. As a Brit you have to prepare for all eventualities and diversify accordingly.

This leads me to my next point. Whilst in Lisbon, I was chatting to a chap who works for himself in apparently one of the recovering industries in Portugal’s economy – Tourism. In 2015, Portugal’s GDP was €179,410 billion with tourism providing 6.4% of GDP, approximately €11,482 billion. He told me that everything was in the pan apart from Tourism. I’m not sure that is strictly true after doing a bit of research on Portugal’s GDP share per sector – but I guess it is a visibly noticeable improvement – more people and more coaches in the capital Lisbon. This will of course result in more bars and restaurants opening and cabs/tuk tuks and the like will see more footfall and punters. The hope for Portugal is that tourism really takes off over the next few years and increases to help bolster it’s share of the overall GDP. A risky strategy with no guaranteed returns.

After having a chat with this chap and reading more about economics in a copy of National Geographic, it made me think. Over-reliance in one type of industry/sector/monetary policy in the case of the Federal Reserve (FED), is risky. It only takes a slight adjustment made outside of your realm of control and you will be facing a problem. Currently I feel that there is an overexposure present in the global economy of all/nearly all eggs in one basket. The strength of the dollar combined with over-indulgently awaiting news and analysis preceding Federal Open Market Committee (FOMC) announcements, is creating too many ripples. It is the same in Europe and the European Central Bank (ECB) so it isn’t just North America, but the reality is the US is the strongest economy. In my opinion it is the lack of diversity in Monetary Policy (and the systemic problems in the banking industry) that filters down through the rest of the economy, which ultimately means that equities and currency will be manipulated and targeted, just as FOMC do for the dollar.

The Bank of Japan (BoJ) announced yesterday something quite “unexpected” – to vote to keep monetary policy in negative territory and not to relax the current policy. Why anyone thought this was unexpected I’m not sure: 1) BoJ took the initiative originally to aggressively set a negative interest rate 2) Japan have been losing ground in the currency war between the US, the result of this decision means they will capture more ground on the dollar 3) Weak data about the US has already flown round the news so it is no surprise Japan want to capitalise on that through arbitrage 4) They like the US will want to keep parity with China who are buying the alternative asset: gold. What the BoJ have done is in essence prove a point. Do not expect the expected. Economics is interesting because of patterns and algorithms, but it is also interesting because of mercurial swift change and corrections.

I guess the moral of this story is this: diversify and prepare. The idea of buying gold now is more important than ever. If you don’t prepare and take that initiative to diversify and pack your rain jacket in the morning, you may well get drowned by the monsoon in the evening. Thankfully Portugal has sunny weather… mostly.

Article by Michael Cooper
email:-Michael Cooper

April 1st: Fool’s Gold

April the 1st: Fool’s Gold – Why Gold hasn’t lost it’s Lustre

I can hear a deep sigh as you begin to read this article. Yes, it is April the 1st again. Be prepared for the usual idiots bellowing April Fool’s whilst smashing you in the face with a custard pie (metaphoric of course, hopefully not actual pie). Geoffrey Chaucer first mentioned April Fool’s in the Canterbury Tales and incredibly it is still something we, albeit rather begrudgingly, still recognise today. So far I haven’t had anything played on me just yet, although reading Janet Yellen’s Federal Reserve statements you would be forgiven if you had succumbed to some form of regretful April Fool’s feeling. I will get onto that in a minute. We in the office have been discussing our best April Fool’s jokes and pranks and if you are so inclined here is the Guardian’s Best April Fool Jokes. I think the best April Fool jokes for me have always been the subtle ones, the old spider in the cereal bowl or as my brother did to me, the old classic: gin instead of tap water in my glass at 8.30 in the morning. I could of course riddle this article with pyrite – fool’s gold references but I will refrain.

Fool’s Gold: Why Gold has been the best asset class this year

So far this year the biggest gag running is the Interest Rates Rise. In fact it is such a successful gag it has been running for the last couple of years. I just can’t believe no one has picked up on that or ran an article on that basis, cue my article’s meteoric rise on the NY Times. For a while there was a time when the joke was almost genuinely believed and that there might be multiple interest rates rises this year. Even up until a week ago, Yellen was still using Hawkish language in her statements. Yes Employment has been steadily getting better and yes the dollar is flexing its muscles against other currencies, but as will likely happen and I have been stating for some time, the more they pull away from the pack the more isolated their economy will become. The gradual decline of China, Brazil and the overtly weak oil price is going to take its toll on the US economy. This week Yellen has engendered her recent address in New York with dovish sentiment, citing China specifically as reason to be cautious about rates rise. Given this information it would be surprising if another rise will occur in the short term. This recession is not like the ones that have gone before and where monetary policy once could self-right a country, in a modern globalised world, ripples are felt quickly and with venom. With this in mind this is why I think Gold has benefited and will continue to do so in the next couple of years. As much as it has been knocked about with over confidence in the equities markets, Gold is no fool. It will continue to maintain purchasing power and its gravitas as a safe-haven will continue, of that I have no doubts.

I’ll leave you today with an old classic from the seventeenth century, a simple gag called “the Washing of the Lions”. In 1698 the news pamphlet “Dawks’ News-Letter”, wrote a report about several people being “sent to the tower ditch to see the Lions Washed”, the joke being there were no

Classic April Fool’s

Article by Michael Cooper
email:-Michael Cooper

March 2016 Budget Announced

March 2016 Budget: Lucky Number Eight for Osborne?

It is that time again – and fever sweeps across the nation! Maybe a slight exaggeration but those of you with a penchant for economics combined with politics, it is a day to note down in your ledger. This is George Osborne’s eighth Budget and I am curious to see where the axe will fall this time. Likewise, Osborne is not without his surprises as we have seen in previous budgets.

So without further ado, here is the March 2016 Budget:

The Chancellor set out this March 2016 Budget stating that the UK economy was “set to be the fastest growing economy in the world” and prefaced the budget stating that the “UK was not immune” to booms and bust. This budget was certainly engendered with a long term viewpoint, discussing statistics and the economic storm clouds that are hovering. Mr Osborne discussed his long term view that the UK was looking to stabilise and position itself as a leading economy. The Chancellor stressed the future instability and the need to plan appropriately to cement the UK’s ability to handle an increasingly difficult global economic outlook. He also went on to thank the British public for its hard work and for supporting his previous budgets.

UK Economic Growth Forecast Revised Down

The Office for Budget Responsibility (OBR) has downgraded its forecast of UK economic growth in 2015 from 2.4% to 2.2%.
The OBR have also revised the forecast for the following years: from 2.4% to 2% (2016), from 2.5% to 2.2% (2017), from 2.4% to 2.1% (2018) and from 2.3% to 2.1% formerly in 2019 and latterly 2020.

The OBR inflation forecast was 0.7% this year and 1.6% next year.

Tax

March 2016 Budget

Personal Tax

Capital Gains Tax to be cut from 28% & to 20% for Higher Earners and from 18% to 10% for Basic Earners
Tax Free Allowance – will rise to £11,500 in April 2017
Higher Rates Allowance – will rise to £45,000 in April 2017

Pension & Savings

“Pensions too complex and inflexible” – Osborne
Lifetime ISA – for anyone under the age of 40 – £4,000 bracket per year and the government will put in £1,000
ISA Limit to be raised to £20,000 in April 2017

Devolutionary Changes

‘Radical’ devolution of power to Councils and Communities
More Mayors for areas in the UK – West Midlands will be able to vote for one in the next year
Local Councils will raise their own money and 100% of the money raised will be spent in that council
“The Devolution Revolution is taking hold” – Osborne

Infrastructure

Transport: – Stronger links for the UK and Northern England especially
HS3 gets the Green Light
New tunnel road for Manchester to Sheffield
A66 & A69 Upgrades for the North Pennines
Crossrail 2 also to get the Green Light
Housing: Zone housing development to make houses ready for 5G connectivity

Education

Schools to become Academies
Northern England to be focused
Maths to be taught to 18 – (my old Maths teacher would be distraught)

Alcohol and Fuel Duties

Fuel Duty to be frozen for the sixth year in a row – a saving of £75 per average driver and £250 for small businesses
Freezing Beer Duty and Cider Duty yet again

The Chancellor closed his Budget by stating “I commend a budget that puts the next generation first”.

*Apologies for any errors – I am amending as the Budget is being announced*

Article by Michael Cooper
email:-Michael Cooper

Negative Interest Rates: How will it affect the Gold Price?

Negative Interest Rates: How will they affect the Gold Price?

Negative Interest rates are now commonplace; just the wording makes me suspicious. The word negative never makes one feel comfortable. Is this the right policy, what are Negative Interest Rates and should we be worried?

Yesterday was the latest announcement from the European Central Bank (ECB), which outlined a further cut to negative interest rate territory. The fixed rate lending has been cut from 0.05% to 0% and the deposit facility, used by the banks for holding money overnight with the central bank, has been cut from -0.3% to -0.4%.

What are Negative Interest Rates?

Mario Draghi: Negative Interest Rates

In effect negative interest rates mean that the banks are being charged to hold money on deposit. In times of deflation, businesses and banks tend to stockpile cash for the leaner times, by invoking a negative interest rate, the logic is that the banks are going to want to lower their positions on cash being held dormant, as it is now costing them to hold it. A negative interest rate therefore looks to incentivise the banking industry into offloading some of their deposits through lending – this will of course help to stimulate the economy and the all-important inflation numbers (which in the last year for the ECB have been woeful).

That is the dream scenario of course, whether that will be reality we will have to wait and see.

How will Negative Interest Rates affect the Gold Price?

In answering this, I think you firstly have to look at currencies. What is likely to happen in the mid to long term? After the ECB announcement yesterday, the Euro rather surprisingly strengthened against the dollar. This I would imagine is the investors’ response in support of Mario Draghi trying to boost the Eurozone. Realistically however, the last cut of -0.3% hasn’t done the trick so by increasing it -0.4% will it make any difference? My guess would be that the banks will accept the deeper cut, sure it means they have spent a little more but presumably they decided keeping the cash in the bank was safer than lending it out despite having to pay for the privilege. I think there is certainly the argument that even if the negative rates are punitive on banks, at the moment they aren’t lending as they can’t see the profitability in doing so, which actually speaks volumes about the kind of mess the global economy actually is in.

So with that in mind, gold is probably going to fall mercy to an increasing dollar but ultimately I think the message of negative interest rates is going to knock investor confidence in the mid to long term. Gold may sit slightly lower whilst the dollar creeps up but it is no surprise to me that central banks are beginning to stockpile the yellow metal as of 2015. China and Russia have been most active in buying gold which makes me think that they are aware of further economic problems ahead. I’m still keeping my eyes and ears open as I’m convinced there is more unsettling news to come from China.

Verdict:- Negative Interest Rates are in truth are a bit of a stab in the dark. I look at the banks being charged like I would buying a plane ticket on a budget airline. The airline offers a business class seat, which basically means you have fractionally more legroom. We are all going to get to the same destination yet some people feel the need to pay double or triple the normal fare to have something only fractionally better. Why? The extra cost is irrelevant. It means nothing to them because they would rather have the knowledge that they are having a marginally better journey than the other chumps at the back of the plane. Banks no doubt feel the same. Yes they are being charged to have their money safe, yes it seems ludicrous to accept the charge but it isn’t going to incentivise them to shift it. They would rather have the knowledge that it is probably better to hold it with the central bank than lend it out. It is less costly and it is less risky. Much like our the global economy, “Flying is hours of boredom, punctuated by moments of stark terror” – I think investors are in for some turbulence.

Article by Michael Cooper
email:-Michael Cooper