Category Archive: Investing In Gold
Precious Metal Market – Stagnant
After yet another flat few months of trading in the precious metal market – I take up the mantle of writing another article. It will be yet another stat feast, albeit one showing pretty much the hypotenuse that the range has been fine. I will make a brief comparison to the figures in the previous article, which covered the gold and silver price from January to February. My belief is that the figures are not vastly different.
Before delving straight into numbers, I know you are chomping at the bit, I thought I would start with what has happened this month. Usually I do it the other way round, but perhaps we ought to look at the wider news that has happened. (I’m mainly doing this as the gold price and it’s lack of movement this year has begun to make my eyes hurt and I actually do want to get you through the article. I’m definitely doing this for your benefit. Not mine).
So over the last couple of months we have had numerous events, both financial and political. Let’s start with the UK-centric first:
Not much of a surprise, but March and April as will most of this year be, focused on Brexit. At the EU summit in March, it took the 27 EU leaders took just two minutes to approve the Brexit transition period and guidelines for negotiations on it’s future relationship with the U.K.
In the EU, the European Central Bank (ECB) have confirmed to continue buying bonds. As before the ECB have signaled that bond buying could continue beyond the September cut off pint. In the ECB meeting on 26th April, it showed all the hallmarks of a let-us-not-run-before-we-can-walk mentality. Mario Draghi mentioned the word caution almost in every paragraph of his summary. The Euro responded immediately with a three month low against the dollar. Draghi did however say the EU slowdown was ‘temporary’, so much will be made from further data released this year.
Perhaps a little surprisingly, Donald Trump could be seen as something of a peacemaker. Not exactly what one would have guessed at the start of the
year. However in March, North and South Korean leaders declared to end the long term war and commit to a denuclearisation of the peninsula. Whilst I can’t say I enjoyed watching the two leaders holding hands, in what can only be described as one of the most hideously stage-managed attempts at re-conciliation ever recorded. I did also thoroughly enjoy watching the bodyguards running alongside the car – I can’t wait until someone on Youtube has put music to that. Fundamentally however awkward it was to watch, it is at least a break through. Whether it continues is another matter and one has to wonder at what has been promised to North Korea to relation to thaw dramatically. Regardless, Trump rather remarkably has seemed to be instrumental. I will be keenly watching the meeting between Trump and Kim Jong Un scheduled on the 12th June. The meeting of two great minds.
So with the above in mind how has that effected the precious metal market. Here are the key facts and figures for gold and silver – its a quick snapshot and I’ll give a brief analysis afterwards:
|LBMA AM Gold Fix (1st Mar)||LBMA Gold Fix (1st May)||Change +/-||Percentage Change|
|Median Currency Exchange (1st Mar)|| Median Currency Exchange (1st May)
||Change +/-||Percentage Change|
|GBP to USD = 1.3753
GBP to EUR = 1.1258
| GBP to USD = 1.3622
GBP to EUR = 1.1336
|Silver Fix (1st Mar)||Silver Fix (1st May)||Change +/-||Percentage Change|
When I look at those figures, I think it is fair to conclude that the precious metal market has been quite staid. It isn’t so much that precious metals haven’t moved as the range in which the metals have traded is a little more interesting than a straight comparison between a small selection of numbers. But the point I am trying to get across is how little the market has moved. I think a lot of that comes down to the following – gold is used as a hedge and as things get better, the market normalises. Well that has begun to happen but gold actually is staying quite resistant. It is not correcting back down and neither is it moving up? It sits still and waits. What is it waiting for?
Precious metal markets – your move..
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:
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.
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.
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.
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.
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.
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?
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.
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.
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!