A glut of gloomy news reinforces the case for gold
20/01/2011Daniel Fisher
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In the past few days economic figures have reminded us of the rocky economic road ahead and the continued need for some wealth insurance. This has strengthened the case for gold as the best way of achieving this portfolio protection.
Firstly UK inflation rose sharply in December to 3.7%, way above expectations. This has mostly come from the huge increases in energy prices. This now puts UK inflation higher than that of hyperinflation prone Zimbabwe’s CPI at 3.2%, thus making a mockery of long standing commentary in the press that it was ridiculous to compare Britain’s inflation problems with that of Zimbabwe. This month saw the well publicised VAT increase begin which will further fuel UK inflation. Here at Physical Gold, we’ve long been concerned about the possibility of high inflation in the UK due to the dangerous combination of record low interest rates and Quantitative Easing.
After these inflation figures were releases the markets reacted by starting to price in interest rate rises as early as the Spring. However, Ernst & Young has warned that any such increase would be premature and put the UK’s economic recovery at risk.
Next up was some unemployment figures. The total has now hit 2.5m after a 49,000 rise. Perhaps most alarmingly for the future is that youth unemployment (16-24 year old’s) increased to the highest levels since records began.
Finally, somewhat slipping under most people’s radars due to the inflation and unemployment figures, was the news that UK national debt has now surpassed the £1 trillion mark. Just as scary is the pace at which this debt continues to rise – £7,000 every second!
So if you’re honest with yourself and take a hint from the above figures, you’ll come to the conclusion that we’re in this squeeze for a while to come. So with gold providing the balance your portfolio needs in these circumstances there’s no better time to invest in some physical tax free gold coins.
The fact that the gold price has done so well over the past few years means it’s predictable in its nature. With inflation and unemployment struggling, this is the perfect case for gold to continue outperforming every other asset class.
Live Gold Spot Price in Sterling. Gold is one of the densest of all metals. It is a good conductor of heat and electricity. It is also soft and the most malleable and ductile of the elements; an ounce (31.1 grams; gold is weighed in troy ounces) can be beaten out to 187 square feet (about 17 square metres) in extremely thin sheets called gold leaf.
Live Silver Spot Price in Sterling. Silver (Ag), chemical element, a white lustrous metal valued for its decorative beauty and electrical conductivity. Silver is located in Group 11 (Ib) and Period 5 of the periodic table, between copper (Period 4) and gold (Period 6), and its physical and chemical properties are intermediate between those two metals.