Market Crash 2016: Why are people investing in physical gold?
We’ve seen an astonishing trend within the banking sector this week. With many of our UK Banks bruised and vulnerable following 2016’s global market crash -people are panicking. Banking shares have lost considerable value with some banks almost halving in share price. Deutsche Bank is unable to meet much of its debt, shares were suspended in Barclays Bank on 8th February and RBS and Lloyds are expected to cut hundreds of branches. Once more, at a time when we need as much protection as possible – UK government have reduced the amount that savers are protected by £10k if your bank fails. As the Euro weakens this could drop further. The fierce debate over staying in or leaving the Euro has dragged Sterling to a 7-year low. The uncertainty over our everyday banks in addition to extremely low and possibly even negative interest rates has prompted many to ask why keep more money than they have to in the bank?
Henry Sanderson at The Financial Times quotes the Pure Gold Company pointing out that many savers have cleared out their ISA’s to take advantage of gold Sovereigns and Britannia’s. Both of these UK gold coins are also tax free investments like an ISA but feature less risk as there is no counter party risk. With market volatility and uncertainty escalating gold has had the best rally since the 1980’s. It’s not just about the growth in gold price but also its protection from current market risks.
How to invest in gold
There are lots of ways to invest in gold, some more risker than others. If you want expediency and are in it for more of the short-term then an ETF may be appropriate. For people that want to remove counter party risk associated with financial institutions and grow their portfolio in a tax efficient way – then physical gold ought to be a priority. “Investing in physical gold: a beginner’s guide” on Yourmoney.com nicely explains the pros and cons of investing in different types of gold.