21st December 2015
By Joshua Saul – Director of The Pietra Sussan Company
It’s that time of year again, when analysts and experts make their market predictions for the coming twelve months. Among the forecasts, was a long-awaited turn around for gold at the later end of the year. The precious metal hit a multi-year low in 2015 and many people have been taking advantage of the low prices, investing in physical gold ‘on sale’. But with a turn around predicted in the fourth quarter of 2016, the opportunity remains strong into the New Year. Here are our top reasons to invest in physical gold in 2016…
Lowest Price in 6 years
Gold is a great investment for the long term and remains the best performing asset of the 21st century, with an average return of 15% a year, over the last ten years. The price of gold is currently at a six-year low, so it makes sense to invest now. Even central banks around the world are stocking up on gold while the price is down, believing it to be an opportune time to buy. Gold investment is an excellent way to protect your wealth for the future and now you can insure more of your savings for less.
Market Uncertainty
Around the world economies are being shaken by a profusion of financial, political and geopolitical crisis’s and conflicts. From the war in Syria and the fight against terrorism to the rise of divisive politicians such as Jeremy Corbyn and Donald Trump – uncertainty has a negative impact on the price of commonly held assets, like shares. People are reluctant to invest in intangible assets they cannot see and touch. Physical gold has always been a safe haven asset that tends to increase in value, as more and more people insure their wealth against financial risk. Actions by the Fed last Wednesday to increase interest rates has lured China into another potential currency war. When China devalued their currency in August 2015 the FTSE lost £24bn in one day.
Shaky Alternatives
Saving Accounts are currently offering under 1% interest and many of them are in a precarious situation, with regard to capital adequacy rules (the amount of capital a bank or financial institution is required to hold).
The introduction of new stamp duty taxes and taxes on buy-to-let investments will make property investment less and less profitable. The fear is that landlords, who are no longer making good money from their buy-to-let properties, will start to sell en masse, reducing the value of property. Furthermore, as interest rates rise, the cost of borrowing will increase, preventing many people from buying.
Equities are at an all time high and in light of the current market uncertainties, there seem to be more potential risks than gains. Some bonds will offer a good return but they also tend to reflect the risks in the market. For example, Greek bonds are paying up to 9% but would you take the risk? Many bonds also lock you in for a long period of time, which means access to your money is restricted. Gold by comparison is very easy to liquidate.
Tax Savings
We all have to pay tax on our income, including any gains we make on investments; such as savings, equities, bonds and property but physical gold is an exception. When you invest in tax-free gold you can legitimately avoid paying tax on your gains. It’s a very similar product to an ISA but with none of the restrictions or penalties on early liquidation. Furthermore, you are able keep and control you investment. Many people use physical gold as an efficient form of tax planning, to minimise inheritance tax too.
In recent months, investments in physical gold and silver have been steadily picking up, as central banks and individuals buy the precious metals at dipped prices. Many analysts are predicting a rise in gold prices towards the end of the year and its historic performance is undeniable. There are so many uncertainties in our economic and political landscape; investing in gold is a tried and tested, tax-efficient way to protect and grow your wealth.
