Fleet Street Letter Review

Read the Fleet Street Letter Review here.

Gold is a Risky Investment

I have not updated this blog in a while, but thought it was worth reminding people of something that has not been true for many years - Gold is a Risky Investment. Now, this might seem ridiculous, especially considering I will further quantify it by saying I believe in the long-term fundamentals, international inflation prospects of Western nations and the will of government to do all it can to save it’s own skin at the expense of your life savings. Given that last factor, especially, nothing will do as well in the next 10 years as gold…except maybe silver…and food…but that is for another day.

However, look at where the price of gold is now. No-one should be surprised to invest and see it fall, even short term, by 40-50% back to the 900$ level. What am I basing this on? It is exactly what happened in 1976, when it fell from 200$ to 100$, even as the long term trend was for gold to move another 5 times higher in 4 years. 1976 must have been a very hard year to sit there and talk to your friends about gold and reconcile the long term belief with what was really happening in the market.

The point I want to make is that anything is a risk, but gold is much more of a risk at 1800$ than it was at 400$, when it really could not have fallen much further at all.

What can you do about it, even if you want to invest in gold or silver now? Invest monthly in small amounts, via physical bullion ETFs or the internet gold sites such as BullionVault or Goldmoney and promise within yourself to keep those monthly savings going, after all, falling prices mean you actually buy more ounces each month!

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QE III

No no, not some new luxury cruise liner, just observing that something weird is going on when the day the Bank of England announces it is going to devalue all existing money in circulation by creating £50bn out of thin air, the financial markets celebrate by increasing the value of the pound against every other currency.

So why is that exactly? Was £50bn less than the markets expected to be created out of nothing, or is the UK creating less new money than every other nation? I have no idea.

Think I will go and buy some silver.