Unthruths About Investing in Precious Metals
We have earlier spoken several times about investing in precious metals. However, precious metals investing isn’t always what it seems to be. There are myths that need to be debunked about precious metals and in this article, we’ll look at what they are. Investment guru Warren Buffett once said about gold that it’s dug out of the ground somewhere in Africa and that it is buried there again and people are paid to guard it. Now, Warren Buffett has frequently spoken out against investing in gold and precious metals, but could he be right?
Myth 1 – gold may be precious, but devoid of utility
As we all know, Buffett’s primary bias against gold is that his interests are in capital markets, banking and insurance. It’s a well-known fact that his company participated in bailing out the banks during the financial crisis of 2008. Being invested in the banking sector, it’s no surprise that his investment preferences would like in asset classes away from precious metals. If we look deep, we will realise that his outburst against gold is driven more by emotion and sentiment. For several thousand years, gold has been an investment vehicle of choice for the entire world. It was used for coinage and it has several wonderful attributes such as fungibility, rarity, durability and a great hedge against inflation. Its physical qualities make it invaluable in industries such as electronics and mobile technology, to name a few.
Investing in precious metals requires knowledge of the market
Myth 2 – precious metals will have no value in the future, as the world moves to digital currencies
The age of the crypto-currency has seen investors doubting stable investment classes such as gold and silver, as many believe that eventually as we move forward to the 22nd century, precious metals may become redundant. However, the most important thing to keep in mind is that cryptocurrencies are a virtual medium. They are highly volatile and prone to great market risk and volatility. As they are not physical, investors have little control over the way they behave. Gold, on the other hand, is a highly physical and tangible asset that has been globally accepted as a repository of value for thousands of years. Gold is not a speculative asset, and investors looking to make a fast buck through short-selling would find gold unattractive. However, investors looking to build a rock solid portfolio that can outlive their own lives and can be bequeathed to future generations would find the stability of gold reassuring.
Download our Insiders Guide to investing in Tax Free gold & Silver here
Myth 3 – the price of precious metals behaves inversely when interest rates rise
In order to look deeper into whether or not this myth has any basis, we need to take a long hard look at gold price trends over the years. It stands to logic, that when interest rates are on the rise, investors are better off putting their money into currency markets. However, if we see gold price trends as recent as 2015, we can see that the Fed initiated an interest rate hike in December of that year. It was commonly believed at the time that gold and silver would plummet. While the US interest rates rose from 2014 to 2016, both precious metals witnessed price increases
Gold investments are safe in storage like the Bank of England gold vault above
Myth 4 – in the event of a global economic crash, gold may crash completely
As gold is both a precious metal as well as a commodity, it has virtually no correlation with global stock markets, bond markets or housing. One of the factors that keep the price of gold and silver on the rise is scarcity, backed by high industrial demand. As technology progresses, this demand will continue to rise and as we all know, gold is a finite asset. A recent example is the famous 2008 global economic crisis. While virtually the entire stock market was wiped out, including stocks of mining companies, gold fared well for the year. Infact, we have ample proof that investor sentiment is geared towards investing in gold as a safe haven to protect against times of economic turmoil. Therefore, a global economic meltdown would see most investors turning to precious metals like gold and silver.
Myth number 5 – the gold market is manipulated and only insiders can make money
Physical gold and silver markets are very different from paper markets. When we say paper markets, it means exchange-traded funds or ETFs. It is true that some level of manipulation happens in the paper markets, which is mostly geared towards derivatives or futures. Size and clout do matter in these markets and ordinary investors are never privy to the information available to the top financial companies and big banks. These institutional investors have top-quality research, as well as key information that allows them to make smart decisions when trading. Moreover, since their trains are high volume, they are able to get the best price. Physical gold and silver are different. At Physical gold, many of our investors are ordinary customers, just like yourself. Our precious metal steam is able to advise investors like yourselves on the best way to buy gold and silver. We can also help you get price advantages since we are able to obtain large discounts.
Always research your broker rather than walk into a high street gold store
Myth 6 – gold doesn’t pay you any interest and this makes it a bad investment
Well, if you’re a shareholder of large companies you might notice that these big-ticket companies also pay you no interest and the annual dividend is a mere pittance. Infact, one of the biggest critics of gold – Warren Buffett’s company, Berkshire Hathaway does not pay interest or dividends. On the other hand, there are many junk bonds that can get you yield of 50% more for short spans of time, but they are highly risky and the market is very volatile. Even investments made in cash deposits, which are backed by your bank are prone to lose value, simply due to inflation. The reason that physical gold or silver doesn’t pay you interests is that they are not debt instruments. In the UK, many of your investments and physical gold are tax-free. This is an added advantage of investing in physical gold. However, your earnings from the equity and debt markets are subject to taxation.
Myth 7 – precious metals do not fit well into an asset allocation strategy
The reality is in fact far from it. Precious metals 
do form an integral part of any asset allocation strategy, along with several other asset classes ranging from real estate, capital markets, mutual funds and cash deposits. It aids in diversifying a portfolio. Infact, many investment experts do claim that investors should have at least 12 to 15% of their portfolio allocated to precious metals.
Myth 8 – buying precious metals are unsafe, as you are likely to be cheated or burgled
When buying precious metals, it is important to connect with a reputed online broker. A reputed online broker will have a team in place who would speak with you, discuss your investment goals, advise you on how to invest and guide you on the best way to invest in precious metals. For example, at Physical Gold, all our products come with a certificate of genuineness and a guaranteed buyback, should you want to liquidate your asset. Like all other investments, investing in physical gold and silver requires some knowledge of how when and where to buy. This ensures that you don’t end up trading with a rogue broker and get cheated. As far as storage goes, many reputed brokers, including Physical Gold do offer storage facilities to their customers, should they not be willing to take delivery of their physical gold and silver. Our customers get to store their assets safely in an LBMA approved vault. Even if you do prefer taking physical delivery of your purchases, we are able to dispatch them via insured courier and can advise you of certain accessories that you can buy in order to safely store your gold at home.
Talk to our investment experts before putting your money into precious metals
In the same way that it’s important to debunk myths about precious metals investing, it’s also important to speak with knowledgeable advisors before making investment decisions and buying precious metals. Call us now on 020 7060 9992, or drop us an email via our website and a member of our team will be in touch with you shortly to discuss your investments.
Image credits: Pxhere, Bank of England and Richard Paine
How many facts about silver do you know?
Silver is a metal we’re all very familiar with thanks to its multiple everyday uses. You’ll find it everywhere from jewellery and electronics to cutlery, dentistry, currency, in medical procedures and numerous other applications besides. Thanks to its antimicrobial effect it’s also often used in water filtration and air conditioning too. But there are plenty of other facts about silver you may not know…
Five stacks of silver coins
1) Silver is mostly produced in Mexico
These days, silver is predominantly mined in the New World, including the USA, Russia, Canada and Australia. However, it is actually Mexico which produces the most, with Peru not far behind. Approximately 35% of the silver mined today is a by-product of zinc, copper and lead mining. Mexico mined 5,600 tonnes in 2017 alone.
2) Silver is a great reflector
Silver is more reflective than any other element which means it’s essential in things like telescopes, solar panels, batteries and mirrors. Although polished silver is capable of reflecting 95% of the visible light spectrum, it is actually poor at reflecting ultraviolet light.
Find out the 7 crucial considerations beofre you buy silver. Download our FREE cheatsheet
3) Silver was discovered around 5000BC
Silver was one of the first five metals to be discovered by our prehistoric ancestors. Infact, early humans were actually able to separate lead and silver all the way back to 3000 BC. Silver coins and artefacts have even been unearthed which date back before 4000 BC. Silver occurs organically in nuggets in the same way as gold does, which means there is no need for manufacturing or processing.
4) Sterling silver is the most common type
Mostly found in jewellery making, sterling silver is the most common type of silver you’ll find on the high street. It consists of 92.5% silver, with the rest of it being made up of a mixture of compounds including copper.
A silver compact mirror
5) It’s a fantastic conductor
Silver is an outstanding electrical conductor and is the best of all the elements. Additionally, silver is also the best thermal conductor of any metal too. In fact, the horizontal lines you find in the back window of your car to defrost ice in the winter are made from silver for this reason.
On a scale of 0 to 100, silver comes in at number 100 for electrical conductivity and is used as a benchmark by which all other conductors are measured. Just behind it, copper is at number 97 out of 100, and gold is at 76. However, it isn’t used in electrical wiring as it’s simply too expensive.
6) Some say silver has special powers
Transcending time, tradition and religion, silver bars and jewellery have been said to possess magical powers in promoting fortune, wellness and healing. When worn, silver is also said to keep evil spirits away from the wearer. Whilst in the modern Western world these beliefs have all but disappeared, some people remain convinced of silver’s cosmic powers. In ancient China, it was traditional for babies to be presented with a silver necklace to be worn around the neck to keep the baby healthy and warn off any malevolent forces.
This year is actually the Chinese year of the dog, so why not commemorate it with one of our Silver 1oz Lunar UK Year of the Dog 2018 silver coins?
7) Silver has antibacterial properties
It’s a little-known fact that pure silver has excellent antibacterial qualities. Only a very tiny, concentrated amount of silver or silver salts is needed to kill bacteria, for example in an open wound. It works by chemically altering the membranes of the bacteria cells which then means they break down. Unlike conventional medicines and antibiotics, bacteria do not become resistant to silver, even over long periods of time. Thanks to this antimicrobial property, silver is also used in trace amounts in clothing and food storage containers like Tupperware boxes to help keep items fresh.
8) Silver formed our currency
During the Norman conquest, around 1066 AD, silver was used to create the metallic coins that we’re so familiar with today. In Great Britain, these silver coins formed the basic denominations of pounds, shillings, and pence. The pound is quite simply a pound of sterling silver.
9) Silver is used in mass technology – but you wouldn’t necessarily think it
Silver is routinely used in the mass production of industrial and technological applications. It’s ideal as a conductor, RFID (radio frequency identification chips), in GPS and tracking, Nano and Smart technology and surgical equipment where its excellent conductivity and antimicrobial properties are essential. Up until very recently, it was used mainly in photography equipment and cameras, but due to digital photography, this is now on the decline.
An Apple smart watch
10) Silver reacts with air
Over time, silver will start to tarnish as it reacts with the air and become less shiny. Black sulphide will form as a by-product of the reaction with sulphur compounds and this leads to a slight dullness in the colour.
11) It can survive serious heat!
The melting point of silver is 961.8ºC whilst its boiling point is an incredible 2162ºC.
12) It doesn’t get lost in translation
The actual words “money” and “silver” are completely identical in at least fourteen different languages, including Welsh, Swahili, Thai and French.
13) It turns up in spooky fiction
Over the centuries, gothic horror stories have brought about the idea that the way to kill off a wolf-man is with a silver bullet. Due to this, silver is supposed to be one of the only metals which is effective against werewolves, ghosts, vampires and other evil entities.
14) It doesn’t rhyme
Fun fact right here; the only word in the English language that will rhyme with the word “silver” is the word “chilver”. A chilver is actually the technical name for a female lamb.
15) Born with a silver spoon?
It’s a common phrase that we still use today; people who are ‘born with a silver spoon in their mouth’ are wealthy, or at least were born into a wealthy family. However, traditionally it’s actually nothing to do with financial wealth but is infact to do with physical health, as children who ate from silver spoons tended to be stronger and healthier.
Contact Physical Gold to invest in silver today
Here at Physical Gold our expert team are ready and waiting to assist with all of your silver investment needs. Drop us a line today on 020 7060 9992 or send us an email for individual advice on all aspects of buying and selling precious metal.
Image Credits: KSchneider2991 and Pixabay and Oliur Rahman
Jargon Buster
A guide we have put together to help understand – gold jargon, gold lingo, gold terminology, gold terms, gold definitions, investing jargon, silver jargon, silver terminology and silver terms. As an investor keen on investing in gold or silver, it’s important to be up to date with silver and gold terminology. The precious metals market has several such terms, which it would seem are known only to savvy investors. When trading in gold and silver, we need to be aware of these terms as parties we deal with, such as gold investment brokers, financial advisors, numismatists, all use these terms in one way or the other when dealing with clients. There are key terms to be aware of, for example, gold and silver are measured in troy ounces. The troy ounce is not the same as a regular ounce. A troy ounce is 31.103 gms. This means a troy ounce is 1.09 regular ounces. This is an interesting example. Often, investors buy a 100-ounce gold bar. They would expect that it weighs 6.25lbs on the scale, but when it shows 6.85lbs, it often leaves them confused.
Gold craftsmen and traders often use industry jargon to communicate
Similarly, there is a difference between sterling silver and pure silver. Pure silver, otherwise known as ‘fine silver’ is the purest form of the white metal available in the industry, which has a purity of 99.9%. However, the problem with using fine silver to manufacture jewellery or silverware is that it’s way too soft and malleable. These items, which enjoy high demand from customers require a much harder version of silver that can hold shape, as well as provide a durable, shiny exterior. After all, the lure of silver is in its shine and sparkle. So, manufacturers use another form of silver, called sterling silver, which is, in fact, an alloy. It’s only 92.5% pure silver, while the other 7.5% consists of base metals.
Decoding the jargon
Every trade has its own technical language that we often call lingo or jargon. Have you ever heard two doctors having a conversation? They usually use a lot of words which are a part of medical terminology, and they look like they perfectly understand each other. However, it can be frustrating for a layperson, to whom it all sounds like double Dutch. Now, as an investor, you need to learn the precious metals business first. How else are you going to make money out of it if you don’t understand it in the first place? So, you need to learn the language of the trade. The minute you do that and go have a conversation with a gold trader, you will be taken seriously right away. Now that you speak the language, you’re one of them and you won’t be treated like a novice. Gold and silver terminology also comes in handy when doing your own research. All investors do their research on the market before making purchase decisions. Familiarity with investment-related jargon is essential for you, especially if you’re new to investing in precious metals.Learn all about jargon by watching, “Gold & silver investment jargon explained”
Call our team of consultants to learn more
At Physical Gold, our team of consultants are ever ready to guide investors just like you in learning more about the market. We believe that savvy investors are important in creating a balanced marketplace. Call us on 020 7060 9992 or contact us via email to connect with one of our consultants. We will try our best to avoid unnecessary investing jargon!
An A-Z Glossary of Terms for Gold and Silver
Listed below is an A-Z of many gold and silver terms you will find in the gold and silver industry. These are arranged in ascending alphabetical order.
A – B
Alloy
A mixture of two or more metals. Metals such as silver, nickel, copper and zinc are frequently mixed with gold to improve its hardness and/or change its colour.
Allocated Gold
When an investor buys gold outright and stores it in a professional bullion vault with a safekeeping agreement in the custody of a bank, it is commonly known as allocated gold. This gold is not the property of the bank but is owned by the investor. In the event of the bank becoming insolvent, allocated gold is not lost. However, the investor may require paying certain storage charges to the bank which needs to be factored into the cost of the transaction.
American Eagle
The American Eagle is a type of official bullion coin which is produced by the United States Mint. First released in 1986, the coin is predominantly minted in gold but has on occasions also been minted in both Silver and Platinum.
Assay
An analysis of a metal used to determine its purity. A series of assays can be run to determine the alloys in the metal as well.
AG
The chemical symbol for silver with atomic number 47.
AU
The chemical symbol for gold which is derived from “aurum”, the Latin word for gold.
BNTA
British Numismatic Trade Association
Britannia coin
The Britannia is the British one-ounce gold or silver coin, first produced in 1987.
BU
Brilliant Uncirculated used to describe a coin in new condition. The same pristine condition as when it left the mint.
Buffalo
The Buffalo is the American one ounce 24 karat gold coin, first produced in 2006.
Bull Market
A market in which the primary trend is up.
Bullion
Precious metals in bulk form which are traded are known as bullion. Bullion can come in the form of bars or minted into coins.
Bullion Coin
A coin with a symbolic face value whose market value is determined only by its inherent precious metal content.
C – G
Capital Gains Tax (CGT)
A capital gains tax (CGT) is a tax charged on the profit realised on the sale of certain assets that were purchased at a lower price. The most common capital gains are realized from the sale of bonds, stocks, and property. There is no Capital Gains Tax (CGT) to pay when a UK resident sells British legal tender coins at a profit. This contrasts with many alternative investments that attract income or capital gains tax. Therefore, an investor gets to keep all their profit, which further enhances returns.
Carat
See Karat
Certified Gold
A “certified” gold coin is encapsulated in a tamper-proof, sonically-sealed, high-security hard plastic holder, with a unique certification number and bar-code permanently sealed inside each coin capsule for the protection of the investor.
Chinese Lunar Coins
These are coins minted for each Chinese New Year by the Shanghai Mint. These have been minted each year since 1981 and are available in gold, platinum and silver. The reverse of each lunar coin depicts the zodiac animal for that lunar year, whereas the obverse reflects an image of cultural significance in China.
Commodity
A useful physical asset whose value is based on its commercial use and scarcity.
Counterfeit
Counterfeiting of precious metals is where imitations are created to deceive or defraud the buyer. They look genuine to the naked eye but when tested are counterfeit. Always buy gold and silver from a reputable dealer such as Physical Gold.
Device
A design found on a coin. Frequently it is the bust or profile of a person who symbolizes a particular country at a particular time in history or a country’s coat of arms or insignia.
Die
An engraved metal tool used to strike or stamp the design on a coin.
Divisibility
How many individual elements a precious metals allocation consists of. It is deemed to have more divisibility to hold 10 x 1 ounce gold bars than 1 x 10 ounce bar.
Electrum
This is a naturally occurring gold and silver alloy, which also contains trace elements of other metals (e.g. copper).
ETFs
Exchange-traded funds or ETF’s are another way to buy gold without physically owning them. The funds are managed by fund managers who have proven expertise in the gold market, so the assumption is that they would know better about trading in gold than an ordinary individual. When buying an ETF, you buy units in an exchange-traded fund, and as the fund performs better, the value of your units goes up. However, it’s important to research the fund before putting your money into it. Many funds have different expense structures and it’s important to understand these properly. The liquidity of the fund is also important, as many funds sell their units without backing them properly buy gold. This can cause problems later on if several investors start selling their units, the fund may not have enough assets to back themselves up.
Face Value
The legal monetary value stamped on a coin.
Field
The open area or background on a coin.
Fineness
The purity of a precious metal measured in 1,000 parts of an alloy: a gold bar of .995 fineness contains 995 parts gold and 5 parts of another metal.
Fine Weight
The metallic weight of a coin, ingot, or bar, as opposed to the item’s gross weight which includes the weight of the alloying metal.
Gold Eagle
The Eagle is the American one ounce 22 karat gold coin, first issued in 1986.
Gold Futures
A future is a financial product where you take a product position now, and the settlement date is a pre-decided date in the future. This means that you don’t have to pay for the entire amount at this point in time and the seller also doesn’t need to deliver any gold to you. Many investors speculate on gold future trades, in an attempt to buy and sell before the delivery date and simply pay out their gains and losses. You need to pay a margin when buying a gold future. A margin is a down payment that locks you into the deal, reassuring the seller that you will not walk away. One needs to be aware that if the price of gold falls during that period, the margin needs to be topped up.
Gold Reserves
These are reserves of gold held by the central banks of governments for numerous purposes such as currency protection and managing balance of payments deficits, etc. Governments often top-up gold reserves in times of economic uncertainty
Gold:Silver ratio
The amount of silver you can buy with the same money it costs to buy one ounce of gold at any given point in time based on their spot prices. So, a ratio of 85 would mean that 1 ounce of gold would buy 85 ounces of silver.
Gold SIPP
A SIPP is a self-invested personal pension plan . Gold can be part of this plan as an investment and SIPP options are available with physical gold. SIPP plans in the UK are capital gains tax-free in addition to which the government might pay up to 45% of the cost of your gold investments . The important thing to note is that the gold will not come to you physically and will be held by your pension fund. There are also certain administration fees that you may need to pay to your pension fund when you invest in such a scheme.
Gold Standard
A monetary system based on convertibility into gold; paper money backed and interchangeable with gold.
C – G
Ingot
An ingot is a form of gold bar, which gets its name from the mould in which the bar is cast
Intrinsic Value
The value of a coin’s metal content, based on its spot price .
Junk Silver
A piece of silver with a purity of less than 90%.
Karat (also spelled carat)
From the Greek word “keration”, meaning carob bean, the term karat is now used to indicate the proportion of gold relative to other substances within a metallic material. One carat is equivalent to a fraction of one twenty-fourth. Gold purity can also be quoted in thousandths, with 24-Karat gold referring to around 999 thousandths. The typical gold bar will have a minimum of 23.88 Karats (or 995 thousandths), and the minimum gold content required to mint any marketable gold coin is 21.6 carats or 900 thousandths.
Krugerrand
The Krugerrand is the South African one ounce 22 karat gold coin, first produced in 1967.
LBMA (London Bullion Market Association)
This is a wholesale market trading in gold and silver, which is over the counter. Members of the LBMA are usually refiners are bullion dealers, activities are overseen by the Bank of England
Legal Tender
Currency in specified denominations which you could use as payment. Legal tender coins have a face value (i.e. Britannia £100) but the gold content is far more valuable than the amount written on it.
Liquidity
The ease in which an asset can be turned into cash.
London Fix
Twice daily bidding sessions in London of five major gold firms, at which the price of gold is “fixed” or set.
Lustre
A shiny appearance on the surface of a coin, usually an uncirculated coin.
Maple Leaf
The Maple Leaf is the Canadian one ounce 24 karat gold coin, first produced in 1979.
Market Value
The price at which a coin or bullion item trades.
Mintmark
The mintmark is a letter or symbol on a coin that identifies where that particular coin was produced.
C – G
Nugget (or Kangaroo)
The Nugget is the Australian one ounce 24 karat gold coin, first produced in 1986. A gold nugget is also a form of naturally occurring gold in its non-refined state, e.g. as found in a gold mine.
Numismatic Coins
Coins whose prices depend more on their rarity, condition, dates, and mint marks than on their gold content alone.
Numismatist
A collector and student of money, especially coins. Numismatic refers to coins of a more historical and collectable nature.
Obverse / Reverse
The obverse is the front of a coin, usually consisting of the image of one or more people. The reverse is the rear of the coin which often features a picture or design.
Paper gold / Paper silver
Ownership of gold or silver which isn’t tangible. Examples are Electronic Traded Funds (ETFs), mining shares, precious metals funds.
Philharmonic
The Philharmonic is the Austrian one ounce 24 karat gold coin, first produced in 1989.
Physical gold / Physical silver
Real gold and silver which can be touched and held. Common forms are bars, coins and jewellery.
Pooled silver / Pooled gold
An arrangement whereby the investor’s precious metals are held by a third party and mixed in with those of other investors. It is common practice for pooled accounts to actually contain less precious metals than it should.
Premium
The additional cost of a gold or silver coin or bullion over and above the spot gold/silver price, including the costs of fabrication, and distribution. Rare coins carry an additional premium called numismatic value which is based on scarcity, quality, demand and intangible factors.
Proof Gold
Each Proof coin is carefully inspected throughout the manufacturing process to make sure that only perfect specimens are issued. Proof coins are usually of a limited issue and often have employed different minting techniques to produce a highly polished mirror finish to the field (background) and a matt finish to the raised features.
Raw Gold
Bullion coins that have not been certified or encapsulated
Safe Haven Asset
A safe haven asset is where people typically invest in times of political turbulence or uncertainty. Gold is known as the ultimate safe haven.
Segregated Storage
Your gold/silver coins or bars are kept apart from other investor’s precious metals. Just as importantly the gold/silver does not fall onto the balance sheet of either the dealer or the storage facility. This means that in the event of either another investor, the dealer, or indeed the storage company itself going bankrupt, your precious metals are fully protected and cannot be touched by creditors.
SIPP
A Self Invested Personal Pension (SIPP) is a UK retirement plan offering the investor the widest possible choice of investments. Investors are able to obtain a discount of up to 50% through tax relief as gold bullion is the only commodity to qualify for a SIPP.
Sovereign
The Sovereign is a British coin weighing 0.2354 oz and was first produced in 1489.
Spread
The difference between the bid and ask price (i.e. the price where we would buy or sell the gold/silver).
Sterling Silver
A standard of silver defined by law as 925 parts pure silver per 1000 parts overall. Sterling silver is the principal standard in the UK and USA.
Tangible Assets
An asset which is tangible i.e. is capable of being felt or touched, something which has real substance and is not imaginary. Hence the name of our Company, Physical Gold.
Troy Ounce
The standard weight in which gold and silver are quoted in the international market, weighing 31.1035g.
VAT
A tax added to certain products and services at sale. The percentage is currently 20%. There is no VAT to pay when you buy investment grade gold coins or bars. This is a great advantage over silver and platinum, both of which generally attract VAT. You’re now able to also buy physical silver through Physical Gold Ltd without being charged VAT.
Best gold and silver apps
The all penetrating world of apps has ensured that today there’s an app for almost anything. Sure enough, it’s no different for investors and enthusiasts of gold and silver. From price trends to authenticity testing, there’s a range of apps out there for precious metals. Let’s take a quick look at some of the best smartphone apps related to gold and silver.
1. Gold and metal detector
The app is targeted at users who want to look for their gold or silver jewellery lost inside the home. The app actually works for most metals, however, users tend to use it to mainly look for their lost gold rings or silver bracelets and the like. Basically, the app uses a magnetic sensor built into most mobile phones to look for metals. Like most metal detector apps, the app measures magnetic field values and detects metals by identifying them when they are within range.
2. Gold price live
Gold price live is an app created by goldprice.org. It provides investors with silver and prices in the form of charts and graphs on a real-time basis. Investors can also view historical data, which helps them track the value of their investments over time. These are available to view through charts that display data on a monthly, half-yearly and yearly basis. Data is also available for 5 and 16 year periods in most national currencies. The prices are available to view in most fiat currencies across the world. The app updates global prices of precious metals every ten seconds, so it’s pretty current when it comes to accurate pricing. The app is available free for both Android and iOS platforms.
Download our FREE Cheatsheet to Investing in Gold and Silver HERE
3. Moneycontrol market
Another snazzy app for you, if you’re a blackberry user is money control market. Although aimed primarily at Blackberry users, which is a bit out of date, the app posts real-time updates on commodities like gold and silver, as well as global stock markets. The app is downloadable from the blackberry app world and gives investors a complete bird’s eye view, not just on gold and silver, but debt and equity investments as well.
Smartphone apps for gold and silver investors are using innovative technologies
4. The CoinTrust app
The CoinTrust app is an app that detects counterfeit gold coins and silver coins. It does this by cleverly using a bit of science. Basically, the app records a sonic signal that comes from your gold/silver coin. In order to do this, a user needs to find the relevant coin on the app, switch on the recording and then spin the coin. The app records the sound spectrum of the coin as it clatters against a hard surface and then analyses and compares the sound spectrum with the original recording of the coin stored within the app. Currently, the app has free patterns for the Gold Krugerrand and the Silver Maple Leaf. More patterns are being released soon.
5. Auracle
Yet another gold and platinum tester on the market is Auracle. The app is more advanced as it uses pen probe technology to detect the purity of gold and platinum. It also displays the karat value of the metal on the screen, with a range between 6 to 24 karats.
Call us for advice regarding your gold investment plans
Apps may be a handy tool to have when detecting a fake at home, but to get real expert advice about buying gold or checking genuine coinage, talk to our team of precious metals and numismatics experts. Call Physical Gold now on 020 7060 9992 or email us to get in touch with a member of the team. We’d love to hear from you and our experts can give you some great tips on gold and silver investing. Call us now.
Image credit: Pxhere
One of the most important considerations when investing in gold or silver is the purity of the metal you’re buying. Due to gold and silver being relatively soft metals, they are normally mixed with other metals to make them harder. Just a small difference in purity can have a massive impact on the overall value of the goods so It’s important to understand what the different figures used for measuring purity mean.
Millesimal Fineness
The purity of gold and silver bars/coins is normally referred to as “the millesimal fineness”. This measures the overall purity of precious metals based on parts per thousand. For example, if a gold bar has a fineness of 999 then it is made up of 999 parts gold to 1-part other metals. Because no form of gold available on the market is 100% pure, the purest gold bullion bars and coins, normally have a millesimal fineness of 999 or 999.9. The finer the purity of the metal, the higher its value.
“Buying gold – 5 reasons to invest”, a must-watch video for gold investors.
Insiders Guide to Gold & Silver Investment. Download our FREE guide here
Measuring the purity of silver
Like gold, silver is often measured using millesimal fineness, with the purest form of silver measuring .999. When investing in silver, however, you may come across terms such as “Sterling silver or “Britannia silver”. These hallmarks are direct references to the metal’s purity and can be found stamped on the metal itself. Both Britannia silver and Sterling silver is slightly less pure than fine silver with Britannia silver measuring 95.8 and sterling silver 92.5 on the millesimal fineness scale. Some silver bars are made in Sterling silver as are certain collectables and antiques. Britannia silver was a standard first introduced by the 1696 Coinage Act. No coins are currently minted in Britannia Silver, the last being the 2012 edition Silver Britannia.
999.9 fine gold bars
Karats
When buying gold or silver in various forms, you will sometimes find that its purity is measured in “karats”. Gold jewellery, for example, is often measured in karats. The purest form of gold is 24 karats; however, it only needs to have a millesimal fineness of 990 to obtain this status. The reason why karats are not used to measure the purity of gold and silver bullion is that they are not a fine enough measure, however, you can work out the “fineness” of precious metals measured by dividing the karat by 24 and multiplying the value by 1000. For example, a 12-karat gold necklace has a purity of 50% – 12 divided by 24 x 1000. Different countries also have different rules on the minimum purity levels required for gold and silver. Therefore, when trading in gold and silver abroad, you should be aware that what classifies as 24/18 karat gold in one country might not necessarily be the same in the UK.
Verifying the purity of precious metals
Currently, there are only two-real methods of verifying the marked fineness of precious metals and one of these methods requires destroying it completely in order to separate the different metals within it. This is known as assaying the metal. The other method uses x-ray fluorescence to determine the metal content. However, this method isn’t 100% accurate as it only measures the outermost section of the metal and therefore might get fooled by thick plating. Due to the difficulty in being able to determine the true purity of precious metals, it is always advised that you buy gold or silver from a reputable broker or dealer so as you can be assured that you’re getting what you’re paying for.
999.9 silver Queen’s Beasts coin
Invest in gold & silver through physical gold
If you’re looking to invest in gold or silver, then the best way to do so is by purchasing bullion. Bullion is the highest purity form of gold and silver and can be purchased in the form of bars (such as our 1KG silver bar) or bullion coins. Here at Physical Gold, we stock a wide range of gold and silver bullion including legal tender coins produced by the Royal Mint and gold bars in various sizes including 1oz, 100g right up to 1kilo bars. For more information on measures for gold and silver purity or to ask our advisers any questions on the best way to invest, please give us call on 020 7060 9992.
Image Credits: Hamilton Leen and Eric Golub
Rewarding employees is a great way to improve morale and increase motivation within the workplace. Whilst many companies offer money-based bonuses, physical gifts can also sometimes be awarded to employees. In the past, employees were often rewarded with gifts such as carriage clocks or gold watches for their performance, whilst today employees are more likely to be gifted items such as tv’s iPhones or tablets.
Bonuses of gold and silver are also sometimes gifted to employees. This is usually given in the form of bars or coins. For employers looking for a more creative way to reward their staff, gold and silver may represent the perfect option.
Reasons why you should consider rewarding staff with bonuses of gold and silver
There are now many companies which award their staff some form of monetary bonus. It has reached the point where it has become almost expected by many employees. Staff have to wait until the end of the year to receive any sort of financial bonus and they are not always enough of an incentive on their own to keep your workforce fully motivated. Bonuses of gold and silver are a much more personal reward idea. They hold their value over long periods of time and make for a timeless, unique bonus. Not only are they something that can appreciate in value, but they are also less likely to be frittered away, in the same way, that an end of year bonus might.
7 Crucial Considerations before you buy gold or silver. Download our FREE cheat sheet
Gold and silver are available in a wide range of forms
Gold and silver bullion is available in both coin and bar form, offering a wide range of possibilities for employers in terms of bonuses. Whatever value you’re looking to gift as a bonus, you will find something that fits your requirements. A gold bar, for example, might make for a great retirement bonus. You could even have it engraved with a personalised message thanking your employee for their contributions over the years, making it a very special and personal bonus gift.
Bars are just one form in which gold can be supplied
Tax advantages
PAYE tax and National Insurance contributions must still be deducted from bonuses of gold and silver using the employer’s usual payroll procedures, however, gold and silver bullion often comes with certain tax advantages. For example, all legal tender coins in the UK are completely free of Capital Gains Tax whilst coins such as gold sovereigns are free from VAT.
Gold and silver coins
Coins make an ideal bonus gift. They are quite small and can be easily presented in a nice case or sleeve. There is an element of mystique surrounding coins, gold coins in particular, and they are seen as something precious and valuable. Presenting an employee with a gold coin can make them feel valued and special. It’s not something that would find at your local department store or everyday retailer unlike bonus gifts such as TVs or the latest iPhone. Here are some great examples of bullion coins that would make a very special bonus gift.
Gold Sovereigns
Gold sovereigns will probably go down in history as one of the finest ever examples of British coinage. First minted in 1489 on the orders of King Henry VII, it was the largest gold coin ever minted in Britain at the time. Today gold sovereigns are no longer in general circulation; however, they are still are still classed as legal tender along with British Bullion coins such as Britannia’s and Queen’s Beasts coins.
Gold sovereigns are stunning examples of British design and craftsmanship. They are often given as special gifts on important occasions and are a perfect reward bonus for a hard-working employee. Steeped in history there are many examples of gold sovereigns in the UK including those that have been in circulation as well as bullion coins. Browse Physical Gold’s selection of gold sovereign’s here.
Queen’s Beasts coins
Queen’s Beasts coins are a stunning collection of coins made up of 10 different coins each featuring one of the 10 heraldic beasts present at Queens Elizabeth II’s coronation. Available in either gold or silver, Queen’s Beasts are very high purity coins containing .9999 silver/gold bullion. Like gold sovereigns, Queen’s Beasts coins are also considered Legal tender in the UK and are therefore free from Capital Gains Tax. With their stunning designs and high bullion content, Queen’s Beasts coins would make an excellent bonus gift. Browse Physical Gold’s Queen’s Beasts range here.
2oz Silver Queen’s Beasts coin
Order gold or silver through Physical Gold
Physical Gold are specialist dealers in gold and silver. We offer a wide selection of investments at leading market prices, many of which are Tax and VAT free. These include bullion coins, gold sovereigns and gold/silver bars. Get in touch today to find out more by giving us a call on 020 7060 9992.
Image Credits: Money Metals and Bullion Vault
When it comes to buying silver online, the first thing you need to do is identify a reliable silver broker. Look no further than Physical Gold. Yes, we are a trusted and vetted precious metals broker and investment advisor. Although our name may indicate that we only sell gold, we do sell silver and we can tell you how to buy silver bars or bullion online without getting ripped off.
The London precious metals market
For centuries, London has been a great market for precious metals. Today, with the advent of online trading, the rules of the game have changed. By going to a large online broker like ourselves, you are able to exercise choice in buying silver products. We have established links with silver manufacturers, from whom we are able to source our silver at rock bottom prices.
Value, range and expertise
The scenario is vastly different from buying silver locally at a high street shop. While we have great regard for the high street traders, they simply cannot offer the range of products we can and at the prices we sell. All our silver is vetted and carefully selected by our team of experts and this takes away your hassle of having to do the same. We use state of the art equipment to test products and our quality assessment and vetting process are second to none. Our products come with a certificate of genuineness and a buyback guarantee that ensures your peace of mind when you buy from us.
Considering buying silver? Download our FREE 7 step cheat sheet here first
Buying silver online is the smartest and quickest way to purchase
Identifying a reputed broker
Reliable and reputed brokers are registered with an industry body. Physical Gold is a member of the British Numismatists Trade Association (BNTA) and The Royal Numismatic Society. This means we have to adhere to a certain code of conduct when dealing with customers.
It’s also important to complete a background check on the company you’re buying from. We have an excellent track record, borne out by reviews from customers who have traded with us in the past. Reputed online silver brokers would always maintain transparency and must have a customer hotline through which they can be reached.
We are always reachable on 020 7060 9992. No matter which online broker you choose to trade with, it’s important that you conduct the proper checks before executing a precious metal transaction, as your deal could involve a large sum of money. There are plenty of con artists out there who conceal their true identity behind the anonymity that the internet offers. So, its buyer beware.
Get in touch with Physical Gold to buy silver direct
Once you’ve decided to make a purchase from our website, the procedure is really simple. A free account on our website is usually the first step. Next, you need to browse our products online and decide your purchase. You might want to buy silver coins or silver bars. Even if you don’t buy, you will still continue to benefit from all the silver industry news, opinion and research on buying.
Much of this is available in the ‘insights’ section on our website. Payments can be made through bank transfers and most credit or debit cards, through our 3D secure payment gateway. Call us on 020 7060 9992 or send a message online and a member of our team will get in touch with you to discuss your silver requirements.
Image credits: Inyucho
The case for regular investments
Investors who are serious about building a strong financial portfolio usually invest regularly. It doesn’t matter what asset class you pick, the periodic churning of your portfolio is the only way to keep it optimised. Building a precious metals portfolio is, of course, no exception.
When you invest regularly, you end up buying at various price points. So, you don’t have to worry about timing the market because the market fluctuations average out over a long period of time. For example, if you were to buy mutual funds and you invested every two months, you would build a sizable investment portfolio over a period of time, without laying undue financial stress on your budget, while gaining the advantage of averaging the various price points in the market out. Eventually, if you stayed invested for say, 6 years, you would make money.
Download our FREE 7 step Cheat Sheet to Successful gold and silver investing here
Monthly gold plan
As precious metals brokers and investment advisors, we often advise investors to put together a regular investment plan. Our monthly saver gold bundle is an excellent investment option for investors who aren’t sure about the products they want to buy. The minimum monthly threshold starts at £350 and we set you up to buy tax-free gold coins.
Investors receive different varieties of sovereigns and half-sovereigns delivered to their door. They cannot choose the coins they receive. Given that the spot prices of gold vary, you would also buy the coins at different price points, spreading your risk. This is a great way to build the foundations of a strong portfolio of physical gold. Before you know it, you would have amassed a small fortune. You can simply get started by filling out the form on this page.
A regular monthly investment can help you build a quality gold portfolio over time
The director’s pick
If on the other hand, you wanted to kick-start your gold portfolio, we also have a ‘director’s pick’ option. You can choose to invest a couple of thousand pounds, going all the way up to 50k. The tax-free gold coins you will receive are handpicked by our director, Daniel Fisher and have great investable value. All of our products come with a certificate of authenticity and we also offer a guaranteed buyback scheme.
Silver monthly saver
While we don’t run the same auto-pay monthly saver for silver, it’s still possible to regularly save in silver coins. Silver investors need to make individual purchases of silver from our online portal every month. Once an account has been created, single orders are very quick to complete.
Talk to our precious metal experts for the best investment options
At Physical Gold, we take customer satisfaction to new heights. Just call our team of investment experts if you’re unsure which monthly saver package is best for you. Call 020 7060 9992 or drop us an email and a member of the team will be in touch with you shortly. We are a BNTA registered precious metals broker and we always ensure that every customer gets the best value for their money. Call now.
Image credits: Mark Herpel
What is Silver
Silver is one of the most popular precious metals in existence, not only as a material for producing jewellery and currency but also as a commodity to be traded. But what is silver exactly and can it be defined in an unambiguous way?
Silver bars
The etymology of ‘silver’
The modern word ‘silver’ is derived from Old English ‘seolfor’, which in turn has links to Germanic words including ‘silbar’ and ‘sidabras’. Throughout its history, the word has referred both to the metal itself and to the properties it exhibits; namely its bright, shining, almost ethereal quality.
Interested in buying silver? Download our FREE 7 step guide to Silver Investment here
Where is silver found?
Silver is mined in a number of key regions of the globe, in places as diverse and disparate as Poland, Australia, Peru and Mexico.
What explains the popularity of silver?
Silver shares many of the same properties as gold, hence its widespread use and universal appreciation. It is the best conductor of electricity of any metal, meaning it can be useful in various manufacturing roles.
It is easy to work into different forms thanks to being a relatively soft metal, which is advantageous for producing jewellery and coinage. While it is more common than gold, it is rare enough to remain a precious commodity and eye-catching enough to have value for purely aesthetic reasons.
The history of silver trading
Silver was known to humanity before the written word was invented, so it is widely assumed that it was a vital element that acted as a bartering tool in the days before the concept of currency had been formalised.
Silver’s relative malleability meant that it was appreciated more for its pleasing appearance than its practical applications. It was also more widely available in some parts of the ancient world than others, which impacted its value. In Ancient Egypt, for example, silver was more precious than gold at some points.
Silver coins have been circulated since at least 600BC, with archaeological digs at sites in Turkey bringing truly ancient coins to light in recent years. Even at this early stage in the emergence of currency, a design was struck in the coin to make it recognisable, albeit only on a single side.
In Britain, silver has a long history as a store of value, as well as in coinage. Up until the 19th century it was still used to make pennies and has since grown in popularity as a bullion coin with the introduction of the Silver Britannia coin in 1997.
A display of silver coins
Interesting facts about silver
- Although silver is more conductive than other metals, including copper, it is too expensive to be widely used in electrical wiring.
- Silver is so reflective that it is the element of choice for use in the manufacture of everything from mirrors to microscopes. Interestingly its shiny surface is only effective at bouncing backlight in the visible part of the spectrum, while UV rays are absorbed in much higher proportions than you might expect.
- Like gold, silver naturally occurs in nuggets and so was found by prehistoric humans without the need for processing.
- Silver is edible and is used to make various foods from around the world more attractive. Don’t expect the presence of silver to have any impact on the taste of the food, however, as it doesn’t have any flavour and is purely decorative in a culinary context.
- Mexico produces more silver than any other country in the world, mining an impressive 5600 tonnes in 2017
- The largest silver nugget discovered by humans to date was hauled out of Smuggler Mine in the US state of Colorado way back in 1894. Estimates of its weight vary, but a figure of around 900kg is seen as plausible.
Silver as an investment
Silver is an appealing option for investors for a number of reasons, chief amongst which is its resilient reputation and historic low level of volatility. It has been bought and sold for thousands of years and will continue to be traded for thousands more.
Like investing in gold, the decision to buy silver can be spurred on by a desire to avoid the risks associated with other investments. Silver’s value is innate and fairly stable, unlike nebulous concepts of currency and other marketable commodities.
Of course, owning physical silver in the form of silver bars or coins will require that you also have somewhere safe to keep them. If you need help with silver storage, speak to us about our secure storage solutions.
Contact Physical Gold to invest in silver today
The team at Physical Gold should be your first point of contact for all of your silver investment needs. Call us on 020 7060 9992 or drop us an email to ask a question, learn more about our investment opportunities or get advice on precious metal trading.
Image Credits: Money Metals and Pixabay
A country’s monetary policy usually has some kind of knock-on effect on the prices of all stocks, bonds and commodities. Of course, although we view gold and silver as precious metals, they are essentially traded as commodities. So, all monetary policies will have certain effects on the gold and silver markets. Investors are often confused about what quantitative easing really is and how this move affects markets. Let’s dive in and find out.
What is quantitative easing?
Firstly, quantitative easing is not a normal step taken by the central bank of a country. It is an extraordinary and somewhat unconventional move in which a country’s central bank basically increases the money supply. Many of you may think that’s inflation. But we must understand that quantitative easing does not involve the printing of extra banknotes. The central bank (in the UK it would be the Bank of England) simply buys government securities and other financial instruments from the market in a bid to lower interest rates and increase the money supply, thereby creating more liquidity.
An explanation of quantitative easing from the Bank of England
So, the assumption here is that lowering interest rates would add stimulus to the economy by encouraging industry to invest more. When companies invest and start new projects, more jobs are created and additionally, there is a positive ripple effect that kick starts smaller suppliers to also start providing services to the bigger players.
Gold is a safe haven for investors during times of uncertainty
What are the benefits of quantitative easing?
So, quantitative easing (QE) increases the supply of money and financial institutions benefit by increasing their capital base. This promotes lending and increases liquidity, ushering in a revival of the economy. Quantitative easing is usually a step taken when short-term interest rates have fallen to zero or are nearing zero levels. Going by past experience, we can say that if the central banks invest $600bn, the move typically triggers a fall in interest rates of 0.15 to 0.2%.
When did the UK first start exploring quantitative easing and what were the results?
At the height of the last financial crisis, in 2009, the interest rates were dropped to 0.5% for the first time in the history of the Bank of England. The UK economy badly needed a shot in the arm and the first QE programme for the UK was started with an infusion of £75 billion. This was eventually raised to £200 billion. The programme was rolled out on 5th March 2009. The Bank of England had been contemplating a drop in interest rates to 0.5% from 1.00% for a while. By November 2008, the financial pundits of the Gordon Brown government knew that the drop to 0.5% wasn’t going to be enough. It had to be backed by a parallel strategy that could save Britain from going into a long drawn economic depression.
Alistair Darling, the Chancellor of the Exchequer adopted a financial technique that had been used in Japan during the early 2000s. Interestingly, the same technique had also been adopted by Ben Bernanke, the chairperson of the American Federal Reserve, during the US chapter of the crisis, which triggered the fall of Lehman Bros. The radical macroeconomic technique was designed to put cash back into the hands of banks by buying out the government and corporate bonds they held.
These resources would have a two-pronged effect. Firstly, the new demand for these gilts would drive up their prices, triggering the required fall in the interest rates. Banks would now have money to pump back into the economy and things would be easier for businesses and individuals, as the cost of borrowing would be radically reduced. That was pretty much how the under-performing banks like RBS were saved back in the day. The government was able to bail them out via the QE programme.
Many homeowners also rejoiced at the time, since their mortgage repayments dropped to a negligible level. Many homeowners across Britain seized the opportunity to opt for capital repayment, ensuring that banks were able to recover their sub-prime housing loans, injecting more cash into their reserves. The move was hailed as having a double whammy effect for the sub-prime housing market in the UK. While the banks were able to claw back the money they had loaned, homeowners were able to reduce their debt exposure and free up equity in their homes.
However, many critics have been sceptical about the success of the U.K.’s QE programme. It has been 11 long years since the programme was rolled out. It had been purported as an emergency measure, designed to revive the economy and not a permanent fixture. Additionally, interest rates never recovered completely and remained near zero, as we plunge headlong into the next financial crisis. So, the verdict in the minds of many is that the program was a relief mechanism that did not have long-term success. However, in the backdrop of these criticisms, one must not forget that the UK has had the longest sustained quarterly growth record of any G-7 nation.
What quantitative easing was taken during the Coronavirus pandemic of 2020?
US response
On 15th March 2020, the US Fed announced its fourth round of quantitative easing. The Fed is purchasing $700 billion worth of mortgage-backed securities ($200 billion) and treasuries ($500 billion) with three main priorities:
- boosting liquidity within financial systems and
- increasing the aggregate demand by expanding the supply of money
- helping the US to avoid going into a recession
Part of the Fed announcement from 15th March said
“We haven’t set a gradual schedule for QE, quite deliberately. This crisis in UK financial markets demanded more. We will act in the markets promptly and rapidly as we see appropriate. The alternative was a run on sterling, a flight to the dollar and a complete breakdown of the UK financial system’s core.”
On March 23rd, 2020 the Federal Reserve announced:
“it would purchase an unlimited amount of Treasuries and mortgage-backed securities in order to support the financial market.”
UK response
On 19th March 2020 the Bank of England increased quantitative easing in the UK by £210 billion (from £435 billion to £645 billion) through the purchase of government bonds.
Andrew Bailey the new Governor of the Bank of England announcing the £210 billion quantitative easing said:
“We haven’t set a gradual schedule for QE, quite deliberately. This crisis in UK financial markets demanded more. We will act in the markets promptly and rapidly as we see appropriate. The alternative was a run on sterling, a flight to the dollar and a complete breakdown of the UK financial system’s core.”
On 18th June, 2020 the Bank of England raised quantitative easing by an additional £100 billion (from £645 billion to £745 billion) through an additional purchase of government bonds.
Andrew Bailey said after the additional easing
“As partial lifting of the measures takes place, we see signs of some activity returning. We don’t want to get too carried away by this. Let’s be clear, we’re still living in very unusual times.”
All quantitative easing to date by the central bank for quantitative easing purposes have been (click here for further details):
- November 2009 – £200 billion
- July 2012 – £175 billion and
- August 2016 – £60 billion
- March 2020 – £210 billion
- June 2020 – £100 billion
EU response
On 18th March, Christine Lagarde the President of the European Central Bank announced the €750 billion Pandemic Emergency Purchase Programme (PEPP). This was for the purchase of private and public sector securities to mitigate the economic risks caused by the COVID-19 pandemic. Purchases will be made up until the end of 2020 for all asset categories, which are eligible under their asset purchase programme.
On 4th June, the EU announced an additional €600 billion of quantitative easing with an aim of controlling inflation and stimulating vulnerable areas of the EU economy caused by the COVID-19 pandemic. This brings the total response to €1350 billion of quantitative easing when added to the €750 billion from March.
Relative comparisons of response – US, UK and EU
Although, this is a moving picture as at 22nd March the following amount of quantitative easing has been provided by the 3 different central banks:
- US – $700 billion – 3.3% of GDP initially, but this is unlimited
- UK – £310 billion – c14% of GDP and
- EU – €1350 billion – c13% of Eurozone GDP
The US response was the first and is now seen as a small intervention in the markets. Almost certainly there will be further rounds of quantitative easing from the 3 central banks.
How did the 2008 financial crisis affect QE?
The 2008 financial crisis triggered massive falls in interest rates in the UK. As the crisis broke out, interest rates were at 4.5% on 8th October 2008. By 5th March 2009, it had fallen to 0.5%. Unemployment rose as businesses failed due to their cash flows being affected by the bank’s refusal to lend. Overall consumer confidence plummeted and the entire economy entered a bearish phase. By March 2009, quantitative easing was introduced. The Bank of England put in an initial tranche of £75bn in new money, rising up to £375bn eventually.
If you want to know “How to sell gold for the most cash”, watch our YouTube video.
The Bank of England actually called it ‘asset purchase facility’ and bought assets from financial institutions like high street banks. Many of us remember the bailing out of Northern Rock at the time. The Bank of England formally started its QE program on 5th March 2009 after bailing out the high street banks. Initially, it was just long-term government bonds, but by the 25th of March, the program had been expanded to purchasing corporate bonds as well, in an effort to boost business confidence and increase lending to companies. In 2013, Japan announced a massive QE program going into trillions of dollars to boost its economy, in response to the global financial crisis.
The Bank of England introduced quantitative easing in 2009 as part of the monetary policy
In recent years, the ECB has announced a halt to its QE programme, in spite of a continuing slowdown in the European economy. The ECB is currently investing 30bn euros in buying bonds, although this program was slated to phase out by the end of 2018, Coronavirus and the world economy has caused a change in plan!
What are the effects of quantitative easing on gold and silver?
So, now that we know what quantitative easing is all about and how large industrialised economies used it during the global recession, let’s look at how it affects the gold and silver markets. Well, firstly quantitative easing is a step usually taken by central banks during economic turmoil. We already know that gold and silver act as safe havens during these times. So, if we look at price charts for gold during the period 2009 to 2011, we can see that gold prices skyrocketed during this period.
According to economist Marc Faber, quantitative easing hurts currencies and sends people rushing to buy gold. In 2016 he predicted that gold would continue to rise on the back of the fourth round of QE undertaken by the US federal reserve. On June 14th, 2018 when the ECB made the announcement to phase out QE by the end of 2018, they also announced that the European economy was still soft and interest rate hikes would not take place till March 2019. This news saw the gold market responding positively on that very day. Therefore, we can surmise that while QE is good news for the economy in terms of its GDP growth at a time of crisis, it’s not good for the stability of currencies. It’s both these reasons that spur the rise of gold prices at these times.
Call us to know more about gold investments
Our investment experts can guide you on the best times to invest in gold and silver and how to approach them. Call Physical Gold Limited on 020 7060 9992 or get in touch online and a member of our team will get in touch with you shortly to discuss your investment objectives and how precious metals can be an important part of your investment plan.
We sell a range of gold bars (sizes from 1oz, 100g to 1 kilo), gold coins (including gold Sovereigns and gold Britannias).
We also sell an excellent silver range, including silver bars (such as a 1 kilo silver bar) and silver coins (including silver Britannias).
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