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Due to staffing issues our phone lines will be closed until 9.30am Monday 6th April. You can still place orders through the website and LOCK IN PRICES for dispatch once shipping arrangements return to normal.

Gold - A Safe Asset Amid Coronavirus Turbulence

Friday, March 20, 2020

It is difficult to have been able to predict how quickly markets can deteriorate, but 2020 has continued to prove just how volatile they actually are. COVID-19 began as very much a Chinese health issue, but the virus has now developed into a global story.

Markets have reacted sharply to its spread, and this makes it clear which assets are best-suited to navigate these choppy waters. Stocks have been one of the biggest losers in recent weeks, having corrected sharply on expectations that the virus will weaken economic growth. In contrast, gold has rocketed to new highs in pound sterling terms.

Read more about what COVID-19 means for gold as an investment.

Assets jostle for the top spot

Investors traditionally juggle a number of assets in any given year - stocks, bonds and commodities, for example. Diversity is crucial for any portfolio, as some assets move in tandem, and some go down at once. It helps to have an asset with a negative correlation, which moves higher to compensate.

As stocks and shares have lost value in recent weeks, on fears about the spread of COVID-19, markets have priced in the prospect of central banks stepping in to cut interest rates. As a result, bond yields have fallen ever closer to zero, as bond prices have hit new highs.

If inflation continues to run at two per cent over the long term, investors will lose money in real terms, by a significant margin.

Gold is able to enjoy the price rally that bonds have seen, but as it doesn’t have a yield as bonds do, investors have benefited from a price rally without having to worry about diminishing returns as bond investors have seen.

Stay up to date on gold prices, using our Live Gold Price Tracker.

Volatility returns to the markets

For a number of months, volatility appeared to have dissipated, after a rocky 2018 in particular. We’re barely three months into 2020, and volatility has spiked again, with emergency interest rate cuts to allay fears of a global slowdown. Early data suggests that COVID-19 has had a particularly negative impact on the Chinese manufacturing sector.

This could lead to a spill-over effect, given that the world’s second-largest economy is effectively at a standstill, having been a dynamic source of economic growth for years. Gold prices are rising, as gold is pricing in a desire for safety by investors.

Precious metals such as gold have a history of spiking during times of great uncertainty - the 1979-80 Soviet invasion of Afghanistan, or in the aftermath of the EU referendum in 2016. Gold spikes during times of peak stress in the markets, and if you have a little bit of gold in your portfolio already, you can attest to having made some decent gains already.

Stocks and shares relate to businesses which can fall foul of economic downturns, causing them to collapse entirely, if sentiment worsens to an extreme extent. In comparison, gold is gold and always will be. You can invest in this asset, knowing it won’t go bankrupt or request a bailout, as financial institutions did in 2008.

Something which has contributed to jittery market sentiment is the uncertainty about just how many people have been infected by COVID-19. The official global count suggests over 100,000 confirmed cases, and over 3,000 deaths. However, not all countries count cases in the same ways, meaning these numbers could be more retrospective at best.

A global story that helps gold

The COVID-19 story has been quite so powerful because of its global impact. What allegedly started as a Chinese health issue in a wet market in Wuhan has now spread around the world. The majority of cases are estimated to have stabilised in China, largely thanks to the Chinese authorities being more capable of using draconian measures to put the country on lockdown.

Liberal democracies such as the US, the UK and Italy might not be so capable of adopting such measures, meaning the virus could behave in a different way entirely. In the meantime, it helps to stay informed and keep track of case numbers as this story continues to evolve.

Check out this COVID-19 dashboard, to view the latest estimates for infections.

Suitable gold items to consider investing in

Whatever happens, gold has certainly been a great beneficiary of the market turbulence.

The Gold Bullion Company has a number of gold items to consider investing in, to secure your wealth and weather any stress in the global markets. Prices have spiked to as high as almost £1,300 per troy ounce, so any item you choose, whether that’s gold coins or bullion, it will be worth more now than ever before.

Consider our 2020 1oz Gold Britannia coin – priced at £1,339.96 at the time of writing, it is VAT-free and exempt from Capital Gains Tax. To really seal the deal, we guarantee free delivery. Alternatively, we have a range of gold bars, from just one gram to bars weighing 100 grams and above.

Want to be able to invest in gold but need a safe place to store it? We offer 12 months’ free allocated storage solutions. This ensures that any gold item you purchase can be locked down in maximum-security storage away from your home, with at least a year’s free storage. Following this 12-month period, you can continue to store your gold with us for as little as £6 per month.

Whichever way you choose to invest in gold with the Gold Bullion Company, it’s clear that gold is in a bull market, and could move higher and higher, while concerns over COVID-19 continue to grow. Call us on 01902 623 259 to get in touch today.

Covid-19 Update

Wednesday, March 18, 2020

The Coronavirus continues to spread throughout the world and is now impacting the precious metals supply chains.

Most national mints, including The Royal Mint have already sold out of stock of silver bullion coins and are desperately playing ‘catch up’ with new production runs.

International supplies from manufacturers such as PAMP, Metalor and Emirates Gold are subject to disruption and deliveries may even be halted during transit if travel restrictions become more restrictive.

We have seen unprecedented demand for bullion products in the last seven to ten days as investors capitalise on a drop in the prices of precious metals brought about, many experts think, by profit taking by major funds that are trying to make up for losses on stock markets.

As bullion products become more difficult to source, it is inevitable that premiums will increase somewhat but we will continue to attempt to source products that represent the best value for our customers.

Over the last weekend Royal Mail changed the way in which it delivers Special Delivery parcels and no longer requires a signature to prove delivery. This action was not announced to us in advance and has caused considerable disruption to our delivery system as we can no longer insure deliveries using the Royal Mail system.

The result was that we had to suspend the ordering facility on our website, as did many other dealers, whilst we re-configured our system and, more importantly, worked through several hundred orders to contact customers whose deliveries were either already in transit or due to be dispatched.

This process is almost complete and we hope to have our website re-instated and Customer Service lines re-opened later today 18th March.

There will be some changes to our ordering system:

  • We are unable to accept debit or credit card payments for orders until further notice.
  • All payments must be made by bank transfer from a UK bank account.
  •  We are unable to dispatch orders until further notice, which will be when the Royal Mail system reverts to a state which gives sufficient safeguards to allow us to insure precious metals in transit.
  •  All orders will be available for collection, by appointment, from our Wolverhampton offices.
  • Alternatively, dispatch of orders will be delayed until the resumption of a suitable and insurable delivery service, at which point orders will be dispatched at no additional cost. Delayed dispatch orders will be held in our fully insured vaults, free of charge for up to six months. Parcels that are held by us for delayed dispatch will not be ‘storage orders’. (Customers who may wish to sell items from storage should select the ‘buy for storage’ option when purchasing.) 

All items listed on our website will be physically available to order and we will update availability as we receive additional stock.

We apologise for the inconvenience that these changes may cause but our aim is to maintain a reliable system where customers can lock in prices in this volatile market in the face of an increasing crisis.

At present all of our staff remain well but we are planning ahead to enable continued service should any of our small team be required to self-isolate.

We wish you all good health in the coming weeks.

Gold Price Increases due to Coronavirus Concerns

Tuesday, February 18, 2020

Early 2020 has proved to be an interesting time for investors looking for a gold price increase as the coronavirus crisis continues to spook the markets.

At the latest estimate, over 43,000 cases of COVID-19, the new virus’ official name, have been confirmed in mainland China and beyond, while the death toll has risen above 1,000. The World Health Organisation designated China as having a Very High risk level in its latest risk assessment, while saying the global risk level was High.

Understandably, the growing number of cases and the reaction to the virus by Chinese authorities has led to equities becoming volatile, and investors piling into more safe-haven assets such as government bonds and precious metals leading to a gold price increase. This flight to safer haven investments goes a long way towards explaining why gold price is increasing.

For more information about the latest gold prices, check out our Live Gold Price Tracker.

Virus weakens China’s economy

As with the 2003 SARS outbreak, the spread of COVID-19 is likely to dampen economic growth in China, which is currently the world’s second-largest economy. This hit to growth couldn’t come at a worse time for the Chinese, as the economy is already facing significant headwinds, in the midst of an ongoing trade war with the United States.

Economic growth has already fallen to six per cent in recent quarters, a level below the depths seen during the 2008 financial crisis. The impact of COVID-19 remains unclear due to the lack of available hard data for early 2020, but economists expect factors such as the shutdown of businesses and travel restrictions could push growth as low as four per cent in the first half of this year, according to some estimates.

Such weakness in one of the world’s leading economic powers would do much to disrupt economic growth in nations with close ties to China.

In the meantime, gold prices have gained immensely, having risen over 12 per cent since the start of the year, to over £1,220 per troy ounce. Despite the sizable gold price increase in recent weeks, gold remains below its 2019 peak, but another shock to the global economy could be all it takes to propel prices to a new all-time high.

Gold rallies in deflationary environment

Gold’s recent price rally might baffle some, as a slowing Chinese economy represents a significant deflationary shock to the global economy at large in the coming year. Investors have often viewed gold as being an asset that typically performs exceptionally well in times of higher inflation, as opposed to times of deflationary pressure.

During the 1970s, both gold and oil famously enjoyed great bull markets, as the stagflation crisis hit industrialised economies worldwide. In the last few months, oil has been underperforming, especially since the outbreak of COVID-19, but gold has rallied higher and higher.

To explain this apparent divergence from the norm, it’s important to recall the performance of gold during the great bull run of 2001-11. Some of the greatest gains in the last great bull market for gold occurred during times of market turbulence, when deflationary shocks hit equities and pushed most commodities lower.

Gold continues to act as 2020 vision

Just four months ago, we told you that gold is a form of 2020 vision, at a time when markets remained volatile, and investors looked for safe places to make investments for the long term.

Gold as an investment is ideal, as the past few weeks have shown, with fear returning to the markets. This has led to a gold price increase that could allow the precious metal to make fresh highs imminently. It might be worth considering buying gold now to bolster your portfolio and protect it, in the event of persistent volatility in 2020.

To remedy shocks to the economic system, why not consider the 2020 Full Gold Sovereign?

Weighing 7.98 grams, VAT and CGT-free, the 2020 Full Gold Sovereign coin depicts Queen Elizabeth II in her 68th year on the throne, a fitting tribute to the stability of her reign, and surely a gold coin that could prove to be most invaluable stable investment in the coming years of market uncertainty.

In addition, we offer the 2020 1oz Gold Britannia. Struck in solid 24-carat gold, showing Britannia herself in all her resplendent glory, this coin makes for a suitable investment, and we’ve noted marked demand for it, so make sure to take a look at it while stocks last.

What next for gold in 2020?

Before the COVID-19 outbreak, there was an apparent mood of reflation in the markets, which displayed a risk-on approach, amid rising optimism that the global economy had turned a corner - despite a number of yield curves inverting (a good predictor of an imminent downturn) across the world.

The emergence of COVID-19, the Chinese government’s response and the potential hit to growth as expected by some economists highlights the sense of taking caution for so-called “black-swan” events.

A gold price increase has traditionally accompanied unforeseen periods of apparent instability - remember the Soviet invasion of Afghanistan in 1979-80, or the immediate aftermath of the Brexit referendum in June 2016 and a gold value increase would seem likely in response to COVID – 19.

Gold is an adaptable asset, and while it has been easy to assume it was simply dormant for a number of years, following its initial peak in 2011, uncertainty and human nature remain a fact of life. At times of peak stress, gold prices have continued to suggest sizable demand for the yellow metal, as the ultimate safe haven.

If you wish to learn more about diversifying your portfolio by investing in gold or other precious metals, don’t hesitate to get in touch with the Gold Bullion Company.

For more information about buying gold, call us on 01902 623 259, to hear from true specialists in the field of gold investments.