Tuesday, October 14, 2008

A note on gold

Some commentators on the gold market predicted that the price would come down, or at least be restrained, because leveraged speculators would have to sell assets to raise money to clear some of their borrowing.

As the credit market continues to remain tight and the prospects of quick killings made on the back of increasingly-expensive borrowed money become less plausible, watch for the gold price to bottom-out (I read one claim yesterday that this has already happened). Then when continued liquidity injections from governments start to work their way into prices, my guess is that gold will make a steeper and steadier rise, as it becomes not a find-a-bigger-fool speculation but a flight to security, away from devaluing currency.

I may soon get back in myself, with some of my small savings.

And yes, I did indeed start drawing my "cash stash" yesterday, and plan to take more out today. Can anyone believe the blanket guarantees for deposits at banks, especially under the present economic and monetary conditions? You think disasters can't happen, but as a young woman my mother suddenly found herself fleeing the country alone, with two horses. Hope for the best, plan for the worst.


James Higham said...

Can anyone believe the blanket guarantees for deposits at banks, especially under the present economic and monetary conditions?

Unfortunately, some of us have little choice, Sackers.

Sackerson said...

Hi, James. At present it looks as though the best thing is to have nothing and be supported by the State, though a lot then dependes on what kind of neighbours you have. But how much longer can we run a system like that?

dearieme said...

Sacks, old boy, I am dismayed. I am despondent. I am suffering from hell/handcart coincidence phobia. It's all going to go even more horribly wrong. We're looking at a couple of decades of bloody awfulness.

Sackerson said...

Don't despair, DM, it's one thing to grumble and prognosticate, another to give up. Since the public arena is beyond our control, we merely have to concentrate on the good we can do closer to home, and take sensible precautions; and try to warn those who will listen, to do the same. Actually, things are so badly managed that it's becoming funny, in a way.

Anonymous said...

I thought the £50k guarantee was a safe bet, are you now saying it's not?

And if currentcy is devalued, what's the point of pulling it out?

Personally I'm putting everything over my 50 into paying of CC debt, then mortgage. However - should I pay off secured debt before unsecured?

Sackerson said...

Anon - please remember I can't offer personalised advice and if you need that, you should seek an adviser - who will be liable. But personally, I now feel I should make various contingency plans, since root causes aren't being being addressed properly either side of the pond. I'm determined to clear debt as fast as poss. I suspect CC debt may become more expensive in future, and zero-interest offers rarer; and it makes sense to me to pay off debts with higher interest rates first. I'm building up a bit of ready cash not because I think cash will rapidly become worthless (as opposed to gradually, which it has been doing for decades), but remembering that there have been times recently (e.g. in Argentina) when governments have suddenly shut off access to bank accounts. Not likely here in the near future I suppose, but anything's possible, isn't it? This government is destroying my trust.

Anonymous said...

anon: "what's the point of pulling it out?"

Yea, I never find that very satisfactory!

anon: "should I pay off secured debt before unsecured?"

I expect the banks will shortly have far too many houses on their hands, they probably won't want any more. So unless you want the baliff knocking on your door, reduce the credit card and other unsecured debt.

Sakerson: "when governments have suddenly shut off access to bank accounts."

Exactly. What do you do next month, when the cash machines suddenly stop working?

Anonymous said...

Thanks, that's helpful. Re complete meltdown though - if we go the way of argentina then so does everybody else. I wouldn't worry as much about cash as locks.

Sackerson said...

@anon 19:57: "What do you do next month, when the cash machines suddenly stop working?"

That's why I've started now. "There is no borrowing a sword in time of war", as the ancient Greek saying goes. Shan't take it all out (not that there's that much anyhow) - but I like to have options.