Buying gold might just take the glitter off your investment returns

Today’s article in the Press & Journal from Barry O’Neill offers some timely advice for those buying gold this Christmas. Carbon’s Investment Director isn’t suggesting that purchasing gold jewellery for a loved one this Christmas isn’t a good relationship investment, but he does warn against gold as a “safe haven”.

In the article, Barry questions the validity of the ‘safe haven’ investment tag often given to gold. He recalls a time just 4 years ago when the spot price of gold was £1,268 per ounce and compares this to the current price around the £660 mark. Furthermore, it is widely forecast to drop still further in 2016.

The substantial fall in value is one concern but Barry also asks why it is that back in 2013, (when he last wrote about the merits or otherwise of investing in gold) the “experts” got their predictions so badly wrong. At that time, they suggested the spot price was heading upwards toward £1600 by the end of 2014. As Barry rightly points out, they were not only way wide of the mark on price, they even got the direction of travel completely wrong.

Barry explains that “experts” have a dreadful record of predicting the price of any asset but particularly commodities like gold which can be subject to quite severe peaks and troughs.

So, Barry’s advice is to carefully consider any commodity investment, even gold, because nothing goes in one direction indefinitely. Investors herd mentality can often lead them to buy near the top and sell near the bottom.

It is worth reading the whole article, which you can see here.

As you will see, your loved ones can still benefit from a thing of beauty this Christmas, but buying gold as an investment is something you must do with your eyes open.

If you would like to discuss your financial planning options, please contact us with any questions you might have. You can do this by calling our head office on 0131 220 0000, or by emailing us at enquiries@carbonfinancial.co.uk. or you can also follow us on Facebook, Twitter or LinkedIn.

You can view Barry O’Neill’s profile here.