We anticipate we will continue to see an upward trend in people using gold as loan collateral in the coming months.' said Jim Tannahill
When the pound slumped as Kwasi Kwarteng presented his mini-budget, some Britons rushed to the safety of a haven that's recently lost its luster: gold.
As the UK currency slid to an all-time low early Monday, bullion priced in pounds climbed close to a record. That would typically encourage selling and deter buyers, but this time round the turmoil in British bond and currency markets increased the allure of the precious metal.
"Buying has increased exponentially," said Ash Kundra, who runs coin dealer J Blundell & Sons in London's historic Hatton Garden jewelry quarter.
"I keep running out of coins, I keep running out of bars."
The rush for gold in the UK contrasts with the bearish sentiment that's seen dollar prices for the precious metal slump by more than 20% from a March peak, as the Federal Reserve's aggressive monetary tightening makes the non-interest-bearing asset less attractive. Still, bullion's status as a hedge against inflation and currency debasement is keeping demand from retail investors strong.
While
the pound has recovered over the past few days, after the Bank of England was forced to intervene to prevent a bond market meltdown, the biggest set of unfunded tax cuts in half a century continues to reverberate.
At BullionVault, a UK-based brokerage, British users opened accounts to buy bullion at more than double the usual rate this week.
"We're seeing a lot of new UK interest," said Adrian Ash, head of research at the firm.
"The interest rate and inflation crisis is global, but gold is saying that the UK has put itself right in the eye of the storm."Still, Britain's gold bugs are unlikely to have much impact on global prices. UK consumers bought 15.5 tons in bars and coins last year, just over 1% of the global total, according to the World Gold Council.
Even before the government's fiscal policy bombshell, the anxieties generated by
soaring energy bills, food inflation and higher mortgage rates were pushing more Britons to leverage their gold.
"We anticipate we will continue to see an upward trend in people using gold as loan collateral in the coming months whilst this period of extreme uncertainty exists," said Jim Tannahill, managing director of London-based pawnbroker, Suttons and Robertsons.
Over the past few weeks, he has seen a 40% increase customers seeking to borrow against their gold collections.
If I was a country, I'd be buying these metals for good reserve - as an individual it is advisable to have currency of this nature as sort of an "insurance" in the event the derivatives finally explode upon the financial scene as they are so triggered to do just now seems.
[Link] - gold 1 gram
[Link] - silver one troy ounce
Now notice the discrepancy in the coin prices versus the current "spot" value.(particularly for silver)...the "spot" value is really more of a paper exercise than anything fundamental and the derivatives are wrapped up in this and those who have been shorting gold and silver contracts via fiscal maneuvering - they are fixing to be in big trouble is what I think.
Get em while they are still cheap and you can and I notice that versus just a few weeks ago, the price of the coin seems to have gone up while at the same time the "spot" price has gone down. Suggest there is a "disconnect" somewhere and I still don't really know why the US equivalent liberty coin of 1 troy silver ounce is priced presently so much higher - something ain't adding up somewhere you want my opinion. It is not independent of pent up derivative fiscal shenanigans.