Pieces of Eight banking.

#1
With the recent banking nightmare of Northern Rock and doom and gloom on the horizon will we see more people investing in precious metals and gems as a way of safe guarding their savings?
 
#2
I think it'd be safer to invest in tinned food and shotguns, the way this country's going.
 
#3
Probably not. If you have savings at the moment its all good - banks are desperate for you to keep you money with them and you can earn a good rate.

Even if the goverment hadn't shored up Northern Rock there is no way anyone would have lost their savings, the 'run' on the bank was just panic mongering.
 
#4
gentleman_bastard said:
Probably not. If you have savings at the moment its all good - banks are desperate for you to keep you money with them and you can earn a good rate.

Even if the goverment hadn't shored up Northern Rock there is no way anyone would have lost their savings, the 'run' on the bank was just panic mongering.


possibly because nobody believed a single word going out of the mouths of Ministers? :)
 
#5
gentleman_bastard said:
Probably not. If you have savings at the moment its all good - banks are desperate for you to keep you money with them and you can earn a good rate.

Even if the goverment hadn't shored up Northern Rock there is no way anyone would have lost their savings, the 'run' on the bank was just panic mongering.
I'm not to convinced. If it all goes tits up and we get massive inflation then the Fiat money in the bank becomes devalued and savings get sh1t canned.

Not that I don't trust the Chancellor to do a good job :twisted:
 
#8
LordVonHarley said:
With the recent banking nightmare of Northern Rock and doom and gloom on the horizon will we see more people investing in precious metals and gems as a way of safe guarding their savings?
Certainly back in 04 would have been a good time to invest in gold which is now approaching it's all time high price, how much higher it will go is questionable. Certainly many people have had their fingers burnt over the years buying things like gold and diamonds as an investment, mainly I suspect as the main people offering such products are more interested in relieving you of your cash than making you wealthy. Any investment can be good if the investor does his research and buys with care and at the right time.
 
#9
Can't see there ever being hyperinflation a la Weimer Germany or Argentinia in this country. One of the biggest raw currency earners in the UK is financial services to the world. Its one of the few areas we're actually good at nowadays!

And the economy is actually doing quite good right now - low unemployment etc. Sure its all propped up by comsumer spending, which in turn is propped up by easy credit but when the crash comes it'll affect people like me who have lots of unsecured debt and homeowners who have overmortgaged themselves.

If you've got a fair wedge (20k and over) in the bank then you're sitting pretty I'd say.
 
#10
maxi_77 said:
LordVonHarley said:
With the recent banking nightmare of Northern Rock and doom and gloom on the horizon will we see more people investing in precious metals and gems as a way of safe guarding their savings?
Certainly back in 04 would have been a good time to invest in gold which is now approaching it's all time high price, how much higher it will go is questionable. Certainly many people have had their fingers burnt over the years buying things like gold and diamonds as an investment, mainly I suspect as the main people offering such products are more interested in relieving you of your cash than making you wealthy. Any investment can be good if the investor does his research and buys with care and at the right time.
Gold is far to high at the moment to buy into and even silver is getting a bit pricey. I don't think the prices will stay high for very long, but as you said '04 would have been a good time to buy shiney shiney gold :D

But if you buy low, would precious metals safe guard you in a case of an emergancy?

As for the credit crunch I think we will be looking at the 1990's all over again.
 
#11
LordVonHarley said:
(snip) ...I think we will be looking at the 1990's all over again.
Great! There was one particular blonde 18 year old at uni that I'd like to meat again (not a spelling mistake)
 

Alsacien

MIA
Moderator
#12
gentleman_bastard said:
Can't see there ever being hyperinflation a la Weimer Germany or Argentinia in this country. One of the biggest raw currency earners in the UK is financial services to the world. Its one of the few areas we're actually good at nowadays!

And the economy is actually doing quite good right now - low unemployment etc. Sure its all propped up by comsumer spending, which in turn is propped up by easy credit but when the crash comes it'll affect people like me who have lots of unsecured debt and homeowners who have overmortgaged themselves.

If you've got a fair wedge (20k and over) in the bank then you're sitting pretty I'd say.
Financial services that operate in Dollars and Euros. T
The British Pound is used less and less internationally every year, dollars are also losing favour (political elements also influence this though) and the Euro is increasingly used as it is seen to be apolitical and less easily influenced by a currently in power government.
 
#13
LordVonHarley said:
maxi_77 said:
LordVonHarley said:
With the recent banking nightmare of Northern Rock and doom and gloom on the horizon will we see more people investing in precious metals and gems as a way of safe guarding their savings?
Certainly back in 04 would have been a good time to invest in gold which is now approaching it's all time high price, how much higher it will go is questionable. Certainly many people have had their fingers burnt over the years buying things like gold and diamonds as an investment, mainly I suspect as the main people offering such products are more interested in relieving you of your cash than making you wealthy. Any investment can be good if the investor does his research and buys with care and at the right time.
Gold is far to high at the moment to buy into and even silver is getting a bit pricey. I don't think the prices will stay high for very long, but as you said '04 would have been a good time to buy shiney shiney gold :D

But if you buy low, would precious metals safe guard you in a case of an emergancy?
Gold still has a long way to go up, many knowledgeable people think about $2000 an ounce is possible within a couple of years. Traditional market wisdom is turned on its head when new factors are considered; China recently allowing its citizens to buy gold bars and coins as well as gold investment funds - each Chinese household saves on average 40% of its income and local banks only give 3% interest on savings, other emerging markets such as Russia and India are growing consumers. Plus many mines are now reaching the end of their lives..rarer and rarer...

As to its value in an emergency in my past a handful of kruggers has sorted out more problems than cheques, IOU's or even violence 8O
 

Alsacien

MIA
Moderator
#15
gentleman_bastard said:
Financial services that operate in Dollars and Euros. T
I'm not sure but I think that in the city they operate in a multi-currency enviroment. Happy to be corrected.
They use everything you are correct, my point was meant to be that this is nothing to do with GBP as an international currency, simply that London has become a world hub for other peoples business.....
 
#16
Thanks Alsacien.

I'd say that would count as a positive in many ways though. If and when the global recession kicks in our strongest ecomomic area is flexible and able to adjust by being the hub.

Traditional industries are either dead or dying ( I say this as someone who has grown up in the service economy - whe I started working there weren't any traditional jobs about) so our prosperity as UK plc is no longer dependent on the strength of the pound, and is many ways having a stronger pound is actually counter-productive to industry/trade.
 
#17
armchair_jihad said:
LordVonHarley said:
maxi_77 said:
LordVonHarley said:
With the recent banking nightmare of Northern Rock and doom and gloom on the horizon will we see more people investing in precious metals and gems as a way of safe guarding their savings?
Certainly back in 04 would have been a good time to invest in gold which is now approaching it's all time high price, how much higher it will go is questionable. Certainly many people have had their fingers burnt over the years buying things like gold and diamonds as an investment, mainly I suspect as the main people offering such products are more interested in relieving you of your cash than making you wealthy. Any investment can be good if the investor does his research and buys with care and at the right time.
Gold is far to high at the moment to buy into and even silver is getting a bit pricey. I don't think the prices will stay high for very long, but as you said '04 would have been a good time to buy shiney shiney gold :D

But if you buy low, would precious metals safe guard you in a case of an emergancy?
Gold still has a long way to go up, many knowledgeable people think about $2000 an ounce is possible within a couple of years. Traditional market wisdom is turned on its head when new factors are considered; China recently allowing its citizens to buy gold bars and coins as well as gold investment funds - each Chinese household saves on average 40% of its income and local banks only give 3% interest on savings, other emerging markets such as Russia and India are growing consumers. Plus many mines are now reaching the end of their lives..rarer and rarer...

As to its value in an emergency in my past a handful of kruggers has sorted out more problems than cheques, IOU's or even violence 8O
One of the things I have noticed over the years with the financial service lot is that what ever way pricies in anything are moving they will always tell you it will keep going for years. Always remeber they make their money both when you buy and when you sell, they take no risk you take it all.
 
#18
LordVonHarley said:
With the recent banking nightmare of Northern Rock and doom and gloom on the horizon will we see more people investing in precious metals and gems as a way of safe guarding their savings?
Gold and silver do not generally make profitable investments since their markets are prone to volatility and prolonged periods of stagnation. Having said that, it is possible if you have the technical nous, to profit from gold and silver by short-trading. It's also possible to be profitable in the longer-term, by buying at the bottom of the bear and selling at the top of the bull. Easier said than done. Currently, gold sees itself approaching the top of the bull-market. Therefore, an investor looking to profit possibly wouldn't consider buying at the current spot ($903/oz) since there's less room for upward maneuver and more risk of a bear-market emerging sometime soon. However, several learned and erudite investors -- including Peter Bernstein and George Soros -- have stated that they see the price of gold rising to above $1000 per oz in 2008.

People invest in gold and silver as an insurance policy. Most investors hold long-term and do not expect to make vast profits. Their aim is to preserve wealth in the face of inflationary pressures.

gentleman_bastard said:
Probably not. If you have savings at the moment its all good - banks are desperate for you to keep you money with them and you can earn a good rate.

Even if the government hadn't shored up Northern Rock there is no way anyone would have lost their savings, the 'run' on the bank was just panic mongering.
Not quite. Regarding earning a good rate: the fact is that inflation is way above the government CPI figure of 2.2 per cent. If the true figure were just two per cent then, obviously, a savings account paying out 6 per cent would yield you a 4 per cent return per annum. However, if inflation is, in reality, 10 per cent then that same account will lose you 4 per cent per annum. My view is we're certainly closer to 10 per cent -- and possible above this figure -- in inflationary terms.

Regarding the 'saving' of Northern Rock: the government handled this affair appallingly. They should have quietly arranged for some of the larger banks to take over the assets and running of Northern Rock. Or they should have let the business go to the wall. This is the age of 'free enterprise' after all. It was correct, however, for them to guarantee the savers' deposits. If they hadn't done this then there would have been a great chance of a run occurring on all the banks. Importantly, it's not feasible for the government to guarantee all savings in all banks. Where would it get all that money from?

gentleman_bastard said:
Can't see there ever being hyperinflation a la Weimer Germany or Argentinia in this country. One of the biggest raw currency earners in the UK is financial services to the world. Its one of the few areas we're actually good at nowadays!

And the economy is actually doing quite good right now - low unemployment etc. Sure its all propped up by comsumer spending, which in turn is propped up by easy credit but when the crash comes it'll affect people like me who have lots of unsecured debt and homeowners who have overmortgaged themselves.

If you've got a fair wedge (20k and over) in the bank then you're sitting pretty I'd say.
Concerning hyperinflation. Never say never. There are many inflationary factors at work. Inflation isn't defined as a rise in prices. It's defined as the inflation of the supply of money. The standard rules of supply and demand apply. If there is more of a currency in circulation then obviously the currency becomes worth less. In the Weimar scenario, the Mark became worthless. As a currency becomes devalued, the price of goods has to rise to compensate.

Your assertion that the strength of the financial services industry will prevent hyperinflation is dubious. The city is in near meltdown. The FTSE is languishing in an incredibly bearish position and prone to never before seen volatility. The banking sector is in disarray -- resigned to taking billions of dollars in loans from the ECB to stay solvent. The once mighty hedge funds are increasingly finding themselves the victim of subprime, CDOs and recessionary forces. People are feeling real pain and the job losses have just begun.

You argue that the economy is doing well right now. Well, the carnage that is occurring in the financial sector will take time to ripple through to Joe Public. It could be six months, or twelve, or even twenty-four months before we feel the sting in the tail. The unemployment figures are artificially low. Don't believe government statistics, ever. With millions on Incapacity Benefit the government manipulates the true figures.

In response to your assertion that you're sitting pretty if you have £20,000 in the bank, we can go back to my earlier point about the negative interest accrued if inflation and interest rates are out of tally. If the rate of inflation is 10 per cent, then in one year an account of £20,000, paying at 6 per cent interest, will be worth £19,200 at a 4 per cent loss.
 
#19
Good points - as you say having savings depends on inflation. I don't belive the Consumer Price Index either, as it doesn't seem to take into account energy bills etc. Where did you get the figure of 10% though? As you've said that would be the make or break issue regarding savings - does what you have invested/saved match or go above the cost of living? I'm not disputing here just asking.

I'm working in the financial sector and my company is taking on staff as opposed to cutting. Not in the higher city-boys pay bracket but hundreds in the middle to lower end.

Agree with you regarding Northern Rock - we're a capitalist society and if a private company fails then thats its problem. The tax payer should not be liable to prop them up! My point was that Northern Rock (as far as I know) had a short term crisis caused by a bad business plan (dependent on growth in the Mortgage book above all) and liquedity issues in the money market. Should have been handled more discreetly definately.
 
#20
So we're not dooomed but the time to tighten our belts is getting close.

A very interesting point about savings and the effects of inflation. If you bought £20k's worth of gold or silver four years ago you would have made a good profit, or if you sat on it for another four years it might still be worth equivalent to £20k + inflation. It's all a gamble.
 

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