A Question of Finance: Golden ideas from soaps (From The Northern Echo)

A Question of Finance: Golden ideas from soaps

8:02am Friday 17th October 2008 in

• Skip social links
• Print
• Email
• Comments(0)

THIRTEEN years in the Financial Services Industry and over half a dozen professional examinations later... and all I needed to do was watch EastEnders.

If only I’d known that back then I could have saved a lot of time and effort.

It isn’t every day that EastEnders’ Phil Mitchell comes up in conversation while I’m talking about investment returns, but Phil Mitchell is involved with a lady who has trouble with the underworld.

She has gold bullion and wanted Phil to turn it into cash very quickly. Phil obliged and everyone was happy.

At this point, I wondered where my conversation was going until he said: “How do you buy gold? Can anybody buy it and is it legal?”

My client was like the majority of the public in that he thought owning gold was illegal and somewhat sinister.

Gold is a legal asset and sometimes a great investment. It is classed as a commodity and is traded like most other materials, such as oil, gas and wheat. It has a value that rises and falls depending on supply and demand.

As demand for oil has risen in recent years, partly due to the vast growth in the Chinese and Indian economies and more recently, the speculation that oil supplies will run-out earlier than expected – the price per barrel of Brent crude oil has increased by 12.31 per cent in the past 12 months.

Not so good if you drive a gas-guzzling car, but fantastic if you invested in oil stocks before the increases occurred.

Gold is not too dissimilar. Over the same 12-month period, (Comex) gold prices have increased by 19.67 per cent.

Compare these to the FTSE 100 return of -28.77 per cent over the same period and it makes commodities, as well as many other investments, viable alternatives to the stocks and shares we all associate with, and which get publicised on a daily basis.

While I would not recommend you trying to get your hands on a gold bar and keeping it under your bed, I cannot emphasise enough the importance of obtaining independent financial advice when it comes to making your financial decisions.

An independent financial advisor can establish whether any existing arrangements you have are still suitable, and/or ensure all future decisions you make are fully investigated and right for your needs.

Karl Pemberton is director of Guisborough- based Active Financial Services.

He will be answering readers’ financial questions in a bi-weekly column.

Any questions should be sent to echobusiness@nne. co.uk

■ The information contained in this response should not be relied upon as general advice and is for general information only. We always recommend you seek independent financial advice before embarking on any financial decisions.