What has gold got to do with tango?
Some of you may know that Debbie and I work full time as tango teachers
and event organisers. It is hard work and although the spiritual
rewards of working at something we are passionate about are great, the
pay isn't.
We sold our house and part of our business to fund the lean years as we
build a sustainable tango community and manage to stay in the black on
a day-to-day basis because of our savings.
When the Northern Rock fiasco happened it made us think "what happens
if this credit crunch starts to spread to other banks or building
societies are affected?"
FSCS limitations
I found out that the
Financial Services Authority (FSA) provides investors with protection
(FSCS) for up to £70,000 in any one financial institution.
The fund is raised from a levy by the FSA but it has a "maximum annual capacity of about £4.03bn." So, simple maths demonstrates that about the first 61,000 odd investors (with the maximum protected amount) are covered by the fund. Gulp! WIKIPAEDIA ARTICLE
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Take action now...
We did. First of all, spread your investments into sub £70k parcels with top rated banks using Moody's rating MORE.
If you want to speculate that credit crunch implications have not
reached their zenith and that the full repercussions of the US sub
prime situation are still to come, then investing in bullion is an
option you may want to consider.
How easy is it to invest in gold?
After researching options, it became obvious that it wasn't as simple or straightforward as buying gold coins.
I found the website and staff at Bullion Vault very helpful and
informative. We now use their service and found it to be secure,
straightforward and answers all our current needs. WEBSITE
You must make your own evaluation of the risk factor involved in going
for gold. We have made the decision based on the exposure of the UK,
like the US, to the corporate irresponsibility of bond-backed mortgage
schemes in a housing market depressed by high levels of personal credit
and buyers uncertainty.
Do you remember the scene in
'The Tango Lesson' when the taxi driver says to Sally Potter "to dance tango you need
to have suffered"? Sounds like he is describing life in the UK at the
moment.
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Watch the charts
Keep an eye on the share pices of the big players in the High Street - they all look like slippery slopes at the moment.
The construction industry is set to shed 60,000 jobs even though the
government's house building targets haven't been met. People are not
buying.
The buy-to-let sector is generally in turmoil as their gearing is going
up day by day almost as fast as the possibilities of selling are
reducing.
Industry pundits are forecasting a 25-35% reduction in house prices and
a 10% devaluation in sterling by 2010 (that is only 18 months away).
The US has just bailed out Freddie Mac and Fannie Mae to stop a
devastating run on the dollar and IndyMac, a Californian bank has just
folded.
Gold used to maintain a parity with the price of a barrel of oil but
has lagged for sometime. Some experts are suggesting this will soon
correct itself, taking gold through $1,000 per troy oz to as high as
$1,600 T oz.
Weighing up the odds, we think that the risk of leaving our investments
solely in the High Street is too high and have taken the unprecedented
step of buying bullion to spread the risk.
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