Month: February 2020

The CORVID 19 GOLD RUSH

Please be mindful of my recent blog on the bandwagon effect http://bridgewaterfs.co.uk/2019/12/13/2019-election/well now seems the perfect time to re-stress some of the principles that I mentioned in the blog. Especially given the very real panic that Corvid 19 is causing both in the real world as well as the financial markets.

Specifically I want to address the recent activity in the Gold Market that has seen prices soar, as investors move assets into the perceived safety of this form of asset. 

Why it’s not the right time to buy gold

The price of gold has just halted as investors who were in for the longer term are taking their profits now. However with the traditional jumping onto the gold bandwagon in times of market volatility, for the normal investor there probably won’t be any killings to be made.

There is in fact, a real danger that you’ll be jumping to gold at or near to the top of the market. Meaning that unless you’re investing vast amounts into gold, there maybe little return to be made. Plus you have the very real concern of the journey back down, as the price of gold more properly reflects its place in the grand scheme, once the markets recover – and recover they will.

 

It might be the right time to consider selling

If you’re currently in the gold market and have been prior to the Corvid 19 prompted Gold Rush, then you may well be in a position where selling your investment could result in a higher than expected return. Especially as those desperate to hop onto the bandwagon are still keen to buy your gold at the current inflated market price.

 

Markets are in it for the long term

You should be too.

There have been many triggers for a run on the gold market over the past few decades. Investors get spooked as they know that the markets hate uncertainty; and pandemic viruses spread uncertainty as fast as they spread panic.

The tourist industry suffers, large-scale events get cancelled and the crossing of borders with people and goods becomes difficult or impossible.

All of this has the effect of depressing the markets and causing many of the larger investors to opt out of their usual activities. Hence they buy gold, or other ‘safe’ commodities, and sit the storm out.

They know that the storm will blow itself out, because it always does. They also know that when they get their timing right and return to the investment markets, they’ll be able to buy back in at an advantageous price. With this rush back to the investment markets driving values back to the levels they were prior to abandoned them to buy gold in the first place.

 

Ask any comedian and they’ll tell you it’s all about timing

However, abandoning the investment market in favour of the gilt-edged bandwagon could mean that the joke’s on you.

There really is no need to panic or react, as the markets always return to normal, once whatever it is that it making them jumpy passes.

Trust the past, because the one thing history has taught us over and over again, is that these things blow themselves out. Just like they did when SARS (2003), Swine Flu (2009) and Ebola (2014) caused similar panic selling.

In fact, the only time to ever change your direction of portfolio, is when your end destination changes, not because of any temporary bumps in the road.

 

A calming influence over troubled waters

As always, were here to help, whenever you need us. If you do have any further questions regarding anything I’ve raised in this blog, then please get in touch with us at Bridgewater Financial Services, where we will be delighted to help guide you through your individual options and strategies.

Post Brexit transition and financial services in the EU

Now that we have officially left the European Union and entered a process of “transition”, a few of our ex-pat clients have been asking me what effect this now has; and how will it impact beyond 31 December 2020.

How will Financial Services and investment opportunities change post 2020?

Dealing with the longer-term question is easy, although it’s also a little unsatisfactory, as the simple answer is that nobody know for sure what the financial and investment landscape will look like post 2020’s trade negotiations with the EU.

Popular opinion is that it would be political suicide to hand control of the jewel in the crown (our financial services industry) over to the EU, or to let the EU impact, change or restrict it in any significant way. That would be bad for the UK, the EU and the world economy in general. The feeling is that we’ll be left with something that looks largely like what exists today.

What is the immediate impact on Bridgewater Financial Services dealing with our EU clients?

Well the simple answer is ‘nothing’. There has, and there will be, no change to our ability to full service and advise our clients throughout the European Union. We are currently pass-ported, via the Financial Services Authority, to help and advise new and existing clients in most EU jurisdictions.

In terms of the UK we are, and will remain, integrated with the European Union with regards to regulation, distribution and classification of all investment funds.

With the Irish UCITS funds remaining fully available in all of their current locations. 

As far as Bridgewater Financial Services is concerned, we will continue to go about our usual business and deal with our EU clients up to 31 December 2020 without any change whatsoever. At the start of 2021 we will either carry on dealing direct with our EU clients, or we will do so via an EU company. It all rather depends upon the outcome of the trade negotiations that will take place throughout the year. 

Once we have a realistic indication of what the outcome of those negotiations is likely to be, we will advise all of our existing clients on how we will go about providing continuation of service and advice. 

Rest assured that we will continue to provide our advice and services in as seamlessly as possibly. Our clients in the European Union are extremely important to us and we understand how important we are to them too. Which is why we will continue to be providing unfettered access to our advice and services well into 2021 and beyond.

Is there anything you should be doing?

Again, the general answer to that question is ‘no’. If there is an individual case that we feel needs examining, we will contact you direct and advice you on the opportunities or concerns we have identified. 

If you are still uneasy regarding the future impact of trade negotiations on your investments and portfolios, then please get in touch with us at Bridgwater Financial Services and we will be delighted to help and advise.

But do rest assured that there are no immediate changes coming. We understand that uncertainty, but there really is no need to panic or worry. 

We will keep you fully informed of any changes, once they become clear. In the meantime, as we always say, the best form of action in uncertain investment markets is to simply wait and see.