Gold – you’re indestructible…

David Foot finds hope among the bitter pills and pessimism

SOMETIMES IT’S EASY to sit down and write a piece for the Whistler. Sometimes, it is difficult. Today is the latter. Generally, I have some sort of handle on what is going on in the financial world. Alas, I really have no idea of what may happen, in the next few months. Events have an unerring ability to shock and surprise, and markets react in peculiar ways to events. 

It feels like we’re stumbling towards the edge of a cliff. We’ve certainly been in situations before where, despite things looking gloomy, everything has turned out fine. Maybe I am suffering from too many months of “lock-down misery”, but I feel increasingly worried about the direction the UK is heading. 

The two massive factors influencing the near future of this country are what the long-term effect of the pandemic will be, and what will our trading relationship with the rest of the world be, after the “transition period” ending our relationship with the EU. What effect it will all have on world markets are complete unknowns. 

My short-term pessimism and long-term optimism, tell me that things will be horrible, but all right in the end. I may be wrong, but I fear that despite a mini-boom in house prices, due to the pent-up purchasing power,, there may well be some “bitter pills” to swallow – once the artificial stimuli are gone and things settle down. 

The long-term economic effects of coronavirus may prove to be much worse than we are currently given to believe. The willingness of our Government to flout international law, fills me with woe. How will those, with whom we wish to make trade agreements, look upon our nation, if our leaders cannot obey their own laws? Our future relationship with our biggest trading partners looks increasingly shaky. What happened to “the easiest trade deal in the history of trade deals”? Enough. If I dwell further on the subject, I’ll be in grave danger of making myself bilious.

One of the (few) investment upsides of this horrid virus, is that the price of gold (historically, a hedge against unstable markets) has increased a little more than somewhat. This probably has little effect on most of us, but one interesting aspect has come to my attention. 

One of my clients lost a gold bracelet and as part of the claim procedure had to get a valuation for a replacement item. It wasn’t expensive and was covered by the “unspecified personal possessions” section of their home insurance. Or so they thought. 

Fear not, this is not a horror story. However, it is something that is worth remembering. The replacement value was more than the “single item limit” on the policy, not by much, but the replacement cost was more than twice the original cost. If you have jewellery, particularly items that you wear away from the home, and you want to ensure that it is adequately covered, check the replacement value every so often. 

The insurer paid the claim in full, but insisted that the replacement was specified on the policy, to make sure there would be no problem, in the future. They’re not all monsters! Until next time.

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