Gordon Brown, Failures and Selling Gold

Gordon Brown, Failures and Selling Gold

Trading Features / Strategies from Simon Denham of Capital Spreads.

It seems to me that there is very little actually going on out there on the political front. Nobody seems to be coming up with any wonderful new ideas about getting us out of the current mess and even the opposition seem to be going through the ‘yah boo sucks’ motions. This is actually rather unnerving as though our lords and masters are waiting for some further piece of disastrous news just hanging over the horizon.

The last rate cut seemed to be a very strange affair almost as if the BoE was throwing in the towel. The current economic situation (as we can see it at the moment) did not really warrant interest rates at such ridiculously low levels although I realise this is very difficult to agree with if your job/company is currently on the line.

The reaction in the markets to the latest round of cuts has been rather muted and investors might start to get a tad nervous if a break out does not occur soon.

Interest rates are now 4% below the levels of last summer/autumn and yet the equity market is still struggling to recover (even with yields of over 6% average for the FTSE 100). It becomes difficult sometimes to equate returns with valuations and obviously fear is still the dominating factor with greed a good bit lower down on the agenda.

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The current furore over banking bonuses rather misses the point. Yes, those involved in the units that lost all the money should not receive any bonus but most of the units within RBS and Lloyds etc actually made money. It is asking rather a lot of individuals to ‘forgo’ bonuses for one year (possibly two) of their working lives.

If we look at the correlation with a double glazing salesman, he will make his commission whether or not the company makes money. Politicians should be wary of blanketing all staff at banks as not being worthy of remuneration for their efforts. Gordon Brown has not exactly been a star performer himself.

Speaking earlier this month, the Prime Minister, referring to banking bonuses, stated “[the UK was] sweeping aside the old short term bonus culture of the past and replacing it first of all with a determination that there are no rewards for failure and secondly that there are rewards only for long-term success”.

No rewards for failure...at what price did Gordon sell gold?

When he was Chancellor of the Exchequer he held 17 auctions to sell half of the UK's gold reserves between 1999 and 2002. Proceeds from the sales were around $3.5billion. If the gold was sold in 2008 / Q1 2009 it would have raised $10-11 billion.

Of course Mr Brown did say there would be “no more boom and bust”. Now this is not to be taken as investment advice but I do not think Gordy should be spread betting on gold.

The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.

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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.

'Gordon Brown, Failures and Selling Gold' edited by DB, updated 17-Feb-09

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