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Nervous Brits rush to gold ahead of expected rate rise

Paloma Kubiak
Written By:
Paloma Kubiak

There has been a 39% increase in first timers investing in physical gold in the last week amid speculation of a hike in base rates.

The Pure Gold Company said the gold rush has come from nervous investors concerned that an interest rate rise could affect their mortgage repayments and lead to a collapse in property values.

Gold has performed poorly in recent months, dropping from over $1,340 an ounce to its current level of $1,270 an ounce. However, it has historically been a good option at times of uncertainty, or instability in the financial system.

The Bank of England is expected to raise rates today for the first time in nearly a decade, albeit by just 0.25% .

The gold firm has also seen a 69% increase in financial professionals over the age of 50 buying physical gold in the past week.

A quarter of those say they have already taken action over the last six months by selling investment properties to use the proceeds to purchase physical gold.

A number are concerned interest rates will rise to pre-crisis levels of 5% which could see the economy echo that of the early 90s when people struggled to pay their mortgages and house values fell by more than 30%.

In a recent survey, it found that 61% of people under the age of 40 said they would struggle to pay their mortgage if rates increased to 5% and some believed their mortgage obligations could more than double.

CEO, Josh Saul, said: “Our clients are concerned that we have record high debt with record low interest rates and over eight million people have never known a rate rise in their adult lives.

“Our clients view physical gold as a longer-term store of wealth that increases when other assets fall in value. With all the uncertainty surrounding Brexit, North Korea and the global economy, the prevailing concern is one of unpredictability, and physical gold has a proven track record of guarding against some of these risks.”