Going for gold - should the 'new dollar' be your next investment?
The fast-mounting tensions in the Middle East are fuelling the ascent of gold.
The price hit $3,389 an ounce this week – 30 per cent higher than at the start of the year, and 185 per cent above its level of a decade ago.
The metal is being called 'the new dollar' since it is supplanting the US currency as the place to seek shelter in tough times.
This new status suggests that maybe you should make some room for gold in your portfolio, particularly if you are apprehensive about the outlook for inflation.
Meanwhile, even if you have already joined the gold rush of 2025, it is worth taking a look at the other precious metals whose values are being propelled by the view that gold is the safe haven of our era.
The price of silver is up by 29 per cent since January, while platinum has soared by 39 per cent to $1,312. Silver is used in batteries and solar panels. The demand from platinum is coming from the jewellery industry, particularly in China. This metal is also needed for the catalytic converters on hybrid and petrol cars.
Precious metals are having a moment. But will it turn into a long-term trend? Here's what you need to know.
WHAT'S NEXT FOR THE GOLD PRICE?
In the short-term, any worsening of the hostilities between Israel and Iran may spur further gold price rises.
Goldman Sachs expects the price to increase to $3,700 by Christmas, and to $4,000 by the summer of 2026. Citigroup is almost a lone pessimist, forecasting a retreat to about $2,600 by Christmas next year.
By contrast, the arch-optimists see bullion hitting $5,000 by the end of the decade.
Earlier in the year, the fears that Donald Trump would impose tariffs on the import of gold to the US gave the price a fillip. This did not materialise.
But a gold spending spree at central banks is now fuelling the metal's ascent. These institutions, whose key responsibility is to ensure the financial stability of their nation's, are buying 80 metric tonnes of gold a month which is worth about $8.5billion.
US dollars still make up about 46 per cent of these banks' reserves, but gold accounts for about 20 per cent, having overtaken the euro, as data released this month reveals.
Secrecy covers which central banks are buying. But it is clear that some nations, such as China, are playing catch up.
China's holdings may be at the highest ever, but just 10 per cent of its reserves are in gold, by contrast with France, German, Italy and the US where the share is closer to 70 per cent. In the UK, the percentage is under 20 per cent, following the sale by then Chancellor Gordon Brown in 1999 of about half of the stockpile stashed in the Bank of England. At the time, the price was about $298.
Through its gold purchases, China is seeking to bolster the credibility of its currency, the yuan. But, like other nations, it is engaged in 'de-dollarisation' that is lessening dependence on the US currency.
In some emerging market nations, this shift is being driven by anti-American sentiment. But it is also a policy prompted by pragmatism, with fears that there could be more 'weaponisation' of the dollar.
US sanctions imposed on Russia following the invasion of Ukraine and its exclusion from the Swift international payment system rendered that country's dollar reserves worthless.
Central banks view moving more into gold as way to swerve such a fate. They are also alarmed by the size of US debts.
But this anxiety has yet to reach a pitch that would precipitate a frenzied investment in gold. James Luke of asset manager Schroders says: 'The fiscal frog continues to boil slowly, for now.'
This is a reference to the adage that people tend to wake up too late to the progressively increasing risks of a situation in the same way that a hapless frog seems not to be conscious that the temperature of water is becoming ever hotter.
Even if there is no sudden upward surge, central banks seem set to keep going for gold, limiting the amount available for trading and so putting a floor under price falls. Lina Thomas of investment bank Goldman Sachs says: 'The long-run bull story for gold is that central banks are buying large amounts of it. We expect that to continue for at least another three years.'
SHOULD YOU GO FOR GOLD?
Despite the predictions that the gold price will remain strong, some investors will never get into the metal because it does not provide an income – and because they regard it as fundamentally uninteresting.
As the legendary US investor Warren Buffett has said, gold 'doesn't do anything but sit there and look at you'.
Even if you are unconcerned by the lack of a yield and also of excitement, it would still be unwise to commit more than 5pc of your portfolio to the metal.
You also need to ponder your strategy. If you are drawn to the look of gold, with its beguiling lustre, you may be interested in acquiring a bar, a coin or an ingot.
A one kilogramme gold bar will set you back about £82,000 at Sharps Pixley, the bullion dealer in St James's Street, London, although smaller, much less expensive versions are available. The Royal Mint has also options for most budgets. Its website is a mine of information on every aspect of gold. But do not overlook the practical issues such as storage – in a secure vault.
Holding physical gold through low-cost exchange traded commodity (ETC) fund is simpler, if more prosaic. These funds track the price of the metal by owning bullion, which is safely stashed in vaults.
The investor platform best-buy options include iShares Physical Gold, which opts for responsibly-sourced gold.
This column highlighted this fund in February, when the metal's price was about $2,900, and it became my choice for a first foray into gold.
For me, gold jewellery is an adornment, rather than an investment. Funds that hold gold mining shares are a more complex proposition. The profits of these companies gain an extra boost from upward moves in the gold price since their overheads are fixed.
But they face other challenges, like the cost of borrowing and possible political intervention.
For example, the authorities in Mali have taken control of Barrick Gold's mine in that country following a dispute. The mine accounts for 14 per cent of the output of Barrick, a Canadian group.
If you are prepared for such eventualities, the gold mining company funds that appear on the platforms' best buy lists include BlackRock World Mining and Ninety One Global Gold.
Ninety One Global Gold has stakes in the big mining names like Newmont, Northern Star, Alamos Gold and AngloGold Ashanti. The $64.81billion Colorado-based Newmont is the world's largest name in its field.
As always, it is wise to check whether you already have exposure to gold through funds and trusts that aim for capital protection. Personal Assets, Ruffer and Troy Trojan all have a slug of gold.
If you are ready for an adventure in the world of metals, Ben Yearsley of Fairview Investing suggests Amati Strategic Metals which invests in gold, silver platinum, but also copper, manganese and rare earth metals.
The fund's top holding is Fresnillo, the Mexican gold and silver mining group whose shares have jumped by 117 per cent since January. This rise may not continue. But it is a sign that this is a sector which you cannot afford to ignore.
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Sky News
3 hours ago
- Sky News
US warplanes transit through UK as Trump considers striking Iran
Flight tracking data shows extensive movement of US military aircraft towards the Middle East in recent days, including via the UK. Fifty-two US military planes were spotted flying over the eastern Mediterranean towards the Middle East between Monday and Thursday. That includes at least 25 that passed through Chania airport, on the Greek island of Crete - an eight-fold increase in the rate of arrivals compared to the first half of June. The movement of military equipment comes as the US considers whether to assist Israel in its conflict with Iran. Of the 52 planes spotted over the eastern Mediterranean, 32 are used for transporting troops or cargo, 18 are used for mid-air refuelling and two are reconnaissance planes. Forbes McKenzie, founder of McKenzie Intelligence, says that this indicates "the build-up of warfighting capability, which was not [in the region] before". Sky's data does not include fighter jets, which typically fly without publicly revealing their location. An air traffic control recording from Wednesday suggests that F-22 Raptors are among the planes being sent across the Atlantic, while 12 F-35 fighter jets were photographed travelling from the UK to the Middle East on Wednesday. Many US military planes are passing through UK A growing number of US Air Force planes have been passing through the UK in recent days. Analysis of flight tracking data at three key air bases in the UK shows 63 US military flights landing between 16 and 19 June - more than double the rate of arrivals earlier in June. On Thursday, Sky News filmed three US military C-17A Globemaster III transport aircraft and a C-130 Hercules military cargo plane arriving at Glasgow's Prestwick Airport. Flight tracking data shows that one of the planes arrived from an air base in Jordan, having earlier travelled there from Germany. What does Israel need from US? Israeli Prime Minister Benjamin Netanyahu said on 15 March that his country's aim is to remove "two existential threats - the nuclear threat and the ballistic missile threat". Israel says that Iran is attempting to develop a nuclear bomb, though Iran says its nuclear facilities are only for civilian energy purposes. A US intelligence assessment in March concluded that Iran is not building a nuclear weapon. President Trump dismissed the assessment on Tuesday, saying: "I think they were very close to having one." Forbes McKenzie says the Americans have a "very similar inventory of weapons systems" to the Israelis, "but of course, they also have the much-talked-about GBU-57". The GBU-57 is a 30,000lb bomb - the largest non-nuclear bomb in existence. Mr McKenzie explains that it is "specifically designed to destroy targets which are very deep underground". Experts say it is the only weapon with any chance of destroying Iran's main enrichment site, which is located underneath a mountain at Fordow. Air-to-air refuelling could allow Israel to carry larger bombs Among the dozens of US aircraft that Sky News tracked over the eastern Mediterranean in recent days, more than a third (18 planes) were designed for air-to-air refuelling. "These are crucial because Israel is the best part of a thousand miles away from Iran," says Sky News military analyst Sean Bell. "Most military fighter jets would struggle to do those 2,000-mile round trips and have enough combat fuel." The ability to refuel mid-flight would also allow Israeli planes to carry heavier munitions, including bunker-buster bombs necessary to destroy the tunnels and silos where Iran stores many of its missiles. Satellite imagery captured on 15 June shows the aftermath of Israeli strikes on a missile facility near the western city of Kermanshah, which destroyed at least 12 buildings at the site. At least four tunnel entrances were also damaged in the strikes, two of which can be seen in the image below. Writing for Jane's Defence Weekly, military analyst Jeremy Binnie says it looked like the tunnels were "targeted using guided munitions coming in at angles, not destroyed from above using penetrator bombs, raising the possibility that the damage can be cleared, enabling any [missile launchers] trapped inside to deploy". "This might reflect the limited payloads that Israeli aircraft can carry to Iran," he adds. Penetrator bombs, also known as bunker-busters, are much heavier than other types of munitions and as a result require more fuel to transport. Israel does not have the latest generation of refuelling aircraft, Mr Binnie says, meaning it is likely to struggle to deploy a significant number of penetrator bombs. Israel has struck most of Iran's western missile bases Even without direct US assistance, the Israeli air force has managed to inflict significant damage on Iran's missile launch capacity. Sky News has confirmed Israeli strikes on at least five of Iran's six known missile bases in the west of the country. On Monday, the IDF said that its strategy of targeting western launch sites had forced Iran to rely on its bases in the centre of the country, such as Isfahan - around 1,500km (930 miles) from Israel. Among Iran's most advanced weapons are three types of solid-fuelled rockets fitted with highly manoeuvrable warheads: Fattah-1, Kheibar Shekan and Haj Qassam. The use of solid fuel makes these missiles easy to transport and fast to launch, while their manoeuvrable warheads make them better at evading Israeli air defences. However, none of them are capable of striking Israel from such a distance. Iran is known to possess five types of missile capable of travelling more than 1,500km, but only one of these uses solid fuel - the Sijjil-1. On 18 June, Iran claimed to have used this missile against Israel for the first time. Iran's missiles have caused significant damage Iran's missile attacks have killed at least 24 people in Israel and wounded hundreds, according to the Israeli foreign ministry. The number of air raid alerts in Israel has topped 1,000 every day since the start of hostilities, reaching a peak of 3,024 on 15 June. Iran has managed to strike some government buildings, including one in the city of Haifa on Friday. And on 13 June, in Iran's most notable targeting success so far, an Iranian missile impacted on or near the headquarters of Israel's defence ministry in Tel Aviv. Most of the Iranian strikes verified by Sky News, however, have hit civilian targets. These include residential buildings, a school and a university. On Thursday, one missile hit the Soroka Medical Center in Beersheba, southern Israel's main hospital. More than 70 people were injured, according to Israel's health ministry. Iranian foreign minister Abbas Araghchi said that Iran had struck a nearby technology park containing an IDF cyber defence training centre, and that the "blast wave caused superficial damage to a small section" of the hospital. However, the technology park is in fact 1.2km away from where the missile struck. Photos of the hospital show evidence of a direct hit, with a large section of one building's roof completely destroyed. Iran successfully struck the technology park on Friday, though its missile fell in an open area, causing damage to a nearby residential building but no casualties. Israel has killed much of Iran's military leadership It's not clear exactly how many people Israel's strikes in Iran have killed, or how many are civilians. Estimates by human rights groups of the total number of fatalities exceed 600. What is clear is that among the military personnel killed are many key figures in the Iranian armed forces, including the military's chief of staff, deputy head of intelligence and deputy head of operations. Key figures in the powerful Revolutionary Guard have also been killed, including the militia's commander-in-chief, its aerospace force commander and its air defences commander. On Thursday, Israeli Prime Minister Benjamin Netanyahu said that US assistance was not necessary for Israel to win the war. "We will achieve all our objectives and hit all of their nuclear facilities," he said. "We have the capability to do that." 3:49 Forbes McKenzie says that while Israel has secured significant victories in the war so far, "they only have so much fuel, they only have so many munitions". "The Americans have an ability to keep up the pace of operations that the Israelis have started, and they're able to do it for an indefinite period of time." Additional reporting by data journalist Joely Santa Cruz and OSINT producers Freya Gibson, Lina-Sirine Zitout and Sam Doak.
Times
6 hours ago
- Times
What war in the Middle East means for your money
The conflict between Israel and Iran is the latest geopolitical shock set to hamper the outlook for the UK economy — and, ultimately, your bank balance. Since the attacks began on June 12, the price of oil has risen to a six-month high. Hopes for interest rate cuts have been dashed, fears of rising inflation have been amplified, and any respite from stock market turmoil appears to have been short-lived. • Read more money advice and tips on investing from our experts This week the prime minister, Sir Keir Starmer, said: 'I'm always concerned about the effect of international issues on people back at home. You saw with Ukraine the direct impact it had on energy bills. Equally, with this conflict, you can see the effect it's having on the economy, particularly on the price of energy.' From petrol prices to pension pots, here's what you need to know: Iran is the third-largest oil producer among the 12 members of the Organisation of the Petroleum Exporting Countries (Opec), and there are worries about how a wider regional war could affect the transport of oil through the Strait of Hormuz, which accounts for about 25 per cent of seaborne crude oil transportation, according to the consultancy Capital Economics. The price of a barrel of Brent crude hit a six-month high of about $78 after Israeli attacks on Iran began, up from about $65 at the start of this month. That is bound to have a knock-on effect on motorists, said David Oxley from Capital Economics: 'A rough rule of thumb is that a $10 rise in the oil price will add about 7p to the price at the pump.' It normally takes about two weeks for oil prices to feed into pump prices, Oxley said. Motorists have, however, had some recent respite from the cost of living crisis as petrol and diesel prices hit their lowest in almost four years. Petrol cost an average of 132p a litre last month, the lowest since July 2021, while diesel was at 138p, the lowest since September 2021, according to the motoring organisation the RAC. While prices are likely to rise, they are not expected to reach the high of March 2022, when Russia's invasion of Ukraine caused the oil price to reach $127 per barrel. The price in sterling peaked in July of that year at more than £100 with pump prices hitting 192p per litre for petrol and 199p per litre for diesel. More than a million homeowners whose fixed deals come to an end this year may have their hopes of further interest rate cuts dashed. The lowest two-year fix was 3.72 per cent last month, but rates are starting to tick up again, according to the property portal Rightmove. The lowest two-year deal is now 3.82 per cent from Lloyds Bank for those with a Club Lloyds account. The lowest five-year fixed rate has gone from 3.78 per cent to 3.88 per cent, also from Lloyds. Lenders had been cutting mortgage rates to compete for business, but changed tack after inflation went from 2.6 per cent for the year to March to 3.5 per cent in April. This makes cuts to the Bank of England base rate less likely — the Bank generally keeps the rate high when inflation is above its target of 2 per cent. The Consumer Prices Index inflation figure for the year to May, released this week, was 3.4 per cent. Uncertainty around President Trump's trade tariffs and conflict in the Middle East has also dampened hopes of further base rate cuts. The Bank held rates at 4.25 per cent this week, which, although a lot higher than the sub 2 per cent rates many mortgage holders will have fixed at three or five years ago, is down from the peak of 5.25 per cent in August last year. Fixed mortgage rates are based on swap rates (the rates at which banks lend to each other, which are in turn based on forecasts of where Bank rate is expected to be in the future), which have edged up over the past week or so, suggesting that mortgage rates could follow. Homeowners who want certainty can lock in a new deal up to six months before theirs ends yet still swap if a cheaper deal comes along. Rising oil prices could also cause other expenses to creep up, particularly if the Iran conflict continues or escalates. Lotanna Emediegwu, an economics lecturer at Manchester Metropolitan University, said that prolonged conflict could drive up energy bills. The price cap that limits how much suppliers can charge customers on standard variable tariffs will work out at an average bill of £1,720 a year for gas and electricity from July 1 (down 7 per cent from today's cap). At the moment analysts expect the cap to go up 2 to 3 per cent in October, but this could change dramatically. He said: 'Until recently, fuel prices had been rising less than other things, so actually mitigating some inflationary pressures. The recent conflict is expected to reverse this trend. 'The financial repercussions extend beyond immediate energy costs into transportation and logistics. Transport expenses are particularly vulnerable to fluctuations in fuel prices. This affects everything from airline fares to shipping costs for products, ultimately hitting consumer prices.' Before June 12, when Israel launched strikes on Iran, inflation had been expected to rise to 3.5 per cent by the autumn — now it could go further. A sustained $10 per barrel rise in the oil price typically pushes up annual inflation by 0.1 to 0.2 percentage points, according to The Economist, meaning that it could be closer to 3.7 per cent by September. Emediegwu said a prolonged blockade of the Strait of Hormuz shipping route could add a further 0.5 to 1 percentage points, which could take it close to 5 per cent. So far the stock market has been fairly resilient to the conflict in the Middle East. The UK's FTSE 100 is down about 0.77 per cent since the turmoil started, while the US's S&P 500 is down about 1.06 per cent. If a sustained conflict leads to an increase in the price of oil, stock valuations may fall — this is because higher oil prices lead to higher inflation, which means interest rates are likely to stay higher for longer, which makes it more expensive for companies to borrow money to grow and often curbs investors' risk appetite. Losers are likely to include airline and travel stocks, as well as so-called growth stocks, which include technology and healthcare companies. Many investors will have exposure to the US 'Magnificent Seven' tech stocks of Microsoft, Apple, Alphabet, Tesla, Amazon, Meta and Nvidia. These companies are often valued on their future earnings potential, which means their stock price can be volatile if company results or wider economic conditions point towards a slowdown of earnings. The good news is that Iran and Israel are a very limited part of the global stock market, so direct exposure for most UK investors will be immaterial. However, Michael Field from the research firm Morningstar said that the risk is that wider markets get jittery about the potential for the conflict to escalate further. Investors should avoid making any kneejerk changes to their portfolio. Ultimately, while geopolitical tensions may create short-term turmoil, historically markets have been resilient in the long term. Jacob Falkencrone from the investment bank Saxo said: 'As an investor, your greatest tool is a disciplined approach — staying informed, remaining calm and focusing on your long-term investment goals rather than reacting impulsively to temporary shocks.'
Daily Mail
8 hours ago
- Daily Mail
Going for gold - should the 'new dollar' be your next investment?
The fast-mounting tensions in the Middle East are fuelling the ascent of gold. The price hit $3,389 an ounce this week – 30 per cent higher than at the start of the year, and 185 per cent above its level of a decade ago. The metal is being called 'the new dollar' since it is supplanting the US currency as the place to seek shelter in tough times. This new status suggests that maybe you should make some room for gold in your portfolio, particularly if you are apprehensive about the outlook for inflation. Meanwhile, even if you have already joined the gold rush of 2025, it is worth taking a look at the other precious metals whose values are being propelled by the view that gold is the safe haven of our era. The price of silver is up by 29 per cent since January, while platinum has soared by 39 per cent to $1,312. Silver is used in batteries and solar panels. The demand from platinum is coming from the jewellery industry, particularly in China. This metal is also needed for the catalytic converters on hybrid and petrol cars. Precious metals are having a moment. But will it turn into a long-term trend? Here's what you need to know. WHAT'S NEXT FOR THE GOLD PRICE? In the short-term, any worsening of the hostilities between Israel and Iran may spur further gold price rises. Goldman Sachs expects the price to increase to $3,700 by Christmas, and to $4,000 by the summer of 2026. Citigroup is almost a lone pessimist, forecasting a retreat to about $2,600 by Christmas next year. By contrast, the arch-optimists see bullion hitting $5,000 by the end of the decade. Earlier in the year, the fears that Donald Trump would impose tariffs on the import of gold to the US gave the price a fillip. This did not materialise. But a gold spending spree at central banks is now fuelling the metal's ascent. These institutions, whose key responsibility is to ensure the financial stability of their nation's, are buying 80 metric tonnes of gold a month which is worth about $8.5billion. US dollars still make up about 46 per cent of these banks' reserves, but gold accounts for about 20 per cent, having overtaken the euro, as data released this month reveals. Secrecy covers which central banks are buying. But it is clear that some nations, such as China, are playing catch up. China's holdings may be at the highest ever, but just 10 per cent of its reserves are in gold, by contrast with France, German, Italy and the US where the share is closer to 70 per cent. In the UK, the percentage is under 20 per cent, following the sale by then Chancellor Gordon Brown in 1999 of about half of the stockpile stashed in the Bank of England. At the time, the price was about $298. Through its gold purchases, China is seeking to bolster the credibility of its currency, the yuan. But, like other nations, it is engaged in 'de-dollarisation' that is lessening dependence on the US currency. In some emerging market nations, this shift is being driven by anti-American sentiment. But it is also a policy prompted by pragmatism, with fears that there could be more 'weaponisation' of the dollar. US sanctions imposed on Russia following the invasion of Ukraine and its exclusion from the Swift international payment system rendered that country's dollar reserves worthless. Central banks view moving more into gold as way to swerve such a fate. They are also alarmed by the size of US debts. But this anxiety has yet to reach a pitch that would precipitate a frenzied investment in gold. James Luke of asset manager Schroders says: 'The fiscal frog continues to boil slowly, for now.' This is a reference to the adage that people tend to wake up too late to the progressively increasing risks of a situation in the same way that a hapless frog seems not to be conscious that the temperature of water is becoming ever hotter. Even if there is no sudden upward surge, central banks seem set to keep going for gold, limiting the amount available for trading and so putting a floor under price falls. Lina Thomas of investment bank Goldman Sachs says: 'The long-run bull story for gold is that central banks are buying large amounts of it. We expect that to continue for at least another three years.' SHOULD YOU GO FOR GOLD? Despite the predictions that the gold price will remain strong, some investors will never get into the metal because it does not provide an income – and because they regard it as fundamentally uninteresting. As the legendary US investor Warren Buffett has said, gold 'doesn't do anything but sit there and look at you'. Even if you are unconcerned by the lack of a yield and also of excitement, it would still be unwise to commit more than 5pc of your portfolio to the metal. You also need to ponder your strategy. If you are drawn to the look of gold, with its beguiling lustre, you may be interested in acquiring a bar, a coin or an ingot. A one kilogramme gold bar will set you back about £82,000 at Sharps Pixley, the bullion dealer in St James's Street, London, although smaller, much less expensive versions are available. The Royal Mint has also options for most budgets. Its website is a mine of information on every aspect of gold. But do not overlook the practical issues such as storage – in a secure vault. Holding physical gold through low-cost exchange traded commodity (ETC) fund is simpler, if more prosaic. These funds track the price of the metal by owning bullion, which is safely stashed in vaults. The investor platform best-buy options include iShares Physical Gold, which opts for responsibly-sourced gold. This column highlighted this fund in February, when the metal's price was about $2,900, and it became my choice for a first foray into gold. For me, gold jewellery is an adornment, rather than an investment. Funds that hold gold mining shares are a more complex proposition. The profits of these companies gain an extra boost from upward moves in the gold price since their overheads are fixed. But they face other challenges, like the cost of borrowing and possible political intervention. For example, the authorities in Mali have taken control of Barrick Gold's mine in that country following a dispute. The mine accounts for 14 per cent of the output of Barrick, a Canadian group. If you are prepared for such eventualities, the gold mining company funds that appear on the platforms' best buy lists include BlackRock World Mining and Ninety One Global Gold. Ninety One Global Gold has stakes in the big mining names like Newmont, Northern Star, Alamos Gold and AngloGold Ashanti. The $64.81billion Colorado-based Newmont is the world's largest name in its field. As always, it is wise to check whether you already have exposure to gold through funds and trusts that aim for capital protection. Personal Assets, Ruffer and Troy Trojan all have a slug of gold. If you are ready for an adventure in the world of metals, Ben Yearsley of Fairview Investing suggests Amati Strategic Metals which invests in gold, silver platinum, but also copper, manganese and rare earth metals. The fund's top holding is Fresnillo, the Mexican gold and silver mining group whose shares have jumped by 117 per cent since January. This rise may not continue. But it is a sign that this is a sector which you cannot afford to ignore.
