We will begin to compare tradable assets which, based on previous blogs, we consider recommended in the current climate.

But firstly, what do we define as the current and future climate?

1. Frequently volatile in the short-term
2. Record government deficits threatening the most “secure” of investment products
3. Poor equity performance
4. A forecast for a high inflationary environment post QE alongside continually weakening currencies.

As a result we believe that inflation hedging investments in tradable assets are the way with which we can best preserve our wealth.

Two excellent choices therefore are gold and wine. Should you only be able to invest in one or the other, which should you choose? Below is an objective comparison and at the very least, some food for thought when considering these asset classes:

• Quick income - neither are income producers unless they are bought in bulk and sold off individually (whilst also timing the market precisely) so they must be held for a period of time (typically 12 months minimum, 2-5 years usually)

• Recent performance – From November 2008-9, Gold was up 50%. The Lafite Rothschild 2008 made 45% gains in 9 months.

• Ongoing returns – the difference between gold and wine is that wine is essentially a number of products with differing shelflives and maturing ages, whereas gold is only the one product. For example, the Lafite 2008 might make 50% gains in total. You may then sell and buy a different vintage, the Mouton 1996, which also experiences 50% gains. Gold, after one 50% rise, is unlikely to continue growing at 50% per annum, as would any singular product/share/stock, etc. Therefore it will struggle to stick with those ambitious growth forecasts in the long term.

• Supply – Gold’s supply is well documented as dwindling which is likely to keep prices high, at least in the short-term and whilst markets remain volatile. It is why you see so many “cash for gold” adverts in the UK. Vintage wine supply is more unpredictable although a vintage generally decreases in availability as it gets older and gets consumed! What happens with wine is as one vintage ends, another begins, giving the investor ongoing opportunities. A good broker is an essential tool when understanding supply and the knock-on effect of when to exit the market.

• Demand – both products are likely to experience high levels of demand, at least in the short-term. Gold is the inflation hedge, and wine because its price point is perfectly poised to retain consumption from all levels of the investor spectrum. At £8,000 per case approx., the entry level investor can afford it, and so can the multi-millionaire. The rich may not be buying £20m yachts at the moment, but high quality vintage wine still represents a tiny % of disposable income. It is also worth noting that wine (along with make-up), are 2 of the best performing products in any recession. When the population feels down, they tend to cheer themselves up with alcohol.Demand for both has also had a big shake up geographically. Traditional old money is being added to in huge volumes by new money as well as emerging nation demand from high population countries such as Brazil, China and India.

• Durability/Storage – both products can come with storage and ultimately protection. Wine bottles can break, and therefore gold may be considered more durable. However, the strength of storage, plus insurance, means you are now well covered in this unlikely eventuality.

• Your economic viewpoint – Should you believe the world is going to recover, it is likely that gold has reached it peak and will not provide further returns, if not future losses. If you believe the opposite to be true, gold could, as some forecast, treble in value. Vintage wine is less likely to be disturbed by economic cycles, but one must conclude that the less demand, the more volatile the pricing could be there.

Although both products are strong investment contenders in a volatile, downturning market, gold relies on certain economic conditions to rise in value whereas wine does not. In a market that continues to go down, in particular coupled with a weakening currency and inflation, gold would continue to rise in value. However, wine would also rise as a fellow tradable asset (as has been seen with the rises in vintage value in the last 2 years).

Ultimately wine has a more subtle manoeuvrability compared to gold in that wine is not one product, it is several products, born at different times, with natural price peaks based on its age rather than its dependency on the economic cycle.

Therefore, if you can, it is wise to diversify into both asset classes. Both are strong products, but if you cannot, your economic viewpoint will be crucial as will your investment performance requirements. If you strongly believe the economy is yet to sink to the bottom (and has a long way to go as well), gold is your best bet. If you are looking for more flexibility within varying market conditions, wine is a much better prospect.

2010; a new year, a new start. But in some ways, we have been here before.

This is not the first time we have experienced a recession, and as tends to happen, governments spend their way out of them. New infrastructure projects, more public sector jobs, and that now oh so familiar phrase, Quantitative Easing, or QE. In other words, the government is flooding the markets with money to stimulate action.

Although deflation has been an equally used buzzword in 2009, as the lack of demand has in some instances had a downward effect on pricing, the smart discussions revolve around inflation, the natural consequence of “too much money chasing too few goods”. Inflation, that by-gone concept of the 1970s! In fact inflation is all around us, with a particularly constant pressure on currency over the years. How many remember when a chocolate bar was 10p?

Although there is a split between forecasters, significant evidence points toward a higher inflationary period and an increasingly weak Sterling/Dollar fuelled by unprecedented government debt. Current house price rises, driven by a lack of available supply are likely to be short-lived rather than upward demand (as sellers wait for prices to go back to “break even” levels) , as the resultant supply increase will outpace demand does increase through higher interest rates. The stock market is having one of its roughest periods on record. Therefore, where can investors look for not only safety, but also results?

In volatile times coupled with vulnerable and weakening currency values, tradable hard assets become investments of choice. The likes of gold, silver, farmland, wine and stamps have proven to retain value in tough times as the measurement and value of cash becomes uncertain. Regardless of the measurement of exchange, or currency, these products show value and become excellent locations to park and secure wealth whilst the world begins anew.

Throughout January and indeed 2010, we will explore inflation hedges in more depth, with the next blog giving investors a comparison of the available options. There are some cracking opportunities even in these times, so I look forward to welcoming you back for another instalment in the next few days.

As soon as I finish this blog, it will take its place in history. Admittedly, it won’t be up there with world wars, births of monarchs and world cup winning football teams, but it will indeed have its own place in history.

A funny subject for an investment related blog? Probably, but as an investor, history plays a massive part in the way we invest, but is it always an accurate version of what really happened. Yesterday will almost always define how we approach tomorrow.

Let’s roll back to a week last Wednesday. I tend to play a few arrows with a good mate down my local pub (this really is going somewhere, I promise). It was one of those nights where every dart I threw was a winner and for once I walked away the darts champion of the 7th of January 2009, for my local pub and our game anyway. All said and done, I won, that is history, it is there for both me and my friend to reminisce to the grandkids about if we achieve nothing else as life moves forward.

This is not a rant I promise, but as we prepare for another massive match tomorrow, we had a quick chat about times and venues, then nothing more than a passing comment was motioned into the conversation, he said I won 3 – 1, whereas I think I won 3 – 0. He is sure, I am sure, there was no cheering audience or passing local to back either of our opinions up. The fact I won is there, we both agree, but as to the score, we both have different opinions. So this one piece of history is covered in doubt, possibly controversy, and although history dictates that I won the game, the score is still up for debate, even though it happened only 6 days ago.

Moving back to the investment topic, as we all sit down and plan and prepare for our investments for the next few years, how will we look back at the history of our previous investments?

Some will say its been a terrible year with house prices crashing, but the houses they owned all had tenants and the rent covered the mortgage, so does the history of 2008 define a bad year because of the house price drop, or does it indicate a good year as all the houses had tenants and we are not out of pocket in the physical sense, only in the paper value of what the houses might be worth today. If the reverse was true and they had no tenants for 6 months but their house price rose by 5%, would this indicate a good year or bad year, with a big loss of physical money, but a rise on the value of their houses?

This is where history, although it does indeed happen, can be taken and interpreted in many different ways. England winning the football world cup in 1966 did indeed happen, but for some people it was the greatest game they ever saw, for others in the crowd that day it was an immense disappointment.

Even though history may indeed make 2008 look like a terrible year for investors, we must as investors and individuals look back and look at it from a balanced point of view. If we are still standing and investing, it couldn’t have been that bad, could it?

Some good news has been reported from the British Bankers’ Association (BBA) this morning, with early indications showing that mortgage approvals rose in January, with approval levels hitting 23,376 last month, up 4% from 22,416 in December.

But, as it seems with every other story that has some good news in it, there is also some not so positive reports, with the number of approvals in January still 43% lower than the same month a year earlier.

Hardly surprising in the current climate, but the fact that mortgage lending is continuing to rise month on month could be taken as a sign that we are starting to emerge from the gloomy mist which has been partially caused by the lack of lending over the past 6 or 7 months.

BBA statistics director, David Dooks, said of the latest data:

“The high street banks’ mortgage lending is still seeing double-digit annual growth, albeit in a much slower market. Lower borrowing costs and falling property prices have underpinned demand at these lenders, who are providing over two-thirds of all new mortgage lending. There is only limited demand from households for unsecured credit, while a fall in their deposits in January reflects a tendency to draw on cash or to move into alternative financial products.

“Lending to non-financial companies rose after two monthly falls, with modest increases in several industrial categories, while finance for other financial companies reversed the year-end fall in lending.”

The BBA also reported that in January, net mortgage lending rose by £2.9 billion, consumer credit rose in line with the recent average and overall company finance increased by £14.1 billion, reversing the previous month’s fall.

However, personal deposits fell by £2.3 billion as spending drained cash and savers sought alternative deposit products.

It is good to see some positive comments from the BBA, hopefully which will hopefully encourage more people to apply for mortgages who might not have previously considered applying, as they thought they did not stand much of chance in being approved. If we see another month of increased approvals for February, indications would suggest that the housing slump has reached its lowest bottom point and that the only way from here on in is up.

But, until we see the figures from the BBA and other leading bodies next month, we will take the positives from the news today and hope there is much more to come.

New statistics were published today by the Council of Mortgage Lenders on mortgage arrears and possessions. Unsurprisingly, full year figures for 2008 show a sharp rise on 2007, but many steps are being taken to help borrowers facing difficulty. Interestingly, there were 5,000 fewer repossessions than expected and were forecast in the previous year, with the measures that were introduced towards the end of year seemingly having some kind of effect.

A few stats and figures released by the CML today:

* 5,000 fewer repossessions than forecast in 2008
* 40,000 repossessions in the year - 1 in 290 mortgages
* 10,400 repossessions in the fourth quarter - 1 in 1,100 mortgages
* 1 in 64 mortgages in arrears of 2.5% or more
* 1 in 53 mortgages in arrears of three months or more (inflated by lower interest rates)
* 75,000 repossessions forecast for 2009 remains unchanged.

Around 10,400 properties were taken into possession by first charge mortgage lenders in the fourth quarter of 2008, down from 11,100 in the previous quarter but up from 6,900 in the fourth quarter of 2007, according to the Council of Mortgage Lenders. The total number of first-charge repossessions in the year was an estimated 40,000. This was 5,000 lower than the CML’s original forecast for the year.

The fact that there were 11% fewer repossessions than expected, despite a worsening economy and rising unemployment, demonstrates that mortgage lenders are making strenuous efforts to ensure that repossession really is a last resort. It is important to recognise that repossessions include a proportion of abandoned properties and property fraud. They also include buy-to-let repossessions, as well as home-owner repossessions. In the vast majority of cases where home-owners are committed to working with their lender to keep their home, this outcome is successfully achieved.

At the end of 2008, around 182,600 mortgages - or 1.57% of the total - had accumulated arrears equivalent to 2.5% or more of the outstanding balance  - for example, £2,500 or more on a £100,000 balance (a £97,500 mortgage plus £2,500 arrears). This compares with 1.29% at the end of the third quarter of 2008, and 1.08% at the end of 2007.

On a “number of months” basis, 219,100 mortgages were in arrears of more than three months at the end of 2008, up from 166,600 at the end of the third quarter of the year, and up from 127,500 at the end of 2007. However, the big reduction in mortgage rates experienced in 2008 was a significant influence on the rise in the number of arrears cases measured on a “number of months” basis - as the same given sum of arrears represents a higher number of months payments as interest rates fall.

The vast majority of people who face temporary difficulties successfully work with their lender to stay in their homes, and get their mortgage back on track over time. Where borrowers contact their lender early, maintain good communication and are committed to paying what they can and resolving their arrears, lenders work hard to help wherever the household’s future prospects look feasible.

Source – CML Press Releases

The fifth of November 2008 is a day I will remember for some time. Now I know what you’re thinking, that’s the day a few centuries ago when a certain Mr Fawkes decided to try & blow up the powers that be, right? Or maybe that I went to a rather spectacular fireworks display? Neither of these were the case in this instance. That morning at around 10am our Ambulance Trading investment opportunity was emailed to one of our partner’s databases. I can remember telling my colleagues that I will be happy if we can generate 15-20 enquiries – after all, enquiry levels must be down as we prepared to head into recession.

After the eightieth enquiry had landed in my inbox just after 6pm you could say I had encountered my busiest day yet at Discover And Invest! Over the course of the following few days more filtered through ensuring that yours truly was putting in some seriously long hours!

Amongst this number was a variance in terms of quality, from those who were too afraid to hold a conversation over the phone to those who invested. In between were all extremes; those whose level of liquidity fell below the entry level, those who had no real interest, those who absorbed the information never to be heard from again, agents sniffing around and those who I simply could not contact! As all the enquiries are submitted in the same format, it’s impossible to gauge the level of quality until contact is established.

Investing is very similar in this respect. There are still so many opportunities out there ranging from property to bonds to shares to alternatives etc. How does one accurately appraise each individual opportunity? Which ones are most likely to do what they say on the tin and provide the promised returns? Which ones are the scams? Which ones are the big gambles?

Whilst there are no blueprints for what’s good and what isn’t, it’s fair to say that the usual rules apply. Over the course of sifting through the enquiries I received, the level of questioning was considerably higher than I expected – good! This goes to show that investors are doing their research, it shows that they are familiarising themselves with the workings of the opportunity, and it shows that where applicable they are using their experiences –both good and bad – to base their decision as to whether or not to take it further. Whilst this continues to be the case, those marketing the decent secure opportunities are certain to prosper.

Another day, another rate cut…or so it seems at the moment.

Who would have thought 12 months ago that we would be in this position now? Economic measures are known to take a while to affect the economy, but with lending remaining tight, many believe it is not and will not be the required dose. However, with the intriguing news that house prices have surprisingly risen in January, are rate cuts the answer or should we really try something different?

Well, to answer the property surprise, it is likely that falling prices are more to do with renewed demand than a drop in rates.

Why? Well it is clear that the lower prices mean the market is now reachable for a new generation of first time buyers still eager to own their own home now they can afford to. That and the fact that successful Buy-to-Let investors are taking advantage of the value on offer are the key reasons. With interest rate cuts not being passed on by the lenders, this cannot be the overruling factor.

With the UK making a strong case for being bankrupt right now, the argument must therefore turn to other avenues for increased liquidity.

My argument is a simple one borne from experience in selling international property investment. There are plenty of people out there with surplus funds looking for something to do with them. Nothing they turn their attention to seems to work today. In today’s climate the area of funding may be the answer.

Therefore, I propose that Co-Op funding groups are formed (not fund run) to offer alternatives to institutional funding. Businesses which work in downtime growth markets making good margin but in need of quality funding are the natural avenues to pursue.

This why businesses that should survive and are well-run can benefit from the community and benefit the community with its produce; it’s win-win basically. We managed to put together a similar project for an ambulance stockist as many of you will know, with excellent results.

The idea is not new and has been used successfully through the centuries. So why not try it again? We’re all after a sense of community and forming these groups could significantly help local businesses and local economies get on their feet again. Co-op funders could be venturing with groups finding growth markets in a recession to ensure funding was funnelled in the right directions, maximising job potential.

It’s time to stop moaning about lack of tools to change the situation and start coming up with solutions. Just a thought…

29 January 2009, London – Currency Solutions are pleased to announce their partnership with Discover and Invest, an investment consultancy firm.

As the credit crunch grips its tight fist around the global economy, more and more people are looking for creative ways to invest and save money.

Over the last year, currency markets have suffered unprecedented volatility. The Pound has declined 25% against the Euro alone lending a significant degree of volatility to your international investment. Now, as the global economy slides into a deepening recession, the business climate is facing a new series of challenges.

Managing Director, Chris Davidson commented “Discover and Invest is delighted to team up with Currency Solutions. We wish to align ourselves with market leading partners in all related industries so our clients get the most professional, efficient and effective service we can offer and Currency Solutions ticks all the boxes for us. Our clients invest from all over the world and therefore we need a 1st class global currency service for them.”

“As a consequence, more and more people are looking for creative means of investment and ways of improving their bottom line. It is in this context that Currency Solutions and Discover and Invest are proud to announce their partnership, aimed at helping businesses and individual clients beat the credit crunch.”

Discover and Invest is a fresh new consultancy with the clear aim of providing investors with new, exciting and alternative opportunities in the current climate that are income generating early and realistically secure.

With experience in sourcing and selling deals in over 20 countries, it is apparent that in today’s market, there is a need for alternative opportunities to those that are run-of-the-mill and that do not deliver. With this in mind, Discover and Invest seeks to bring to market opportunities that are better created, generate income early and that above all, deliver!

Currency Solutions are specialists in the foreign exchange industry, providing bank-beating exchange rates and reduced currency risk to businesses and individuals. With a first class personal service and flexible trading options, Currency Solutions have helped over 20,000 clients to save time and money in all of their foreign exchange. In partnership, the two are set to help both businesses and individuals with their investments, despite the deteriorating economic outlook.

Dr Tien Tran, Chairman of Currency Solutions is optimistic about the partnership. “In light of recent market turmoil, how when and where you conduct your foreign exchange has never been more important. We are proud to offer our services alongside those of Discover and Invest. We look forward to helping our business and individual clients beat the credit crunch!”

For more information, please visit our dedicated currency page by clicking here, or find our full contact details on our contact us page, by clicking here.

We’ve all heard the term “short term investments for long term gain” over the years, and particularly within the money markets. Often investors are attracted by the ability to reap their returns in shorter space of time, although in almost every case the risks are greater. Typically minerals such as gold and silver would feature popularly due to their rapid nature of rate changes, thus once the price had been deemed to hit a ‘low’ it would be worth a gamble to invest and hope for the rise.

In finance terms a short term investment can be anything up to as much as ten years, although in more recent times it is referred to as a significantly shorter period, particularly when related to property. Alternative investment opportunities are now becoming more prominent in today’s marketplace too and can contain some very left field subject matter.

Whilst it is difficult to assess which ones are right & wrong, like everything an investment is just that, risk is always involved no matter how solid the security. Take the Ambulance Trading opportunity for example. It provides 10% return in just 90 days, is recession-proof and impeccably secure which is virtually unheard of. The response to the scheme was understandably phenomenal and the take-up was certainly encouraging, although a fair percentage chose not to proceed due to what small risks remained, choosing to wait until 3-4 months down the line. These people will have missed the boat when the door closes but that’s the beauty of this type of opportunity – you snooze you lose!

But are these types of short term investments right for everyone?  I think a better way to address that question is to instead ask what type of investors might be attracted to these kind of opportunities and why? Firstly I would look at time sensitive factors, in particularly the current economic climate. Take bonds for example & their all time low prize funds. They have now introduced a new £25 minimum prize, thus structuring it so you’re likely to win less but more often – not good enough for many. Take looming redundancies in the financial sectors. Many individuals with high levels of savings can live off the short term returns whilst they reassess their futures. Also take those with the funds to purchase property but are reluctant to do so. These opportunities provide them with a means of watching their money grow whilst they wait for the right time to buy.

With this in mind, from a business perspective it’s great to have a successful & proven short term product to offer, but the fact of the matter is that they are not right for everyone at any given time. Therefore it’s wise to diversify and bring to market a short range of products with varying lengths and genres – something Discover And Invest will endeavour to pursue during the oncoming quarter.

We are all in trouble this year. The property market has crashed, unemployment could reach record levels’, spending has decreased and we are all basically going to have one of the most miserable years since the last doom and gloom crisis to sweep the country. Add to this the high street is crashing and industries are dying and we really don’t sound in that greater shape, do we?

I am sure that whilst a small percentage of the populate are experiencing some of, if not all of the above, for the rest it is pretty much the same as normal, albeit with a heightened sense of needing to save a little bit more money, just in case.

From a personal point of view, I can afford my mortgage repayments, I have a manageable level of debt and the bills, although rising for some areas, are still under control. I believe this is the case for the majority of the country, but this is not what we are lead to believe, on an almost daily, if not hourly basis.

My routine always involves a quick check of the BBC news website as soon as I enter the office in the morning. For the past 4 months, I could always guarantee there would be a story about the recession or something connected to it. When I reached my Englishman’s castle, I turned on the news, again, the guarantee of more doom and gloom about the economy was featured, if not the headline for that day.

At some point in every year since time began, a small percentage of every community, town, village, city and country would be experiencing money issues. There would always be a percentage of people unemployed and since mortgages began, so did repossessions. But this year, it all seems a little more serious, which we learn from the news. Yes, we are in a recession, yes the property market is crashing and yes, the next year does not seem a lot of fun, but would we all feel as bad, if it was not for the media that tells us this all of the time?

The media influences how we should feel and think about every topic or matter known to man. Stories can be displayed to make us feel how the media would like to think we should feel. We are made to hate certain people, dislike certain celebrities and now, we are almost being made to feel scared, worried and as pessimistic as we have ever felt before.

With the rise of 24 hour news, websites updated every second of every day and the emergence of topical newsletters and blogs (of which this is one admittedly), we just can not escape this current epic voyage of disaster. Even shopping in my local supermarket, whilst queuing at the never end queue for the checkout, the 4 plasma screens were a mixture of the latest BOGOF’s, discounts on Penguin bars and updates from BBC news about the latest interest rate cut! Overkill? I think so.

My point is quite simple. If it wasn’t being covered quite as much, would the country feel better? For the vast majority of us, we are still in work, paying our bills and living like we are used to, just with a little more thought for what might be and an increased sense of needing to save the pennies we can. On one hand I love this constant supply of information, in fact I would miss it should it not be available, but on the other, I just cant help but feel we might be feeling slightly better, without it.