Data from investment firm The Pure Gold Company suggests it has seen a 39% increase in first time buyers of physical gold in the past week as investors hedge themselves against the first interest hike in a decade to hit the UK, with the Bank of England meeting on 2 November to consider putting up its base rate from the record low 0.25%.
Interest rates in the UK were last raised in July 2007.
The Company added that its data pointed to a 69% increase in financial professionals over the age of 50 buying physical gold over the past week.
Josh Saul, CEO, said this reflected concerns “that interest rates will ultimately rise to pre-crisis levels of 5%, which could trigger a situation similar to the early 1990s, when people couldn’t afford to pay their mortgages and [property] values fell by more than 30%.”
“Over 8 million people [in the UK] have never known a rate rise in their adult lives,” he added.
A survey done by the Company found that 61% of respondents under the age of 20 stated that they would struggle to pay their mortgagews if rates increased to 5%. Some 25% of those who made inquiries to the Company into buying physical gold over the past week had sold investment properties in the past six months and intended to use the proceeds to buy gold.
According to the World Gold Council, there was a 13% increase in total global demand for coins and bar gold in the year through the second quarter of 2017. Over that period the dollar price remained unchanged, but the sterling price rose some 12% – reflecting the currency weakening experienced in the wake of the Brexit referendum.