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Showing results for tags 'black wednesday'.
Last month, I posted a video about black Wednesday on a thread. I can't remember which one so I'll repost here: I'm too lazy to explain what black Wednesday was, so this excerpt from wikipedia will have to do. What I worry about is the possibility of another black Wednesday type event (does not necessarily have to be on Wednesday). There are several reasons that I believe this could happen, many of which the members of this forum know quite well, starting with an obvious giant housing bubble, but also including Very low interest rates Brexit fears Trade imbalances Unemployment, high cost of welfare, other high costs George Osborne's failed attempt to significantly decrease the debt/deficit I'm not going to go into detail of the above, there are plenty of threads about these subjects. Given the similarities between where we find ourselves now, and the last black Wednesday, I am willing to take the leap that if another one does occur, the government will try to use the same thing to shore up the pound. First, the government will Attempt to reassure everyone that everything is ok, which will fail as everyone will now panic Buy back pounds by using the nations foreign currency reserves (and maybe gold), this will also fail Raise interest rates brutally, which may or may not work, and lastly Now you may think at that this is good, as we can see full HPC as well as good saving rates at the bank, enabling us to finally own our own homes but, the government may use the last trick in their arsenal to prevent the pound from plummeting DEVALUATIONWhat I wanted to focus for the rest of this thread is, how do we best protect ourselves from all of the above? I have some half cooked ideas but they need some scrutiny. Changing pounds to another currency which is deemed safer Buying precious metals Savings accounts Buying stocks or assets (not housing assets) None of the above are perfect ideas. Changing pounds to another currency will cost some money if you use the post office, so there will be some loss there. I found an online service called transferwise, which is an international money transfer system, created by the same people as PayPal, that works like the bank but with way better rates than conventional currency exchanges. For example, as I wrote this post, the exchange rate from the GBP to the USD was 1: 1.415. Tranferwise gives you 1: 1.4084. I did a calculation and this works out to be 0.99533% efficient. The problem is, this service is a money transfer service, which means you need a bank account at the other end if you are going to transfer to yourself. In this case I would need a bank account in USD if I wanted to change pounds to dollars with this method. Another method, which is 100% efficient without fee's or charges, but probably a pain in the **** to use, is oxchange. A peer to peer exchange, where you log in with your facebook, and place an order to buy another currency for a certain amount, and the program matches you with someone who wants to sell their currency for the amount proposed. I see this working in London with tech savy tourists in a startbucks. This won't be very good up in the sticks though. However, changing pounds to another currency wont protect the value of that currency in the long term, as all fiat devaluates over time (unless there is deflation). Which brings me to the next option. Buying precious metals. This has been discussed to death, there is a mega thread pinned at the top of the forum. Gold has historically been used as money. The government can't print gold so it can be a useful tool to store value, except its very very expensive, doesn't yield dividends and gold sellers sell at slightly over spot. Another thing against gold, is that it's price fluctuates like it's a roller coaster. If we head down towards a black Wednesday, gold inventories aimed towards small investors will run dry pretty quick. If I wanted to buy a small gold coin, which is the best service available? Silver, is much cheaper than gold, and by some accounts is way under valued. Unfortunately silver is taxed with VAT. I've seen some websites, and just looking at the tax puts me off buying. However, after a bit of digging, I found that Estonia does not place VAT on silver, which allows one to buy silver at just slightly over spot. PROBLEM is, you have to get the silver from Estonia, meaning you loose out on shipping. So maybe metals are not the way to go. Savings accounts are not a good option with very low IR. Also, if the government devaluates the currency, it will do so by far more than the best HTB ISA. (4%) Buying stocks or assets could be an option, provided they are very good quality stocks which pay dividends, this may be a way to make extra money. Trouble is finding those stocks, whilst massive QE and low IR has pushed almost all of them up into the stratosphere AND George Osborne, not one to miss a trick, has implemented a new tax on dividends, the son of a bitch. So I'm out of ideas, and very tired, have to sleep. Thoughts?