Gold Priced in British Pounds (GBP or £’s) – December 2012 Update

This is the regular gold priced in Pound Sterling update.  The last update was in August 2012 and can be found here.

The chart below shows the Nominal Monthly Gold Price since 1979.  The key Nominal Gold metrics are:

• The Nominal Gold Price is currently £1,051.97 which is 2.4% below the November 2012 Price of £1,078.37.
• Year on Year Nominal Gold is 0.3% below the December 2012 Price of £1,055.00. 

Click to enlarge

So over the past year in nominal terms gold has gone precisely nowhere.  This demonstrates nicely one of the negatives of holding gold compared to equities.  If equities go nowhere price wise for a year you can still sleep easy knowing your equities (ie real world companies) are (hopefully) making profits.  Some of those profits are then (hopefully) spun off as dividends, particularly if your allocation to equities is HYP based, which gold doesn’t give you.  That said I’m not changing my strategy and will continue to hold gold because of its diversification benefits.

Stop acting like a victim

A couple of weeks ago I posted the article KISS Investing for Retirement.  This looked at what I believe was a simple strategy to achieve financial independence.  The first point, which was simply Start, really rang true this week when I read the BBC article Pension Planning ‘Inadequate’ Among Over 50’s.  The article itself wasn’t the kicker for me as it was essentially just an advertisement from the National Association of Pension Funds.  The bit that made me think was reading some of the comments.

If people are to Start down the road towards achieving financial independence then they must first stop acting like victims and must stop blaming others.  Instead they need to start taking responsibility for their own actions.  Of course it’s easy to play the victim because then you don’t have to change your ways and can keep your head buried in the sand.  Let’s briefly look at a couple of the 378 comments that this article received.  (Full disclosure:  I only read the first page of comments by which time I was shouting take some responsibility at my laptop screen so loudly I felt it prudent to stop reading)

UK Average Weekly Earnings – November 2012 Update

Are you one of the 29.58 million people over the age of 16 working in the United Kingdom?  Do you feel like it’s getting harder to save or survive to payday depending on your goals in life?  Worry no longer because the answer is that it is.  If you are an average earner your salary is now back to levels last seen in September 2001.  As always on Retirement Investing Today let’s look at the data.

The Office for National Statistics reports that the Average Weekly Earnings for the Whole Economy including bonuses and allowing for seasonal adjustment is now £471.  This is nominally £2 less per week than last month and is the nominally similar to that of April 2012.  Annualised this is £24,492.  Breaking this figure down between the Public Sector and the Private Sector reveals the Public Sector to be still coming out on top by some 4%.  The Average Public Sector employee earns £488 per week (up 2.1% year on year) compared to that of the Private Sector which funds those earnings (of course in conjunction with a lot of government borrowing) at £467 (up 1.7% year on year).

The FTSE 100 Cyclically Adjusted PE Ratio (FTSE 100 CAPE or PE10) – November 2012 Update

This is the Retirement Investing Today monthly update for the FTSE 100 Cyclically Adjusted PE (FTSE 100 CAPE).  Last month’s update can be found here.

As always before we look at the CAPE let us first look at other key FTSE 100 metrics:

• The FTSE 100 Price is currently 5,819 which is flat against the 01 October 2012 Price of 5,820 and 7.3% above the 01 November 2011 Price of 5,422.
• The FTSE 100 Dividend Yield is currently 3.71% which is also flat against the 01 October 2012 yield of 3.72%.
• The FTSE 100 Price to Earnings (P/E) Ratio is currently 11.41.
• The Price and the P/E Ratio allows us to calculate the FTSE 100 As Reported Earnings (which are the last reported year’s earnings and are made up of the sum of the latest two half years earnings) as 510.  They are down 1.0% month on month and down 7.9 year on year.  The Earnings Yield is therefore 8.8%.

Is it really that novel, innovative and value adding a strategy?

Ok I’ll admit it.  I read the Investment Times which is a monthly publication issued by Hargreaves Lansdown.  It’s clearly a piece of marketing material aimed at keeping Hargreaves Lansdown fresh in your mind but I read it because occasionally I do find an interesting titbit that encourages me to go off and do some more research.  I’ve just received the December 2012 edition and within it there is a review of an actively managed fund called the Troy Trojan Fund.

Important: Before we get started, I must point out that what follows is not a recommendation to buy or sell anything, and is for educational purposes only. I am just an Average Joe and I am certainly not a Financial Planner.

I don’t normally comment on actively managed funds as I am a supporter of passive index funds however the Troy Trojan Fund promises a lot.  The manager “believes that sooner or later the inflationary effects of QE (Quantitative Easing) will take hold” however he also does not rule out the rule possibility of a ‘Little Ice Age’ of deflation beforehand”.  The fund manager has apparently prepared for both scenarios by building a portfolio around blue chip equities, index linked bonds, gold and cash.  The actual asset allocation is listed as:

• 11% UK Equities
• 20% Overseas Equities
• 17% Cash (including UK T-Bills)
• 7% Singapore T-Bills
• 12% Gold
• 6% Gold Shares
• 13% US Index Linked Bonds
• 14% UK Index Linked Bonds