Page 27 - Introduction to investing in Gold

The Beginner's Guide to Investing in Gold
year. Should they have to refinance at 6%, that could be as much as £21,000 a year – treble. Ouch!
Psychology
When inflation and interest rates increase, investors get nervous. They may be able to afford things now, but until they see costs “top out” or prices “settle”, they’ll probably wait until there’s more clarity. So, they do nothing.
I’ve used the term “investors” here, but it applies to a lot of major purchases.
It’s important to remember there are two sides to any deal: a willing buyer and a willing seller. In difficult times, you may find the other side of the equation goes quiet for a while (whether you’re buying or selling). They’re waiting for clarity before making their move.
Yes, there are distressed deals (a willing buyer and not-so-willing seller), but how do you know it’s hit bottom? You’re essentially catching a falling knife. If you time it right, that’s great, but if there’s further for it to fall, there could well be others waiting for “clarity” before they pounce. If you’ve caught the knife too early, you could find yourself at a significant disadvantage.
Be very careful about what assumptions you make about catching that knife. It’s better to be pessimistic and then pleasantly surprised rather than optimistic and find yourself scrabbling to raise money. At that point, you’re often trying to keep what you’ve already invested rather than make any money.
The term “hungry people make bad shoppers” springs to mind.
Think about the repercussions if you are wrong; could some sort of buffer help you? You can always deploy that capital elsewhere if you’re right, but it’s nice to have a bit of breathing room.
“Being right” is something that we often take for granted, especially if we’ve made some good investments in the sector; we can get a bit cocky. I’d suggest you write down the assumptions you’ve made and make sure they make sense. Even if they do, when you look at them in black and white,
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