We are today urging people to take care when buying a property or remortgaging in the UK – there are bad things coming, and rates, despite what commentators and so-called experts say, are inevitably going to rise.
Why We're Breaking Our Silence on the Market
Usually, we stay out of alerting people to the state of the market – it’s not our business. We specialise in short-term loans for people who aren’t typically going to go out and be able to purchase a property over £150,000. Plus, it isn’t an exact science. If we genuinely knew for certain which way rates were going to go, we’d go into buying bonds and make 20 times more money that way. But what is happening right now is something of a perfect storm, and we feel we need to step in and issue an urgent warning.
The Media's Push for Rate Cuts Is Dangerous
The difference is, this time we are witnessing uniformity in the mainstream media, political commentators, and even politicians on both sides of the Atlantic calling for cuts in interest rates – and it’s terrifying. We are now seeing people who are holding off buying a property, or holding off fixing interest rates, because they are expecting rates to fall.
The mainstream view is that interest rates can’t go up because millions would face repossession. Frankly, that’s one of the silliest financial arguments we’ve ever heard. It’s like someone in the aviation industry claiming planes can’t fall out of the sky because too many people would be hurt – you’d think they were an idiot, and you’d be right.
Financial markets don’t care about people losing their homes any more than gravity cares who gets hurt when a plane crashes. Sure, markets can be manipulated, and the inevitable can be delayed – maybe for a few years, possibly even a decade – but that doesn’t change what’s coming.
Millions of people who have overborrowed are already in serious trouble – they just don’t know it yet.
Why Delaying Remortgaging Could Be a Costly Mistake
Holding off buying a property isn’t a bad thing. In some ways, these people won’t be affected if rates rise, fall, or stay the same. If rates rise, typically what we see is the prices of homes falling to reflect what people can now afford. It’s the other part that scares us – people aren’t locking in fixed rates now to remortgage their properties. What we are instead seeing is mortgage holders delaying their remortgaging because they think rates are going back down to 2% – it is not going to happen. At the time of writing this article, the current Bank of England Base Rate is 4.25%.
Why Gold Prices Are a Leading Indicator for Interest Rates
The reason it isn’t going to happen is very simple – gold is rising in price. No matter what anyone tells you, the point of interest rates is to try and control the price of gold – that’s it. The first reason, the last reason, and the only reason. Forget about everything else anyone tells you – it’s wrong.
The idea that interest rates really care about what the economy and inflation are doing is only a secondary concern. It doesn’t come close to being as important as keeping the price of gold down.
By omitting this from their advice, we don’t believe influencers and commentators are lying deliberately – they simply don’t understand what they are talking about. And why would they? Their job is to package financial advice into a nice, ready, fast-food-type case for viewers to consume. Their job isn’t to do research into ingredients and prepare a long, time-consuming, quality meal their viewers can digest within a few minutes.
Viewers demand the Janet and John version, and that’s what they get. Supply and demand – who are we to argue with that?
The idea that interest rates really care about what the economy and inflation are doing is only a secondary concern. It doesn’t come close to being as important as keeping the price of gold down.
By omitting this from their advice, we don’t believe influencers and commentators are lying deliberately – they simply don’t understand what they are talking about. And why would they? Their job is to package financial advice into a nice, ready, fast-food-type case for viewers to consume. Their job isn’t to do research into ingredients and prepare a long, time-consuming, quality meal their viewers can digest within a few minutes.
Viewers demand the Janet and John version, and that’s what they get. Supply and demand – who are we to argue with that?
Gold as the Ultimate Currency Benchmark
Keeping the gold price down is hugely important because gold is the ultimate liquid currency – it’s the easiest method by which capital can flow from one currency to another. Gold is also the benchmark every other currency in the world is compared to. Technically, gold isn’t rising – as gold is the benchmark, other currencies are being devalued rather than gold rising. But for the benefit of this article, we’ll just describe gold as rising as it’s easier for people to understand.
If the gold price rises more than 1% above the interest rates for a sustained period of time, investors and savers start to see better returns in holding the metal rather than in things like Government bonds and savings accounts. Eventually, capital starts to leave the currency and the currency falls even further until, if it isn’t addressed, the currency turns into some kind of Zimbabwe Dollar of the mid-2000s. That’s the ultimate death spiral of a currency.
We are a little way from that in the UK, but we are on track for it. The price of gold since 2021 has been well above the rate of interest set by the Bank of England. Unless the Bank of England raises rates above the pace at which gold is rising, we are going to have serious issues in the next decade.
That’s why rates have to rise.
If the gold price rises more than 1% above the interest rates for a sustained period of time, investors and savers start to see better returns in holding the metal rather than in things like Government bonds and savings accounts. Eventually, capital starts to leave the currency and the currency falls even further until, if it isn’t addressed, the currency turns into some kind of Zimbabwe Dollar of the mid-2000s. That’s the ultimate death spiral of a currency.
We are a little way from that in the UK, but we are on track for it. The price of gold since 2021 has been well above the rate of interest set by the Bank of England. Unless the Bank of England raises rates above the pace at which gold is rising, we are going to have serious issues in the next decade.
That’s why rates have to rise.
The True Cost of Holding Gold vs Interest Rates
The reason that gold must rise more than 1–1.5% above the base rate is that holding physical gold has its own costs. Normally, to hold gold securely in a vault would see someone pay around 1% of the gold’s value (The Royal Mint charges 1% with insurance).
With the current base rate being 4.25%, we would need to see gold rising at around 5.75% or 6% to really challenge the currency’s integrity.
2021: -3.73% Gold price decline – no problem
2022: +2.08% Gold price rise – no problem (interest rates were 2.25% in 2022)
2023: +13.14% Gold price rise – big problem
2024: +27.20% – very big problem
2025: +19.14% so far (year to July 19th) – massive problem
With the current base rate being 4.25%, we would need to see gold rising at around 5.75% or 6% to really challenge the currency’s integrity.
2021: -3.73% Gold price decline – no problem
2022: +2.08% Gold price rise – no problem (interest rates were 2.25% in 2022)
2023: +13.14% Gold price rise – big problem
2024: +27.20% – very big problem
2025: +19.14% so far (year to July 19th) – massive problem
Why Real UK Interest Rates Should Be Around 20%
To maintain integrity in our currency, real interest rates in the UK should be around 20%, but in reality, maybe even slightly higher.
We can hear people chanting in the background that that would kill the economy – millions would be forced to sell their homes. Yes, they would. But if there is a will to save the currency, that can’t be helped now. The time for raising these concerns was 30 years ago before this train started to roll out of the station. 2008 was the last real chance for a medium-sized organic crash to naturally clear the bad wood. Interest rates should never have dropped below 6% in 2008.
We can hear people chanting in the background that that would kill the economy – millions would be forced to sell their homes. Yes, they would. But if there is a will to save the currency, that can’t be helped now. The time for raising these concerns was 30 years ago before this train started to roll out of the station. 2008 was the last real chance for a medium-sized organic crash to naturally clear the bad wood. Interest rates should never have dropped below 6% in 2008.
The Infinite Money Tree Illusion
There is an infinite money tree right now and it can’t continue. No currency can have an infinite money tree and survive. Right now, investors are borrowing in the UK at 5% and buying gold which is rising at close to 20%.
The average holder of the Pound Sterling is being fleeced and doesn’t even know it. The game is rigged, and it’s set to collapse either way.
The average holder of the Pound Sterling is being fleeced and doesn’t even know it. The game is rigged, and it’s set to collapse either way.
What You Can Do Right Now To Protect Yourself
The best way you can prepare at the moment is to buy gold rather than paying down your mortgage. Why pay the mortgage down when the cost of servicing it is 5% a year? Use that money and earn 20%+ by buying gold. We aren’t even that far off the point at which it makes financial sense to buy gold instead of paying off the credit card each month.
But At The Very Least - Consider Doing This - Lock In Your Mortgage Now
If you listen to us and take one thing from this article, strongly consider locking in your mortgage for as long as you can – especially in the next 12 months. Yes, the Bank of England may go totally crazy, act politically, and lower rates by 0.25%, but it will quickly be reversed as gold accelerates even quicker.
We aren’t qualified to give any mortgage advice – always speak to a professional who is insured to give you advice. But when you do, if they advise anything different from what we are advising, ask them to explain where this article is wrong.
Lock in – and good luck.
We aren’t qualified to give any mortgage advice – always speak to a professional who is insured to give you advice. But when you do, if they advise anything different from what we are advising, ask them to explain where this article is wrong.
Lock in – and good luck.
