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Category: Soap Box

Soapbox: What to buy?

“Let me tell you about the very rich. They are different from you and me…” – F. Scott Fitzgerald. Covid-19 has done a lot of damage...

30 July 2020

Gary Mead

“Let me tell you about the very rich. They are different from you and me…” – F. Scott Fitzgerald.

Covid-19 has done a lot of damage to a lot of things, but has it damaged the luxury goods market? All the frothy stuff (‘rare’ handbags, trainers, perfumes, watches and so on) that people buy when they don’t bother to count the change. Fine wines, ‘classic’ cars, antiquarian books, paintings – anything that can be labelled ‘rare’.

With splendid timing the buildings’ broker Knight Frank published in March this year its “wealth report 2020”. It says the global population of UHNWI (ultra-high net worth individuals) was 513,244 in 2019 and is expected to increase by 27% over the next five years.

Thumbs-up for the super-wealthy.

The Boston Consulting Group (BCG) publishes around this time each year an analysis of the luxury goods market. It’s fairly comprehensive. It covers 10 “luxury spending countries” and surveys more than 12,000 people who can afford to spend around €39,000 a year on luxury items and experiences.
This year’s BCG survey suggests it’s more a case of thumbs-down for the inordinately rich.

Mount Everest beckons

According to BCG, whose report derived from Italy and – as more than 40% of the world’s luxury goods’ production happens in Italy – it should know about this subject, the personal luxury (tangible items) market was headed for 3.2% year-on-year growth during 2020-22. Meanwhile, the luxury market in experiences (get out of breath on Mount Everest for around $45,000 anyone?) was powering ahead at almost 6% a year.

Covid-19 has done for that, for the time being at least. The report says “even the most optimistic forecasts show a drop from -35% to -45% in 2020”. These types of big spenders are shunning most hotels, cruises, resorts. Travel has become much trickier, and much luxury splurging is done overseas.

Unless you are in this category of people who can afford to blow €39k on luxury items – roughly 0.00017% of the world’s population – you may in any case be worried about other things than whether spending £10 million on a Patek Philippe Nautilus wristwatch is really a good idea. Like whether you can afford next month’s rent, perhaps.

Climb a smaller mountain

Those of us who are never going to be able to afford risking death on Everest are not like the fabulously rich. For the Bill Gates or Jeff Bezos’ of this world even a chunky fall in fiat currency – in their case the US dollar – would not plunge them into penury.

That’s not true for most of us.

Most of us are searching for some stability in a world which feels more insecure than for a long time. Far from being able to indulge in expensive fripperies – sorry, ‘luxury items’ – we are perhaps more concerned to protect what wealth we have, and know that our money today will be able to cover our expenses tomorrow.

Maybe even some of the magnificently well-off are thinking along those lines too.

Gold went up by almost 20% last year and has this year so far risen by around 26%. Of course everyone knows the saying “what goes up must come down” – but the “down” could be a very long time coming. Over the past 20 years the gold price has shifted up and down, largely reflecting the strength (or otherwise) of economies, and the stability (or otherwise) of our societies. But over those same 20 years the US dollar price of gold has increased by more than 600%.

So, when you’re worrying about the economy, considering what to do with your savings and don’t want the hassle of more exotic homes or vintage sportscars; a stronger case for choosing a Glint account, to use gold as money and help protect your wealth, is hard to imagine. After all, Glint is for everyone, from those who can invest millions to the not so incredibly well-off.

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