Gold may have been an appropriate gift two millennia ago but anyone holding the not-so- precious metal this year could well have been the biggest loser of 2013.
That's the stark analysis from financial wizard Stephen Womack of Chartered Financial Planners David Williams. The "safe 'haven" investment sank like lead in 2013, he says.
Gold rush"Gold has long been seen as an alternative 'safe haven' investment when financial markets are wobbling. And gold had a great run through the financial crisis, more than doubling in price between the start of 2009 and the Autumn of 2011. But renewed optimism about the world economy during 2013 has left gold out in the cold," Womack warns.
"The price fell from just over $1680 an ounce on Jan 2nd 2013, down to less than $1250 an ounce by mid-December. This 25% fall in value hit investors who had stocked up on gold Sovereign or Krugerrand coins."
Golden duckBut the reverse Midas touch effect of gold went much wider, Womack explains. "Investors in specialist commodity funds that buy shares in gold and precious metal mining companies were hit harder. A falling gold price can turn a once-profitable mine into a loss maker, so mining share prices tend to magnify the movements of the actual commodity price.
"Big losers over 2013 included funds such as Blackrock Gold & General (down 50% in the year to December 16th), Smith & Williamson Global Gold & Resources (down 48%), CF Ruffer Baker Steel Gold (down 60%) and MFM Junior Gold (down 67%)."
And tumbling gold prices also caused chaos on the High Street as 'cash-for-gold' buyers and pawnbrokers saw their stocks of gold jewellery and bullion lose value. Britain's second largest chain of pawnbrokers put itself up for sale in December after its profits plunged by 75%. The company's shares fell from 240p in March to under 20p by December.
No futureBut those with cash to invest fared better than those struggling to make ends meet in 2013. It was a year of doom and gloom for the yet to retire, for example.
Bank HSBC warned that many may never be able to afford to retire. With life expectancy rising fast it said hopes of retiring at 60 looked unrealistic. Company schemes are in deficit and employers, hit by rising costs, have backed away from guaranteed pensions. Responsibility is falling more and more on individuals, who simply do not have the cash.
The Institute for Fiscal Studies emphasised this in December when it said that workers aged from 34 to 53 were being punished by inadequate pay rises, dire pensions and crippling housing costs. With meagre savings, their only hope of a comfortable retirement was a large inheritance – an unrealistic dream for many.
Twenty-somethingsConsumer group Which? told AOL Money it was even younger people who were the worst off at the end of 2013.
A spokesperson said: "The rising cost of living means millions of households are feeling the squeeze, but some are being hit harder than others. Under-30s have been affected worst of all age groups in 2013, partly because they are often highly dependent on their wages, which are not rising in line with inflation. Rent increases and price hikes of essentials like food and energy have made their situation even worse."
Which? identified significant factors hitting the under 30s:
- In the past year, under-30 households have seen their real disposable incomes fall more than any other age group at a rate of 1%.
- This age-group is particularly dependent on working wage, with little in the way of investment or other income, but wages are increasing just 1.1% on average throughout the economy.
- There are a high proportion of renters among this group, meaning the average rent price increases of 3.9% have affected them badly.
- This is compounded by high price increases of essential items such as food and energy that form a larger part of the typically lower budgets of this age group.
- Tuition fee rises are also a factor for under-30s, with the cap now set at £9,000 a year.
These were based on the Which? Spending Power Index. This measures all income sources (including wages, investment income, benefits, etc.) minus taxes, and adjusts this for the effect of inflation on what that money can buy to track how spending power from income changes over time.
Youth of today
But even younger people had a miserable time of it. At a time when equality legislation was though to have tackled age discrimination, 2013 proved legalised discrimination against young people was still rife. The minimum wage – that directly affects 890,000 workers - rose in October by 12p to £6.31 an hour. That's a rise of 1.9%.
But legalised age discrimination remained and younger workers, who already got lower pay for doing exactly the same work, had even lower rises of just 1% - half as much as for adults. The rate for 18-20 year olds rose by 5p to £5.03 an hour, with the 16-17 year olds' rate up by 4p to £3.72 an hour. The apprentice rate rose by 3p to £2.68 an hour.
New rules preventing young people from riding large motorbikes until they reach 23 came in this year. And car insurers – still permitted to discriminate on the basis of age when banned from discriminating on sex – demanded similar restrictions be placed on young car drivers too. That was on top of premiums regularly over £2,000. 2013 was not a year to be young.
This came on top of crippling motoring cost. AA president Edmund King said three out of five drivers cut back on car use, other spending or both to compensate for high petrol and diesel prices, an AA Populus survey of 21,587 AA members in November 2013 had found. Some 45% were using their car less and 28% are slashing family or personal budgets to compensate.
King, said: "Despite some recent drops in fuel prices there is still scant sign of economic recovery for consumers on four wheels. Looking ahead we need a freeze or cut in duty and greater fuel price transparency."
Save the childrenBut perhaps the biggest losers of 2013 were actually children. Austerity cuts hit children the hardest, according to campaigners. William Higham, head of UK poverty policy at Save the Children flagged an official Department for Education report this year that showed 21% of poor children had fallen behind in reading by age seven.
Higham said the damage to children would be felt by the country as a whole. "Poor children continue to be systematically failed at a very young age. Their talent and potential is lost to the British economy so ultimately all of us suffer."
And it was telling that PCS union leader Mark Serwotka, when asked who the biggest losers of 2013 were, chose not mention his members who had faced job cuts and attacks on their pensions, but to say children too.
Serwotka highlighted research from the Chartered Institute of Housing in one London borough (Haringey) that found 747 households in the borough saw their benefits cut between April 15 and August 16, 2013 because they were above the new benefit cap threshold, which limits total benefits to £500 per week for families with children, or £350 per week without children.
The amount lost ranged from 15p to £374.50 per week – with 51% of affected claimants losing £50-£199 each week. Around 2,300 children were affected by the cap, with larger families experiencing the highest loss.
But it is was the personal stories that hit Serwotka. He said: "One fact about cuts to social security stood out for me this year. Reporting on the implementation of the benefits cap in just one of the trial areas, the Chartered Institute of Housing revealed seven children had already been forced to leave a school in north London, and more were expected to follow.
"That's seven kids ripped from their friends and having their education disrupted, from just one school in the initial stages of a now national policy. This is horrific, and points up the devastating social and human consequences of the cuts to our welfare state that this government is pursuing with vigour, eagerly and luridly cheered on by sections of our media."
We can only hope for a better 2014.