Gold glistens as the market is tarnished

Published: 30 September 2007

In these times of financial turbulence, some investors might feel like stuffing their savings under the mattress. And thanks to the credit crunch, the dark days aren’t over.

Some experts reckon that now could be the time to go for gold — traditionally a «hedge» investment that provides a safe haven if currencies and stock markets are falling in value.

Since 2001 the price of gold has soared, from $277 (£137) an ounce to $730 this year. With the rapid economic growth in countries like India and China, the need for metals and other basic commodities has increased and mining firms have struggled to keep up with the demand. That has helped to fuel the surge in the value of gold, and experts reckon the price still has further to climb.

«People have said they can see it rising to $1,000 an ounce. I don’t see that, but I certainly think it will go to $800 or $900,» says Nick Raynor, investment adviser at The Share Centre.

«Investors should dedicate somewhere between 5 and 10 per cent of their portfolio to gold, depending on how bullish they are,» says Mark Dampier, head of research at stockbroker Hargreaves Lansdown.

There are a number of ways to go for gold. Investors can choose from a wide range of bullion and coins issued by governments across the world. Gold bars can also be bought from a variety of merchants over the counter in the UK; go to www.gold.org for a list of reputable dealers.

The problem with coins or bars is that you have to find a place to keep them. A dealer or bank would charge you for storage, and your insurance premiums would rise if you had gold around the house.

The alternative is to put your money in unit trusts that invest in the shares of gold-mining companies. Mr Dampier singles out the Blackrock Merrill Lynch Gold & General fund for its performance. It was laun- ched in 1988 and has produced growth of more than 200 per cent over the past five years.

«I think it’s better to buy into a fund as it gives better diversification,» says Mr Dampier. He also recommends Ruffer Baker Steel Gold and Nucleus Global Gold & Resource as funds to watch.

Even though gold is seen as a safe haven by many investors, it is not a dead cert. Just like stocks and shares, the price of the metal can go down as well as up.

«Gold and commodities tend to be quite volatile but they are particularly suitable for diversification in a larger portfolio,» says Rebecca O’Keefe, head of fund management at advice website Interactive Investor.

In fact, the price of gold can move quite wildly. During 1997, for example, prices fell by 22 per cent at a time when world stock markets were powering ahead. In recent years, however, investors who have gone for gold have done well.

Новости мирового рынка драгоценных металлов (цены на золото, серебро, платину и палладий)