Warning over joining gold rush as price hits new high
THE GOLD price has hit an all-time high of nearly $2,355 (£1,855) an ounce as Middle-East tensions, persistent inflation and political unrest trigger a flight to the world’s oldest financial safe haven.
Gold has jumped more than seven per cent in the last month, and almost 20 per cent over the year, but experts are warning against joining the gold rush at today’s highs.
The precious metal has soared a staggering 840 per cent since former Chancellor Gordon Brown sold half the nation’s gold reserves at the start of the Millennium, for as little as $250 an ounce.
Brown secured $3.8billion from selling 395 metric tonnes, said Robert Fullerton, senior research analyst at Hawksmoor Investment Management, as he points out: “That gold is worth $33billion today.”
Brown’s disastrous timing highlights the danger of trying to play the gold price.
Most advisers suggest serious investors should hold around 10 per cent of their total portfolio in gold, for diversification.
Buyers traditionally favour gold bars and coins, but these pose security risks, and today many prefer to track the gold price with a low-cost exchange traded fund (ETF).
The safest ones are backed by physical gold purchases, with SPDR Gold Shares, iShares Gold Trust and Invesco Physical Gold all proving popular.
The downside of gold is that it does not pay any income, unlike cash, bonds or shares, but this will be less of an issue if interest rates fall.
Fawad Razaqzada, market analyst at City Index, said tread carefully today: “Gold looks overbought on almost any metric you use.”