Gold

There was a time when gold was viewed as the ultimate safe haven investment both by individual investors and by countries. For some it still is.

Traditionally priced in US dollars, it hit a peak of $850 in 1980, fell under $300 by early 1998, but has since hit a 25-year high.

Investors looking at gold have two options - bars and coins or jewellery.

Jewellery may look pretty but is not worthwhile as an investment. The price is marked up to take account of the jeweller's work and the retailer's profit. The intrinsic value of jewellery could be as little as half the price you actually pay. You may consider second-hand jewellery a better investment but remember the gold used in jewellery is by no means pure. Pure gold is too soft to be worked properly. Jewellery is also subject to fads and fashions.

Gold coins, especially sovereigns and krugerrands, are popular with individuals. But if you are going to keep gold coins at home, you need to think about your contents insurance. Your insurer may demand special security measures be taken, otherwise it may hike your premiums.

It's highly unlikely you would want to keep gold bars lying around the house, which means laying out for a safety deposit box. This means that you will be paying for the privilege of owning gold and, at the same time, not receiving any return such as dividends from shares or trusts or interest from cash savings. Gold may be said to have a "negative yield".

See also Bullion Online share dealing service Stockmarket Centre

Last Updated: August 2007 © Moneyextra.com

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