Is gold still a safe haven?

It would be hard to imagine a worse run of events for paper money. Investment banks such as Lehman Brothers have drowned in a sea of subprime debt. Building societies such as Bradford & Bingley, once so dull and safe they made fun of it in their ads, have had to be nationalised. In the case of Iceland, a whole country suddenly went pop. So you might think it would have been a great year for the world’s oldest form of money: gold. Fleeing a bankrupt monetary system, investors would seek the security of ingots and krugerrands.

Except, as it happens, they didn’t. Among the many fascinating sub-plots to the credit crunch has been the way the ‘gold bugs’ — as die-hard enthusiasts for the metal are known in the City — have finally been nailed. Gold turns out not to be the ultimate store of value after all. Nor is it a safe haven in times of turmoil.