The asset that shines in troubled times

John Stepek says the price of gold is a gauge of investment fear — and there’s a lot of fear around right now

Last week, we had a power cut. It was already pitch-dark outside — not the best time to discover that the children had hidden our only torch. We stumbled about in the dark, before a kindly neighbour gave us some candles and a lighter — just as the power went back on.

It was a useful reminder that you can rely on the modern world to function about 99 per cent of the time, but it’s always worth having an old-fashioned back-up, just in case. When the National Grid cuts out, you want candles in your drawer. When the global financial system starts to wobble, you want good old-fashioned gold in your portfolio.

But why? Gold makes no sense as an investment. The point of most investment assets is that they generate income.