The gold price, we keep being told, because investors are seeking a ‘safe haven’. The first part of that sentence is true – from £1100 per ounce at the beginning of this year, gold has surged to £1500 per ounce this week. But are those buying it really doing so because it is ‘safe’ investment? Come off it. It is easy to get on the wrong side of a stock market or property boom, but gold has proved are a far more insidious destroyer of wealth over the decades.
Had you fallen for the lustre of gold in 1980, when it was selling for £280 an ounce it would have taken you 25 years to get your money back, in nominal terms. In real terms, the value of every ounce of your gold would have plunged to £98. So much for gold being a hedge against inflation. And in the meantime your gold would have received zero income – although you may well have run up a large bill for a bank safety deposit box in which to keep it.
Gold is no safe haven; since its value has been decoupled from that of currencies, it has become a short-term speculative investment on which it is possible to make a lot of money in a short time during periods of financial upheaval
It could have been worse.
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