Sparkling period for gold is driven by global fears
House prices, shares and cash savings have struggled with recession and low interest rates this year, but one asset has enjoyed a golden period.
In demand: Gold has risen 41% this year
Earlier this month the price of gold hit an all-time high of $1,226.56 (£766) an ounce, up 41% this year and more than four times higher than a decade ago - a sparkling return against most other lacklustre investments.
As gold fever took hold this year people threw parties at home where guests could have unwanted jewellery valued by an assessor and be offered a cheque on the spot. Television and billboard adverts also sprang up, inviting people to sell unwanted gold. Sales of gold coins soared and even Harrods started selling bullion.
It is not just individuals who have been buying - central banks have bought gold as a hedge against currency falls. Gold has always been seen as a haven in troubled times and demand has been fuelled by fear of recession and then of inflation.
Egon von Greyerz, managing director of Matterhorn Asset Management, believes inflation will remain the driving force behind the gold price.
'Gold is not going up, paper money is coming down,' said von Greyerz, whose Swiss company specialises in wealth preservation and sells and stores gold bullion - in vaults under Zurich airport.
'Gold is a strange product,' he said. 'You dig it out of the ground, refine it and, apart from jewellery, you put it back in the ground.'
'In my view the next stage of the market starts in 2010 because government deficits and unemployment are only going to go up,' he said, warning of hyperinflation due to collapsing currencies.
In contrast, Mike Lenhoff, chief strategist at stockbroker Brewin Dolphin, said there was good reason to believe that gold's sparkling year owed a lot to the ailing dollar.
'There is a clear correlation between a falling dollar and a rising gold price,' he said. 'I expect a rebound in the dollar as the US economy grows next year so I would expect gold to fall.'
Most watched Money videos
- The new Volkswagen Passat - a long range PHEV that's only available as an estate
- Paul McCartney's psychedelic Wings 1972 double-decker tour bus
- Mini unveil an electrified version of their popular Countryman
- Iconic Dodge Charger goes electric as company unveils its Daytona
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- How to invest for income and growth: SAINTS' James Dow
- Steve McQueen featured driving famous stunt car in 'The Hunter'
- German car giant BMW has released the X2 and it has gone electric!
- MG unveils new MG3 - Britain's cheapest full-hybrid car
- How to invest to beat tax raids and make more of your money
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Barclays profits hit by subdued mortgage lending and...
- MARKET REPORT: Meta sheds £130bn value after AI spending...
- BHP launches £31bn bid for Anglo American: Audacious...
- Unilever in talks with the Government about ice-cream...
- PWC partners choose another man to become their next leader
- Sitting ducks: Host of British firms are in the firing...
- Unilever sales jump as consumer giant eases price hikes
- BHP swoops on rival Anglo American in £31bn mining megadeal
- Sainsbury's enjoys food sales boost months after...
- BUSINESS LIVE: Barclays profits slip; Sainsbury's ups...
- Anglo-American will not vanish without a fight, says ALEX...
- WH Smith shares 'more for patient money than fast bucks',...
- AstraZeneca lifted by blockbuster oncology drug sales
- Ten stocks to invest in NOW to profit from Rishi's...
- WPP revenues shrink as technology firms cut advertising...
- LSE boss David Schwimmer in line for £13m pay deal...
- Sainsbury's takes a bite out of rivals: We're pinching...
- Meta announces it is to plough billions into artificial...