In the face of an uncertain future, gold remains the best insurance policy
The market price of gold may have fallen during the year, but hoarding of the precious metal by central banks and private individuals is approaching record levels.
In trading terms, it has been a tough year for the yellow metal. The price of gold has fallen 28pc during the past 12 months. However, the fundamentals, characteristics and attractions of gold are undiminished because we remain in times of extreme intervention by governments around the world, the outcome of which is completely unknown.
The first rule of investment is preservation of capital. The second is to go searching for gains or income that fits with your appetite for risk. Gold has been the insurance of choice for thousands of years to satisfy the first rule, despite the fact it generates no income and actually incurs costs for storage.
Alternative ways of protecting wealth, such as a bank account or government bonds, have all seen rates of interest destroyed by monetary stimulus. With negative rates on some of the safest bonds in the world, such as short-dated Swiss government bonds, investors now have to pay to lend Switzerland money, and once adjusting for inflation, investors are also paying the bank to hold their cash.