The allure of gold funds – which way next?

Gold had a good year in 2019. In dollar terms, it was up in price 19%. Priced in pounds, it rose by 15%, finishing the year at a tad over £1,157 an ounce. It’s the fourth consecutive year that gold prices in sterling terms have risen. Yet, according to investors and some financial experts, gold has further to go – much further, even. They believe 2020 should be another excellent year for an asset that many consider a safe haven – in both calm and stormy times.

An asset that most experts insist should always be considered by investors looking to build a broadly diversified investment portfolio, sitting alongside other long-term investments such as equities, bonds and property. This is despite the fact that, unlike other assets, gold is non-income producing. It’s all about the price with gold – it rises and you win, it falls and you lose. The latest poll conducted by precious metals dealer BullionVault suggests that confidence to deliver strong price gains this year remains sky high.

Nearly four in five of BullionVault’s clients believe that gold prices will rise by more than 10% in 2020. Of course, you would expect precious metals investors to talk up an asset they have a financial interest in. But BullionVault’s clients are not exclusively gold investment fans. Indeed, they typically hold no more than 10% of their investments in gold. The consensus among commentators is that fear will drive the gold price even higher – resulting from potential geo-political and global economic risks such as rising tensions between the US and Iran.

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