I have little idea where the price of gold is heading (does anyone?) But I do know that gold is a solid investment in troubled times, a good portfolio diversifier – and that plenty of central banks (including those bad boys in China and Russia) have been buying it up as if it is going out of fashion.
Strong demand, of course, results in higher prices – which is reflected in a gold price hovering around the £1,525 per ounce mark (16 per cent up on the price at the start of 2022).
Last month, I had a fascinating conversation with Sebastian Lyon, manager of the £6.5billion multi-asset fund Trojan.
Midas touch: Strong demand, of course, results in higher prices – which is reflected in a gold price hovering around the £1,525 per ounce mark
The chief investment officer of Troy Asset Management prides himself on protecting the value of money entrusted to him and his team by investors. Capital preservation is as important as growth.
It explains why Trojan has 12 per cent of its funds in gold-related assets – a mix of gold bullion securities, a gold exchange traded fund (Invesco Physical Gold) and shares in Canadian gold mining company Franco-Nevada.
‘For a long time, crypto-assets such as Bitcoin took the oxygen out of gold,’ Lyon told me. ‘But as we’ve found out in recent months, crypto-assets are like investing in US stocks listed on the Nasdaq that are on crack.’
He added that he was ‘sure’ gold would do its job this year as a ‘defensive asset’. So, buy a little gold.
Funds such as Trojan and Ruffer can give you limited exposure, as can vehicles such as BlackRock World Mining and JPMorgan Natural Resources (12 and 11 per cent invested in gold respectively). More focused funds include Black Rock Gold & General (investing primarily in gold companies) and iShares Physical Gold (which tracks the gold price).
I will leave you with one final statistic. According to online bullion trader BullionVault, a portfolio split 60 per cent in the FTSE AllShare Index and 40 per cent in ten-year gilts returned 0.6 per cent per annum between 2018 and the end of last year.
Switching just 5 per cent of that portfolio into gold would have boosted the average annual return to 1.1 per cent.
Diversification pays.
A sinking feeling over New Year…
A massive thank you to the staff of the Cotswold Water Park De Vere Hotel near Cirencester for their understanding attitude last weekend over an unfortunate incident of my own making.
Checking into the hotel for a New Year’s Eve gala dinner, I went for a nose around before putting on my glad rags (black tie) in anticipation of partying the night away. But in my haste to check out the spa facilities, taste the hotel’s whitebait and sip a few bubbles, I forgot to fully turn off the tap in my bathroom.
The result was not far off the Cotswolds’ answer to Niagara Falls. Re-entering the room and hearing the sound of running water, I initially thought that someone in my absence had taken the opportunity to have a quick shower in the bathroom (share and share alike).
But upon politely knocking on the door and opening it a wee bit, all I could see was water cascading from the sink. Not only had I left the tap on, but the plug was in closed mode. The bathroom floor was flooded. The only consolation was that the room was on the ground floor.
The staff could not have been more helpful. Within minutes, a mix of towels and mops had been employed to soak up most of the flood.
‘It happens all the time,’ said one lovely employee, operating a machine employed to suck most of the water from the carpet outside the bathroom door.
I trust it was a coincidence that the table we had booked for the gala dinner was not on the seating plan when we rocked up for canapes and prosecco (it was then constructed before our very eyes). To De Vere: I won’t do it again. Mea culpa and all that.
Premium hikes are just not cricket
Hit for six: Tom in action in 2012
Ever-rising insurance bills are as much a feature of the New Year as spiralling energy costs.
Last week’s article in The Mail on Sunday on double-digit premium increases in car, home and travel cover prompted a flurry of correspondence from readers complaining that they had been hit by similar hikes.
Ray Palmer, from Hove in East Sussex, recently received a home insurance renewal notice from Liverpool Victoria. Despite having the policy for nigh on 20 years and never having made a claim, he was informed that the annual premium would be jumping from £347.70 to £484.65 – an increase of 39 per cent.
He rang LV, only to be told that it could not offer better terms. A subsequent email offered no explanation for the inflation-busting increase. ‘Our home insurance renewal prices are the best we can offer,’ it said, ‘so no reductions can be made.’
Ray has now taken out cheaper cover with another major provider.
Eifion Davies is also being asked to pay 20 per cent more for his car cover with LV. ‘Loyalty doesn’t pay,’ he says. ‘These price increases are never-ending. What with rip-off energy bills and high petrol costs, how can we save for the future?’
Former professional cricketer Tom Poynton, from Repton in Derbyshire, has also seen the cost of his car and home insurance jump through the proverbial roof.
Having reluctantly renewed his home insurance last year with Hiscox despite a 24 per cent premium hike (he couldn’t find cheaper cover elsewhere), he has just been told his annual car cover with Axa will cost 52 per cent more this year – £1,378 as opposed to £902.
Tom, who played for Derbyshire, is a director of Baron & Grant Investment Management, a firm specialising in running investment trust portfolios for clients. (The Baron in the company’s name stands for John Baron, Conservative MP for Basildon and Billericay and author of an authoritative guide to investment trusts.)
Tom, who drives a Range Rover Sport, is bamboozled by the premium hike. ‘Another year of no claims,’ he says. ‘Another year’s experience behind the wheel. Yet I am rewarded with a 52 per cent premium hike. When I asked Axa for an explanation, it said it was business sensitive information. Absolute disgrace.’ Absolutely.
Home improvement pricing not a paradigm of virtue
My cleaner’s daughter is looking to give her Berkshire home a 2023 makeover. New windows are the order of the day. After receiving a quote from a local company, she thought she would approach Anglian Home Improvements to see if it could better it. Initially, Anglian quoted £11,000 more. It then offered a £3,000 deduction for the ‘Government scrappage scheme’ (no such scheme exists).
When she said it was still too expensive, they asked for details of what she does for a living. Armed with that information (she’s a key worker), she received a quote £1,000 below the one from the local company. She accepted.
Ingrid, my cleaner, is pleased that her daughter finally negotiated a good price. But home improvement pricing shouldn’t work like this. It makes the world of insurance pricing seem like a paradigm of virtue.
