Forget Willy Wonka… As price hits record high, could investing in GOLD be just the ticket for your portfolio?

By ROSIE MURRAY-WEST, Mail on Sunday, 10 December 2023:

The new Wonka movie starring Timothee Chalamet isn’t the only golden ticket in town.

This week the gold price hit a record high, coming in at above $2,100 an ounce and making investors wonder if they should add a little lustre to their portfolios.

Whether you hold it as bullion, invest via a fund or dabble in gold mining, the precious metal holds a unique appeal despite some obvious limitations…

But many people use it as a diversifier to protect their portfolios from extreme movements, whatever their feeling about the economy.

However, gold itself can be a volatile investment. Global uncertainty tends to push the price up over the long term, but over the short term there can be wide fluctuations.

Higher interest rates also tend to push the price down. That is because gold does not produce an income. When rates are low, that is not so keenly felt by investors.

How to invest money in gold

If you think your portfolio could do with a golden sheen, there are several ways to invest.

The simplest to understand is to buy physical gold, in bars or coins. The downside of this is that you’ll either have to pay to store it or accept quite a hike in your home insurance to have an acceptable safe fitted. You’ll also incur costs if you buy and sell…

Alternatively, you could choose an open-ended fund or investment trust that is exposed to the gold price, but has an active manager. Personal Assets Trust, down 2.2 per cent so far this year, has nearly 11 per cent of its portfolio in gold bullion.

James Carthew, head of investment companies at fund specialist QuotedData, says that the trust is focused on growing money but also on not losing money when markets fall, and gold is used as a defensive play.

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