I have no idea where the price of gold is headed (anyone?) But I do know that gold is a solid investment in troubled times, a good tool for portfolio diversification – and many central banks (including the bad boys in China and Russia) bought it up as if it were out of fashion.
Strong demand, of course, drives higher prices – reflected in a gold price hovering around £1,525 an ounce (16% higher than the price at the start of 2022).
Last month, I had a fascinating conversation with Sebastian Lyon, manager of the £6.5 billion multi-asset fund Trojan.
Midas touch: Strong demand, of course, translates into higher prices – reflected in a gold price hovering around £1,525 an ounce
Troy Asset Management’s Chief Investment Officer takes pride in protecting the value of money entrusted to him and his team by investors. Capital preservation is as important as growth.
This explains why Trojan holds 12% of its funds in gold-related assets – a mix of gold bullion stocks, a gold exchange-traded fund (Invesco Physical Gold) and shares of the mining company. Canadian Franco-Nevada gold mine.
“For a long time, crypto-assets like Bitcoin took the oxygen out of gold,” Lyon told me. “But as we’ve discovered in recent months, crypto-assets are like investing in Nasdaq-listed US stocks that are on crack.”
He added that he was “sure” that gold would do its job this year as a “defensive asset”. So buy some gold.
Funds like Trojan and Ruffer can give you limited exposure, as can vehicles like BlackRock World Mining and JPMorgan Natural Resources (12% and 11% respectively invested in gold). More focused funds include Black Rock Gold & General (investing primarily in gold companies) and iShares Physical Gold (which tracks the price of gold).
I’ll leave you with one last stat. According to online bullion trader BullionVault, a portfolio split 60% into the FTSE AllShare index and 40% into ten-year gilts returned 0.6% annually between 2018 and the end of last year.
Changing just 5% of that portfolio to gold would have boosted the average annual return to 1.1%.
Diversification pays.
A feeling of shipwreck at New Year…
Many thanks to the staff at the Cotswold Water Park Hotel De Vere near Cirencester for their understanding attitude last weekend in the face of an unfortunate incident on my part.
Arriving at the hotel for a New Year’s gala dinner, I went for a walk before putting on my rags (black tie) in anticipation of partying the night away. But in my rush to tour the spa facilities, sample the hotel’s white bait, and sip some bubbles, I forgot to turn my bathroom faucet off completely.
The result was not far off from the Cotswolds’ response to Niagara Falls. Upon entering the room and hearing the sound of running water, I first thought someone in my absence had taken the opportunity to take a quick shower in the bathroom (share and share).
But knocking politely on the door and opening it a tiny bit, all I could see was water pouring from the sink. Not only had I left the faucet open, but the outlet was in closed mode. The bathroom floor was flooded. The only consolation was that the room was on the ground floor.
The staff couldn’t have been more helpful. Within minutes a mixture of towels and mops had been used to absorb most of the flooding.
“It happens all the time,” said a charming employee, using a machine used to vacuum most of the water from the carpet outside the bathroom door.
I hope it was a coincidence that the table we reserved for the gala dinner was not on the seating plan when we swung for canapes and prosecco (it was later built in front of our eyes) . A De Vere: I won’t do it again. Mea culpa and all that.
Premium hikes just aren’t cricket
Hit for six: Tom in action in 2012
Steadily rising insurance bills are as much a feature of the new year as skyrocketing energy costs.
Last week’s story in The Mail on Sunday about double-digit increases in car, home and travel cover premiums prompted a flurry of correspondence from readers complaining they had been hit by similar rises.
Ray Palmer, from Hove in East Sussex, recently received a home insurance renewal notice from Liverpool Victoria. Despite having had the policy for nearly 20 years and never making a claim, he was told the annual premium would rise from £347.70 to £484.65, a 39% increase .
He called LV, only to be told he couldn’t offer better terms. A subsequent email offered no explanation for the rise in inflation. “Our home insurance renewal rates are the best we can offer,” he said, “so no discounts can be made.”
Ray has now taken out cheaper coverage from another major provider.
Eifion Davies is also asked to pay 20% more for his car cover with LV. “Loyalty doesn’t pay,” he says. “These price increases are endless. With sky-high energy bills and high gas prices, 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 soar.
After reluctantly renewing his home insurance last year with Hiscox despite a 24% premium hike (he couldn’t find cheaper cover elsewhere), he was just told that his annual car cover with Axa will cost 52% more this year – £1,378 from £902.
Tom, who played for Derbyshire, is a director of Baron & Grant Investment Management, a firm specializing in managing investment trust portfolios for clients. (The baron in the company 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 amazed by the high-end touring. “Another year without a claim,” he says. ‘Another year of experience behind the wheel. Yet I am rewarded with a 52% bonus hike. When I asked Axa for an explanation, he replied that it was commercially sensitive information. Absolute shame. Absolutely.
Home improvement pricing is not a paradigm of virtue
My housekeeper’s daughter is looking to give her Berkshire home a makeover in 2023. 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 improve it. Initially, Anglian quoted £11,000 more. He 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 on what she did for a living. Armed with this information (she’s a key worker), she received a quote that was £1,000 lower than the local company. She has accepted.
Ingrid, my cleaning lady, is delighted that her daughter has finally negotiated a good price. But home improvement pricing shouldn’t work like that. This makes the world of insurance pricing appear like a paradigm of virtue.
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