A golden opportunity?

GOLD has been, at some point or other, a darling of the investment world. If you grew up in the 1980s, you may recall Scrooge McDuck's signature dive into his pool of gold coins in his bank vault. But for those looking to amass their entire fortunes in gold, think again.

In times of rising debt and extraordinarily low long-term real interest rates, gold, with low credit risks and high liquidity, could play an important role in portfolios as a defensive asset, alongside government bonds. But as gold is a non-productive asset, investors are advised not to place all their eggs in one basket.

A study by the World Gold Council has found that, depending on investor risk appetite, gold should have an allocation of between 2.5 and 11 per cent in a large, well-diversified portfolio.