Gold

About the gold package

Gold is valued for its rarity and for the fact that, unlike a currency, no government can print more of it. For that reason many investors hold some gold alongside shares, bonds and cash, in the hope that it will behave differently when other markets fall.

That is a pattern, not a rule. The price of gold moves with interest rates, the strength of the dollar, and investor sentiment, and it can fall for long periods. Gold also pays no interest or dividend, so any return comes from a change in its price.

Why investors consider gold

• Diversification. It has often moved differently from shares and bonds.
• Inflation hedge. It has historically held its purchasing power over long periods, although not in every period.
• Global demand. Jewellery, central banks, industry and investors all buy gold, and it is traded in every major market.