Is it too late to jump on the gold bandwagon?

The price of gold has been rising since the earliest virus reports from China in December. Adherents regard it as a hedge against inflation, bad government, economic turmoil, weak currencies and negative real returns on financial alternatives, all of which are present threats. For pessimists, this week’s headlines — above-inflation pay rises for 900,000 UK public-sector workers, the EU’s €750 billion debt-fuelled recovery package, the WHO’s report of 260,000 new Covid cases in a single day — all represent arguments for this ultimate safe-haven holding.

Too late to jump on the bandwagon? I’m no natural pessimist and (as I’m about to reveal) I’m a hit-and-miss forecaster, but I do see a case for some gold insurance in any well-balanced portfolio. How to achieve that? A quick word from this column’s veteran investor, Robin Andrews: ‘A new investor might do worse than buy a few gold coins as the lowest-risk investment in the sector and look for significant upside in carefully chosen exploration stocks.’ We’ll come back to stock choices another week, but the message for now — amid the daily confusion of positive and negative signals — is don’t overlook the possibilities of gold.

Too gloomy?

In early April, when lockdown had anaesthetised the housing market, I predicted it would re-open in the autumn at 15 to 20 per cent below pre-virus levels, echoing what happened after the 2008 crash — and suggested that wouldn’t be bad if it made first homes more affordable for the generation that will lead post-pandemic recovery. I still think the coming recession will depress house prices for the medium term but I’m happy to admit that, for now, my forecast was too gloomy: estate agents report a surge of enquiries boosted by the temporary stamp duty cut, while Rightmove says the average UK house price this month, at £320,625, is 2.4