Special report by Electio Invest featured in Sustainable Business.
Dubai: Investing in gold can be used in times of inflation and deflation. It also offers a useful place of refuge in times of turmoil in currencies, it provides stability when the euro and dollar waver. But, while gold does retain a value of wealth, it has no yield.
‘The majority of advisers generally agree that gold should not represent more than 5% of any investor's portfolio. More would be ‘foolish', says Adam Kenny, Head of Investments at Electio Invest Middle East; a commodity investment company head-quartered in Johannesburg.
Mr Kenny argues that, for the private investor, gold is just insurance against a further financial meltdown.
However better protection could be obtained from simple asset diversification. Before people decide on which style of gold investment to use, it's very important to understand what forms are not appropriate. Jewellery is not a constructive investment as the price always includes the distribution, retail and manufacturing costs, ‘You just have to take a quick look at prices offered by the "money for gold" firms that flood the market to know that,' says Kenny.
Different ways to invest
For people wish to hold the physical asset, the most simple way is to purchase gold coins such as Krugerrands or Britannia's. Investors can obtain these free of VAT and stamp duty, although they must be aware of additional costs for insurance and storage. However there is still an issue of security on gold coin investing as the price doesn't perfectly match the price that gold trades for on the markets.
Read the full report at Sustainable Business
