Gold still a safe bet

Thursday 10th September 2009

Gold is still a safe bet and part of a good portfolio after prices topped US$1,000 an ounce yesterday.

Gold hit an 18-month high this week, hitting US$1,009.70 as concerns about inflation begin to rear their head.

The precious metal has been a favoured haven for investors seeking stability in the face of the worst global recession since World War II, surging some 41% after falling to US$710.30 per ounce last November.

Diversified Investment Strategies brought gold into its portfolios five years ago to act as a counter to a potential meltdown in the global financial system.

"The risk of rising inflation is a factor" that has helped lift the price of gold, said investment analyst Norman Stacey.

"There are also seasonal factors that it jumps up on that we've seen over several years."

The appeal of gold as a safe haven has ebbed as policy makers and central banks around the world have acted to shore up the credit system, but Diversified is still encouraging investors to maintain a model weighting at 10% to gold as it adds valuable diversification and "intrinsic worth."

NZ Mint bullion deal Michael O'Kane said the metal was still deemed safe by investors, and that the strong kiwi dollar would offer benefits to gold traders.

"A substantial body of analysts is predicting it will go even further as global market volatility continues," he said.

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