Warning from expert as investors pile into gold

Ultra-cautious investors have been warned about moving all their holdings into gold.

Analysis from Bloomsbury Financial Planning noted today that ’putting all your eggs in one basket’ might not prove the best strategy over the long term.

The precious metal - whose intrinsic value insulates it from wild market fluctuations - has grown in popularity due to the financial turbulence caused by the global credit crunch.

Central banks’ quantitative easing plans - which sees institutions such as the Bank of England effectively print money in order to promote economic growth - has also boosted gold.

This is because the metal offers investors a hedge against high rates of inflation - which some analysts see as a likely consequence of the programmes.

New figures out this week from the World Gold Council highlighted a 38 per cent increase in customer demand, year on year.

Common ways of investing in the metal include Exchange-Traded Funds linked to the gold price, gold coins and gold bars.

Jason Butler, a chartered financial planner at Bloomsbury Financial Planning, said: ’The problem with gold is that, while it is a ’storer’ of value, it doesn’t have any return value other than its speculative supply and demand value.’

He added: ’It is quite rational for people to turn to something that they can touch and that has been around for thousands of years, but the jury is out on whether you would want to put all your eggs in one basket with gold.’ADNFCR-2318-ID-19183373-ADNFCR