Gold vs. Other Investment Asset Classes

GOING INTO 2009, gold bullion beat all other asset classes yet again for UK investors, the second year running and the third time since 2005.

Analysis shows that £1,000 invested in gold bullion on New Years Eve 2008 would now be worth more than £1,427 as 2009 begins. The FTSE-100 share index meantime lost almost one-third of its capitalisation, turning £1,000 into less than £689.

Before maintenance and mortgage costs, residential property owned at the start of 2009 had turned every £1,000 into £870. Cash ISAs – the tax-free "wrappers" offered by the major banks and building societies – added £46 in average interest payments, just outstripping retail price inflation of 3.7%.

Now, with interest rates at record all-time lows as 2009 begins, the UK government – like anxious policy-makers everywhere – seem determined to turn cash savings into dust. And as the recession continues to depress the stock market, 2009 may prove good for gold once again, if only because it looks so bad for everything else.

Already since the end of 1999, gold has risen by 246% against Sterling, beating even residential property (up by 210% on Nationwide data). The FTSE has lost almost 36% of its capitalisation since the record peak of New Year's Eve 1999. Putting cash in a tax-free ISA has returned 52.5% over the nine years to January 2009.