Currency fluctuations means some investors are faring much better than others DIY investors face a triple threat of falling stock markets, rampant inflation and geopolitical uncertainty. The traditional solution to all three has been simple: buy gold. The metal’s long history as a reliable store of value has earned it “safe haven” status and investors tend to rush to it for shelter during periods of market turbulence. But investing in gold has delivered mixed results this year, depending on where investors live and the currency they use.
For American investors, for whom the dollar is the currency that matters, gold has lost 6pc of its value. But for many investors in Britain, gold’s value in sterling is more important. They have made a 10pc gain on their investments in gold this year due to the weak pound. This is far superior to the return on global stocks, which have lost 4pc of their value, and better than any interest a saver could hope to earn on their cash.
Martin Bell, a 56-year-old management consultant from North Yorkshire, said it was for this reason that he had started to invest in gold a few years ago via the Royal Mint. “I have money invested elsewhere, too: in my house, my pension and my stocks and shares Isa,” he said. “But gold is another way to diversify my money and it feels safer to me. I have some cash savings, too, but over the long term, I think gold is likely to earn a better return.”
Mr Bell invests in gold because it’s more likely to earn a better return CREDIT: Lorne Campbell/Guzelian All cash savers are losing money in real terms, due to the rising cost of living. Inflation hit a 40-year high of 10.1pc in July, while the average interest rate on an easy-access standard account was just 0.85pc, according to Moneyfacts, an analyst. The cost-of-living crisis has pushed Remi Harvey, a 25-year-old from London, to reconsider how she puts her cash to work.
Ms Harvey said she had started to invest in gold this year to keep up with the rent on her four-bedroom home, which has risen by 30pc to £4,300 a month. “I know I can get a better return from gold than if I just let my cash sit in a savings account,” she said. Ms Harvey, who is saving up for a deposit to buy a home with her boyfriend, said many friends in a similar position had started to invest in cryptocurrencies such as Bitcoin last year.
“The volatility scared me. I invested a few hundred pounds in Bitcoin, but I decided to focus primarily on gold,” she added. “I felt wary of the hype surrounding cryptocurrencies, whereas I could see that there was historical growth in gold.” Ms Harvey uses Tally Money, an app that allows users to both save and spend money invested in gold. However, investors who buy gold for the first time should be aware of how movements in the foreign exchange market can affect their returns.