Investors 'should only hold gold in small quantities'

By Sarah Engle, Thu 26 Aug 2010 - Published in Banking

Investors should only place a small amount of their portfolio in gold, according to one sector expert.

Adrian Lowcock, senior investment adviser at Bestinvest, said that the precious metal market fluctuates far too wildly for it to be considered a wise investment, even if gold is very valuable at the moment.

His comments follow the publication of the World Gold Council's Gold Demand Trends report for Q2 2010, which showed that demand for gold will remain "robust" during 2010 as a result of accelerating interest from India and China.

"Investment now drives gold performance and speculators can just as easily pull out their investment causing gold to become a more volatile asset class," Mr Lowcock said.

He added that markets are concerned about a double dip recession and deflation, so low-risk secure assets are in demand, whereas gold has "fallen behind" and will continue to do so if deflation occurs.

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