Question: what’s the best way to withstand high inflation? Answer: buy some gold bars. That’s what many investors are doing, making one pension provider add a bullion buying service to its Sipp.
Inflation in the UK is already at 4%, and Marcus Grubb, of the World Gold Council, says growing fears in Europe will only increase gold's appeal. 'We don't think gold will lose its lustre in 2011,' he says. 'Last year was a very strong year for demand and we're expecting record numbers for gold in 2010.
'Gold demand remains extremely strong and we think 2011 will be another good year.' But he warns that interest rate hikes may also pull down the value of gold.
However, Andrew McGowan, of GoldMoney, warns against treating gold as a ‘yield generating asset. He says:
'Gold is meant for retaining the purchasing power of your money – and its an excellent method. Over the last 60 years it has been a constant performer in this regard.'Better then to use gold as the element of your pension that isn’t invested, to reduce risk.