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No safe haven

Amid global uncertainty, the price of gold has enjoyed a surge as investors flock to the precious metal, attracted by its reputation for stability.

But on Wednesday questions were raised for the first time about gold trading as better-than-expected economic figures led to $170 being wiped off the value of gold in 48 hours. As it corrected itself towards the end of the week, was this just a momentary blip?

According to Bank of America Merrill Lynch, most probably as it revised its 12-month gold target to $2,000 an ounce. 'Physical gold is the ultimate collateral because it has no credit risk,' the bank said.

Philippa Gee, an independent financial adviser, was more ambiguous in her assessment, saying: 'Clearly there has been considerable interest in gold as the perception is that it is a safe haven. Unfortunately, this is not actually the case, as the value could fall significantly when stock markets move up, and you need to get the timing precisely right – you must be able to move out at exactly the right time.

'If a client wanted to invest specifically in a commodity fund as his or her only holding, I would advise against it 100 percent. Gold is an interesting asset, particularly at present, but the harder question is when to sell rather than when to buy.'

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