Join the Gold Rush (Shovel not needed)

Demand for gold has surpassed that during the panic-stricken period following the collapse of US bank Lehman Brothers in October 2008.

At this time many believed the global banking system was finished.

Turmoil in the eurozone has now pushed markets into yet more panic. Fears of unmanageable public debts, inflation and sluggish growth have created an uneasy backdrop in which gold flourishes.

How do you invest in gold, if you want to? And – a harder question – will the price rise yet further?

Invest in ‘proxy’ gold

You can’t touch or see proxy gold holdings, so you need ultra-reliable assurances from your dealer and storage firm that your gold is there.

BullionVault.com is a service that in five years has attracted 18,000 investors now owning 19.3 tons of gold (worth £510m) and 50.6 tons of silver.

Run from west London, it uses high-tech trading platforms to unite buyers and sellers. This means investors get live prices and, crucially, can set the price at which they are prepared to sell or buy.

Investors can buy ‘portions’ of gold – worth as little as £100 – paying a dealing commission of 0.8% per trade (the same rate applies to sales).

The sliver of gold bought with £100 is part of a larger bar which BullionVault stores on investors’ behalf.

Every day, BullionVault publishes lists of investors (using pseudonyms) and their holdings – verified by an independent firm storing the gold, Via Mat. All individual holdings recorded at BullionVault must tally daily with the gold in Via Mat’s vaults.

Retired accountant John Whitehead has been keen on gold since Gordon Brown chose to sell half Britain’s gold reserves in 1999 at prices which John then thought were low. He was right. Gold has since quadrupled in value.

John, in his mid-50s, says: ‘Until recently there was no easy way to invest in gold. I bought coins but was worried about storage and my ability to sell easily.’

He made his first investment in BullionVault in 2008, when gold was half its present value, and bought small chunks of gold to protect himself against short-term price lurches.

John, who lives near Ipswich in Suffolk, says: ‘My aim is not to trade actively, but to buy and hold, taking profits when it seems right and investing again if prices fall back.’ But getting the timing right is hard, he admits, adding: ‘I wish I’d invested more.’