Think of gold as cheap insurance

Despite its recent slide, gold is still a solid bet. There is plenty of scope for future rises and, given the risks to the world economy, it remains the ultimate safe haven and the oldest form of money.

Gold bugs have been "hit in the face with a frying pan", says Justice Litle on www.Kitco.com. The yellow metal has slumped by over a fifth since mid-July and hit a nine-month low under $800 an ounce. The rebound in the dollar has dented sentiment towards all commodities, while inflation worries have been eclipsed by the poor growth outlook amid easing oil prices. Falling demand for gold jewellery due to higher prices has also prompted speculators to head for the exit.

Nevertheless, gold still looks a solid bet. Supply remains tight and jewellery demand is recovering in India, the world's biggest consumer, now that gold is cheaper, says Lawrence Williams on www.Mineweb.co.za. As far as investment demand is concerned, there seems plenty of scope for future rises. Gold is the ultimate safe haven and the oldest form of money, so it should shine, given the nasty array of risks to the world economy and its major currencies.

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MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.