Why I still hold gold

I had a conversation with a woman from the press office of the Financial Services Compensation Scheme this week. She wanted to take issue with a comment I made on the scheme. I had said that while people might like to think that the government was somehow guaranteeing their deposits to the much publicised limit of £31,700, it wasn't necessarily so. The fund currently only has a few million quid in it, so hardly enough to pay off one early morning queue outside Northern Rock on the average Monday morning.

Her point was that the FSCS was more of a pay-as-you-go scheme: if there is a real disaster, they would just ask the banks to hand it over. Mine was that while that may be fine in theory, I'd like to see them have a go at raising a couple of billion quid from the UK's high street banks in a hurry: look how long it takes them just to clear a cheque or repay an overdraft fee taken "in error". Another point is that the FSCS's website makes it very clear that in their own words "it is still possible to conceive of a default (or a combination of defaults) so big as to be beyond FSCS's ability to pay compensation up to our limits". Doesn't make you want to dash out and put your money in a bank that might not be entirely secure or, indeed, one that you don't know much about, does it? Icesave has just raised the rate on its instant access savings account to 6.3%, which is nice, but if your deposit isn't really guaranteed, is it nice enough? I don't think so. My own money is staying in lower interest-paying accounts with low-risk banks. And, of course, in gold.

Not everyone connected with MoneyWeek is a goldbug but I remain utterly devoted to gold and have a large part of my own portfolio invested in it in various ways and have had since 2002. An article in The Independent this week expresses utter amazement at what it calls the "gold boom". This shouldn't be happening, says the paper. "Gold ought to have been relegated to fillings and wedding rings by now. In a world of breathtaking financial ingenuity, the sun should have gone down on this most basic and ancient stores of value." I see it the other way around. It is precisely because of the "breathtaking financial ingenuity" of the City that I feel I need to hold something as basic as gold as a store of value.

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On an entirely different subject, I want to urge you not to miss next week's magazine. It will contain the transcript of a roundtable discussion we hosted this week on the UK property market. And it is unmissable because it was the loudest, angriest and funniest roundtable we have ever had. We often disagree about all sorts of things during our talks, but this was the first time I have ever got so heated in debate that I have actually shouted at one of our participants. I regret doing so, of course, but I have two good excuses. First, he was wrong. And, second, everyone else was shouting too. Until next week.