Five questions about: The price of gold


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The Independent Online

It's slumped this week, hasn't it?

Yes it has. It fell to its lowest level for two years dropping 13.7 per cent between last Friday and Monday, the fifth-largest, two-day slump since records began in 1920.

So the boom is over? It's time to sell?

It would have been better to sell before the slump, obviously. But, yes, it could be time to rethink any investment you have in gold, whether it is in the physical metal, or any funds that invest in gold or gold-realted activities, such as mining.

Rethink? Do you mean cut and run?

No. Panic selling can be a huge mistake. As with any investment, you need to decide how you think gold will perform over the next few months or years and whether that potential performance still fits in with your plans and financial expectations.

How will it perform?

No-one knows. As one investment expert said to me this week: "Gold is a speculation, not an investment." So it's much harder to predict future performance than in more mainstream opportunities.

What's behind this week's slump?

Fears that Cyprus might have to sell part of its gold reserve, which could flood the market and cut the price. But now the market reflects that fear, it could be time to buy in hopes of a recovery.

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