Gold's long-term returns

Although gold like any other commodity, experiences periods of, sometimes very strong volatility, over the long term the returns are spectacular. Over five years to the end of 2008, in dollar terms, it is up by 102% and by a massive 195% over the past decade.

Rather unfortunately, back at the turn of the century, Gordon Brown, when he was Chancellor, disposed of half the UK's reserves when the price of bullion was at a severe low. The move was later, unflatteringly dubbed 'Brown's Bottom', amongst dealers.

The first pure gold coins were struck by King Croesus of Lydia (present-day Turkey) during his reign between 560BC and 547BC – and gold coins have continued as legal tender ever since.

Gold is widely viewed, as the 'ultimate safe haven' for investors. It is liquid, so easy to sell and buy, it works as a currency hedge and always has supply issues - mining output peaked in 2003 - and short supply, typically leads to high demand.

Many experts believe gold has further rises in store. For example the Dallas Commodity Co., anticipates an average price of $1,200 per Troy ounce this year.