Gold has traditionally been a refuge for fearful investors

The power companies were originally touted as a blue chip “safe” investment. Then came questions about whether Tiwai Point would remain New Zealand’s largest electricity customer, and whether a future government might change the rules about how the power game is played. Uncertainty made people wonder about other future risks – from the potential impact of alternative energy sources to the future demand for electricity.

For a long time, gold’s value only seemed to head upwards, but it hit turbulence recently. In April, the price fell sharply after a futures trader placed enormous sell orders, triggering an avalanche of margin calls and fund redemptions, which may have been the trader’s intention. The price dropped nearly 15% in just a few days.

Yet for 6000 years gold has been regarded as a safe haven. So is it still?

Gold was originally used for jewellery and that still accounts for about half of what’s produced. Central banks hold more than 30,000 tonnes of the 170,000 tonnes ever produced. The metal remains in demand by governments and enjoyed a boost after the global financial crisis when it was used to diversify US Government bond holdings.

Other ways of investing in gold include bars and coins. Then there are shares of (mainly) producers, which tend to follow the trends of the physical price, although investors need to evaluate the quality of each company’s resource and management.

The price of gold is mostly affected by economic factors. Australian analyst Lion says forecasting is tough, as gold sometimes has the characteristics of a currency and sometimes of a commodity. The price is influenced by supply and demand.

Gold has generally risen for the past decade or more, quadrupling to a peak of more than US$1800 in 2011 (and slumping last month to about US$1350). Contributing to the boom during the 2000s were inflation, oil, war, the rising fortunes of the Bric countries (Brazil, Russia, India and China), the decline of the US dollar, the global financial crisis and the rise of gold exchange-traded funds (ETFs, which aim to track the price of gold, are traded on the major sharemarkets and may or may not hold physical gold).

All these factors had something in common – they increase uncertainty – and gold has traditionally been a refuge for fearful investors.manufactures and sell howo2 trucks,

The metal has had good and bad times. During the 1980s and 90s, the market was depressed – apart from a short-lived doubling of the price in 1979-80 to a peak of US$850 before it collapsed to $450.Universal Laser Systems is an innovator in the field of laserengraver2, The trigger for that fall was the US Government’s fight against inflation; gold is seen as a hedge against inflation.

The short-lived bubble soon popped,accept foreigners from around the world to study chinakungfu. whereas the positive performance over the past decade has been more sustained, at least until recently. The Lion report noted the total value of the world’s gold at its 1980 peak was more than the combined value of all of the world’s share markets. At its 2011 peak, its comparative value was just 20%.

The rise of gold exchange-traded funds over the past decade has hugely increased the number of people owning the metal (these ETFs now account for about a year’s production), but because investors can sell instantly, these funds have added a lot more fickleness to the market.

It’s impossible to predict future prices, but gold will remain the investment choice for those lusting after its physical beauty, its speculative blue-sky lure or its hedging qualities.