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Last week I told you I was planning to sell some of my gold. Some readers found that worrying. They wondered if perhaps I no longer have faith in the one thing that has been a core MoneyWeek holding for a decade.
Not so. The problem with my gold – and it is a problem I suspect some long-term readers will also have – is that its pleasing rise over the last few years has meant it has gone from being a smallish percentage of my portfolio to being around 50%. Some people are happy with that kind of imbalance – our own Tim Price, for example. However, I am not blessed with perfect foresight (as regular readers might have noticed). So I want my gold to be my insurance – not the only thing I have. I still think the gold price will go higher from here (financial repression and money printing should make sure of that). I just don’t want to be utterly reliant on it doing so.
The good news, of course, is that MoneyWeek readers in gold have had a good year. It’s been the best-performing asset class out there: up 13%, more than all stock and bond markets and up more against the dollar than any other currency. Readers who wanted to be in equities and took our advice early this year to focus on developed markets over emerging ones will have lost less money than others (as long as they didn’t put money into Europe, of course).
Look at a chart of global markets and you’ll see that the best performers are mainly Western (the US, Britain, Switzerland). Even Japan, while hardly putting in a stellar performance (down 17%), has outperformed the likes of Brazil and China and British investors will have been protected from its falls to a degree by the rising currency (the yen has risen by around 4% this year, making it the world’s second-best-performing currency after gold).
Indexed-linked gilts have also had a good year. Those who agreed with us that cash is a perfectly acceptable thing to hold in abnormal times should be pleased with themselves too. They may not have made a real return (after inflation), but they’ve lost a lot less in the way of purchasing power than they would have had they invested in the funds most managers and financial advisers were hyping in January. The fact that the pound has more or less held its own this year has been good for those who have held their cash in sterling as well.
In January, I’ll look in more detail at what we expect from 2012, but we have reasonably high hopes on the basis that things can’t carry on as they are. Europe must resolve itself one way or another and with both China and America facing changes of government it seems reasonable to expect changes of policy too. It will, I think, be a year of resolution – hopefully in a good (or at least an interesting) way. I’m looking forward to it! A very Merry Christmas and Happy New Year to you all.
• PS There’ll be no magazine next week so you will get your next copy on 6 January.
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Merryn Somerset Webb
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