The turmoil in global financial markets has triggered a surge in the price of gold, which investors consider a safe haven in times of trouble.
Here, Times Money offers ten ways investors can profit from demand for this precious metal.
1. Bullion
Small bars and bullion coins can be bought from dealers, such as Spink, at about 5 per cent above metal value and sold back at the same rate below value. This week Spink was selling 1oz Krugerrands for £470 and buying from the public at £426. Dealers tighten margins for customers who buy or sell in bulk.
2. Collectable coins
Gold coins with a value above their bullion content are an interesting option, but not one recommended by Ben McLoughlin, bullion manager at Spink. He says that the market is notoriously difficult for noncollectors to second-guess. “If you do decide to buy, rare coins in excellent condition are the safest,” he adds. “We are seeing strong interest in coins from Russia, India and China, and in British Celtic coins.”
3. Jewellery
This has the advantage of being both decorative and wearable. However, bog-standard new items come with a mark-up of as much as 300 per cent on the gold price. Collectible items, either vintage examples or new pieces from top designers, have greater investment potential and a value well above bullion, but they are a speculative punt, dependent on volatile market trends.
4. Exchange-traded funds (ETFs)
Gold ETFs track the gold price and offer what Gary Dugan, of Merrill Lynch, the investment bank, calls “the easiest way to gain exposure to pure gold”. ETFs are listed on the stock market, like shares, and can be bought through a stockbroker, held tax-free in an Isa and incur much smaller fees than managed funds.
5. Mining shares
Shares in goldmining companies provide geared gains over the metal price. This is where a rise or fall in the gold price translates into a more significant rise or fall in the share price. Several funds invest heavily in the sector, notably the Black Rock Merrill Lynch Gold and General Fund. This has delivered a return of 2,026 per cent since its launch in 1988.
6. Gold futures
These are high-risk investments available from stockbrokers. A futures contract is a tradeable promise to buy or sell at a set price on a future date. Investors put down a deposit of only 10 per cent, so can buy 100oz of gold - the size of a futures contract - for the price of 10oz. Huge profits, and losses, can be made.
7. An online option
BullionVault.com offers the chance to buy and sell shares of gold bars held in secure vaults in Zurich, London and New York. The metal is held in the investor's name - not in trust, as with ETFs. Transaction costs are a fraction of those in the small-bar market, while storage and insurance costs are 0.12 per cent a year, with a $4-a-month minimum. New users can sign up for a free gram of gold to get a feel for the site.
8. Metal detecting
A decent switch-on-and-go detector costs as little as £200. Though this hobby has gold-finding potential, base-metal items of archaeological interest, but minimal monetary value, are far more common. All gold finds over 300 years old must be declared as treasure trove and may be bought by museums at market value.
9. Panning for gold
This will not make you rich, but it is a fun day out in some of Britain's best countryside. The Museum of Lead Mining at Wanlockhead, Lanarkshire, Scotland, has full-day courses tomorrow and on September 21, priced at £65, including lunch and the necessary licence. The museum says that most participants find a small amount of gold to take home.
10. Treasure hunting
Lost treasures include King John's treasury, which disappeared into the Wash in 1216; two pirate caches on Cocos Island, off Costa Rica; and the cargoes of several wrecks. An alternative to searching for such riches yourself is to invest in marine-salvage businesses, such as Odyssey, which is listed on the Nasdaq stock market.
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