CT: Gold may be rising, but it is not the time to buy
A leading economist has warned investors not too get swept along with the flood of money currently going into gold, despite the commodity breaking new record highs on a near daily basis.
A weak dollar, dwindling supply, and expectations that central banks and other investors will continue to buy gold in order to diversify their portfolios has lifted the precious metal to its highest ever level in recent weeks, and mid-week it broke new ground once more after peaking at $1,148 per troy ounce.
However John Greenwood, the chief economist at asset management group Invesco Perpetual - home of star fund manager Neil Woodford - has said the commodity is unlikely to offer much potential to investors at these levels.
Greenwood said: 'Personally I'm hesitant about making any further commitment to gold.
'Although commodities do rally at the start of the business cycle upswing, and I've said the dollar will be weak, the fact is you don't get any yield on your gold.'
Greenwood said that gold was a safe haven against economic crises, and since the worst of the recession and downturn now appeared to be behind us, gold was not the place to be investing.
He said: 'The underlying assumption is that gold is an insurance against catastrophe, and I don't think we are going to have that catastrophe, as we will see a process of gradual recovery.
'I think people will also be continually surprised over how low inflation is and over time that will erode or undermine the gold price, rather than support it.'
