Gold is as much a trickster as some of the charlatans who have made their fortune faking it. In recent years it has failed profoundly to repeat its bright rallies during previous troubled times, despite the threat of war, an oil crisis and scares of a credit squeeze. This personality change is blamed on the appearance of new instruments for hedging and higher world gold production.
If gold is to be pinned down to one indicator, that is the trend in global inflation, with the emphasis on US inflation. Government attempts to contain inflation and the apparent feebling of gold's political insurance value thus suggest some unexciting times ahead. Gold is, however, still a good hedge in bad times, particularly if other assets are falling, says Warburg director of mining Evan Worthington. Long term, though, it is little more than an inflation hedge. Fortune magazine cites that an ounce of gold has been roughly worth the price of a business suit or equivalent garb for the past 700 years.
Art, antiques and jewels.
The speculative end of the art world has produced some pretty disastrous results recently. And we have probably not seen the worst yet. The next six months will be testing times, much to the delight of the art buyer who invests for pleasure, rather than profit. Citicorp's head of art advisory, Ian Dunlop, says that more traditional quality areas, such as British paintings, and the bottom end of the market (eg. cheap ceramics) have weathered the storm better. It was new money, that turned from a wave of enthusiasm for Warhol and Rothko to a strangled trickle, that reversed prices six months ago. Dunlop advises that the speculative end of the market is still "very risky". If your purchase is for straight investment, stick to the solid traditionals.
Jewellery prices, in contrast, still have a robust glow. In November Sotheby's sold a diamond for a record £6.5 million. The glitter, it seems, inspires a sense of comfort no less today than in Elizabethan times. Antiques have shown mixed results recently, but, because of their practicality, can be counted on to provide more stable values.
Classic cars and classy nags.
In four years the cost of a mid-'60s 500 Superfast Ferrari has swung from £80,000 to £450,000 and now back again to £250,000. Do you really want to be in this game? Maybe if you are a fanatic. Robert Brooks of vintage car auctioneer Brooks says that luckily the market appears to have settled down and "hit the bump stops". Some of the high flyers, like the road-going Ferraris, could still ease further, but realistic prices are now prevailing. For just £20,000 to £60,000 you can buy a Rolls-Royce 20/25 from the 1930s. The sturdiest financial future is in pre-war motorcars, with the onus on rarity, originality (no modern parts) and good provenance (history). But, says Brooks, they all carry only one guarantee that matters: they are a hell of a lot of fun.
The same goes for horses. Your chance of making serious money buying a run-of-the-mill racehorse is one in several hundred. Picking from the cream of the crop, the odds are more like one in 10, and breeding bloodstock is another story altogether. Not so long ago horse trading for profit was easy - prices for the best bloodstock shot up in the early '80s by 300 to 400%. But from 1985 a dramatic slump was brought on by overheated prices, oversupply of stock and US tax law changes. This year prices plunged again nervously.
Pacemaker Update editor Jocelyn de Moubray says that until European tracks start offering better prize money, bloodstock prices will budge little. "It's a dead market," he broods. The only way to make money is to buy a few top-flight yearlings each year, with good advice, ie. in the hundreds of thousands of pounds range. The competition is stiff and the rewards are risky.
In finishing, one point more: whatever opportunities may abound, the wise are using these low times to snap up cheaply what they most love and need - be it a country cottage, a business or garden gnomes. Sir James Goldsmith may seem to be taking the opposite tack - by selling out of the strategic stakes that he loves and lying low in Newmont gold. But not so - for what could be closer to the wily man's heart than gold?