Gold relevant in UK PP

[Gfourmoney]

I have read some of HBs work and in "why the best laid investment plans usually go wrong" he says gold is an inflation hege. But he continues that it only protects against US inflation and not any other country. As a UK PP Investor I have my stocks, bonds and cash in the uk so am only interested in UK sterling inflation. Does this make Gold irrelevant to me and is there an alternative? Thanks in advance.

[craigr]

I have read some of HBs work and in "why the best laid investment plans usually go wrong" he says gold is an inflation hege. But he continues that it only protects against US inflation and not any other country. As a UK PP Investor I have my stocks, bonds and cash in the uk so am only interested in UK sterling inflation. Does this make Gold irrelevant to me and is there an alternative? Thanks in advance.

Gold is tightly linked to the dollar due to the dollar's role as a reserve currency. But at the same time it can offer very strong protection against local currency problems. With world central banks often moving in lockstep today it is not entirely true that gold protects only against US inflation. Gold serves as a portfolio hard asset in any currency and I tend to view it as currency neutral as it is not readily affected by any one particular central bank's monetary policy. Gold can do poorly if the dollar is very strong. However the good (??) news is that I can't ever remember the US deliberately seeking out a strong dollar policy. Ever. So the trend over time is going to be for gold to continue to rise in terms of dollar or whatever other paper currency it is priced in. IMO.

So yes, I would still own it in your portfolio regardless where you live. If for no other reason that there are no other really good alternatives. Even if you substitute the gold for US dollars you have not solved the situation and just introduced a new currency into the mix to potentially have to worry about.

[craigr]

Thanks Clive, I completely forgot about all those UK pages you put together on this!

[Gfourmoney]

Thanks for those replies. Very helpful indeed. I shall continue with my 25% in gold.