JEFF PRESTRIDGE: Buy a little gold – it could help brighten the portfolio

I have no idea where the price of gold is going (anyone?) But I do know that gold is a solid investment in tough times, a good portfolio diversifier – and that plenty of central banks (including those bad guys in China and Russia) have been buying it up as if it goes out of style.

Strong demand naturally results in higher prices – reflected in a gold price hovering around £1,525 an ounce (16 per cent higher than the price at the start of 2022).

Last month I had a fascinating conversation with Sebastian Lyon, manager of the £6.5 billion multi-asset fund Trojan.

Troy Asset Management’s chief investment officer prides himself on protecting the value of the money investors entrust to him and his team. Capital preservation is just as important as growth.

It explains why Trojan has 12 percent of its assets in gold-related assets — a mix of gold securities, an exchange-traded gold fund (Invesco Physical Gold), and shares in Canadian gold mining company Franco-Nevada.

“For a long time, crypto assets like Bitcoin took the oxygen out of gold,” Lyon told me. “But as we’ve found out over the past few months, crypto assets are akin to investing in US stocks that are on the Nasdaq and on crack.”

He added that he was “confident” that gold would do its job as a “defensive asset” this year. So buy some gold.

Funds like Trojan and Ruffer can give you limited exposure, as can vehicles like BlackRock World Mining and JPMorgan Natural Resources (12 and 11 percent invested in gold, respectively). More targeted funds are Black Rock Gold & General (investing primarily in gold companies) and iShares Physical Gold (which tracks the price of gold).

I’ll leave you with one final statistic. According to online gold trader BullionVault, a portfolio divided 60 percent in the FTSE AllShare Index and 40 percent in 10-year gilts returned 0.6 percent annually from 2018 to the end of last year.

If only 5 percent of that portfolio were turned into gold, the average annual return would have risen to 1.1 percent.

Diversification pays off.

A sinking feeling about New Year…

A huge thank you to the staff at the Cotswold Water Park De Vere Hotel near Cirencester for their understanding attitude last weekend regarding an unfortunate incident of my own making.

Checking into the hotel for a New Year’s Eve gala dinner, I poked around before donning my happy rags (black tie) in anticipation of partying all night. But in my rush to check out the spa facilities, sample the hotel’s whitefish, and drink a few bubbly, I forgot to turn off the faucet in my bathroom completely.

The result was not far off the Cotswolds’ answer to Niagara Falls. When I re-entered the room and heard the sound of running water, I initially thought that someone had taken the opportunity to take a quick shower in the bathroom (share and share) in my absence.

But when I politely knocked on the door and opened it slightly, all I saw was water pouring out of the sink. Not only had I left the tap open, but the plug was in the closed position. The bathroom floor was flooded. The only consolation was that the room was on the ground floor.

The staff couldn’t have been more helpful. Within minutes a mix of towels and mops had been used to deal with most of the flooding.

“It happens all the time,” said a nice employee, operating a machine used to suck most of the water from the carpet outside the bathroom door.

I believe it was a coincidence that the table we had booked for the gala dinner was not on the seating plan when we moved up for canapés and prosecco (it was being built in front of our eyes at the time). To De Vere: I won’t do it again. Mea culpa and all.

Premium walks just aren’t cricket

Ever-rising insurance bills are just as indicative of the new year as rising energy costs.

Last week’s article in The Mail on Sunday about double-digit premium increases in car, home and travel coverage sparked a flurry of correspondence from readers complaining they had been hit by similar increases.

Ray Palmer, from Hove in East Sussex, recently received a home insurance renewal notice from Liverpool Victoria. Despite having the policy for almost 20 years and never making a claim, he was told the annual premium would rise from £347.70 to £484.65 – a 39 per cent increase.

He called LV, only to be told it couldn’t offer better terms. A subsequent email offered no explanation for the inflation-destroying surge. “The prices for renewing our home insurance are the best we can offer,” he said, “so no discounts can be made.”

Ray has now taken out cheaper coverage with another major provider.

Eifion Davies is also being asked to pay 20 percent more for his car cover at LV. “Loyalty doesn’t pay,” he says. “There is no end to these price increases. What about sky-high energy bills and high petrol costs, how can we save for the future?’

Former professional cricketer Tom Poynton, from Repton in Derbyshire, has also seen the cost of his car and home insurance go through the proverbial roof.

After reluctantly renewing his home insurance with Hiscox last year despite a 24 percent increase in premium (he couldn’t find cheaper coverage anywhere else), he’s just been told that his annual car insurance with Axa will cost 52 percent more this year – £1,378 as opposed to £902.

Tom, who played for Derbyshire, is a director of Baron & Grant Investment Management, a firm specializing in managing investment trust portfolios for clients. (The Baron in the company’s name stands for John Baron, Conservative Member of Parliament for Basildon and Billericay and author of an authoritative guide to investment funds.)

Tom, who drives a Range Rover Sport, is cheated by the premium increase. “Another year without claims,” he says. ‘Another year of experience behind the wheel. Yet I am rewarded with a premium increase of 52 percent. When I asked Axa for an explanation, it said it was company sensitive information. Absolute disgrace.’ Absolute.

Home improvement prices are not a paradigm of virtue

My cleaner’s daughter wants to give her Berkshire home a makeover in 2023. New windows are the order of the day. After receiving a quote from a local company, she thought she would approach Anglian Home Improvements to see if it could improve it. Initially, Anglian quoted £11,000 more. It then offered a £3,000 deduction for the ‘Government scrappage scheme’ (no such scheme exists).

When she said it was still too expensive, they asked for details about what she does for a living. Armed with that information (she’s a key worker), she received a quote £1,000 less than the local company’s. She accepted.

Ingrid, my cleaner, is happy that her daughter has finally negotiated a good price. But home improvement prices shouldn’t work that way. It makes the world of insurance pricing seem like a paradigm of virtue.