How to invest in gold online

One of the problems for gold bugs is how to stash their hoard. Generations have found that stuffing gold bars under the mattress is not particularly secure, and gold is such a heavy metal that the floor could collapse.

So it is intriguing to learn that there is an online solution. Last autumn a system of gold depository receipts was established on the New York Stock Exchange traded under the symbol GLD.

Thus all you need to own, hold and trade gold online is to open an account with an online stock broker - such as the excellent www.internaxx.lu which is an AME Info sponsor - and you are in business.

This is alarmingly easy, and just involves completing and returning a form with your passport copy, and funding the account with a wire transfer. Hey presto! No need to have those gold bars cluttering up your bedroom.

Over the past three weeks gold prices have been steadily rising as the data suggesting that inflation is on the rise has gathered pace. And a poll of analysts by Bloomberg predicted further rises in the price of the yellow metal in the weeks ahead.

Of course nothing goes up in a straight line, and gold bugs have seen a retraction from the highs of $455 an ounce at the end of last year. But the upward trend looks clear, and many expect this bull market to continue for a couple of years, possibly ending in a Nasdaq-style peak.

Opponents argue that gold is just for jewelry these days, and point to rising interest rates as being good for the US dollar and therefore bad for gold. However, they forget that interest rates will only rise if inflation is picking up and that gold is the classic hedge against inflation.

Besides if inflation picks up strongly real interest rates will turn negative which would be bad for the US dollar, and positive for financial assets whose supply is fixed. In short, gold will inflate in value against a falling US dollar.

Whether we will see a super spike in gold to match the spike Goldman Sachs has forecast for oil is a more difficult argument. But once speculators get behind a rising asset stranger things have been known.