Alex Hoctor-Duncan on investing in gold

Alex Hoctor-Duncan, Head of UK Retail at BlackRock, said: "The versatility of gold as a long-term investment tool has never been more clear-cut. While the characteristics of gold make it a good hedge in the face of current economic uncertainly, BlackRock's Gold & General unit trust invests mainly in gold mining and other precious metal related shares and has been serving investors well over much longer periods than the recent turmoil.

"It is now 10 years to the month after ISAs were first introduced, a period over which BlackRock Gold & General has been the best performing unit trust in the UK market. £1000 invested into the BlackRock Gold & General fund via a newly launched ISA in 1999 would now be worth a tax efficient £7,087, providing an annualised return of 22%. It is a similar story over 20 years with the fund again in the lead, turning £1000 invested in April 1989 into £16,684 today.

"It is difficult to predict the economic environment facing investors over the next few months, let alone the next five or ten years. But the Gold & General fund's combination of investment in gold mining and other precious metal shares has exposed investors to the qualities of gold as an investment, as well as to carefully chosen companies in this field. It has been a worthwhile journey.

"Looking ahead, over the medium to long - term underlying supply and demand fundamentals have a bigger part to play in determining the gold price. Gold production fell 4% last year and may fall further in 2009. This is partly due to the lack of exploration success by an industry which discovered 15 million ounces of gold last year, compared with production of 80 million ounces. On the demand side, the growing wealth of emerging economies is likely to support jewellery demand in the future, while financial turmoil and inflationary pressures underpin investment demand."