There have been a number of inaccuracies and misperceptions in the gold thread.
Perth Mint Certificate Minimum orders are $10,000 USD (some €7,400) and not beyond the reach of many smaller investors. The average SSIA amount maturing last Monday was €14,000.
Gold has not been a terrible investment. Importantly, it has outperformed both the S&P and Dow Jones since 1971 when the present fiat dollar non gold standard money system came into existence.
The fundamental tenet of investment theory is diversification. This tenet applies to all investors - individual, company and institutional.
"...from a portfolio diversification standpoint, holding gold has proven to be an excellent investment. We at the BIS hold a considerable amount of gold and in recent years have benefited considerably on a valuation basis from the rise in the price of gold."
Robert Sleeper, Head of the BIS Banking Department, '
How Central Banks Manage their Finances' Bank for International Settlements (The Central Bank's Central Bank)
An excellent article on gold and the Bank of england's gold reserves and Gordon Brown's incompetence appeared in the Sunday Times two weeks ago:
http://www.timesonline.co.uk/tol/news/politics/article1655001.ece
The fundamental tenet of investment theory is to be properly diversified and not have all the eggs in the one basket – whether that be the stock, bond or property markets. It has been shown in numerous financial and academic studies that an allocation of some 5% of one’s portfolio to precious metals is prudent.
Many financial professionals and investors worldwide recognise the important role that precious metals can play in stabilising and reducing volatility in a portfolio. This is particularly evident in the fact that the largest owners of gold bullion remain the world's Central Banks and the IMF ( US Federal Reserve: 8133 tonnes, the Bundesbank: 3440 tonnes, the Banque de France: 3024 tonnes and the IMF: 3217 tonnes).
Central Banks maintain their gold reserves as gold is the only asset class which is no one else’s liability, in order to maintain full faith in modern paper currencies and to protect against monetary crises as experienced by the Bank of England during the sterling currency crisis of 1992.
Jim Power, Chief Economist of Friends First believes gold is the asset class of the moment. "I teach Financial Management on a part-time basis in Dublin City University and a central tenet of what I teach concerns the virtues of portfolio diversification. I am a firm believer and have argued in numerous presentations on the topic of Property v Equities that it is not a case of either/or, but a case of both. I would be a big fan of holding gold as part of a diversified portfolio and would feel more confident about it than any other asset class at the moment."