While traders and governments tend to up their exposure to the precious metal during macro-economic uncertainty, only 49 per cent of respondents to the latest FE Trustnet poll said they were tempted by gold despite the possibility of an all-out euro collapse. "Gold is seen by many as a safe haven currency alternative, but still remains an unloved asset class to the majority of mainstream investors," explained Kerry Nelson, managing director of Nexus IFA.
"It is less tangible than a lot of other areas, but it has been proven time and time again to be a good diversifier when markets take a turn for the worse."
"If you look at the dotcom crash and post-Lehman Brothers, portfolios with gold did a lot better than those without."
Nelson says she uses gold and gold funds across all of her portfolios, no matter the macro outlook.
"I’m surprised that so few [FE Trustnet readers] rate gold," she added. "Many investors are willing to overcomplicate things and look to radical and unproven diversification techniques, yet gold remains unloved."
"Even if things look positive, it’s good to have exposure to gold because you never know what’s going to happen."
"There are some really strong gold funds out there – you’ve obviously got the usual suspect in BlackRock Gold & General, but there’s also the Smith & Williamson Global Gold & Resources fund, which offers something a little bit different."
"I hold both, and their weighting changes according to how much risk my client wants to take on. If they’re particularly bullish, the exposure drops and vice-versa."
In recent weeks, tensions in the eurozone have hit global equity markets across the board, with the FTSE All Share down 7.5 per cent in the last two months.
Despite its safe-haven status, there has also been a sell-off in bullion, with the price down 4.08 per cent over the same period.
However Martin Arnold of ETF Securities says this trend will be short-lived and expects the gold price to normalise in the coming weeks.
He commented: "The selling of gold is a normal initial reaction to a risk-off event, as gold is generally held as part of an investor’s risky asset pool."
"However, with some form of break-up of the current configuration of the euro increasingly likely, once this initial phase of selling ends, investors will likely re-focus on finding alternative stores of value, with gold standing out as the ultimate alternative hard currency."
If investors want exposure to only the price of bullion, ETFS Physical Gold is an option.
ETFs such as these attempt to replicate the performance of the precious metal by either holding the physical asset, or using derivatives, contracts for difference, futures and other indirect instruments.
Performance of ETFs vs gold price over 5-yrs
Source: FE Analytics
Nelson prefers to hold gold funds, which have exposure to both bullion and gold mining stocks.
"There aren’t that many available, but in a specialist area like this you don’t need a massive selection," she explained. "Few houses have the resources to support a gold fund."
Gold funds tend to be more correlated to equity markets than bullion, since mining stocks suffer more during market sell-offs.
However, the relative underperformance of gold equities since 2010 means that they could be set for a spike in performance reminiscent of 2009 and 2010 if there is support for the gold price.