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EDITIONS
Tuesday, 16 July, 2002, 12:31 GMT 13:31 UK
Savers: Anywhere left to hide?
New York Stock Exchange traders
Worldwide stock markets have taken a battering

Outside the sun may be shining, but the climate for investment is definitely harsh.

Investors that were once attracted by the upward trend of a share price graph, would now be happy for a graph - any graph - that just continued flat.

Stocks continue to tumble in the UK, Europe and America and for many investors the search for safe havens has already begun.

Even within a tumbling stock market, hope remains that there should still be pockets of security.


People have been ringing saying, where do I buy it? How do I buy it?

Rhona O'Connell, World Gold Council
Traditionally, there are some sectors of the stock market that attract money in tougher economic times.

These defensive sectors - such as utilities, food and drink companies as well as tobacco - are so called, because no matter how little money people have, they still need to buy the essentials, so in theory these companies should still perform well.

However, dramatic stock market falls tend to be brutally democratic - virtually every share falls.

And given that the crisis of confidence is linked to accounting standards - something which could in theory affect every company - no one sector is immune.

"Tobacco stocks until relatively recently were up dramatically, because of the wave of selling has been so strong in the last couple of weeks, they are down," Damian Larkin, investment manager at the Share Centre in Aylesbury said.

The nature of the current falls has also implicated the dollar - a sometimes safe haven of choice - with the euro at parity with its US counterpart.

Time to bond?

If you do not have to be in the stock market, Mr Larkin advises "sitting in cash".

For those who want to be in the markets and want diversity from equities, he advises bonds.

Many professionals have chosen this route, with government bonds in the UK and America benefiting from a rush of interest.

Bonds are effectively IOUs - certificates issued to investors guaranteeing the return of their money after a fixed period, and with a regular interest payment.

The safety of your investment hinges on the creditworthiness of the borrower.

"Until the equity market shows any sign of bottoming out, it is looking extremely positive for government bonds in general," said Don Smith, analyst at Garban Intercapital.

"It is difficult to bet against this market at the moment."

For Sale signs
Putting your money into bricks and mortar

Just as shares continue their vertiginous fall, so do house prices continue their climb in the other direction and most forecasters believe they will continue to rise.

Over the life of a 25-year mortgage, this could prove to be a safe bet, albeit a long-term one.

All that glitters

Those that are not ringing the bond broker or the estate agent may be ringing the World Gold Council.

"People have been ringing saying how do I buy it, where do I buy it," Rhona O'Connell, the council's manager, market analysis, said.

The advice they receive is to buy gold bars or coins, which can either be ordered through your jeweller for a fee, or from a specialist company.

The Queen's jubilee carriage
This gold carriage was a wise investment

Gold's history as a safe haven goes back several thousand years, since it was first recognised as a currency, along with silk and seashells.

In times of political uncertainty, it has the advantage of being transportable and easily concealed.

"If you have to pick up your skirts and run to the border, it is the one thing you can use for transactions or barters," Ms O'Connell added.

The last time there was substantial investment in gold as a safe haven was just before the start of the Gulf War, when the price peaked at $411 an ounce.

The gold price is now just over $317 and this time the build up of interest has been slow - starting with the 11 September attacks and heightened by the problems around corporate governance.

A pretty picture?

If your investments don't provide you any income, they might at least provide you with something nice to look at.

The sale of Ruben's Massacre of the Innocents for nearly 47.9m earlier this year highlighted the crazy sums of money that art and antiques can change hands for.

But - with the exception of the former British Rail pension fund which invested heavily in arts and antiques - it is not generally seen as a safe bet or even a recommended investment.

The advice is to buy work you like that is of good quality, British Antique Dealers Association's deputy secretary general Mark Dodgson.

"It tends to be a long term thing," he says.

"It can be very volatile, particularly the picture market."


Analysis

IN DEPTH
The Markets: 9:29 UK
FTSE 100 5760.40 -151.7
Dow Jones 11380.99 -119.7
Nasdaq 2243.78 -28.9
FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins
Launch marketwatch
View market data
See also:

12 Jul 02 | Business
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