This week's expert is Adam Carruthers
BBC News Ask the Expert column gives readers a chance to have their financial questions answered.
This week BBC News website reader David James would like to know how he can invest in gold.
The week's expert is Adam Carruthers, investment manager of financial advice firm Origen.
Adam Carruthers writes:
As far as buying a stake in gold is concerned you have two options: either purchase gold, or a stake in an investment which should move in line with the price of gold.
If you want to own gold - be able to touch it, generally the cheapest route is to buy it in bar or coin form.
Krugerrands are the best known of all the modern one-ounce gold-bullion coin.
They are available in greater quantities, and they can generally be bought at lower prices than any other gold coin.
Their production quality is consistently high, and they are a very cost-effective way for small investors to buy gold.
They are also easy to compare prices of, as they contain exactly one ounce of fine gold.
Sovereigns are a smaller, more attractive, more historic, and probably better known coin than Krugerrands.
Therefore you may consider it more worthwhile paying a little more to own a sovereign over a Krugerrand.
Banking on bars
At first glance, gold bars may seem to be the most cost effective way of owning gold. Buying a gold bar can be cheaper than buying the same weight of gold coin.
However, there are lots of drawbacks with gold bars. Firstly, gold bars can be hard to sell - only a specialist gold dealer will give you a good purchase price for a bar.
Secondly, you can't sell a part of a gold bar - it is all or nothing.
Finally, storing gold can be a security headache, for starters you are likely to need a safe and if you store them at home you may have to pay more in contents insurance.
Storing gold can be a headache
In the light of all this, it is no surprise that most gold bars are traded by governments and central banks rather than private individuals.
Fortunately, buying bars or coins is not the only way to have a stake in the price of gold.
Instead, it may be best to look at investing in gold mining companies or mutual funds which invest in a "basket" of mining firm shares.
There is a simple theory that when the price of gold increases, then gold mining share prices will follow.
However, there is problem with this theory as many mining firms sell their future production years in advance.
This gives them a guaranteed income but means that their shares may not be very responsive to movements in the gold price.
It is also worth remembering that, historically, shares in mining companies can be risky.
Mutual funds are probably the safest way to gain exposure to gold.
These funds invest in lots of different mining companies, therefore diversifying risk. Shares or units in these funds can be bought or sold very easily.
However, the investment management firms which run these funds levy an initial charge, usually about 5%, and an annual management charge of about 1.5%.
Ups and downs
There are many reasons to say "yes" to investing in gold.
Demand for gold has exceeded production in recent times, therefore prices have been rising.
Gold is also considered a good investment during stormy economic times.
Rising oil prices and a weak dollar normally spell strong demand for gold.
A little gold can help diversify an investment portfolio.
However, having said all that, there are serious drawbacks with gold investment of any kind.
Except for the past three years, the price of gold has been on the slide after a peak in 1980.
Central banks have tons of gold bullion which they still occasionally threaten to sell. When central banks sell gold it can force down prices.
As for gold mutual funds these have been losers, compared to funds which invest in the shares of non-mining firms, as long as you don't count the past three years.
All in all, if you are considering investing in gold, you should seek independent financial advice.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.