A gold rush is on, but a financial expert says all that glitters is not necessarily great and is urging caution for would-be speculators.
Auckland Bullion Traders managing director Tony Coleman said a recent increased interest in gold and, to a lesser extent, silver had been "exponential" as the crisis in world financial markets deepened.
"We've been very busy . . . The interest for us is probably 10 to 20 times that we've been previously doing," Mr Coleman said.
He said the rush to buy gold ingots and coins became noticeable about two months ago following the first big financial crisis in the United States.
Now, people were hedging their funds in the "safe" commodity, with some investing hundreds of thousands of dollars.
"People want their money in a commodity which is safe," he said.
"If everything turns to custard, the gold will still have considerable value. In fact, gold will go up, exponentially."
He said since May the price of gold had dropped markedly to $US720 an ounce, but this was offset by a plunging New Zealand dollar which had fallen to about US59c.
"All this money being spent by the United States and all around the world is terribly inflationary and the one thing gold is very good at is covering inflation.
"We are not going to see that yet but those inflationary pressures will definitely push gold up as it weakens the US dollar."
Mr Coleman said silver was a smaller market compared to gold and tended to fluctuate "very strongly".
But because it was relatively inexpensive - down from this year's high of $21.40 an ounce to $9.97 yesterday afternoon - he said many were prepared to invest in it.
"It's quite possible to double your money in it, even triple it for not a lot of work . . . but it is more of a speculator's market."
Financial author Martin Hawes agreed that gold had traditionally acted as a "crisis hedge" in uncertain times.
But despite having gold himself, Mr Hawes urged caution and said the value of gold was volatile and there was not a perfect correlation between prices and the metal. By his own definition, buying gold was speculative and not an investment.
"My definition of an investment is that it carries a cash return, so for shares there are dividends, for properties there are rents and for deposits and bonds there is interest," Mr Hawes said. "Gold doesn't carry a return other than a change in value."
Bullion dealers website, www.kitco.com, showed since the beginning of October silver had decreased from about $12.50 an ounce to about $9.50.
Gold has decreased since its high of $918 an ounce earlier this month to about $720 yesterday.
