Precious metals value increases

If anyone wondered why jewellery is top of the agenda for Christmas wish lists, then this latest investment data might give the answer they have been looking for - it is expensive.

Precious metals became the top performing investment for the second year running in 2010 as their value soared by 42%, research from Lloyds TSB has revealed.

The group found that this was the fourth time in the past five years that precious metals have topped the tables as people sought a safe haven from inflation.

With many of these metals being used to make fine pieces of jewellery it is clear that while demand for other products might fall, jewel-encrusted trinkets will always be a girl's best friend.

With continuing uncertainty over the prospects for the global economy, investors flocked to gold, silver and platinum.

During the past decade the value of precious metals has soared by 365%, which is almost double the increase for residential property (198%), the next best performing asset during the period.

The increase in precious metal prices during the year was driven by silver, which saw its value jump by 80% - outstripping the 29% in the price of gold and the 20% rise for platinum.

Pressure on the supply of silver was said to have boosted the price, as demand remained high from investors and industries that use it.

Commodities were the second best performing asset class during 2010, offering returns of 30%, while they were the third best during the past decade, with a 176% increase in value.

They were also the best performing asset during the first two months of 2011, driven by a 38% jump in the price of cotton since the start of the year, due to a combination or rising demand from Asia and falling supply as some of the major cotton producing countries were hit by flooding.

All nine asset classes produced a positive return during the past year, although people who held their money in cash would have seen it rise by just 0.6%, while residential property did little better with a gain of 1.2%.

UK shares and commercial property both returned 14.5%, while the value of international shares increased by 10.6%.

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