Sandra Mueller-Gisler, senior first Vice President of Rothschild Bank in Switzerland, told financial advisers at Grosvenor Financial Services conference last week that many investors in Europe had piled into gold, both futures contracts and the actual metal, to protect their investments when financial markets soured in the early months of the year. Unfortunately, many did not realise that the commodity was traded in US dollars, and some ultimately lost money on their investment because of this.

"Gold as a safe haven driven by overall uncertainty," Mueller-Gisler said. "There are discussions about putting all or significant amounts of savings into gold, but gold is a relatively small market."

From its strongest point against the euro at US$1.24 in February, the US dollar slumped 21% to $1.49 per euro. Over the same period, gold only gained value 12% to a record high US$1,099.90 per ounce on the New York Mercantile Exchange.

Mueller-Gisler said gold is also problematic to invest in, with the majority of the metal used to manufacture jewellery.

"You'd be surprised to see 70% of gold manufactured is for use in jewellery, and not accessible to investment," she said.

Still, investors should probably have some exposure to the precious metal to help mitigate risks in other volatile markets, and Mueller-Gisler said a portfolio allocation should probably consist of both futures contracts and the actual metal.