Nervous investors quit equity funds at record pace

Equity funds have now seen net outflows in four of the past five months, after more than two years of net inflows, the IMA said. Photo: Alamy

British investors pulled out a record £864m from equity funds, compared with monthly average inflows of £506m for the previous 12 months.

Equity funds have now seen net outflows in four of the past five months, after more than two years of net inflows, the IMA said.

Savers holding funds in tax-efficient Isas also gave up on shares, with £28m being withdrawn.

Not surprisingly, investors who continued to invest opted for safer havens, such as corporate bonds and balanced funds, which invest in a mixture of shares, bonds and cash.

Bond funds saw sales of £443m in November, a marked increase on its monthly average of £332m.

UK Absolute Return funds were the second most popular, with £164m in net retail sales in November, the highest level since June 2011 and well above the monthly average of £81m for the previous 12 months.

Financial advisers said investors always reacted with panic when markets wobble.

Mark Dampier at Hargreaves Lansdown said: "I am not surprised that investors have been selling out of equities. Every time you turn on the radio, the TV or open a paper there is something about the eurozone debt crisis.

"The public is pessimistic, and this is priced into the markets. Usually pessimism in the market means it is a good time to buy, but you can understand why investors do not want to take the risk."

Richard Saunders, chief executive of the IMA, said: "The second half of 2011 has seen a marked slowdown in fund sales from the exceptionally strong levels of the last three years, and there was no let up in November, which saw the lowest monthly net sales since October 2008."

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Questor share Tip: Inchcape deserves the green light for investors

The figures of the society of motor manufacturers and traders showed that UK car sales fell 7 FP7 in February from last year and the end of the scrappage incentive means that this decline is likely to be maintained through the year.

Questor has only look in its portfolio because its after-sales activities growing. Inchcape, which is by far the largest list British dealer, with a market capitalization of £ 1 MD, has been warning yesterday of "uneven global recovery" and "margin erosion" of increased costs for vehicle manufacturers.

It is expected to decline this year in four markets - Singapore, Greece, Belgium and United Kingdom - which account for half of the Group turnover.

However, at the side of caution outlook is a car dealer who deserves to be passing the green light.

The key is that the Inchcape operates 26 markets and is the leader of the market in 14 of them. Thus, while European revenues fell 13 4pc 871 m £ last year, this division accounts for 15pc of sales and its decline was offset by the performance of the Australia, China, and the Russia.

Overall, pretax profits stir-fry 41pc to 192 m £ on earnings above £ 5. 89bn, 5. 4pc then Australasia represents £ billion in sales and the Russia and emerging markets another £ 1 billion.

Not only the emerging markets are set for further growth in sales of car - Director General André Lacroix has Hong Kong, in Australia, the Russia and South America in particular - but Inchcape also got a foot in the burgeoning luxury car segment.

In China, for example, Inchcape sells Jaguar and Land Rover, and the success of British brands allows him to prepare for an expansion of £ 170 million in the country over the next five years.

Mr. Lacroix, said Inchcape is "uniquely positioned to take advantage of these markets premiumisation" while the class average and seeks a better quality of life. In addition, he claims that luxury brands with inchcape works will be "ahead of their competitors in their development of advanced hybrid and electric vehicles."

Financially, Inchcape can invest in these opportunities with a pile of 206 million net cash of £, amassed fortunes last year resumed and a deferral of certain capital expenditures. This pile of cash has also led to the company restoring the dividend for the first time since 2009. A payment of 6.6 p per share will be made to the shareholders.

The action of the Inchcape prices rallied 65 p in March 2009, when the dividend has been discarded, a rights issue was launched and Questor has warned investors to avoid actions. He has been a steady rise since August, when it rose to 253.20 p.

By Miss report and UK rival Pendragon, Inchcape is not cheap, trading at 11.7 2011 time gains and 2 4pc performance. However, Questor believes the global reach of the business and potential undermines the relevance of this comparison. Purchase.

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The FTSE could produce a positive surprise for brave investors in 2012

 Even the most bullish forecasters predict just a modest rise for the benchmark FTSE 100 index in 2012. Photo: GETTY

The domestically focused FTSE 250 fared even worse, falling 12.6pc over the 12 months as austerity measures and crumbling consumer confidence hit hard.

But will investors do any better in 2012? Will the UK's equity markets bounce back this year and compensate beleaguered investors for a dismal 2011?

The background noise is hardly encouraging. As my colleague Ambrose Evans Pritchard eloquently sets out, there is no quick or easy solution to the eurozone crisis - which has the potential to send London's equity markets spiralling back towards their 2009 lows of 3,600.

London managed to detach itself from the eurozone gloom last year. The FTSE performed relatively well, when compared to Germany's DAX which ended the year down more than 15pc and the French CAC which lost almost 18pc over 2011.

But could London really shrug off the exit of a peripheral euro member or even the collapse of the single currency that so many economists and politicians now predict?

Then there is the small matter of China: can the country's apparatchiks really engineer a soft landing for the over-heated economy? The latest economic data suggests it will be difficult to tackle inflation (and the property bubble driving it) without stalling economic growth.

The US could also throw London markets off course. Yes, election years have historically been good for stock markets. And we have seen more positive economics data in recent months, with fewer job losses and tentative signs of recovery in the US housing market, but few would bet on a smooth road to recovery from here.

Closer to home the prospects for the UK economy look bleak. Capital Economics is one of a number of economists that expect the UK to slip back into recession this year as the economy contracts by 0.5pc and unemployment rises above 3m.

It is hardly the best background for a market rally – so perhaps its not surprising that many expect the FTSE 100 to end 2012 even lower than it closed last year.

Even the most bullish forecasters predict just a modest rise for the benchmark FTSE 100 index in 2012. It is hard enough to find a serious commentator who predicts that the FTSE 100 will breach the 6,000 mark, let alone the 7,000-plus forecasts of only a few years ago.

Yet despite all the doom at 5,566.77 the FTSE 100 looks to be trading at historically cheap levels on a variety of measures – not least its dividend yield.

The blue chip index is yielding almost 3.5pc - double the meagre 1.75pc interest that can be earned in a National Savings account. With little prospect of interest rates rising in 2012 surely - argue the bulls - savers will be tempted to switch some of their savings into the market.

Markets have, of course, a record of catching out even the most experienced forecasters. Shortly before the 1929 stock market crash the respected economist, Irving Fisher, predicted: "Stock prices have reached what looks like a permanently high plateau."

So could the bearish forecaster be left red faced? The FTSE 100 undoubtedly has the potential to surprise on the upside this year – but you'd have to be very brave (and optimistic) to bet on it doing so.

There is however one sure-fire buy signal. Alex, the star of our daily cartoon strip. The investment banker has only been fired twice in his illustrious near-25 year career.

Both departures marked the bottom of the equity market.

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Private investors hit by the disruption of markets

Retail holdings hit £ 233bn late February, the most since November 2007, according to a quarterly survey on the records of the UK shareholders.

People with money to invest are tributary to the shares, held the weakness of the rate of return of traditionally safer holdings of bonds and cash and the precarious state of the real estate market. This means that UK plc share held in the hands of the sale at the retail amounted to 11 8pc, to its highest level since the summer 2009.

However, since the data was overloaded, some £ 16bn was completely off the coast of portfolios of private investors in the wake of the tsunami of the Japan.

Half of the who has since recovered but the risk the agitation of the Middle East and oil prices could prove a major stumbling block.

"The disaster in the Japan shows how far freak events can change the whole picture," said Charles Cryer, CEO of the registrars of the capita, compiled the figures.

Discover the best sale ISAs and get 0% commission when you order online with Telegraph ISA-Fund supermarket.

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Rumors: a sustainable strategy for savvy investors

Despite sounding rockets as something Robert Robinson might say on Call My Bluff in the 1970s, rumours is an investment technique.

Derived from network of the ship, which the sailors would be together to share the latest gossip at sea, rumours refers to all qualitative information that better investors combine their scorecard with calculation to evaluate an investment. It's gossip and information of these in knowledge, but also on the personal observations and that investors escape and deporting the tyres.

Rumours was popularized by Philip Fisher, pioneers of modern investment techniques who wrote in the 1950s on the importance of the collection of information from all possible sources in a work on the analysis of the investment shares and Profits rare. Fisher inspired by Warren Buffett, and he has had an influence key on the Peter Lynch of fidelity, Director of the Magellan Fund between 1977 and 1990.

Fisher used rumors when he alighted on Motorola, at the time where a humble radio manufacturer. The value of his stake increased 20 times more than two decades. Lynch was too convinced of the importance of tapping into its own and other personal experiences companies, invested in: "whenever you shop at a store, eat a hamburger or purchase of new sunglasses that you get a valuable contribution." While browsing around you can see what sells best and what is not. "I was reminded of the importance of the rumours a week or there when I had the misfortune to fly with British Airways of Edinburgh, Gatwick. Like most travel war stories, he seems more fun that it fades into memory. At the time, I and my fellow travelers were fuming.

I did that with all the details though a quick search of Google find a host of articles fairly accurate describing the bizarre story of Captain attempting to flee before a red arrows display closes airport, a mobile phone would have fallen on to the tarmac of a window on the cockpit and a delay of four years and a half hour to find a replacement driver.

Rumors of this story is less to do with the actions of a driver in haste, but rather with the failure of BA to tell us at any point what was going on. to make any serious attempt to ease our discomfort or let us aircraft; We offer compensation or even only a good apology; or answer my questions aircraft and since on Twitter.

My attempt to communicate with BA using social networking shows how rumours is potentially a much more powerful force in the 21st century when Fisher and Lynch used in the 20th. Would get the choose a business that you are interested, it is a simple case today that he used when information is more closely supervised.

When I was in the research to see if BA had taken the trouble to respond to my tweets, I had the opportunity to see what everyone thinks of our flagship carrier. To be fair to BA, while I was not not only complain its service, there are many others describing the happy experiences of unexpected and similar upgrades. And this is the danger of an excessive dependence on the extrapolation of the experiences, what might be described as rumours of first-hand. I could feel the same way on the airline, but I would be unwise to stop of the investment on my only experience.

Other aspects of rumours - in addressing society suppliers, customers and competitors - remain an essential element of the 360-degree research which implies good active management of a portfolio of investments. In fact, it is one of the main differences between active and passive investment and a reason why active funds represent more than Tracker. In a market globalized really looking at a business at all levels is not free.

One of my colleagues is just China, where he spent a week trying to find out what was behind the wheel of the price today. He came to believe that a slowdown in China (to curb inflation in the country) could be bad news for the whole complex products and returned with a more nuanced view. The prospects for copper (it's good, there is a huge housing shortage) is very different from that of nickel (this is bad, the Chinese have obtained very hard to produce this very cheap). As the correct definition, not bluffing Show of Robert Robinson could have read: rumours - an essential part of the Toolkit for an investor.

tomrstevenson@fil.com

Tom Stevenson is a Director of Fidelity International investment. The views expressed are his own. Twitter: @ tomstevenson63

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Sorry investors, there is no such thing as a free lunch

Phrases such as "elephants do ride" and "run your winners and cut your losses" evolving investment adages because they are often real enough to be accepted. There is, however, a world of difference between a good rule of thumb, and something that can inform reliable investment strategy. The bottom line for an investor is: does it work?

The excellent guide annual investment returns of Credit Switzerland and London Business School (lbs.) three of these beliefs is under the spotlight. Proffesors Dimson, Marsh and Staunton the lb overloaded numbers on the effect of size (small shares outperform big ones?), premium value (many labor markets shares are better than growth fast ones?) and momentum (must you return last year winners or losers?). Their conclusions probably disappoint Holy Grail claimants; It looks not as there is a free meal.

The frustrating thing for those seeking a shortcut to the success of investment is that, on the numbers of suggest there may be persistent prejudices that can be exploited by investors. As shown in the figure, £ 1 invested in the stock market UK in 1955 would be pushed to £ 822 at the end of 2010, 12 8pc annualized yield. Not bad, you might think, until you realise investment same index to the companies smaller Hoare Govett (actions that make up the smallest 10pc by the value of the UK market) have pushed £ 3,248 during the same period and the so-called micro-caps which make up the smallest 1pc reportedly worth £ 14,210 by the end of last year.

For much of the 1990s, l'effet smaller company just stopped working, and then, when everyone had abandoned it at the turn of the century, he struck again. The lost decade was essentially a matter of gros-cap.

Evidence for so-called value stocks outperforming the growth stocks is even more convincing at first glance. A study of the top 100 UK market shares goes all the way back to 1900 shows that £ 1 invested in 50 lower dividend yields (a proxy for the growth stocks) have pushed to £ 5,122 at the end of 2010. Still, you may think it was good enough, but only until you realise that an investment in the market as a whole would have pushed to £ 23,335 over the same period and an investment in 50 stocks with highest return (stock value) to a powerful £ 100,160.

Yet again, there is good reason to expect the value of stocks to outperform. It is compensation for the fact that almost by definition, they are lower than the shares of growth opportunities. But what is also clear is that if the expected yields adequately compensate higher-risk. My intuition is that it does, which explains why the best investors seem to share a denier, search for the character value.

Value stock outperformance is a reflection of our gullibility when it comes to attractive growth stories and our willingness to pay for them.

The third approach tested by the lb is even more difficult to use profitably. Yet again, the evidence suggests greenhouse pronounced momentum which choirs from actions which have recently surpassed causes future outperformance too. At the risk of blinding you with even more numbers, back-tests show to buy last year's losers would have net you 3 FP7 per year, while the winners of choirs have given you 14 3pc a year between 1900 and 2010. The power of compounding makes an absolutely phenomenal difference of total return. However, there are two caveats significant to remember with momentum investing. Firstly, in the real world, it is a very expensive strategy to be implemented because the transaction costs eat your statements very significantly. Secondly, as other effects there a bad habit to enter the opposite.

Momentum investor will not forget the whiplash hit they experienced in March 2009, when the market suddenly took off in the opposite direction and above the previous year has become the fastest risers of the market. Unfortunately, it y just not shortcuts.

tomrstevenson@fil.com

Tom Stevenson is an investment at Fidelity International. The opinions expressed here and in his tweets (@ tomstevenson63) are its own

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This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

Sorry investors, there is no such thing as a free lunch

Phrases such as "elephants do ride" and "run your winners and cut your losses" evolving investment adages because they are often real enough to be accepted. There is, however, a world of difference between a good rule of thumb, and something that can inform reliable investment strategy. The bottom line for an investor is: does it work?

The excellent guide annual investment returns of Credit Switzerland and London Business School (lbs.) three of these beliefs is under the spotlight. Proffesors Dimson, Marsh and Staunton the lb overloaded numbers on the effect of size (small shares outperform big ones?), premium value (many labor markets shares are better than growth fast ones?) and momentum (must you return last year winners or losers?). Their conclusions probably disappoint Holy Grail claimants; It looks not as there is a free meal.

The frustrating thing for those seeking a shortcut to the success of investment is that, on the numbers of suggest there may be persistent prejudices that can be exploited by investors. As shown in the figure, £ 1 invested in the stock market UK in 1955 would be pushed to £ 822 at the end of 2010, 12 8pc annualized yield. Not bad, you might think, until you realise investment same index to the companies smaller Hoare Govett (actions that make up the smallest 10pc by the value of the UK market) have pushed £ 3,248 during the same period and the so-called micro-caps which make up the smallest 1pc reportedly worth £ 14,210 by the end of last year.

For much of the 1990s, l'effet smaller company just stopped working, and then, when everyone had abandoned it at the turn of the century, he struck again. The lost decade was essentially a matter of gros-cap.

Evidence for so-called value stocks outperforming the growth stocks is even more convincing at first glance. A study of the top 100 UK market shares goes all the way back to 1900 shows that £ 1 invested in 50 lower dividend yields (a proxy for the growth stocks) have pushed to £ 5,122 at the end of 2010. Still, you may think it was good enough, but only until you realise that an investment in the market as a whole would have pushed to £ 23,335 over the same period and an investment in 50 stocks with highest return (stock value) to a powerful £ 100,160.

Yet again, there is good reason to expect the value of stocks to outperform. It is compensation for the fact that almost by definition, they are lower than the shares of growth opportunities. But what is also clear is that if the expected yields adequately compensate higher-risk. My intuition is that it does, which explains why the best investors seem to share a denier, search for the character value.

Value stock outperformance is a reflection of our gullibility when it comes to attractive growth stories and our willingness to pay for them.

The third approach tested by the lb is even more difficult to use profitably. Yet again, the evidence suggests greenhouse pronounced momentum which choirs from actions which have recently surpassed causes future outperformance too. At the risk of blinding you with even more numbers, back-tests show to buy last year's losers would have net you 3 FP7 per year, while the winners of choirs have given you 14 3pc a year between 1900 and 2010. The power of compounding makes an absolutely phenomenal difference of total return. However, there are two caveats significant to remember with momentum investing. Firstly, in the real world, it is a very expensive strategy to be implemented because the transaction costs eat your statements very significantly. Secondly, as other effects there a bad habit to enter the opposite.

Momentum investor will not forget the whiplash hit they experienced in March 2009, when the market suddenly took off in the opposite direction and above the previous year has become the fastest risers of the market. Unfortunately, it y just not shortcuts.

tomrstevenson@fil.com

Tom Stevenson is an investment at Fidelity International. The opinions expressed here and in his tweets (@ tomstevenson63) are its own

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Tom Stevenson: Four average investors can protect themselves against the loss of company reputation

"A significant risk for investors, is that companies like BSkyB are not always in control of their own risk" Photo: Reuters

With the news of the world complete editorial staff, investors in the satellite television channel has become innocent victims of a spectacular piece of the mismanagement of crisis - by another company.

They should not have taken to the free, however. Sometimes events come out of the blue but not these. It is act decisively, accept responsibility or in fact one of the things that someone with a life in the newspapers would have understood a minimum five years since the telephone hacking scandal response outbreak, five years during which News International has failed to take control of the story.

As Warren Buffett, it can take to build a reputation for 20 years and only five minutes to ruin it. Reputation risk is one of the greatest threats a company faces and, therefore, one of the most important things for an investor to assess. The problem, however, is that, while it is easy with hindsight to see what damage was done to a reputation, it is much more difficult to measure the extent to which a company is or is not in control of his public image.

There are at least three risks that should take account of the investor. Firstly is the measurement in which customers vote with their feet at the first breath of irregularity. Finally, Rupert Murdoch acted because it has the (correct) judgment that revenues would evaporate - because readers boycott paper and advertisers do not want to be associated with such a tarnished mark.

Arthur Andersen was found to its cost, for a professional, business services, the perception of integrity is the greatest asset of the firm. The accounting firm has grown from four great to annihilation in a blink of eye in 2002 because customers walked. Unfortunately, it is not a mere correlation. At the same time Enron was leaving Andersen history, Shell was shaken by the revelation that it had overestimated its reserves of oil. Today, few would associate Shell with this episode.

Another key for investors risk is that the companies (such as BSkyB) are not always in control of their own risk. Last year, BP has found that when oil ran aground on the beaches, indifferent America if the fault lay with the British company or Transocean, its subcontractor of drilling. BP has paid the price. In the same way Walmart may not have used illegal immigrants as cleaners, or even known about it, but that did not prevent further the Distributor for the forfeiture of its supplier by the Government.

A third risk is political. The Gulf of the Mexico a lot of water and he has recovered from the Deepwater spill with surprising ease. But the political capital to win a reflex ban offshore drilling in America was too tempting for politicians. This meant that the rest of the industry investors spilled BP disaster. This type of collateral damage is common. A striking example of the recent has been the stagnation in all areas of the price of the shares of Chinese companies listed on the U.S. list after a handful of allegations of fraud for large projects such as those launched against Sino Forest, a Chinese lumber company. After all, it is never a rotten Apple is?

Only can do you to protect yourself from this kind of impact reputation? Four things. Firstly and obviously, ensure that you are diverse. A fall 50pc price is a disaster if it is the only one you own. But if the stock is one of the 50 in a portfolio, the damage could hardly be noticed. Second, make sure that you invest in companies which have set the roof while the Sun was shining again. Ten years ago, Coca Cola face banned across Europe after an outbreak of poisoning cases. Less than a year, it is the largest beverage sales in the area again with good will and trust, that he had accumulated over the years. Thirdly, talk to suppliers and customers of the company. The rumours that I wrote about last week can provide an alert vital reputation risks to come.

Finally, walk towards the blow-ups as soon as it is deemed that it is safe to do so. BP has been a great investment for anyone brave enough to look through the crisis.

tomrstevenson@fil.com

Tom Stevenson is a Director of Fidelity International investment. The views expressed are his own.

Twitter: @ tomstevenson63

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U.S. roadshow offers new investors Ocado

FTSE 250 close up 5.37 11082.17.

Fresnillo reaches 60% £ 15.68 Kazakhmys acquired 24 p to £ 15.11 and Antofagasta, has advanced from 23 percent to £ 14.36, as commodity prices lifted the mining sector - which was also supported by $3 (£ 1. 91bn) takeover Walter Western coal energy.

Gerard Lane, Coast capital equity analyst is bullish on the prospects for juveniles in the run up to Christmas: "taking into account the end of the increase in metal prices suggest that gains in the mining sector are likely to continue to be revised more and given its low value, we remain positive on the sector."

Manufacturer of catalysts Johnson Matthey has been another increase in merchandise recipient, award, with its closed shares higher at £ 19.26 59 p. Society, which is approximately one third of catalytic converters used in vehicles, was also helped by an increase in the target prices and Liberum Capital, which maintains its "buy" estimates the stock rating.

Broker raised its price target for £ 20 to 25 £ and surveying company its long-term autour 10pc over consensus earnings forecasts. Liberum Capital said that the change in the forecast is partly raised expectations profit for the activities of Johnson Matthey precious metals.

Other winners included Imperial Tobacco, which rose from 19% to £ 18.93 on a smaller than expected in Spanish tobacco tax break. Madrid said that the increase in tax would raise 780 million euros (£ 639 m) a year — less than many had expected - under a package of reforms, he hoped to calm investor concerns about its economy.

Far from classification, speculation has continued to grow on the future of Kesa Electricals, owner of street high retailer Comet, subsequent to the release note of UBS.

Earlier this week, investor activist Knight Vinke raised its stake in the Kesa to 7pc, fueling the suggestions that a break-up of the chain may be imminent. Shares in the company increased by 0.4 to 174 p as UBS Adam Cochrane analysts and Andrew Hughes have speculated that Knight Vinke "can attempt to generate a one-time return of capital". Might come across a sale and leaseback of 300 m € of owned French company, get rid of Comet or one of its emerging companies or increasing financial gear company, they said.

However, analysts had doubts as to whether Knight Vinke was likely to be sustainable. "Investment attracted investors speculation and interest, but we do not know what value long term shareholder can be created in advance of what day-to-day management is already taken."

Among the laggards, Group Man shares shed 9.6 to 279,1 p as Numis Securities cut its rating to "reduce" to "hold" in an otherwise neutral review of UK asset managers hedge fund manager.

Luxury retailer Burberry also falls in mode yesterday. The company is found among the losers after a short rally - saw shares jump on in two days - 10pc has ended.

Shares in the company withdrew from 20% to £ 10.79 despite the initiator cover Seymour Pierce society with a "buy" rating Kate Calvert, analyst at retail broker, said mark was "strengthened as modern decor, the trend should be the brand of luxury".

"Business model continues to change as management tackles many of the problems of distribution and moves to the retail-oriented business model." All the benefits of a large number of these actions are still to come on profit wise. »

The financial services sector is as unobtrusive as insurers weighed on the market. Old mutual fell 120.1 p 3.1, Aviva slipped 5.8 percent 379.5 so that the Standard Life closed 2.2 206 p.

Bucking trend has St. James place, grouped wealth manager. He jumped 14.9 to 268 p response delayed for an upturn in the broader insurance sector of the earlier this week.

Barrie horns, Panmure insurance analyst said: "the last days have seen insurers rebound as Irish debt fears allayed after confirmation that the exhibitions are relatively small and manageable." Instead of St James of missed shares rally earlier in the week but bounced back after leaving behind them relatively. "Director share dealing, the absence of Irish debt exposure and a general recovery in the mid-cap market has also helped.

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Investors see silver lining in economic gloom

The ratio varies wildly. In 1970, it was about 20 and it peaked at just under 100 in 1991. The average is around about 40 – and that is the key to any silver bull's argument. Historically, it appears that silver is undervalued in relation to gold, they argue.

In 2010, the ratio has been as high as 72, recorded in February, and is now just below 60. Many believe it could have further to fall.

The reasons for gold's outperformance are well documented – inflationary fears, currency woes and safe-haven demand – but does the declining ratio towards its average mean that silver is going to continue with its charge forward?

Most analysts are not that bullish – with a price of about $24 targeted for next year. There are some, however, that believe the silver price will become much more lustrous over the coming years.

James Turk, who founded bullion dealer GoldMoney in 2001 and manages $1.2bn (£758m) of assets, thinks prices could hit $50 by the end of next year, but accepts that there will be volatility along the way.

Mr Turk believes quantitative easing will devalue currencies and send precious metals much higher.

"Just pick up your newspaper to see what central banks are doing to destroy currencies," Mr Turk says. "Unlike the 1970s, there are no safe havens from currency debasement – such as the deutschemark."

Mr Turk is more bullish on silver than gold. "The problem is the volatility," Mr Turk says. "Essentially it is a cheap form of gold, but it is not for everyone because of the volatility."

He says investors should always buy the physical metal and not paper and advises a portfolio of one-third silver to one-third gold.

Suki Cooper, a precious metals analyst at Barclays Capital is not so bullish. She has an average target for silver next year of $22.2, expecting the metal to peak in the second quarter at an average price of $23.7.

"Silver mine supply is still growing and industrial demand – although improving – remains relatively weak. Silver is still in surplus, but it has benefited form safe-haven buying," Ms Cooper says. "The price could fall sharply if investor interest wanes."

Already investor interest this year is much lower than last year, which is surprising given the recent bull run.

In the current year to date investment inflows into silver have amounted to 1,377 tonnes. In the nine-months to September 2009 it was 2,942 tonnes – with full year 2009 inflows at 4,112 tonnes, Ms Cooper notes.

However, Mr Turk remains unbowed. "I expect the gold-silver ratio to fall back below 23 over the next three-to-five years," he says, despite most analysts thinking this is unlikely.

Precious metals consultancy GFMS also believes that there is a risk of a sharp fall in the silver price.

Silver has risen on gold's coat-tails, but it is also used in industrial processes so it has risen on hopes of a recovery in the global economy too.

Philip Klapwijk, GFMS's chairman, said last week that the absence of an improvement in the economy will be a negative for the silver price.

"If you think gold will continue to advance in the medium term, then why wouldn't silver necessarily follow suit? One reason could be that if economic prospects take a bath, that side of the argument for silver becomes a lot weaker," Mr Klapwijk said.

"In the current situation, silver is benefiting from both general optimism on industrial production in emerging markets, and the investor interest in safe-haven assets like gold," he added.

All of this implies that, on a fundamental basis, silver is looking more toppy than gold at the moment after its recent outpeformance.

Instead of chasing the price of the physical metal, investors may want to invest in silver mining companies that are expanding production, such as the FTSE 100 group Fresnillo.

In the first half of this year, the group's cash cost of production was just $3.58 an ounce – one of the lowest in the industry. It aims to bring on line one new mine or expansion per year until 2014.

Of course the share price will be hit if the silver price falls, but the company will remain highly profitable. But cautious investors may want to wait for a dip before they pile in.

Quantitative easing could boost oil prices

Oil prices could rise by more than a quarter if there is more QE – even if demand stays weak, according to new analysis from Bank of America Merrill Lynch.

The broker's economists expect the Federal Reserve to expand its easing programme by $500bn (£317bn) to $750bn as early as the first quarter of 2011.

If the global money supply expanded at the same pace as this, gold would move 15pc higher and oil prices by 26pc, the broker argues.

This could bring Brent crude oil prices up from an average of $78 a barrel this year to an average of $83 a barrel next year irrespective of demand, Merrill said.

COPPER for delivery in three months hit a two year high on the London Metals Exchange on Friday, following upbeat manufacturing data from China.

The price rose to $8,078 (£5,101) a tonne, the highest level since August 1 2008, but prices eased in the afternoon.

The purchasing managers index rose to 53.8 in September from 51.7 in August, the China Federation of Logistics and Purchasing said. A figure above 50 indicates expansion.

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