The price of gold continued to fall last week, leaving thousands of investors nursing losses on funds that back the precious metal.
Bullion traded below $1,200 an ounce last week for the first time in four years. It had become popular with investors as a hedge against inflation. The fear was that the money printing enthusiasm of central banks would pump up price pressure.
But the indication from the Federal Reserve that its stimulus programme would at some point end, although stating the obvious, sent stock markets and gold prices falling.
The BlackRock Gold & General fund sits on £1.6bn of investors' money. While not a direct proxy for the gold price, it backs the shares of gold miners. Gold peaked at $1,895 in August 2011 and the fund has lost more than 50pc over three years.
But last week Hargreaves Lansdown, Britain's largest seller of funds direct to investors, told investors that it remained a good buy. It said: "Recent share price falls mean the shares of gold mining companies look undervalued."
It also acknowledged that the share prices of gold mining firms had lagged the price of bullion. Its report said: "The seeds of the current problems faced by gold miners were sown long ago. The past decade should have seen higher profits as the gold price rose strongly over the period as a whole.
