The sudden lurch down in gold has spooked investors desperate for inflation protection, but regular readers of the Investors Chronicle would have benefited from our investment advice a little under a year ago when we highlighted a group of shares that are better than gold. We recommended investors should take a look at the solid gains and inflation-busting dividend income on offer in the utility sector, and with bid rumours once again swirling and share prices approaching record highs we thought it was worth revisiting the theme.
The investment case was simple: why hold something that produces no income, and has no use, when you can own a share in vital infrastructure assets that are structurally supported by the macro economic backdrop and generate inflation-beating dividend income. It seems we weren't alone in our thinking. In the period from 25 May to 16 April the FTSE All-Share utilities index has advanced 15.4 per cent to new highs, while the price of gold has fallen 12 per cent - an outperformance of some 27.4 per cent, and well ahead of FTSE 100 gains of 18 per cent.
