Bunhill: Gold is cheap

JULIAN BARING has gone back to the Savoy for proof that gold is cheap. To put it more precisely, the guru responsible for Mercury's Gold and General Fund has indulged in another of his famous comparisons between the price of the precious metal and the cost of dinner at the august hotel.

As the chart shows, Baring takes his comparison seriously enough to have gone back to 1914, when 'souper' cost a full six shillings (30p for our younger readers). Today, as Baring says: 'The venue is the same, the menu is much the same and some cruel commentators have been heard to speculate that even some of the waiters are much the same.'

Although the price of dinner has almost doubled in terms of gold since the outbreak of the First World War, Baring's comparison is not entirely joky, since he feels that the price of gold ought to reflect people's standard of living - as symbolised by the Savoy's nosh - rather than the cost of living reflected in the official figures.

And he dismisses any cries of complaint that the dinner figures are exaggerated by making the perfectly valid point that 'even in these hard times, you have to book early at the Savoy in order to avoid disappointment'.