INVESTMENT in gold almost trebled to £4 billion in 2002 as global investors sought a solid alternative to tumbling equities.

The precious metal is set for another boost from the World Gold Council, which is working on plans to make it easier for private investors to buy the asset.

Investors who have gambled on gold in recent years have been handsomely rewarded. It surged by 24% last year, while British shares lost a quarter of their value.

The best investment fund of 2002 was Merrill Lynch Gold & General, which soared by an impressive 66% after charges. The scheme buys gold- mining shares, which have performed better than the price of gold itself. Newmont Mining and Anglo Gold, for example, have both climbed more than 40% over the past 12 months.

But gold has not always delivered such strong returns. The price peaked at $800 (£500) an ounce in 1980, but had plunged to about $300 by 1982. It fell to a new low of $253 in 1999 when equities were the asset class of choice. It is now $355, its highest level for six years, as share prices have dived.

Investors have always viewed gold as a safe haven, so it tends to perform well amid economic and political uncertainty.

The World Gold Council said: “Investment in gold is being driven by fears of war in the Middle East and a desire to hedge against the risks of holding shares and bonds. The lack of trust in corporate accounts, after the WorldCom and Enron scandals, has deepened the perceived risks of holding equities.There are also concerns about the dollar, the euro and the yen, so gold has come into play as a reserve currency.”

The council has seen strong demand for gold from investors in Japan and Argentina, where there are growing fears about the banking sector.

Interest in gold from private investors has been boosted by tax changes made in 2000, when the government was forced by a European directive to remove the Vat paid on gold.

While demand has boomed, several big gold-mining firms have reduced their supply, which has helped to push up prices. Many countries including Britain have also stopped selling off their gold reserves.

The asset is, however, volatile. If equities make a strong comeback, experts warn that the gold price could fall.