Jeremy Beckwith: There's gold in them thar hills - or is it a bubble?

Looking at the history of financial market bubbles, one interesting but neglected fact is that they have all tended to be fairly localised affairs.

The often-quoted Tulip Bubble of the 1630s only really affected Holland and Dutch speculators, and in more recent times, the bubble in Japanese property and equity markets was mainly first enjoyed and then endured by Japanese investors and institutions.

Foreigners generally do not seem to have got caught up in a group mindset that can persuade otherwise sensible people to pay unrealistically high prices for certain assets.

Arguably the TMT bubble of the late 90s had a more international dimension, with both Europeans and Americans paying huge prices on the promise of the forthcoming internet and technology revolution. In fact the internet has probably developed even further and faster than many would have dreamed possible then. But unfortunately companies overall have not found ways to translate that technological change into huge profits.

However, technological change in the past decade, coupled with the rapid development of so many emerging economies and their impact on crucially important resource-rich nations as commodity prices rise, could all coalesce next time financial markets lose their senses and create a financial bubble. This situation would be further fuelled if investors from all over the world were to succumb to the allure of continuously rising prices in a particular asset.

It is interesting to speculate on what sort of asset could attract and captivate investors of many different nationalities and backgroundsin such away that prices get pushed to absurd levels. There is however one, clear standout candidate for the world's first truly global financial market bubble - and that is gold.

Gold has enchanted people of all nations throughout the history of the world. There is something primaeval and atavistic about gold's effect on mankind's senses. In good times humans seek to acquire gold as a display of wealth, and in uncertain times they seek to hold it for security reasons.

So today for example we see Europeans seeking to keep a good part of their wealth in gold, particularly in Swiss banks, as their confidence in the euro diminishes.

The uncertainty now prevailing in the Middle East is making many who have become rich through oil begin to wonder if they should continue to invest in gold. However, for these the security and mobility of gold is very attractive. For example, the wife of the former Tunisian leader Ben Ali was only just prevented from flying out of the country with a plane packed with 1.5-tons of bullion worth €40-million earlier this year.

In Asia where many nations are growing substantially richer in today's world, the Indian sub-continent has always represented one of the world's largest markets for gold. As Indian wealth increases, we should expect them to continue to keep a good part of it in gold. China too has a long history of faith in gold as real money, although the bulk of it was hidden for much of the 20th century.

Gold has the capacity to enchant mankind all over the world and today most nationalities have good reason to want to buy gold.

If they were to decide to buy a little more gold all at the same time - perhaps merely on the grounds that the price seemed to be going up, as it has been now for eight years - we could just see the biggest financial markets bubble the world has ever experienced.

These sentiments are intended to give an insight into the thought processes that lie behind our views and our investment strategy. They do not necessarily reflect the current investment policy of this firm. Indeed these comments are intended for information purposes only and do not take into account the investment objectives. Both new and existing investors would be advised to obtain independent advice based on their own particular circumstances before making investment decisions.

• Jeremy Beckwith is Chief Investment Officer of wealth managers Kleinwort Benson.