In a new year of economic uncertainty, gold is a bright prospect again

The recent gyrations in the FTSE 100 and the tumbling price of oil may have captured public attention, but in the last four months the FTSE All-Share index has lost 12% of its value and the gold price has jumped 10%. If any two figures really show how nervous traders have become about the new year, it is these.

The safe haven that gold offers has pushed its price to a 15-month high of £1,010. The riskier FTSE All-Share, which covers all London-listed companies, has tumbled almost 600 points to 3596.

Adrian Ash, director of research at the online gold market Bullion Vault, said: “If gold acts as a barometer of financial fears then it’s flashing red for 2019. From Brexit to China’s hard economic slowdown, investors face a range of risks and shocks in the year ahead.”

The possibility of a long government shutdown in Washington can be added to a growing list of potential threats to the global financial system, including the overhang of property debts in China, growing frustration in the west with Moscow’s foreign policy, and Italy’s fragile banks.

But, as the Nobel-winning economist Paul Krugman has argued, most of the tax cuts were saved by the rich people and companies they benefited, and the small boost they gave the US economy has largely run out of steam. Investment spending in the US has begun to decline and the jobs market has peaked.

“The reality is that the [boost to growth] probably had more to do with oil prices than the tax cut,” he said.

Debt is also praying on the minds of traders. Not so much the personal debt that triggered the 2008 financial crash, but the huge rise in corporate and government debt in recent years.

The US government must refinance about $1tn of debt in 2019 and the same again in 2020. It is a lot of money for the markets to find and the consequences are unknown. Corporations have also borrowed heavily and must roll over large sums next year into new financing deals. Tobias Adrian, director of the monetary and capital markets department at the International Monetary Fund, also said recently that “the sheer size” of the shadow banking sector – that is, unregulated non-bank lenders – was very different from years past, “and we don’t quite know how that is going to behave in a downturn”.