BarCap predicts 'perfect storm' for gold bullion

A leading figure at Barclays Capital has suggested that the current economic landscape could provide a "perfect storm" for gold bullion over the next six months.

Wall Street is wobbling after Congress rejected the proposed $700 billion bailout plan, leaving traders in New York and around the world gasping in amazement and disbelief.

Now Jonathan Spall, a director in BarCap's commodities division, has explained that even if an alternative arrangement is struck up, investors will be pushed into a reconsideration of gold's merits.

Speaking in Japan at the London Bullion Market Association's (LBMA) annual conference, he said: "I think we should make new highs…within the next six months, I would've thought. We should be in a perfect storm for gold.

"I was always very sceptical of the argument of gold as a safe haven, but that has changed dramatically for me and for others - now it's financial institutions themselves that are under threat."

Many of the delegates at the conference in Kyoto predicted that gold prices would remain between $700 and $1,200 per ounce in 2009, thus possibly beating the high of $1,033 per ounce recorded in March.

As Jeremy Charles, chairman of the LBMA and head of precious metals at HSBC in London, lucidly summed up: "High bullion prices are here to stay."

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