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Gold 'would rocket' with 1% of stocks' value

The price of gold would be much higher than it is today if just one per cent of the total value of stocks and bonds was ploughed into the yellow metal, it has been claimed.

Speaking to the Guardian, author and investment expert Shayne McGuire noted that global gold mining supply has been on a downward trend since 2001.

He added that while the total value of worldwide gold bullion holdings is about $3.4 trillion, just a tiny proportion of this is actually traded on the financial markets.

"If one per cent of the global value of stocks and bonds - roughly $960 billion - went into gold, the precious metal would skyrocket," Mr McGuire commented.

"Thinking of prices well above $10,000 per ounce would suddenly become rational."

Indeed, a number of experts are predicting previously unthought-of highs for the yellow metal anyway, with some estimates surpassing the $2,000 an ounce mark for the longer-term.

With the dollar continuing to weaken and demand in India seeing a pick-up during the traditional gold jewelry buying season, prices may hit four figures soon.

The comments came after UK prime minister Gordon Brown was subjected to criticism for selling a significant proportion of British gold reserves at a time when gold prices were at about $275 an ounce - compared with the high of $989 an ounce reached earlier this week.

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