Fears over banks 'will lead to gold buying surge'

A leading figure at New York's Blue Phoenix Inc. has suggested today (September 17th) that the threat of banks being wound up will see gold prices rocket over the coming months.

Wall Street has been shaken to its core by this week's bankruptcy of Lehman Brothers, the fourth-largest investment bank in the US, and the speculation over the future of major insurer AIG.

Now John Licata, chief investment strategist at Blue Phoenix, has explained that a surge in gold buying could be on the cards as investors attempt to find security against the current turbulence.

He said: "Gold is going to be the beneficiary of a global move towards a safe haven. There's a gigantic fear factor. Most people are concerned another bank is going to fail."

There are major concerns about some banks in the UK, with rumours that HBOS, the country's biggest mortgage lender, will need to be bailed out in a merger with Lloyds TSB.

As Matt Zeman, a metals trader at Chicago-based LaSalle Futures Group Inc, explained: "The fact is there is going to be more banks that will fail. This is the time when people want to buy gold and bury it in their backyards."

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