Gold investment 'a good bet'

Inflation and interest rates have been cited as a reason why investors should buy gold to benefit from increased prices in the long term.

Keith Fitz-Gerald, writing for the Smart Profits report, suggested that at least ten per cent of the value of bonds should be placed in gold bullion as a hedge against inflation.

"[Gold] has a significantly correlated ten-to-one relationship with interest rates and bond prices which react to inflation. Therefore, if interest rates rise by one per cent, the face value of bonds should fall ten per cent but gold should rise by 100 per cent," he said, according to Money Week.

Mr Fitz-Gerald added that the current time is particularly good for buying gold as he believes the Federal Reserve is underestimating inflation pressures.

Earlier this month, Michael Darda, chief economist at MKM Partners in Connecticut, said he believes there will be further economic turmoil over the next six months, which could act to support gold prices.

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