Gold: 'Bubble will grow in scope'

Investors in gold should not be discouraged by periods of pullback in the price of the precious metal.

Martin Hutchinson, editor of Money Morning and a regular contributor to the highly respected Prudent Bear site, says that prices in previous commodity booms have never gone up uniformly, but have shown volatility and consolidation at times.

He cites rapid inflation in developing countries such as China and India, as well as in America, as the factor which could further support gold prices.

"It's highly likely that the commodities bubble - which is clearly what this has become - will grow in both size and scope.

"Moreover, an economic recession, which would probably be accompanied initially by inflation that was still accelerating, could intensify the rise in the price of gold, instead of suppressing it," he commented.

Mr Hutchinson also predicted that the price of gold could soon reach $1,500 an ounce, higher than the record price of $1,000 reached in March this year.

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