Gold News

US fiscal output 'positive' for Gold Investment in the long run

A prominent fund manager has claimed today (May 21st) that gold will reap the benefits of the US' increasing stimulus spending and budget deficit, Bloomberg reports.

Following the announcement of a $787 million fiscal stimulus plan in February, the US government noted earlier this month that its deficit could reach a record $1.84 trillion this year.

With that in mind, Ken Windheim, founder of hedge-fund firm Strategic Fixed Income, explained that Buying Gold as an investment looks shrewd as the dollar will struggle to cope under such pressure.

He told the news provider: "Once the Fed leaves the game, it's going to be calamitous. I don't have a high level of confidence that they will do this correctly.

"Investors can profit by shorting the dollar and US Treasuries. Going forward, gold will be the major beneficiary."

Mr. Windheim's comments come after HSBC announced last week that it has increased its Gold Price forecast for the remainder of 2009 from $825 per ounce to $895 per ounce.

Explaining the decision, chief commodities analyst James Steel told Reuters that the yellow metal will continue to find hedging support as investors are wary about an impending period of inflation.

"Inflation fears are supporting gold … Possible USD [US dollar] weakness remains a potential source of support," he said.

"Stagnant mine output, reduced official sector sales, and robust ETF and retail demand are also supportive factors."

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