Gold Investment increasing 'on a flight to safety'

A commodity analyst at Dresdner Bank in Zurich claimed yesterday (February 11th) that investors are continuing to Buy Gold as a flight to safety, Bloomberg reports.

Gold Prices have already risen by 6.8 percent this year and touched a six-month high yesterday over fears that the US government's fiscal stimulus package may not revive the economy.

Now Bayram Dincer from the German bank - which was bought last year by Commerzbank - has explained that people increasingly view gold as a safe place to put their money in the long term.

He told the news provider: "This uncertainty increased risk aversion and continued a flight to a safe haven of gold investments."

Mr. Dincer's comments come after Evy Hambro, who co-manages BlackRock's World Mining and World Gold funds - both worth around £2.7 billion - also expressed a positive outlook for gold investment.

He explained that the price of the yellow metal should continue to grow in 2009 as mines are facing the prospect of further reductions in output.

"Over the medium to long term the underlying supply and demand fundamentals have a bigger part to play in determining the price," he told Citywire.

"Gold production fell last year and may fall further in 2009."

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