Gold prices 'will surge' as new US money filters back into economy

A senior figure at a major Australian financial services company claimed on Saturday (January 10th) that investing in gold is a wise strategy as inflation will soon return, the Herald Sun reports.

Mark Pervan, head of commodity research at ANZ, which offers products such as mortgages and credit cards, stated that central banks are currently hoarding huge volumes of the yellow metal.

He explained that this is motivated by a fear that the relentless printing of money currently being undertaken by the US government will eventually send inflation soaring.

He told the news provider: "There is 33,000 tonnes sitting in central banks, which is the equivalent of ten years' supply of gold.

"We haven't seen how all the cash they are printing will play out yet. They're giving it to banks and the banks aren't doing anything with it, but the moment the banks start pushing that money back into the economy, inflation will come back and gold will surge."

Those comments were backed up recently by Kishore Narne, the research head at Anand Rahti Commodities, who claimed that gold prices will have reached $1,200 per ounce by the middle of 2009.

"With liquidity infusion across the globe, paper currency will see an erosion in value and gold will be a better vehicle for investment," he told the Economic Times.

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