Investors buying gold 'as a hedge against inflation'

German trader Michael Blumenroth claimed on Thursday (January 15th) that investing in gold is still being seen as a prudent tactic in the current financial climate, Reuters reports.

Opinion over the future of the yellow metal is divided, with some commentators predicting tough times ahead due to impending deflation, but others forecasting record gold price highs this year.

However, Mr. Blumenroth, of Germany's largest bank, Deutsche Bank, explained that gold investment remains popular as people are fearful over the economy and are attracted to its safe-haven status.

He told the news provider: "Investors are buying into gold as a hedge against inflation and turmoil in the financial markets. (They think) maybe the worst is not over."

This stance was echoed last week by Allan Furlong, manager of client services at Sydney-based firm Joseph Palmer and Sons, who expressed his belief that gold prices will stay strong until the financial crisis begins to ease.

"I expect gold to stay up until we come out of this credit crunch," he told the Melbourne Herald Sun.

"If you want gold - if you think the world is going to end - then go and buy physical gold and pay to have it stored somewhere."

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