Gold prices due 'substantial rally' when liquidity unwinds

A well-respected former financial strategist has claimed today (January 20th) that anyone with a gold investment will be richly rewarded in the future, globeinvestor.com reports.

Donald Coxe, erstwhile employee of BMO Nesbitt Burns, has suggested that the Fed has quadrupled the size of its balance sheet since the beginning of the global financial crisis.

With such considerable volumes of money being printed, he believes that the substantial liquidity in the system will begin to unwind and inflation will soar, taking gold prices with it.

He told the news provider: "There's going to be an inflationary price to pay for this, but right now governments are prepared to pay that price because they are so scared of the collapse in the economy.

"Once people realize the economies have stopped going down and have started coming back, then they are going to look at all the liquidity in the system and that will be the point we'll probably start seeing the substantial rally in gold."

Although Mr. Coxe could not put an exact time frame on the gold price surge, he claimed that the yellow metal will be the best-performing commodity over the coming six months.

His sentiments were strongly corroborated last week by Mark Pervan, head of commodity research at top Australian financial services company ANZ.

"We haven't seen how all the cash they are printing will play out yet," he told the Melbourne Herald Sun.

"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."

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