A prominent fund manager has claimed today (February 4th) that the gold price will continue to rise this year as production of the yellow metal dwindles further, Citywire reports.
Evy Hambro, who co-manages BlackRock's major World Mining and World Gold funds - which are both worth around £2.7 billion - believes that investing in gold is in vogue at present due to sustained economic turbulence.
Although he stopped short of an exact price prediction, he explained that he expects the yellow metal to extend its gains this year and noted that gold bullion is attractive as it is "nobody else's liability".
He told the news provider: "Over the medium to long term the underlying supply and demand fundamentals have a bigger part to play in determining the price. Gold production fell last year and may fall further in 2009."
Mr. Hambro added that gold miners are struggling to undertake successful exploration projects and noted the discrepancy between the 15 million ounces discovered and 80 million ounces produced last year.
His comments follow the assertion last week by Eugen Weinberg, a commodities analyst at Commerzbank, Germany's second-largest bank, that the economic downturn is playing into the hands of anyone with a gold investment.
"In times of economic crisis, falling equity markets and mounting aversion to risk, physical gold is preferred as the safest form of investment," he told Reuters.
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