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Gold prices 'will increase by 20-25%' this year

A major Asian investment group claimed last week that gold prices could increase by between 20 and 25 per cent over the course of 2009.

Eastern Financiers, which is the oldest investment strategist in eastern India, released a new report into the gold industry entitled 'Year 2009: The Year for Gold and Gold Mining Companies'.

The work revolves around the argument that the huge debt accrued by the US economy in the wake of the collapse of Lehman Brothers will benefit anyone with a long-term gold investment.

One section reads: "The US is already running a huge fiscal deficit and the magnitude will increase after the $700 billion Troubled Assets Relief Program bailout signed by president George Bush.

"A further $650-750 billion which is proposed by president-elect Barack Obama will in turn weaken the US currency. We feel a significant portion of these Treasury bills will be invested into gold."

Those sentiments were strongly corroborated recently by Frank Holmes, CEO of US Global Investors, which manages around $2.3 billion worth of assets, who claimed that the dollar should fall markedly this year.

"Gold is starting to move as a monetary asset. With all the printing of money taking place in the US, the dollar, which has gone parabolic on the upside, is due for a correction and gold is now responding to that," he said.

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