National debt 'to undermine dollar and boost Gold Prices'

Gold Prices are likely to strengthen significantly in the long-term as a result of projected inflation in the US, it has been warned.

Some economists forecast that by 2020, interest payments on national debt and entitlement benefits such as Medicare will account for 80 per cent of federal revenues.

According to Jeff Clark, who is senior editor of Casey Research's Gold & Resources Report, the only way that the government will be able to reduce such a debt burden is to devalue the dollar.

"And the direct result of that is a rising gold price," he said.

"We may very well see another round of deflation, but the endgame is inflation."

Julian Phillips, of Gold Forecaster, has also forecast a brighter time ahead for Gold Prices, suggesting that the IMF's plans to sell 191 further tonnes of bullion could be good for the value of the precious metal.

He wrote: "The market first reacted by fearing a dumping of this amount of gold, but once it gathered itself together, realized that it could as well be bullish for the gold price."

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