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Monday, 20th July 2009 (977 views)

Gold can be seen as a "solid hedge" for investors looking into their portfolio options in preparation for a possible period of inflation, it has been suggested.

According to Mike O'Kane of the New Zealand Mint, it is possible that recent indicators of a beginning to the economy's recovery may result in inflation.

He cited figures indicating that the US consumer price index rose by 0.7 per cent last month, while retail sales saw a 0.6 per cent increase, with both figures being higher than expected.

"The more optimistic the economy, the higher the probability of inflation. In inflationary times, investors target gold as a solid hedge," Mr O'Kane commented.

According to a recent Economic Times column by Christian Nolting of Deutsche Bank Private Wealth Management, commodities such as gold are seeing strong investment demand at present because investors are looking for ways of guarding against "dollar weakness and global economic uncertainty".

He noted statistics showing that global demand for gold coins, jewellery and other forms of gold investment rose by 38 per cent in the first quarter of 2009 compared with last year.

 

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