Risk of Inflation says City Economists
Delivering their outlook for 2011 to pension fund trustees, several City economists believe a sharp rise in inflation is the biggest risk for investors, as reported by the Financial Times.
There will be further dollar weakness according to Gerard Lyons, head of global research at Standard Chartered.
The second round of quantitative easing by the Federal Reserve and heavy buying of Treasuries to stimulate the economy are part of measures being taken by the Federal Reserve in America until June next year according to the financial paper.
Low US interest rates and a weak dollar are likely to make gold bullion fare better. Gold bullion is seen by some investors as a safe hedge against short term and longer term risks. In the short term there is a risk of a double-dip recession. Longer term, we may see a jump in inflation, as predicted by Goldman Sachs analysts.
Goldman Sachs strategists predict a further 20 per cent rise in the price of gold bullion and all gold prices.
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