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March 5, 2010 – Although most of the current economic talk focuses on recession, many analysts think gold investment could be on the verge of benefitting from long-term inflation. While the US government has allocated over $986 billion to boost struggling banks and held interest rates near zero, some experts like Jeffrey Nichols, an analyst for MD American Precious Metals Advisers, see these measures as leading to inflation.

The Economic Cycle Research Institute's US Future Inflation Gauge, designed to predict cyclical swings in the rate of inflation, has been indicating the potential of inflation for nearly a year. After ten consecutive months of increases, the gauge dipped slightly in February, but analysts still see the trend continuing higher. "Despite its first downtick in 11 months, the USFIG remains in a cyclical uptrend, with underlying inflation pressures continuing to trend upward," said ECRI Managing Director, Lakshman Achuthan.

Jeffrey Nichols also states, the coming interest rate increases and flood of Fed money form the “type of development over time [that] is very bullish for gold." Nichols predicts, “Ultimately in the next few years there is a very good chance we will see [gold prices of] $2,000, even a good possibility of $3,000 or higher."

Inflation has been traditionally linked to gold investment, as the weaker value of the dollar can lead to higher gold prices. Frank Lesh of Chicago-based FuturePath Trading LLC is recommending that people invest a portion of their portfolio in gold due to fears over devaluation of the dollar. "Gold is a part of the currency crosses now," he was quoted as saying. "The international currency is gold."

With the ECRI maintaining its forecast for inflation to move steadily upward, gold investment could benefit people who look to gold as an investment hedge and an alternate currency. 

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Stewart Lawson

Senior Staff Writer - Gold-Investment.info