THE TELEGRAPH: Fears that American, British and other governments intend to inflate their way off the rocks of excessive debt prompted record inflows into gold this week.
Now some fund managers claim the price could more than double to $3,000 (£2,080) per ounce within five years.
Heavily indebted governments throughout the developed world are struggling to fill deficits of black-hole dimensions in public finances by imposing spending cuts and tax rises. Both are expected in Britain's emergency Budget on June 22 and neither will be popular.
But keeping interest rates lower than inflation and letting the currency take the strain is another way to reduce the real value of debt. You can see why politicians may feel that is the ''least worst'' option.
Stealthily robbing savers by eroding the purchasing power of money is less likely to cause riots in the streets than spending cuts, because inflation tends to hit older people hardest while unemployment hits the young.
Governments can devalue their own currencies, but it is harder for them to make more gold. That fact helped prompt record inflows of $484m (£336m) into gold exchange-traded commodities this week, while gold trading volumes peaked at $2.1bn (£1.45bn). >>> Ian Cowie | Thursday, May 20, 2010
