March

‘Ocean’ of Money to Drive Gold’s Record Rally

23 March 2011 Bloomberg.com

(Bloomberg) -- Gold may rally to a record as

investors from China, Japan and the Middle East buy the metal on

expectations of “hyper inflation” created by central banks,

according to Phoenix Gold Fund Ltd.

“The real driver for gold is the ocean of new monetary

reserves being created by irresponsible central banks around the

world,” David Crichton-Watt, Kuala Lumpur-based manager of the

$140 million fund, said in an interview. “Hyper inflation is a

very likely outcome, so gold can go to any number of dollars.”

Bullion may extend its 10th annual advance as Japan, struck

by a massive earthquake and tsunami on March 11, joins global

peers in bolstering money supply, Crichton-Watt said. The metal

climbed to a record $1,444.95 an ounce on March 7 as turbulence

in the Middle East and the debt crisis in Europe spurred demand

for haven investments.

European leaders will meet this week to create a permanent

solution to the region’s debt crisis. JPMorgan Chase & Co. said

Portugal’s government may collapse today as the parliament votes

on budget cuts that have divided lawmakers. Japan pumped a

record 40 trillion yen ($494 billion) into the financial system

since the temblor to soften the economic impact.

“Western governments and Japan’s government are

essentially bankrupt and have no intention of ever reducing

their deficits or indebtedness,” Crichton-Watt, 63, said.

“Once confidence goes, there will be a real panic.”