George Soros Warns Gold Is Now the 'Ultimate Bubble'
Source: Telegraph, Edmund Conway (1/28/10)
"When interest rates are low we have conditions for asset bubbles to develop. . ."
Gold prices last month reached a record level of just over $1,225 per ounce, having risen around 40pc last year. Investors are piling into the metal amid fears both of potential inflation and fading faith about the stability of previously-assumed safe assets such as government debt. However, the chairman of Barrick Gold, the world's biggest producer, Peter Munk, said he expected the metal's upward march to continue.
Mr. Soros added that by proposing imminent "exit strategies" from the unprecedented support handed out to troubled banks and consumers, governments around the world could be in danger of triggering a double-dip in the global economy. In comments which will reinforce Labour's plan to fight the next election on promises not to start raising taxes or cutting spending too soon, he said that it was still too early to slash budget deficits.
He said: "I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. Some countries, like the U.S. and European countries, have plenty of room to increase their deficits. The political resistance to doing so increases the chances of a double dip in the economy in 2011 and after that."