Government bailouts are good for gold - Imtiaz Ahmed, Macquarie First South

Government bailouts are good for gold - Imtiaz Ahmed, Macquarie First South

In an interview on SAfm @ 18:25 on 6 January 2009

[miningmx.com] -- THERE will be an inflationary effect from the money governments are pouring into the private sector which is good for gold, said Imtiaz Ahmed from Macquarie First South.

The US government has poured billions of dollars into that country's banking system and is starting to pump money into the motor vehicle making business there.

"It's going to be inflationary. I think, to start with, I suspect that should be good for gold. Gold remains for me a long-term asset play," Ahmed said on SAfm Market Update.

"It's been an underperformer for such a long time. But finally I think the wind is starting to come to its back, especially with all this money being thrown around. It's going to be inflationary. Interest rates are very, very low right now, so that reduces the holding cost," he said.

By about April or May of this year it should be possible to make an assessment of where the markets and economies are headed for over the year 12 to 18 months.

"My hope is that we don't enter a depression. But it's quite clear the way regulators are thinking about this, and this is excellent news. They are thinking that we are going into a depression, and they are throwing everything at this," he said.

"And I suspect that some of this is going to work, and we will go into a recession, but a shallower one than we expected three or four months ago, which should be positive for markets going forward."