Allianz Global – Gold investments – still a safe bet

“Allianz Global” believes that inflation is the most likely outcome of the “cure” meted out by central banks.

Allianz Global, the Italy-based asset management firm, remains convinced that the specter of inflation poses the greatest risk to investor wealth in the next few years.

Analysts at the firm reiterated their advice to acquire and hold the precious metal as a way of countering the inflation that it says is inevitable given the likelihood that governments around the world will continue to pursue inflationary policies in an effort to reduce the real value of their debts.

A source close to “Allianz Global” said that the unprecedented levels of bond issuance by developed nations is placing extremely high pressures on their ability to service their debt payments in the years going forward as tax revenues fall. The firm believes that there are two choices: the first is for nations to default on their debt whilst the second is for them to inflate their way out of trouble by paying their debts off with a devalued currency.

This will seriously affect the purchasing power of investors’ and savers’ money.

“Allianz Global” have long been bullish on gold citing its credentials as a hedge against government profligacy rather than inflation per se. The firm points to the price of gold in pounds sterling which has increased from just £375 per ounce in the 3^rd quarter of 2007 to over £700 in the 3^rd quarter of 2009 as a real world example.

“Allianz Global” routinely advises clients to purchase gold through ETFs (Exchange Traded Funds) to avoid having to take actual delivery and organize storage of their gold.