Investors 'concerned about inflation'

Quantitative easing programmes launched by central banks are driving private banking wealth management clients to increase their gold and commodities exposure.

A new report from Interactive Investor suggests rising popularity for gold funds, with investors attempting to hedge against the increased inflation rates caused by the ’money-printing’ schemes.

Inflation figures released by the government yesterday showed a smaller-than-expected drop in CPI and a slight rise in RPI from -1.2 to -1.1 per cent over May.

This follows the launch of the Bank of England’s £125 billion quantitative easing scheme in March, which sees the central bank buying up a combination of gilts and corporate bonds and thereby boosting the money supply to the recession-hit economy.

However, some analysts have warned that this scheme has the potential to be highly inflationary.

Interactive Investor added: ’These [quantitative easing] policies may have serious long term implications for currencies, markets and ultimately investors as rising inflation will reduce the real yield achieved on investments.

’Investors are actively considering investments such as gold to hedge against potential weakness in G7 currencies and the inflationary ramifications that this would involve.’ ADNFCR-2318-ID-19223053-ADNFCR