The gold price is showing more trouble is on the way - Imtiaz Ahmed, Macquarie First South

In an interview on SAfm @ 18:25 on 22 September 2008

[miningmx.com] -- THE gold price is warning of more trouble on the way, said Imtiaz Ahmed, chief investment officer at Macquarie First South.

"I think right now there is a real worry and risk of currency debasement, What I mean by that is that most currencies right now are at risk," Ahmed said on SAfm Market Update. "You just don't know which is most at risk, whether it's going to be the US dollar, the Swiss franc - you might have already heard rumblings about UBS being in trouble as well - and whether it's going to be Europe or the UK. You know that those economies are slowing very quickly," he said. "Investors right now are not spoilt for choice and in this environment gold does best. And that's what we've seen in the last few days," he said. "The gold price for me has always been an excellent barometer of risk measure, and that gold price right now is telling you that there is more trouble coming," he added. The platinum price has staged bit of a comeback as a feared unwinding of platinum exchange-traded fund positions underwritten by AIG has not been as bad as first thought, he said. "AIG was a big underwriter of platinum ETFs, and the worry at the time was if AIG was going to go bust and some of its assets or structures were going to be liquidated, that those platinum ETFs would be unwound as well," Ahmed said. "So we saw the platinum price come down very sharply and then recover today and a few days last week on the back of both the weaker US dollar and I think the understanding by investors that those ETFs aren't going to be unwound to the degree that they initially thought." GEOFF CANDY: What Michael Power was saying was quite interesting in terms of possibly a move away from the dollar and the need for South Africa to hitch its wagon much more to the Asian economies. Would you go along with that? IMTIAZ AHMED: I fully agree with that. I've been a strong supporter of the US dollar for a long, long time, but these latest developments in the last two weeks have certainly scared me. Just say to yourself, a large part of the US is service-orientated; a large part of that service denomination is banking and financial services-driven. And what we've seen there, the weaknesses in their financial system, must be a cause for concern. More importantly, we all talked about the budget and trade deficits in the States for a long time, and a further $700bn bail-out by the US Federal Reserve is just going to drive the budget deficit even wider.