Senior Officials within the Gold Industry have warned that an economic depression followed by a dollar crash is a real possibility, as they announced moves by major economies to raise their central banks' gold reserve holdings.

Marcus Grubb,
managing-director of investment research and marketing at the World Gold Council, has warned that the strength of the U.S. dollar is likely to be short-lived and has said that major developing economies such as India and China are looking toward diminishing their dollar holdings.

"What we are seeing is a reassessment of the risk associated with the high exposure to the dollar. Obviously at the moment you see the dollar appreciating 25 to 30 percent against most currencies around the world, but a lot of that is obviously driven by liquidity." Grubb said.

"That is a temporary phenomenon, if you look at the size of the bailout packages in North America the fact that the U.S. economy may well enter a depression ... there is a real fear of that," he said. "In that scenario I wonder what will happen to the U.S. dollar."

Grubb also says he expects to see moves by middle eastern countries to shore up their economies by buying gold.

Grubb's analysis dovetails with that of other prominent economists and investors such as such as Eric Sprott, Johann Santer, Jim Rogers, Robin Griffiths, Edward Hands and Jurg Kiener to name but a few, who are now predicting that global central banks' insistence on printing their way out of economic turmoil is setting the stage for a hyperinflationary holocaust, a knock-on effect of which will be gold's acceleration towards $2,000, as demand for precious metals outstrips supply.

This past weekend, legendary investor Warren Buffett joined the chorus as he warned that the multibillion-dollar bailouts handed out by the US Government will bring on an “onslaught of inflation".

“Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel,” Mr Buffett said. “These once unthinkable dosages will almost certainly bring on unwelcome after-effects. Their precise nature is anyone's guess, though one likely consequence is an onslaught of inflation.”