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Thursday, 29th January 2009 (2857 views)

A hedge fund manager who has previously shunned gold has invested in the metal as prices have risen sharply in recent months, an article has claimed.

Business Week reported that successful hedge fund manager David Einhorn has responded to attempts by the US government to resist deflation and improve the economy by turning to gold.

Mr Einhorn predicted that current US economic policy is likely to improve the prospects for gold in the near future and has started investing in the precious metal through its Greenlight Capital fund, purchasing gold options, physical gold and gold mining stocks.

"Our instinct is that gold will do well either way: deflation will lead to further steps to debase the currency, while inflation speaks for itself," he wrote in a confidential letter to his investors obtained by Business Week.

The fund manager revealed that he had previously avoided investing in gold, but has recently changed his approach to the metal in the current economic climate.

Citigroup has predicted that the value of gold could soar to more than $2,000 (£1,408) as a result if rising demand spurred by the global financial climate, according to the Daily Mail.

 

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