Gold and other precious metals will outperform most other asset classes including equities, bonds and real estate this says Nick Barisheff, president and CEO of Bullion Management Group Inc.

In his 2009 outlook, presented at the Empire Club in Toronto, Barisheff explained to investors the problems continuing to negatively affect most asset classes this year will actually help gold continue its upward swing in 2009.

“Precious metals have been on an upward trend for eight years and for the past five gold has been the best performing asset. Throughout the financial turmoil of the past year, gold preserved investor wealth and outperformed all other asset classes other than bonds,” said Barisheff. “This trend will continue in 2009 as more investors will continue to seek a safe haven from the financial crisis that started in 2008”

Gold proved itself as a safe haven from the financial storm in 2008. In Canada, the metal gained 31% while the Toronto Stock Exchange lost 39%. In U.S. dollars, the metal may have only increased 5%, but the Dow Jones industrial average lost over 38%. Gold’s performance against other major currencies was even more pronounced as global equity markets lost between 30 to 70%, gold rose 9% in euros, 45% in British pounds, 25% in Russian roubles and 38% in Brazilian reals.

“Interest in gold will increase in 2009 as investors realize the crash of 2008 is not a simple correction and that the financial imbalances that broke open last year — which had been building for decades — are unlikely to correct in a single year,” observed Barisheff. “The next 20 years are going to be completely unlike the past 20.”

Contributing to gold’s continuing strength is the clear possibility of inflation fueled by government bailouts in the United States and around the world. Combine this with the resulting rapid increase in money supply and the formula is set for higher gold prices.

“Growth in money supply will ultimately lead to a decline in the U.S. dollar, higher inflation and result in higher gold prices,” said Barisheff.

In addition, supply and demand will play a role in gold prices in 2009. “China, Russia and the OPEC countries are considering increasing their allocations to gold in order to diversify their currency risk. Any reallocation by these countries will drive prices much higher,” Barisheff said.

While some institutions have predicted gold prices as high as $2,000, Barisheff feels the exact number is very hard to determine, and it doesn’t really matter.

“I am confident that gold will continue to outperform real estate, equities and in 2009 will likely also outperform bonds; it will continue to hold its purchasing power whether we experience, deflation, inflation, stagflation or hyperinflation.”

IE