Nouriel Roubini, the economist dubbed ‘Dr Doom’ for predicting the US housing crash, believes the dollar, yen and Swiss franc may be better investments than gold if the global economy suffers a double dip.
While Roubini expects gold to be in demand should the world slip back into recession, he says save haven currencies could appreciate further.
"If there was a double-dip recession, increasing risk aversion, some assets are going to be preferred, and gold will be one of them," Roubini told Bloomberg.
"But in that situation, things like the dollar, the yen, the Swiss franc have more upside in a situation of rising risk aversion because they are much more liquid than the gold market."
The Swiss franc rose to a record against the euro on Tuesday, while the yen last month hit a 15-year high against the dollar. Gold has risen 14% this year and trades at over $1,250 an ounce.
"I believe that gold is going to trade around current levels," Roubini adds.
"There are two extreme events that lead to a spike in gold. One is inflation, but we have no inflation in advanced economies. If anything, there is a risk of deflation."
"The other event in which gold prices go up is the risk of a global financial meltdown, and that tail risk has been reduced because we backstopped the financial system."
