DAVOS (Commodity Online): Even as Gold fears looms large over the world, several market analysts have been backing the yellow metal saying that the global economy will take more time to recover from the recession and the stimulus packages will boost inflation forcing people to park their investments in gold. But, situation is changing and there are strong signals of a gold bubble. That is the advice of billionaire investor George Soros.

Talking before the World Economic Forum meet, Soros said gold is now the ultimate bubble. This statement has sparked fear and debate among global investors.

Soros, arguably the most famous hedge fund manager in history, warned that with interest rates low around the world, policymakers were risking generating new bubbles which could cause crashes in the future.

Soros was quoted by news agencies as saying: “When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.”

Gold prices last month reached a record level of $1,225 per ounce, having risen around 40% last year. Investors are piling into the metal amid fears both of potential inflation and fading faith about the stability of previously-assumed safe assets such as government debt.

Soros added that by proposing imminent exit strategies from the unprecedented support handed out to troubled banks and consumers, governments around the world could be in danger of triggering a double-dip in the global economy.

He said: “I think that since the adjustment process to the recession is incomplete, there is a need for additional stimulus. Some countries, like the US and European countries, have plenty of room to increase their deficits. The political resistance to doing so increases the chances of a double dip in the economy in 2011 and after that.”

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