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Economist Ties Gold Bet to Bernanke Resignation

Federal Reserve Chairman Ben Bernanke may resign in late 2011 as deflation continues to dash hopes of strong economic growth in the U.S. economy, Jim Walker, founder and CEO of Asianomics, told CNBC Friday.

Federal Reserve Bank Chairman Ben Bernanke
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Federal Reserve Bank Chairman Ben Bernanke

"Deflation is still going to be around in the U.S. and the credit contraction will continue, which will eventually lead to much lower growth," Walker said.

Bernanke's resignation would cause a decline in the price of gold, but until then the precious metal is still likely to rise, according to Walker.

"We're advising people to be long gold, I think that continues to go up, certainly through the first nine months of next year," he said.

"We're kind of expecting that at that point that Ben Bernanke will resign and I think the gold price will fall on the back of that and then resume its rise," he said.

Walker also said that the price of U.S. Treasurys will rise in 2011 on the basis that deflation will persist.

Euro Zone Faces Exodus

The ongoing European debt crisis, and the austerity measures brought in to solve the issues, will see an "exodus" of countries from the monetary union, according to Walker.

"I think the euro is finished in its current form. I think there will be an exodus of countries from the euro that just can't stand the pain," he said.

"They are democracies after all and people vote out governments that inflict pain on their population," Walker said referring to a raft of cost-cutting measures brought in by many of the region's indebted nations.

Austerity measures have tabled sharp reductions in public spending leading to widespread protests throughout Europe as citizens voiced their anger at the political leadership of the debt crisis.

"Whether it's 2011 I'm not sure, but over the next two years I'm pretty certain that's what's going to happen," he added.

  • Watch Jim Walker's views on emerging markets here >>>

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