Twenty out of 22 questioned hedge fund managers in the US are investing in gold to counter inflation, according to interviews conducted by Moonraker Fund Management , the London-based independent investment management boutique.

On a fact-finding tour, Jeremy Charlesworth, the firm’s chief investment officer and manager of the Moonraker Commodities and Moonraker Global Opportunities funds, found that 20 of the 22 investors he interviewed were buying physical gold, fearing that national quantitative easing programmes will eventually result in a bout of steep price rises, the firm said in a statement.

“Gold is the ultimate currency, performing best when economies are at extremes, whether that is inflationary or deflationary. The managers I met in the US know that if the politicians get the quantitative easing programme wrong then the value of money relative to real assets will dwindle,” Mr Charlesworth said.

“History is littered with such instances; governments have a track record of destroying the value of money over the long term and currency devaluation is a relatively painless way for them to reduce the value of the enormous debt that is hampering economic recovery now.”

“Everyone agreed that sentiment is better than it was a few months ago but none of the structural problems have yet been fixed. Double-digit inflation two or three years down the line is a very real possibility,” he added.

Mr Charlesworth, who is looking to increase long exposure to gold in both funds he manages, believes in more upside in gold.

He anticipates major price rises in the not too distant future, as governments will be forced to allow inflation to rise to reduce the real value of debts.

The interviews also revealed that the fund managers were in no rush to pay off personal debt but had positioned their finances to be able to repay their debts at short notices.

Industries the interviewees expected to prosper in future included energy and alternative energies, materials, healthcare, food and food manufacturers, while some were keen on railways. They were negative on financial services and especially airlines, where they expected to see a lot of consolidation.

“Most of the managers were quietly betting that we are more likely to have brief period of boom and then a Japanese-style slow, grinding economy,” Mr Charlesworth said.

Mr Charlesworth is now withdrawing from long credit strategies, opting instead for those trading sovereign debt in Anglo Saxon countries looking to profit from the short side. He is also investing the funds with managers who know the global macro situation and its risks, having demonstrated their ability in event-driven trading.

London Gold (AM Fix) was priced yesterday at $934.67, which is only slightly up from the same day last year ($928.75) but a great increase to the price two years ago ($661.5 on 30 June 2007).

After having peaked in mid-March 2008 at $1023.5, the price of gold fell dramatically below $700 in October 2008. Since then, the price of gold has recovered, nearly reaching $1000 in February 2009.

Moonraker’s funds offer sterling, US dollar and Euro share classes and are available to both institutional and retail clients. The minimum investment is £15,000.