Experts are divided on which threat is worse for the global economy, deflation or inflation, but gold is a safe bet in either outcome, Morgan Stanley said in a research note.
"Gold looks to be the investment area that provides significant upside under the inflation-rebound scenario and relative resilience in the deflation scenario," Morgan Stanley said.
It could act as a "relative safe haven" in the event of spiraling deflation, the report said.
But if the wave of government bailout money eventually sends prices higher, "gold should be one of the best hedges for investors," it said.
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Gold has performed relatively well throughout the last nine years, even through the 2001 deflation scare, the report pointed out.
Market watchers remain at odds as to whether the ongoing financial turmoil will develop into an inflationary or deflationary environment.
