With fears swirling about the Greek debt crisis and uncertainties about the global economic outlook, Pictet, the Swiss private bank, has revised up its target forecast on gold to $3,000 per ounce from a previous target of $2,000.

Gold has already soared this year to a record of over $1,900 per ounce in the summer before retreating slightly. However, the fears that a Greek referendum will derail efforts to avoid a debt crisis in the eurozone have sent gold prices higher. Spot gold fetched around $1,750 per ounce late-morning today (Source: BullionVault.com).

In a briefing for journalists yesterday, Pictet said the gold price is slowly nearing the target ratio of 5 ounces of gold for one unit of the DJ Industrial Index of US blue-chip stocks, with fears about recession and inflation justifying a lower ratio.

Yves Bonzon, chief investment at Pictet Geneva, said the venerable Swiss private bank had been bullish about gold in its asset allocation for years: “This has been my best asset allocation decision ever.”

One of the most severe uncertainties surrounds the outlook for China, while the worst investment picture was in the eurozone, Bonzon continued.

China is attempting to curb its hot real estate market and contain inflationary pressures. And yet China’s fast-ageing population raises risks down the line, creating a “middle income” trap where the country’s labor force is too expensive relative to Vietnam and not cheap enough versus other countries, according to notes Bonzon presented.

Another issue, he argued, is that China’s exports as a share of all global exports – currently near 10 per cent -are at a level that is normally followed by a plateau.

Turning to the eurozone, Bonzon said markets were very difficult to read given the political forces coming to bear. But the picture will clarify when or if the eurozone’s central bank decides to print money to inflate away some of the massive debts built on the southern periphery.

“It will be a time to sell the euro if and when the European Central Bank monetizes the funding gap [debt] of southern Europe. That is why the euro is currently trading so strongly because it looks more like the old deutschemark than the lira or drachma,” he said.

Asked about the gold price and whether traditional, metal-backed currencies might stage a comeback at the expense of paper, or “fiat” money, Bonzon said this was unlikely because the old gold standard system was associated, he said, with gentle deflation in the nineteenth century, for example, and a period of regular bank runs.

Some commentators have argued that modern monetary systems, in which banks - especially central banks - inflate or contract the availability of credit beyond the stock of available deposits, have caused damaging booms and busts in recent years.