Nervous investors in search of safe havens amid continuing uncertainty in Europe and Washington have driven the price of gold to record highs and, according to one local analyst, that trend looks set to continue.“During the last several months you’ve seen an increased volatility in fiat currencies: the dollar, the euro and to a lesser degree sterling. You’ve seen investors looking for some traditional safe place to anchor their investment portfolios,” said Dave Barker, head trader at Lines Overseas Management, in an interview earlier this week.Nowhere is investor anxiety better evidenced than in the price of gold, which in recent weeks has traded consistently above $1600 an ounce and reached a series of nominal highs. Fears that American lawmakers would fail to reach a deal to raise the country’s debt limit which had loomed large until yesterday’s last-gasp deal was signed have only added to gold’s lustre.“The consequences of a non-deal were so significant that gold market became one of the few places for investors to safely hold their money,” said Mr Barker.“If you look at the structure of the deal this [week], that really hasn’t changed. The components of this deal are so down-market from what should have happened and the politicising of the national debt situation in the United States has been so egregious that confidence is being lost within the US at an increasingly accelerated degree.”Although some experts are wary of gold for smaller investors it produces, after all, no dividends or cash flow Mr Barker believes it has a place in any portfolio.“The argument that gold has no quote unquote return in the traditional sense has been negated over the last 12 years. The price of gold has gone from $300 an ounce up to $1600 an ounce,” he said, noting that anyone who invested in the commodity at this time last year would have seen a near 33 percent rise in spot prices.Mr Barker, whose company offers a range of gold-related services such as futures as well as actual bullion, reported significant interest in gold among LOM’s well-heeled clients.“A lot of our very high net-worth guys, who are very knowledgeable, have had a tendency to favour physical gold. I think it’s an understanding by the sophisticated investor that the gold aggregate is indeed a protection against both inflation and the monetising of debt by Western economies.”Investors with long memories might recall a similar trend in gold prices during the early 1980s, which was followed by a period of extended volatility. However, Mr Barker said he did not envision a similar reversal in the short-term, noting earlier fluctuations in gold prices were largely due to market manipulations.“It’s very difficult to place absolute targets on it, but the trend is still higher. The trend has not turned parabolic as did in a very short period of time in the 1980s. It’s backed by a continuing deterioration of fiscal and trade positions in the Western world”.A seasoned trader himself, Mr Barker has noticed another change in the gold market: the hoary truism taught to generations of economics students of the relationship between gold and currency seems no longer to hold.“We’ve just seen the dollar take a knee-jerk reaction upwards,” he said, pointing to the market’s reaction to budget ceiling deal. “One would have thought that would have sent gold lower. That inverse relationship between the dollar and gold seems to have been broken.”Even with an American government default narrowly averted this week, Mr Barker remains bullish on gold in the medium-term.“In this environment I don’t think we have seen anywhere near the top for gold,” he said.