With the outlook for global markets still very much in the balance, and quantitative easing likely to be utilised by western governments, Arnold believes gold and other precious metals are poised for significant gains.
"In spite of the good start for equity markets this year, there are some big headwinds out there," he said. "When it comes to governments in Europe and the US coming up with plans and implementing plans to stimulate growth later on this year, I think they’re going to struggle in a big way."
"The only real option this leaves is quantitative easing, which is always a positive for the gold price. When there is so much money pumping around the system, currencies lose their value and reliability."
"It’s a very gloomy reality, but growth is going to be pretty stagnant in the western world for many years to come, and quantitative easing is one of the very few tools policy makers have at their disposal," he added.
While Arnold thinks projections of $2,000 an ounce by the third quarter of this year may be a little premature, he thinks gold is poised to challenge its all-time high of $1,926 in September 2011.
Performance of gold over 5-yrs
Source: FE Analytics
"Before it hits the $2,000 mark, it’s still got to go past its all-time high, which would mean gains of 15 per cent also,” he said. “This is a pretty substantial gain, and at this stage by no means unrealistic."
To get direct exposure to bullion, a gold ETF is probably the most efficient option. A recent FE Trustnet study highlighted the most effective gold ETFs available to investors.
Of the other precious metals, Arnold is more positive on palladium and platinum than silver.
"Investors tend to look at silver as a relative value play when gold has made big gains," he said. "The two metals are correlated quite significantly – by around 80 per cent historically. However, as a defensive play, it comes second-best to gold, as it is used far more widely for industrial purposes."
"Around 50 per cent of silver is used in the industrial sector, compared to 10 per cent of gold. This means it is more economically sensitive, which isn’t really what you want when projections for global growth are so poor."
"All the growth that we are going to see will come from emerging markets, which is why we’re more optimistic about palladium and platinum."
The main usage of silver is in the manufacturing of electronic goods – a sector that is still dependent on the western consumer. However, palladium and platinum are the principal materials used in the construction of catalytic converters in cars, which are seeing most of their demand from the likes of China and India.
Arnold believes that the fate of the copper price will be determined by Chinese growth.
"There has been a recent downgrade, which was met by a bit of an overreaction from the markets," he said. "I don’t think it’s a particular source of concern – growth now seems to be back in line with sustainable levels, and unless there is some really disappointing data on Friday, $8,000 looks like a decent price. That said, with global appetite where it is at the moment, precious metals are a safer bet."
While some analysts have forecast oil to hit record highs of $200-a-barrel in 2012, Arnold thinks prices are likely to stabilise.
"I think Brent oil will grind down a little lower, to around $115 or so," he said. "The noise coming out of talks between the US, Iran and Israel imply that political tensions are on the mend, which should put a bit of pressure on the price."
"There are always hypothetical factors that could send the price through the roof, but at the moment I don't see any on the horizon," he finished.