Thursday, June 27, 2013

Roubini: Investors should have a modest share of gold

Yes, all investors should have a very modest share of gold in their portfolios as a hedge against extreme tail risks. 

But other real assets can provide a similar hedge, and those tail risks – while not eliminated – are certainly lower today than at the peak of the global financial crisis.

Wednesday, June 26, 2013

Growth In Emerging Markets

“It was already evident in the first and second quarters of this year that growth in China and other emerging markets was slowing.”

Tuesday, June 25, 2013

Gold has no intrinsic value

Gold remains John Maynard Keynes’s ‘barbarous relic,’ with no intrinsic value and used mainly as a hedge against mostly irrational fear and panic.

Monday, June 24, 2013

The Exit From The Feds QE And Zero-Interest-Rate Policies Will Be Treacherous

"The exit from the Fed's QE and zero-interest-rate policies will be treacherous: Exiting too fast will crash the real economy, while exiting too slowly will first create a huge bubble and then crash the financial system. If the exit cannot be navigated successfully, a dovish Fed is more likely to blow bubbles."

Related ETFs: SPDR Gold Trust (ETF) (GLD), SPDR SP 500 ETF (NYSE:SPY), iShares MSCI Emerging Markets (ETF) (EEM)

A New Period of Uncertainty & Volatility Has Begun

"New period of uncertainty & volatility has begun; it seems likely to lead to choppy economies & markets."

Friday, June 21, 2013

Gold: A 6-Point Bear Case

Here’s a recap of Roubini’s six-point case, in his piece for Project Syndicate:
1. Gold spikes in times of serious economic, financial and geopolitical risks — think “financial Armageddon.” But that doesn’t make it such a safe investment, says Roubini, noting sharp falls in gold prices during crisis periods of 2008 and 2009.

2. Gold performs best in times of high inflationary risks, as its popularity grows under the view that it is a hedge against inflation. But even after aggressive monetary policy by central banks, he says, global inflation is low and dropping further, and commodity prices are adjusted downwards.

3. Gold provides no income. With equities, you get dividends; with bonds, coupons and with property, rent. Now that the global economy is recovering, other assets are providing higher returns — so who needs gold, which has “vastly” underperformed since early 2009 versus stocks, he asks.

4. Real rates are headed higher on the view that the Federal Reserve and other central banks are going to back out of quantitative easing and zero-policy rates. “The time to buy gold is when the real returns on cash and bonds are negative, and falling,” and that’s not now, he says.

5. Highly indebted sovereigns are not pushing investors towards gold and away from their bonds. In fact, many of these governments have high stocks of gold, which they may dump to cut debt. Italy, for one, could be tempted to pare back on its huge holdings.

6. Political conservatives in the U.S. have hyped gold so much that it’s become counterproductive. “For this far-right fringe, gold is the only hedge against the risk posed by the government’s conspiracy to expropriate wealth,” he says.

Wednesday, June 19, 2013

Gold Prices Are Likely To Move Much Lower

"There are many reasons why the bubble has burst, and why gold prices are likely to move much lower, toward $1,000 by 2015."

Related stocks and ETFs: SPDR Gold Trust (ETF) (GLD), Newmont Mining (NEM), Barrick Gold (ABX), Goldcorp (GG)

UK: Economy Still Fragile

UK economy still fragile as there's barely any positive growth & EU Brixit saga creates uncertainty.

Monday, June 17, 2013

Art: A New Major Asset Class

"From the Venice Art Biennal it looks like art is indeed a new major asset class. It may be in a bubble as a frenzy of new collectors emerges."

Thursday, June 13, 2013

Fed`s Liquidity Injections Are Not Creating Credit For The Real Economy

The problem is that the Fed's liquidity injections are not creating credit for the real economy, but rather boosting leverage and risk-taking in financial markets. The issuance of risky junk bonds under loose covenants and with excessively low interest rates is increasing; the stock market is reaching new highs, despite the growth slowdown; and money is flowing to high-yielding emerging markets.

Tuesday, June 11, 2013

A Global Quest For Yield

“With interest rates on government bonds in the US, Japan, the United Kingdom, Germany, and Switzerland at ridiculously low levels, investors are on a global quest for yield.” - in CNN money