Global Investing

from MacroScope:

Press that reset button…

resetbuttonMohamed El-Erian, CEO and co-CIO of the world's biggest bond fund PIMCO, says 2010 is the beginning of the multi-year resetting of the global economy.

In the period up to the crisis, there were two labels that dominated the world -- Great Moderation and Goldilocks. Not too cold, not too hot. 2009 was about crisis management -- the label was 'whatever it takes'. The 2010 label is post-crisis. It's not just about post-crisis. In our view, 2010 is about multi-year resetting of the global economy. It will be a bumpy journey to the new normal.

Speaking in London ths week, he warned that migration of wealth and growth dynamics of advanced economies to systemically important emerging economies must be on top of investor radar screen in 2010, as well as sovereign risks.

It is the year of sovereign risk. Everyone has to recognise sovereign balance sheets themselves (as) an issue. Sovereigns are
called sovereigns for reasons. Everyone gets influenced.

Gold offers double-edged shine

It was Goldman Sachs who famously predicted oil prices to reach $200 a barrel last year, but there are a school of bullish investors who forecast a substantial rally in gold.

Take Gold and Energy Advisor, which predicts gold will soon reach $2,500 an ounce (from today’s $895) then to $5,000. The Florida-based firm argues that gold is the only asset class that’s not only private (as opposed to state-owned), but also liquid, portable, fungible, divisible, and valuable enough that a small amount can store a massive amount of wealth.

It also argues that of $11.5 trillion stored in offshore accounts and other assets, if one percent were transferred into gold, that would be almost four times the entire annual investment demand for gold.