Expert Zone

Straight from the Specialists

The golden bubble?

(The views expressed in this column are the author’s own and do not represent those of Reuters)

The spot price of gold crossed $1500/oz on April 22 and confirmed the belief that gold and, even more so, silver, are the best investments. In the last one year, gold gave a return of more than 30 percent; equity (Sensex) a mere 10 percent.

That was not always so. For more than 28 years before 2008, gold was a dead investment. The price of gold which peaked at $850 in 1980 dropped continuously to recover only in the last decade to cross the earlier peak in January 2008. What is surprising, gold was not even a hedge against inflation. Had gold prices increased at the same rate as CPI, gold today would have cost $2200/oz.

Gold has no intrinsic value except for some industrial uses. Hence gold accumulates as stock. New mining of gold is small and expensive. Of silver it is negligible. As such, prices of these metals depend entirely on demand.

U.S. vs China: which economy is bigger, better?

Photo

A girl holds a U.S. and Chinese flag at the White House in Washington January 19, 2011. REUTERS/Kevin Lamarque/Files

(The views expressed in this column are the author’s own and do not represent those of Reuters)

One of the most surprising developments resulting from the financial crisis is the belief among ordinary Americans that China has become the world’s leading economy. This view appeared in the roughest times of 2009 and has persisted even though the impact of the crisis has begun to ebb. U.S. media have frequently conveyed the same belief. But it is patently absurd.

Lower profits, uneasy market

(The views expressed in this column are the author’s own and do not represent those of Reuters)

On April 11, the CSO announced a further dip in industrial growth to 3.6 percent, bringing the Sensex down 189 points. That index was for February, the expectation about March is no better — which leaves the market a little cold.

What to expect from earnings season?

(The views expressed in this column are the author’s own and do not represent those of either Principal Pnb or Reuters)

The markets seem to be meandering in search of a push to move on in some direction.

Budget 2011: Good news for mutual fund industry?

An employee counts rupees at a cash counter inside a bank in Mumbai June 21, 2010. REUTERS/Rupak de Chowdhuri/Files(The views expressed in this column are the author’s own own and do not represent those of either Principal Pnb or Reuters)

When it comes to the mutual fund industry, the 2011-12 budget has good news and not so bad news.

Chinese investment in US: $2 trln and counting

Chinese one yuan coins are placed on 100 yuan banknotes in this illustrative photograph taken in Beijing February 8, 2011. REUTERS/Petar Kujundzic/Files
(The views expressed in this column are the author’s own and do not represent those of Reuters)

If most members of Congress were asked how much China has invested in the U.S., they would respond with about $900 billion. This is a notable sum. Yet it’s too low by $1 trillion and possibly more. If many participants in financial markets were asked about Chinese investment in the U.S., they would fret over the possibility of disinvestment. This seems perfectly reasonable. At present, though, it’s essentially impossible.

More important than the yuan: Opening China’s capital account

Chinese one yuan coins are placed on 100 yuan banknotes in this illustrative photograph taken in Beijing February 8, 2011. REUTERS/Petar Kujundzic
(The views expressed in this column are the author’s own and do not represent those of Reuters)

The entire global economy would benefit if the dollar-yuan exchange rate were driven by market demand. It would contribute to a U.S.-China economic relationship that is more balanced, more sustainable and more beneficial to people in both countries in a way that a government-ordered revaluation would not.

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