Nouriel Roubini has opposed Jim Rogers and Peter Schiff recently with his rather bearish calls on gold. Here are his five reasons to be bearish on gold right now:
"First, the dollar carry trade may at some point unravel, popping the global asset bubble that this carry trade has fueled.
Second, central banks will eventually need to exit quantitative easing and effectively zero policy rates, which will put downward pressure on risky assets including commodities.
Third, bouts of global risk aversion may occur as the global recovery may turn fragile, anemic and subpar, thus leading to a rise in the U.S. dollar that would drive down prices of commodities and gold in dollar terms.
Fourth, since the carry trade and the wall of liquidity are causing a global asset bubble, some of the recent rise of gold is also bubble driven by herding behavior and momentum trading, pushing gold higher and higher. But all bubbles eventually crash and the bigger the bubble the bigger the eventual crash.
Fifth, the effect of rising sovereign risk on gold prices is ambiguous, as the events of recent weeks suggest. A risk in such risk could push up the price of gold if it leads to expectations that central banks will eventually monetize those fiscal problems. But in practice it has weighed on the price of gold because it has increased investors’ risk aversion and led to a rush into a different (and more liquid) asset than gold—e.g. the U.S. dollar—thus pushing gold prices down. In general, gold always competes with fiat currencies and anything that is dollar bullish—like repeated bouts of global risk aversion—tends to be gold bearish." in Roubini Global Economics
Related ETF`s: SPDR Gold Trust (ETF) (Public, NYSE:GLD)
2 comments:
the real question about roubini is that he is not a trader....just another economist talking markets
not very convincing
1. There could be a temporary reversal with stronger dollar, but likely to be temporary
2.Central may try exiting / easing off QE but will likely find that drop off in economic activity will push them to print more money.
3. very similar to 1)
4. What is a bubble? Something not based on underlying assets.
Gold is founded on the undermining of the currency, and this is likely to continue.
5. very similar to 1)
Overall a spaghetti of arguments, only to be consumed if you don't mind being splattered by the inevitability of bolognese stains !
In the end this man will be seen as a one song wonder, recognising it was an enourmous hit.
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