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Post by Shiu on Dec 4, 2009 7:49:51 GMT 4
China warns of possible gold bubble Published on 12-03-2009 Source: Globe & Mail
Gold prices are currently high and markets should be careful of a potential asset bubble forming, a senior official at China's central bank said on Wednesday, as prices for the precious metal hit a record high.
“We must keep in mind the long-term effects when considering what to use as our reserves,” Hu Xiaolian, a vice-governor at the People's Bank of China, told reporters in Taipei, when asked if China had plans to increase its gold holding in its foreign exchange reserves.
“We must watch out for bubbles forming on certain assets, and be careful in those areas.”
Gold hit record highs at $1,216.75 (U.S.) an ounce in Europe on Wednesday as investors bet on higher prices.
China's more than $2-trillion in foreign exchange reserves are mostly parked in U.S. treasuries, despite calls from some in China to invest the reserves in oil and other natural resources that the fast-growing Chinese economy will need in future.
Before gold prices hit record highs, however, China said last month that it is working to improve the allocation of assets in its foreign exchange reserves, when asked whether it would buy any of the gold that the International Monetary Fund is seeking to sell.
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sapuco
Junior Member
Posts: 92
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Post by sapuco on Dec 19, 2009 2:36:15 GMT 4
Is Gold a Safe Haven? International Evidence Dirk G. Baur University of Technology, Sydney - School of Finance and Economics Thomas K. McDermott Trinity College Dublin - School of Business and Institute for International Integration Studies September 1, 2009 Abstract: The aim of this paper is to examine the role of gold in the global financial system. We test the hypothesis that gold represents a safe haven against stocks of major emerging and developing countries. A descriptive and econometric analysis for a sample spanning a 30 year period from 1979-2009 shows that gold is both a hedge and a safe haven for major European stock markets and the US but not for Australia, Canada, Japan and large emerging markets such as the BRIC countries. We also distinguish between a weak and strong form of the safe haven and argue that gold may act as a stabilizing force for the financial system by reducing losses in the face of extreme negative market shocks. Looking at specific crisis periods, we find that gold was a strong safe haven for most developed markets during the peak of the recent financial crisis. papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1516838_code339445.pdf?abstractid=1516838&mirid=4
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