Central bankers from world wide, especially in Asia are worried concerning the possible effects of relying a lot of on quantitative easing (QE) policies. This comes after the federal government Reserve embarks by using an ambitious buying program of mortgages and treasuries. Quantitative easing poses risks for investors since the man-made increase of asset prices creates market distortions. Insurance firms asset prices skewing from economic fundamentals, capital resources may be shifted from productive sectors, which may have a negative sustaining impact on gross domestic product.
It has forced public investors to battle more risk, especially public pensions who require to earn a return to fund liabilities. Real asset allocation is taking a better part of asset allocation for public pensions. Even Japan’s GPIF is studying alternative investments, including institutional real estate.
In the United States, there's been a lack of structural reform whether in taxes, entitlements, or fiscal spending based on the U.S. authorities. Deleveraging can be a painful and unattractive thing to do, not popular for politicians who wish to seek another term in office.
As QE usage grows and is also prolonged, it might create greater risks for countries trying to leave the program. Central banks can offer liquidity to produce some amount of financial stability. Central banks are limited within their chance to put fiscal government finances on a sustainable path.
Based on the World Gold Council, at the conclusion of 2011, there was around 171,300 tonnes of above-ground gold. The market price close for gold on December 20, 2012 was US$ 1,667 per ounce. The entire value of gold above-ground would be about US$ 9.14 trillion.
Central banks are increasing their gold reserves. Brazil’s central bank grew their gold holdings now it stands at 2.16 million troy ounces.