All Posts Tagged With: "imf"

India’s central bank is now the proud owner of 557 tonnes of gold. That gives it the tenth largest gold holdings among central banks. But it probably isn’t finished. Gold makes up just six percent of India’s foreign exchange reserves. There’s plenty of room for that to grow.

But don’t forget China. China has $2.3 trillion in foreign exchange reserves…

Next time around, though, we reckon the losses – when they come – will be on domestic real estate assets. And with so much exposure to domestic real estate (mortgage loans), the assets could face a world of hurt. But even if bank asset quality doesn’t crash (housing prices don’t crash), an external shock affects Aussie bank liabilities.

Millions of people, for example, earned their money in ‘housing.’ They were putting up houses in the sand states…or building granite countertops…or selling, flipping, financing the houses.

In the non-communist world, if a man had money and no bread, he exchanged the former for the latter…and sat down to dinner. As if guided by an ‘invisible hand,’ millions of people did the same thing. Everyone tried to get a bit more grease on his plate, by making his own decisions based on the facts before him.

Just to be clear though, the big trends now are soaring inflation and falling financial asset prices, along with increased energy scarcity. This produces a variety of pair trades, which include: short government bonds, long energy, short residential housing, long gold, and probably short commercial real estate and corporate bonds as well, while going long farmland and agriculture.