Sovereign Risk: For the first time since 1970s, there is the possibility that a major industrialized country could default (Greece, Portugal, Spain etc.); Domestic Financial Uncertainty: Unsustainable domestic fiscal/monetary policies have led the S&P to downgrade U.S. debt (negative outlook); Decrease in Confidence of paper money: For first time since demise of the Bretton-Woods system, the status of the two major currencies is being questioned at the same time (Euro-2010 and Dollar-2003-2009-?); Paper assets fail to act as store of value: AIG, Citigroup (once deemed safe and long-term investments) and AAA rated complex debt instruments imploded during the recent crisis; Emerging Market Growth/Inflation: Inflation pressures are building in India, China and other emerging markets; Rising Emerging Market wealth will translate into higher nominal prices for real assets (especially commodities); Low Interest Rates: Zero to negative real short term interest rates around the world increases appetite for zero yield assets; Liquidity: The US government has deployed unprecedented monetary and fiscal stimulus in the U.S. economy leading to a massive increase in liquidity.
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