WHY YOU NEED TO BUILD A WAR CHEST NOW

HERE are warning signs all around. Despite trade wars and geopolitical tensions, the relative calm in asset prices is disturbing. Equity assets and gold prices do not rally or fall in tandem. The dramatic surge in gold prices over the past year indicates a risk in financial markets. It is not just gold. The precious metal pack is surging. Silver prices are surging, too. If you hear some prominent voices in the world of global finance, we are witnessing a lull before a storm.

- RAJAS KELKAR

Gita Gopinath, a renowned economist who recently stepped down from the International Monetary Fund, warned in an article in the Economist magazine that global equity investments in financial markets are concentrated in a few US stocks. Any sharp selloff in America could trigger a global selloff that could wipe off trillions of dollars in value.

In another statement, Jamie Dimon, who heads J P Morgan, the biggest bank in the United States, predicted a ‘serious’ market correction. Heargued that the US has become a less reliable partner for other countries in the world. In the latest Financial Stability Report, the International Monetary Fund warned that there was a significant increase in the chance of a ‘disorderly’ market correction.

Despite all those warnings, money found way into markets like Hong Kong, China, Korea and Japan. US markets continue to scale new peaks and trade at record highs. Most pundits have highlighted the risk of inflation in rich countries.