Analysts and forecasters known to CIG are warning that new economic bubbles are already in the process of forming.
Alan Greenspan recently warned “They [financial crises] are all different, but they have one fundamental source, that is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that it will continue."
Bubble spotting is tricky and most don’t see them before they develope and burst.
Here are a few which are on the CIG radar,
1. China bubble: Notwithstanding the weak global economy, the Chinese stock market has ascended like crazy this year. But many believe the rally has been driven purely by government-supplied liquidity, rather than fundamentals. The fear is that companies are pumped full of cash, but have little "real" to do with the cash, so they're stashing it in the stock market. The Chinese real estate market seems to be on a parallel trajectory.CIG believes this requires close scrutiny.
2. Green bubble: With the COP15 talks looming in December ,Green is everywhere. Analysts are saying the "Age of Cleantech and Biotech" will be the next key economic revolution, This has somehow avoided becoming a bubble, but investors , CIG believes may have overly hopeful expectations of early returns in this new sector.
3. Gold bubble: Gold prices just keep on rising. They've done so for seven straight years, recently breaking $1,000 per ounce.
Should we watching this as a bubble? Presently it doesn't look bad. Gold has managed well in both the good and the bad economic periods with real demand, but there are predictions CIG understands of $2000 an ounce. Surely that would be a bubble!
