WEF 2018: Davos Elite Say Risk Of A Downturn Rising
(Kitco News)- Despiteoverwhelming optimism as a result of global synchronized growth, some financialexperts see potential economic storm clouds gathering on the horizon, accordingto comments made during the 48 annual World Economic Forum at Davos,Switzerland.
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| Image courtsey of the World Economic Forum / Ciaran McCrickard |
Duringthe final day of the global economic conference, some of the global elite saidthat economic growth in the U.S. and Europe is on an unstainable path and thereare risks of a growing downturn within two or three years. The threats come ascentral banks around the world start to tighten monetary policy after a decadeof accommodative easing, said the WEF in a press release.
“Weare in pretty unchartered territory. Exiting from QE [quantitative easing] willbe a difficult exercise,” said Axel A. Weber, Chairman of the Board ofDirectors, UBS, Switzerland in a press release from the WEF.
TheWEF noted that the lack of inflation despite years of liquidity pumped intofinancial markets was an central topic during the conference. Despite billionsof dollars created by central banks in quantitative easing, average wages formost workers have not increased significantly, the WEF press release said.
“Howcan it be that we’ve injected so much money into the system, and inflation isstill weak?” asked Beno?(R)t Coeur?(C), Member of the Executive Board, EuropeanCentral Bank, Frankfurt.
Accordingto some commodity analysts, this growing uncertainty bubbling below the surfaceof global optimism is one of the reasons why the gold market will continue todo well.
Inan interview with Kitco News earlier in the week, George Milling-Stanley, headof gold investments at State Street Global Advisors, said that he thinks goldprices could push to $1,400 an ounce as fund managers continue to strategicallydiversify into gold, in anticipation of a correction in equity markets.
“Weare in the ninth-year of a bull market in equities and while I don’t know whenit will end, I do know that it will end,” he said.
Commodityanalysts at GFMS Thomson Reuters said that they see the potential for gold toreach $1,500 an ounce this year as investors turn to gold as a hedge againstrisk in a world of global uncertainty.
By Kitco NewsFor Kitco News
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