Financial Times (August 7)Financial Times (August 7)
Gold has risen to $1,900 an ounce from $280 a decade ago. “The total market value of all the gold in existence…exceeds the combined capitalisation of the German, Chinese and Japanese stock markets.” When the gold bubble will end remains a question, but by some yardsticks it’s nearing a correction. “Gold is at a 120-year high (at least) relative to US house prices. Likewise, it is at a 74-year high relative to US wages, at multi-generation highs relative to wheat, coffee and cocoa.”
“Trust has broken down between IPO vendors and issuers and traditional investors in new stock offerings in Europe. Deal arrangers seem incapable of bridging the valuation gap between the two sides.” Issuer focus on achieving high valuation is colliding with investor expectation to buy at a discount. As a result, 50% of Europe’s large planned IPOs failed this year. The situation is only slightly better for IPOs of all sizes. “In the first seven months of this year, 143 initial public offerings were priced for European issuers, while 50 others, over one-third as many, were either announced and then postponed or launched and then pulled. That’s a very high failure rate.”
