Currency traders work at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea.
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More and more of the global government bond market shows a negative yield.How interesting, then, that Kenneth Rogoff, the Harvard economist, has been arguing that emerging markets should shift a chunk of their official reserves away from dollars into gold.Gold, despite being in close-to fixed supply, does not suffer from this problem, because there is no upper limit on its price. Mr Rogoff also believes a case can be made that gold is "an extremely low-risk asset" with average real returns comparable to very short-term debt.The emerging markets' diversification problem should lessen, because gold has a strong negative correlation with the dollar.By contrast, only 2.2 per cent of China's reserves are in gold, while the comparable figure for India is 6.3 per cent.For individual emerging markets, the case is anything but cut and dried, not least because Mr Rogoff's suggestion that gold is an extremely low-risk asset is highly contentious. This does not invalidate the case for gold in official reserves.
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