The Bundesbank is to repatriate a large chunk of its substantial gold reserves held in New York and Paris (click here for story). Two questions immediately spring to mind. Why do central banks still hold large amounts of gold even though currencies are no longer tied to gold? Why is the Bundesbank pulling its gold reserves back to Germany? Some analysts see the Bundesbank's move as a sign of an impending currency war. Others see it as the world moving towards a de facto gold standard!
My colleague and former PhD student Gareth Campbell has created a website about the British Railway Mania - click here . This episode has been described by the Economist as probably the greatest bubble in human history. Gareth's website provides background on the Mania and posits some explanations for the 'bubble'. In his explanation of why the bubble happened, Gareth places a lot of emphasis on investor myopia regarding future dividends and uncalled capital. His study of investors during the episode does not support the view that this episode was fuelled by naive and irrational investors.