This made pleasant reading this morning, metals exploration putting the bread on my table, but how high can gold go? Certainly the man has a point, if the US Fed continues to 'print money', gold can do nothing but rise. Indeed if the dollar money supply continues to expand and its value decline there will be no need for the Chinese to raise the value of the Yuan!
Faber says gold price may reach $US6000
By Mike Firn and James Poole in Tokyo
Sydney Morning Herald April 26, 2006
MARC FABER, who told investors to bail out of US stocks a week before the 1987 Black Monday crash and began recommending commodities at the end of 2001, said gold might rise tenfold in the next 10 years.
"If the Dow Jones [index] goes up three times in the next 10 years, I think gold prices will go up by a minimum 10 times to something like $US6000 an ounce," said Faber, 60, who founded Hong Kong-based Marc Faber Ltd and manages about $US200 million ($268.3 million).
The author of the newsletter The Gloom, Boom & Doom Report said gold wasn't expensive when "you compare its price to the quantity of money that has been printed in the last 10 to 15 years in the US and the world in general".
Gold for immediate delivery rose to $US645.85 an ounce on April 20, its highest in more than 25 years, as hedge funds and other speculators bought commodities to seek greater returns than from stocks and bonds. Former George Soros partner Jim Rogers forecast last week that gold would reach $US1000 an ounce.
The outlook for gold depended on how much money Federal Reserve chairman Ben Bernanke "will print", Mr Faber said in an interview in Tokyo on Monday.
"As you know he has pronounced speeches about asset deflation," Mr Faber said, referring to Dr Bernanke. "He's concerned about real estate and stocks going down, so in the long run for sure he'll print money."
Pension and mutual funds are pumping record amounts of cash into commodities as China's booming economy stokes demand for oil and other raw materials, leading to a three-year boom in prices. The amount of money invested in index-linked commodity funds rose last year by as much as $US30 billion to $US80 billion, according to Barclays Capital. The amount might rise by 38 per cent this year to $US110 billion, the bank said.
Gold for immediate delivery reached a record $US850 in 1980.
Energy and uranium prices would continue to rise on growing Asian demand, Mr Faber said.
"Asian oil demand will double," he said. "We don't know whether that will be in eight or 15 years but for sure it will double and I don't think supplies will be able to match that."
Mr Faber has worked in Asia for more than 30 years. He served as managing director at the Hong Kong unit of Drexel Burnham Lambert from 1978 to 1990.
He did not rule out a big correction in commodity prices.
Still, that would not mean the end of the commodity boom.
"Between December 1974 and August 1976 the price of gold declined from $US195 to $US103," he said. "Then it still went up eight times."
Full Version: Golden Bull
Why would the Dow Jones index TRIPLE in 10 years?
Note the plausable deniability here: "May" reach $US6000. This huckster is simply trying to promote gold, and I am sure that there is something in it for him. Gold is overvalued, and anyone entering the gold market is playing Russian Roulette, with more than one chamber loaded.
It is demand following the US Deflationary recession, plus clever marketing, that has run up the Dollar value of gold, and it cannot sustain itself, even in light of the Iranian crisis.
If you are thinking of investing in gold Pepe, help yourself. However, do not come here crying when it falls, and your investment vanishes.
It is demand following the US Deflationary recession, plus clever marketing, that has run up the Dollar value of gold, and it cannot sustain itself, even in light of the Iranian crisis.
If you are thinking of investing in gold Pepe, help yourself. However, do not come here crying when it falls, and your investment vanishes.
There's no denying the dollar's current weakness, I don't think it will crash, there are far too many with too much to lose. But the move away from the dollar will continue particularly once the Fed stops the rate hikes.
Dollar in rough water and needing support
By Steve Johnson
Financial Times Published: April 21 2006 12:28 | Last updated: April 21 2006
The US dollar suffered a terrible week, hitting a seven-month low against the euro, as the market wondered what would support the currency when monetary tightening had run its course.
The dollar was first hit by the release of the minutes of the Federal Open Market Committee’s March meeting, which said that “most members thought that the end of the tightening process was likely to be near”.
The minutes, alongside soft economic data, prompted a growing number of commentators to opine that the Fed would call it a day after one last quarter-point interest rate rise in May, which would take Fed funds to 5 per cent.
Slightly firmer than expected US consumer inflation data on Wednesday did threaten to throw the dollar a lifeline by suggesting that US rates may need to rise above 5 per cent after all.
However, strategists’ minds were already turning to what might drive the market once US yield support dissipates. According to most, the future looks ugly for the greenback with the huge US current account deficit seen casting its shadow once more.
The International Monetary Fund chipped in, helpfully pointing out that the dollar will need to depreciate “significantly” if global economic imbalances are to be resolved in an orderly fashion. Then on Friday it was the turn of politicians and central bankers to highlight another potential threat to the dollar – that of reserve diversification.
Sweden’s Riksbank said it had slashed the proportion of dollars in its reserves from 37 to 20 per cent, pushing its euro holdings up to 50 per cent.
Alexei Kudrin, the Russian finance minister, said at the G7 summit in Washington that the dollar was not the “absolute” reserve currency and that the US external deficit could affect the dollar’s reserve status in the future.
The dollar fell 1.8 per cent over the week to $1.2339 to the euro, 1.7 per cent to $1.7821 against sterling and 1.4 per cent to Y116.93 against the yen.
The yen hit an all-time low of Y145.49 to the euro on Thursday amid signs that Japanese investors were once again buying foreign bonds now that the fiscal year-end was behind them.
The South Korean won hit Won944.1 to the dollar, its highest level since the 1997 Asian crisis, amid strong foreign demand for Korean equities and a strengthening Chinese renminbi.
Dollar in rough water and needing support
By Steve Johnson
Financial Times Published: April 21 2006 12:28 | Last updated: April 21 2006
The US dollar suffered a terrible week, hitting a seven-month low against the euro, as the market wondered what would support the currency when monetary tightening had run its course.
The dollar was first hit by the release of the minutes of the Federal Open Market Committee’s March meeting, which said that “most members thought that the end of the tightening process was likely to be near”.
The minutes, alongside soft economic data, prompted a growing number of commentators to opine that the Fed would call it a day after one last quarter-point interest rate rise in May, which would take Fed funds to 5 per cent.
Slightly firmer than expected US consumer inflation data on Wednesday did threaten to throw the dollar a lifeline by suggesting that US rates may need to rise above 5 per cent after all.
However, strategists’ minds were already turning to what might drive the market once US yield support dissipates. According to most, the future looks ugly for the greenback with the huge US current account deficit seen casting its shadow once more.
The International Monetary Fund chipped in, helpfully pointing out that the dollar will need to depreciate “significantly” if global economic imbalances are to be resolved in an orderly fashion. Then on Friday it was the turn of politicians and central bankers to highlight another potential threat to the dollar – that of reserve diversification.
Sweden’s Riksbank said it had slashed the proportion of dollars in its reserves from 37 to 20 per cent, pushing its euro holdings up to 50 per cent.
Alexei Kudrin, the Russian finance minister, said at the G7 summit in Washington that the dollar was not the “absolute” reserve currency and that the US external deficit could affect the dollar’s reserve status in the future.
The dollar fell 1.8 per cent over the week to $1.2339 to the euro, 1.7 per cent to $1.7821 against sterling and 1.4 per cent to Y116.93 against the yen.
The yen hit an all-time low of Y145.49 to the euro on Thursday amid signs that Japanese investors were once again buying foreign bonds now that the fiscal year-end was behind them.
The South Korean won hit Won944.1 to the dollar, its highest level since the 1997 Asian crisis, amid strong foreign demand for Korean equities and a strengthening Chinese renminbi.
Two thoughts here.
Market manipulation ala the Hunts in 1980. The price will crash once all buyers have bought. I'd stick with tulips if I were you Tonky.
Or..............
The monied people are really concerned about the the state of the world today and are reverting to tangible movable assets. These people are not dummies. They see the rise of the Mussys as a threat to world stability and their paper assets.
Bottom line here. I wouldn't touch gold at these levels. Once the world adjusts to a new dynamic (after Iran is neutered) gold will crash like a lead baloon.
The chart says it all.
Another rough week for the dollar but a good one for metals.
No John I don't buy gold, and Nomad tulips went out of fashion in the 17th century, but rising metal prices mean increasing investment in exploration, so more work for me, and greater demand allows for higher fees
Dollar slides despite buoyant data
By Steve Johnson
Financial Times - Published: April 28 2006 11:23
The US dollar suffered a second week of sharp losses, despite the release of a tranche of broadly upbeat data releases, adding weight to the view that regime change is afoot in the currency market.
Yield differentials have been the prime driver of currencies since the start of 2005. Thus with US rates high and rising fast, at least in comparison with Japan and the eurozone, the dollar was able to break its three-year losing streak.
This week’s US numbers, from strong durable goods orders, consumer confidence and housing sales, to yesterday’s GDP data, which showed annualised growth of 4.8 per cent in the first quarter, attested to the fact that economic prospects are still brighter in the US than other industralised nations.
Yet the dollar extended its April sell-off, falling 2.1 per cent to an 11-month low of $1.2622 to the euro, 2 per cent to $1.8218 against sterling and 2.4 per cent to SFr1.2408 versus the Swiss franc, both seven-month lows, 1.6 per cent to a three-month low of Y113.80 against the yen and 1.4 per cent to C$1.1201 against the Canadian dollar, a 28-year low.
“The dollar is benefiting progressively less from rate hikes as other countries lift rates,” concluded Jeffrey Young at Citigroup. “Better growth prospects outside of the United States are attracting the attention of investors who shipped capital into the US at record rates last year.”
In truth there were other plenty of other dollar bearish factors in evidence. Alongside yesterday’s GDP data it emerged that the core personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation fell from 2.4 to 2 per cent. On Thursday Ben Bernanke, the Fed chairman, had hinted that the Fed might pause after one more rate rise in May.
Fears over rising tension between the US and Iran also hit the dollar yesterday.
Furthermore, the final communique from last weekend’s G7 meeting, which called for greater currency flexibility in emerging Asia to help reduce global imbalances, namely the US current account deficit, also led to expectations that the dollar might finally weaken against Asian currencies.
Indeed this happened - for an entire 24 hours - before Japan started complaining about the speed of the move and South Korea backed up its own complaints with a wall of intervention to stop the won from strengthening.
The issue of central bank reserve diversification away from the dollar also re-emerged yesterday when Finland said it had sold Swedish kronor and Danish kroner and bought euros.
A week earlier Sweden said it too had bought euros (and sold dollars), and there is increasing speculation that banks with far greater reserves could follow suit.
“There could be more of this stuff going on, which is basically pro-euro,” said Tony Norfield, global head of FX strategy at ABN Amro. “Two of the smaller guys have done something and there are plenty more to go.”
The Swiss franc was the strongest major currency, rallying 0.8 per cent to SFr1.5666 to the euro yesterday, on upbeat data and rate talk and the Swissie’s traditional “safe haven” status amid the US-Iran stand-off.
NY gold scales new 25-year high, silver shines
Reuters - Fri Apr 28, 2006 12:58pm
NEW YORK (Reuters) - Gold futures surged to a new 25-year high on a falling dollar and worries over Iran's atomic program on Friday, and the rally spilled over to silver, which was already firmer after a launch of a new silver-backed fund.
Strong oil and base metals prices and uncertainty over the U.S. economy fueled waves of aggressive investor buying across the precious metals group, dealers said.
"I think gold has kind of taken on a leadership role," Steve Platt, a broker with Archer Financials in Chicago, said, adding that the yellow metal also was benefiting from a weak dollar.
"People for a long time had not been interested in the precious metals to any big degree, but now you have started to see them look at them once again as a flight to quality in terms of asset diversification," Platt said.
June delivery gold was up $16.70, or 2.55 percent, at $653 per ounce on the New York Mercantile Exchange's COMEX division by 12:11 p.m. EDT, trading in a range of $634 to $655.50, a new contract high.
Spot gold hit a 25-year high at $652.80 an ounce.
"After a period of consolidation, and with $650 cleared, gold could now be set to challenge $680 as tensions in the Middle East draw investors toward gold's safe-haven qualities," said James Moore, an analyst with TheBullionDesk.com.
No John I don't buy gold, and Nomad tulips went out of fashion in the 17th century, but rising metal prices mean increasing investment in exploration, so more work for me, and greater demand allows for higher fees
Dollar slides despite buoyant data
By Steve Johnson
Financial Times - Published: April 28 2006 11:23
The US dollar suffered a second week of sharp losses, despite the release of a tranche of broadly upbeat data releases, adding weight to the view that regime change is afoot in the currency market.
Yield differentials have been the prime driver of currencies since the start of 2005. Thus with US rates high and rising fast, at least in comparison with Japan and the eurozone, the dollar was able to break its three-year losing streak.
This week’s US numbers, from strong durable goods orders, consumer confidence and housing sales, to yesterday’s GDP data, which showed annualised growth of 4.8 per cent in the first quarter, attested to the fact that economic prospects are still brighter in the US than other industralised nations.
Yet the dollar extended its April sell-off, falling 2.1 per cent to an 11-month low of $1.2622 to the euro, 2 per cent to $1.8218 against sterling and 2.4 per cent to SFr1.2408 versus the Swiss franc, both seven-month lows, 1.6 per cent to a three-month low of Y113.80 against the yen and 1.4 per cent to C$1.1201 against the Canadian dollar, a 28-year low.
“The dollar is benefiting progressively less from rate hikes as other countries lift rates,” concluded Jeffrey Young at Citigroup. “Better growth prospects outside of the United States are attracting the attention of investors who shipped capital into the US at record rates last year.”
In truth there were other plenty of other dollar bearish factors in evidence. Alongside yesterday’s GDP data it emerged that the core personal consumption expenditures index, the Federal Reserve’s preferred measure of inflation fell from 2.4 to 2 per cent. On Thursday Ben Bernanke, the Fed chairman, had hinted that the Fed might pause after one more rate rise in May.
Fears over rising tension between the US and Iran also hit the dollar yesterday.
Furthermore, the final communique from last weekend’s G7 meeting, which called for greater currency flexibility in emerging Asia to help reduce global imbalances, namely the US current account deficit, also led to expectations that the dollar might finally weaken against Asian currencies.
Indeed this happened - for an entire 24 hours - before Japan started complaining about the speed of the move and South Korea backed up its own complaints with a wall of intervention to stop the won from strengthening.
The issue of central bank reserve diversification away from the dollar also re-emerged yesterday when Finland said it had sold Swedish kronor and Danish kroner and bought euros.
A week earlier Sweden said it too had bought euros (and sold dollars), and there is increasing speculation that banks with far greater reserves could follow suit.
“There could be more of this stuff going on, which is basically pro-euro,” said Tony Norfield, global head of FX strategy at ABN Amro. “Two of the smaller guys have done something and there are plenty more to go.”
The Swiss franc was the strongest major currency, rallying 0.8 per cent to SFr1.5666 to the euro yesterday, on upbeat data and rate talk and the Swissie’s traditional “safe haven” status amid the US-Iran stand-off.
NY gold scales new 25-year high, silver shines
Reuters - Fri Apr 28, 2006 12:58pm
NEW YORK (Reuters) - Gold futures surged to a new 25-year high on a falling dollar and worries over Iran's atomic program on Friday, and the rally spilled over to silver, which was already firmer after a launch of a new silver-backed fund.
Strong oil and base metals prices and uncertainty over the U.S. economy fueled waves of aggressive investor buying across the precious metals group, dealers said.
"I think gold has kind of taken on a leadership role," Steve Platt, a broker with Archer Financials in Chicago, said, adding that the yellow metal also was benefiting from a weak dollar.
"People for a long time had not been interested in the precious metals to any big degree, but now you have started to see them look at them once again as a flight to quality in terms of asset diversification," Platt said.
June delivery gold was up $16.70, or 2.55 percent, at $653 per ounce on the New York Mercantile Exchange's COMEX division by 12:11 p.m. EDT, trading in a range of $634 to $655.50, a new contract high.
Spot gold hit a 25-year high at $652.80 an ounce.
"After a period of consolidation, and with $650 cleared, gold could now be set to challenge $680 as tensions in the Middle East draw investors toward gold's safe-haven qualities," said James Moore, an analyst with TheBullionDesk.com.
QUOTE
No John I don't buy gold, and Nomad tulips went out of fashion in the 17th century, but rising metal prices mean increasing investment in exploration, so more work for me, and greater demand allows for higher fees smile.gif
That's great Tonky. You do have some capitalism in you. Who woulda thunk it. By all means do take advantage of this current situation. Just don't adjust your lifstyle to it.............it won't last.
QUOTE (Nomad)
That's great Tonky. You do have some capitalism in you. Who woulda thunk it. By all means do take advantage of this current situation. Just don't adjust your lifstyle to it.............it won't last.
Sure I'm a capitalist, I sell my labour within a free market, I'm happy with that.
Having survived for 26 years in the mining and exploration industry I'm well aware of its cyclical nature, but thanks for your concern
Dollar near lows after Trichet talks up euro
Financial Times ~ Steve Johnson, Published: May 5 2006 11:58
The US dollar held near its lows in European morning trade on Friday as the market continued to digest the hawkish commentary of Jean-Claude Trichet, the president of the European Central Bank.
Mr Trichet said the ECB will exercise “strong vigilance” in the face of inflationary risks in the press conference following Thursday’s rate decision, signalling the near certainty of a rate rise in June.
On Friday the futures markets moved to price in around a 20 per cent probability that the ECB may even break with tradition and raise rates by 50 basis points, rather than the customary 25.
Just as importantly for the currency market, Mr Trichet did not express any displeasure at the euro’s near 5 per cent rally against the US dollar in the past month, potentially giving the market greater leeway to continue to push the euro higher.
The euro rallied strongly on Thursday as a result On Friday it dipped a fraction to $1.2682 against the dollar, but was still close to Thursday’s one-year high of $1.2717. However the euro edged up further to Y144.48 against the yen, £0.6854 against sterling and SFr1.5620 versus the Swiss franc.
The dollar also edged up a fraction to $1.8495 against sterling and SFr1.2313 against the Swissie, although once again it was close to Thursday’s one-year lows of $1.8543 and SFr1.2259 respectively.
The Australian dollar slipped 0.2c to $0.7692 against its US namesake as the release of the Reserve Bank’s quarterly monetary policy statement suggested that this week’s rate rise may not be repeated any time soon.
“The statement suggests that this week’s 25-basis point rate hike was in response to intensified inflation risks but that it was a one off pre-emptive strike rather than a start of a tightening cycle,” said Tania Kotsos, strategist at RBC Capital Markets.
However trading was quiet with many Asian markets still on the Golden Week holiday and market participants keeping their powder dry for the release of US non-farm payrolls data later in the day. The consensus estimate is that the US economy created around 200,000 new jobs in April.
Gold set for sustained positive cycle: AngloGold
Business Day SA ~ Friday 5th May 2006
The momentum in the gold price continues and the gold market seems set for a sustained positive cycle, world number three gold miner AngloGold Ashanti says.
This morning, gold climbed to US$682.15 a troy ounce - its highest level since October 1980 when gold fixed at a high of $690/oz. The metal was last quoted at $681.30/oz, up $1.85/oz from the previous close.
"Besides favourable circumstances particular to gold, the metal was most certainly buoyed by continued investment flows in to commodities in general. This is reflected in part in the high price correlation in the second-half of 2005 between gold and other metals, including zinc, silver,
lead and copper," AngloGold Ashanti said.
"Investor interest in commodities is reflected in the continued growth in several major commodity funds, and this investment interest has translated into record spot prices in metals such as copper, supported by continued physical demand," the group added.
During the March quarter, the price relationship between gold and silver broke down, to the extent that the silver price has risen significantly more sharply than even the favourable movement in gold.
"This move in silver has been driven by the anticipation amongst investors and speculators of the launch of an exchange traded fund in silver, which is likely to have a material positive impact on demand for silver, and a related favourable impact on the silver price," AngloGold Ashanti said.
"Whilst investment flows into gold exchange traded funds early in the quarter kept the gold price firm, trade in these gold funds was much quieter during the latter part of the quarter," the company said.
Stronger prices for silver were likely to be helpful for gold, AngloGold Ashanti said.
"The interruption in the correlation between the US dollar spot price of gold and the US dollar exchange rate against the euro has continued," the company said.
"Market commentators refer frequently to changes in the US dollar/euro exchange rate to justify movements in gold price, but it is difficult to sustain an argument for effective correlation between the markets. During the nine months since mid-2005, when the price behaviour of the two markets
began to diverge, the gold price has moved strongly upwards by almost 60%, whilst the dollar has remained in a band of six cents to seven cents or 5% against the euro," AngloGold Ashanti said.
The physical demand for gold during the final quarter of 2005 and the first quarter of 2006 had fallen in the face of sharply higher spot gold prices.
"This is particularly so in the jewellery sector and in those markets such as India where margins are low and retail prices are close to the underlying gold spot price," AngloGold Ashanti said.
Financial Times ~ Steve Johnson, Published: May 5 2006 11:58
The US dollar held near its lows in European morning trade on Friday as the market continued to digest the hawkish commentary of Jean-Claude Trichet, the president of the European Central Bank.
Mr Trichet said the ECB will exercise “strong vigilance” in the face of inflationary risks in the press conference following Thursday’s rate decision, signalling the near certainty of a rate rise in June.
On Friday the futures markets moved to price in around a 20 per cent probability that the ECB may even break with tradition and raise rates by 50 basis points, rather than the customary 25.
Just as importantly for the currency market, Mr Trichet did not express any displeasure at the euro’s near 5 per cent rally against the US dollar in the past month, potentially giving the market greater leeway to continue to push the euro higher.
The euro rallied strongly on Thursday as a result On Friday it dipped a fraction to $1.2682 against the dollar, but was still close to Thursday’s one-year high of $1.2717. However the euro edged up further to Y144.48 against the yen, £0.6854 against sterling and SFr1.5620 versus the Swiss franc.
The dollar also edged up a fraction to $1.8495 against sterling and SFr1.2313 against the Swissie, although once again it was close to Thursday’s one-year lows of $1.8543 and SFr1.2259 respectively.
The Australian dollar slipped 0.2c to $0.7692 against its US namesake as the release of the Reserve Bank’s quarterly monetary policy statement suggested that this week’s rate rise may not be repeated any time soon.
“The statement suggests that this week’s 25-basis point rate hike was in response to intensified inflation risks but that it was a one off pre-emptive strike rather than a start of a tightening cycle,” said Tania Kotsos, strategist at RBC Capital Markets.
However trading was quiet with many Asian markets still on the Golden Week holiday and market participants keeping their powder dry for the release of US non-farm payrolls data later in the day. The consensus estimate is that the US economy created around 200,000 new jobs in April.
Gold set for sustained positive cycle: AngloGold
Business Day SA ~ Friday 5th May 2006
The momentum in the gold price continues and the gold market seems set for a sustained positive cycle, world number three gold miner AngloGold Ashanti says.
This morning, gold climbed to US$682.15 a troy ounce - its highest level since October 1980 when gold fixed at a high of $690/oz. The metal was last quoted at $681.30/oz, up $1.85/oz from the previous close.
"Besides favourable circumstances particular to gold, the metal was most certainly buoyed by continued investment flows in to commodities in general. This is reflected in part in the high price correlation in the second-half of 2005 between gold and other metals, including zinc, silver,
lead and copper," AngloGold Ashanti said.
"Investor interest in commodities is reflected in the continued growth in several major commodity funds, and this investment interest has translated into record spot prices in metals such as copper, supported by continued physical demand," the group added.
During the March quarter, the price relationship between gold and silver broke down, to the extent that the silver price has risen significantly more sharply than even the favourable movement in gold.
"This move in silver has been driven by the anticipation amongst investors and speculators of the launch of an exchange traded fund in silver, which is likely to have a material positive impact on demand for silver, and a related favourable impact on the silver price," AngloGold Ashanti said.
"Whilst investment flows into gold exchange traded funds early in the quarter kept the gold price firm, trade in these gold funds was much quieter during the latter part of the quarter," the company said.
Stronger prices for silver were likely to be helpful for gold, AngloGold Ashanti said.
"The interruption in the correlation between the US dollar spot price of gold and the US dollar exchange rate against the euro has continued," the company said.
"Market commentators refer frequently to changes in the US dollar/euro exchange rate to justify movements in gold price, but it is difficult to sustain an argument for effective correlation between the markets. During the nine months since mid-2005, when the price behaviour of the two markets
began to diverge, the gold price has moved strongly upwards by almost 60%, whilst the dollar has remained in a band of six cents to seven cents or 5% against the euro," AngloGold Ashanti said.
The physical demand for gold during the final quarter of 2005 and the first quarter of 2006 had fallen in the face of sharply higher spot gold prices.
"This is particularly so in the jewellery sector and in those markets such as India where margins are low and retail prices are close to the underlying gold spot price," AngloGold Ashanti said.
Double post.
Gold up 12% in 21 days, not bad going!
Dollar lurches lower on cocktail of woes
By Steve Johnson
Financial Times ~ Published: May 12 2006 12:01
The dollar fell sharply once again in European morning trade on Friday as both cyclical and structural factors combined to compound bearish sentiment.
With the Federal Open Market Committee having signalled on Wednesday that any future US rate rises will be data-dependent, the dollar suffered badly in the wake of Thursday’s soft retail sales data, which indicated sales rose just 0.5 per cent in April, against expectations for a gain of 0.8 per cent.
Friday’s impending US trade data threaten to shine new light on the seemingly intractable problem of the US trade deficit, and at what price foreign investors will continue to fund it.
The market expects the March deficit will have widened out to around $67.5bn, worse than the $65.7bn recorded in February.
However, a recent run up in US bond yields has led to some speculation that foreign investors are losing their appetite for US Treasuries, speculation that further intensified on Thursday, when just 30.7 per cent of a 10-year bond auction was sold to indirect bidders (shorthand for foreign central banks and other state investment agencies), compared to expectations of a 40-50 per cent take-up by this influential group.
“The anticipation of a deterioration in the US trade deficit back toward the record level in today’s data for March reinforced the focus of the foreign exchange market on the structural issues over the funding of the US current account deficit,” said Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi.
As a result, the dollar plummeted 0.8c to $1.2912 against the euro, 1.4c to $1.8957 against sterling and 1.3 centimes to SFr1.2005 against the Swiss franc, all fresh one-year lows, as well as falling Y1.15 to Y109.51 against the yen, an eight-month low.
The euro was bolstered by comments from Nout Wellink, a member of the governing council of the European Central Bank, who hinted that the ECB may be considering a 50-basis-point rate rise in June, saying such a move was “very normal”.
“Although a well-known hawk, this public acknowledgement suggests that Wellink must think there is a possibility of this view gaining support,” said Mr Halpenny.
The yen also basked in some independent strength, with the pace of the Bank of Japan’s withdrawal of excess liquidity from the banking sector indicating that it may be ready for the next stage of its normalisation process – physically raising rates from virtually zero – by June.
The yen’s rise, which also took it Y0.5 higher to Y141.53 to the euro and Y0.9 stronger to Y84.94 against the Australian dollar, also highlighted the seemingly decreasing ability of Japanese politicians to stem currency strength through verbal intervention.
Shinzo Abe, chief cabinet secretary, said on Friday that share currency moves were “undesirable”, and Sadakazu Tanigaki, finance minister, warned: “What we need to caution against is the possibility of sharp fluctuations and speculative moves destabilising the foreign exchange market.”
However, the South African rand fell R0.09 to R6.1725 to the dollar, with foreign investors said to be cutting their exposure to the domestic bond market.
Chris Towner, consultant at risk manager HIFX and one of the few dollar bulls left standing, saw this as a potentially positive sign for the greenback. With the rand having led this year’s rally against the dollar, its inability to make further gains in recent weeks, despite gold prices spiking to 25-year highs, could signal that dollar weakness may be about to run out of steam, he argued.
Gold and nickel set new highs
By Darryl Thomson
Financial Times ~ Published: May 12 2006 12:14
Gold hit a fresh 26-year high of $730. That figure was previously reached in January 1980, a month in which the precious metal hit its all-time high of $850 a troy ounce.
Physical demand, speculative fund interest, geopolitical concerns, worries over inflation due to the high oil price and the weak dollar are all components of the complex cocktail driving bullion higher.
Gold was trading at $728.0/9.00, up from $721.60/722.60 in late trade in New York.
Nickel set a new record this morning of $21,650 before easing to trade $350 higher at $21,375.
Copper eased in light profit-taking, having hit a record of $8,800 on Thursday.
Copper miner Grupo Mexico said on Thursday it would close its strike-bound San Martin copper, zinc and silver mine within the next two weeks, but did not rule out restarting production in the future. Copper was at $8,485, down $520.
Crude oil prices eased as the International Energy Agency cut its 2006 forecast for demand growth, slightly alleviating worries over supply tightness.
The IEA cut its 2006 demand growth forecast by 220,000 barrels per day to 1.25m bpd, citing high oil prices as discouraging demand.
A barrel of Nymex West Texas Intermediate fell 62 cents to $72.70 for June delivery while Brent crude dropped 54 cents to $72.89.
In spite of the Organisation of the Petroleum Exporting Countries pumping at full tilt, oil prices have still climbed above $70 on fears of supply disruptions in major producers Iran and Nigeria.
But mild winter temperatures, weaker demand in the former Soviet Union and slower growth in US energy use may reduce the need for the producer group’s oil, the energy adviser to 26 industrialised countries said in its monthly report.
Three foreign oil workers kidnapped in Nigeria were released this morning. This helped calm tensions over exports from a country which provides the light sweet crude that refiners prefer for the production of gasoline as the US driving season approaches.
Dollar lurches lower on cocktail of woes
By Steve Johnson
Financial Times ~ Published: May 12 2006 12:01
The dollar fell sharply once again in European morning trade on Friday as both cyclical and structural factors combined to compound bearish sentiment.
With the Federal Open Market Committee having signalled on Wednesday that any future US rate rises will be data-dependent, the dollar suffered badly in the wake of Thursday’s soft retail sales data, which indicated sales rose just 0.5 per cent in April, against expectations for a gain of 0.8 per cent.
Friday’s impending US trade data threaten to shine new light on the seemingly intractable problem of the US trade deficit, and at what price foreign investors will continue to fund it.
The market expects the March deficit will have widened out to around $67.5bn, worse than the $65.7bn recorded in February.
However, a recent run up in US bond yields has led to some speculation that foreign investors are losing their appetite for US Treasuries, speculation that further intensified on Thursday, when just 30.7 per cent of a 10-year bond auction was sold to indirect bidders (shorthand for foreign central banks and other state investment agencies), compared to expectations of a 40-50 per cent take-up by this influential group.
“The anticipation of a deterioration in the US trade deficit back toward the record level in today’s data for March reinforced the focus of the foreign exchange market on the structural issues over the funding of the US current account deficit,” said Derek Halpenny, senior currency economist at Bank of Tokyo-Mitsubishi.
As a result, the dollar plummeted 0.8c to $1.2912 against the euro, 1.4c to $1.8957 against sterling and 1.3 centimes to SFr1.2005 against the Swiss franc, all fresh one-year lows, as well as falling Y1.15 to Y109.51 against the yen, an eight-month low.
The euro was bolstered by comments from Nout Wellink, a member of the governing council of the European Central Bank, who hinted that the ECB may be considering a 50-basis-point rate rise in June, saying such a move was “very normal”.
“Although a well-known hawk, this public acknowledgement suggests that Wellink must think there is a possibility of this view gaining support,” said Mr Halpenny.
The yen also basked in some independent strength, with the pace of the Bank of Japan’s withdrawal of excess liquidity from the banking sector indicating that it may be ready for the next stage of its normalisation process – physically raising rates from virtually zero – by June.
The yen’s rise, which also took it Y0.5 higher to Y141.53 to the euro and Y0.9 stronger to Y84.94 against the Australian dollar, also highlighted the seemingly decreasing ability of Japanese politicians to stem currency strength through verbal intervention.
Shinzo Abe, chief cabinet secretary, said on Friday that share currency moves were “undesirable”, and Sadakazu Tanigaki, finance minister, warned: “What we need to caution against is the possibility of sharp fluctuations and speculative moves destabilising the foreign exchange market.”
However, the South African rand fell R0.09 to R6.1725 to the dollar, with foreign investors said to be cutting their exposure to the domestic bond market.
Chris Towner, consultant at risk manager HIFX and one of the few dollar bulls left standing, saw this as a potentially positive sign for the greenback. With the rand having led this year’s rally against the dollar, its inability to make further gains in recent weeks, despite gold prices spiking to 25-year highs, could signal that dollar weakness may be about to run out of steam, he argued.
Gold and nickel set new highs
By Darryl Thomson
Financial Times ~ Published: May 12 2006 12:14
Gold hit a fresh 26-year high of $730. That figure was previously reached in January 1980, a month in which the precious metal hit its all-time high of $850 a troy ounce.
Physical demand, speculative fund interest, geopolitical concerns, worries over inflation due to the high oil price and the weak dollar are all components of the complex cocktail driving bullion higher.
Gold was trading at $728.0/9.00, up from $721.60/722.60 in late trade in New York.
Nickel set a new record this morning of $21,650 before easing to trade $350 higher at $21,375.
Copper eased in light profit-taking, having hit a record of $8,800 on Thursday.
Copper miner Grupo Mexico said on Thursday it would close its strike-bound San Martin copper, zinc and silver mine within the next two weeks, but did not rule out restarting production in the future. Copper was at $8,485, down $520.
Crude oil prices eased as the International Energy Agency cut its 2006 forecast for demand growth, slightly alleviating worries over supply tightness.
The IEA cut its 2006 demand growth forecast by 220,000 barrels per day to 1.25m bpd, citing high oil prices as discouraging demand.
A barrel of Nymex West Texas Intermediate fell 62 cents to $72.70 for June delivery while Brent crude dropped 54 cents to $72.89.
In spite of the Organisation of the Petroleum Exporting Countries pumping at full tilt, oil prices have still climbed above $70 on fears of supply disruptions in major producers Iran and Nigeria.
But mild winter temperatures, weaker demand in the former Soviet Union and slower growth in US energy use may reduce the need for the producer group’s oil, the energy adviser to 26 industrialised countries said in its monthly report.
Three foreign oil workers kidnapped in Nigeria were released this morning. This helped calm tensions over exports from a country which provides the light sweet crude that refiners prefer for the production of gasoline as the US driving season approaches.
...and back down 10%, what a difference a week makes
Dollar fights back aided by proceeds from sell-off
By Steve Johnson, Financial Times Published: May 19 2006 12:08
Just as the travails of the diminishing US dollar hit the headlines of the world’s media, the greenback managed to post a rare gain.
A series of sharp falls had led the dollar to its lowest level since October 1997 in trade-weighted terms, leading to talk that this was the start of the structural decline many had long predicted.
That may still be so, but markets rarely move in straight lines and this week the dollar rose 1.6 per cent to $1.2727 to the euro, 2 per cent to Y111.86 against the yen, 1.1 per cent to $1.8737 versus sterling, 2.1 per cent to SFr1.2202 against the Swiss franc and 1.4 per cent to C$1.1253 against the Canadian dollar.
A myriad of explanations were presented to explain the move. One view was that the dollar was benefiting from a sell-off in equities, commodities and all things emerging market-related, with much of the proceeds being repatriated into dollars by US-based investors.
“This is a flow dominated market and we are seeing repatriation flows,” said David Bloom, currency analyst at HSBC. “People are cutting positions as volatility rises and getting their dollars back.”
The greenback also doubtless benefited from a retreat from risk in the currency market itself, amid signs that short-term speculative traders had built near record short-dollar positions.
However there were probably also other factors at play. A sharp dollar rally on Wednesday was driven by the first signs of pain in the eurozone. The market had been surprised by a wall of silence from European politicians and central bankers given the euro’s 9.4 per cent rise against the dollar so far this year, in sharp contrast to the howls of protest that ensued during the previous dollar sell-off in 2004.
But just as traders were starting to speculate that there might be some sort of tacit global accord to let the dollar fall evenly against all other major currencies, in the wake of the International Monetary Fund and G7 calling for greater currency flexibility, Thierry Breton, the French finance minister, broke ranks, saying that while the euro was currently in “tolerable ranges”, “everything” should be done to prevent it rising further.
Relative interest rate differentials, while losing much of their potency in the current market environment, also favoured the dollar this week. Strong US inflation data and hawkish commentary from Federal Reserve officials contrasted with diminished prospects for either a June Japanese rate rise or an imminent half-point hike in the eurozone.
However, the pound rose 0.5 per cent to £0.6790 against the euro and 0.7 per cent to Y209.60 against the yen as it emerged that one UK central banker voted for a rate rise this month.
Elsewhere a number of emerging market currencies struggled as newly risk averse-investors headed for the exits. The Turkish lira fell 6.2 per cent to TL1.483 to the dollar, while the South African rand fell 4.7 per cent to R6.5377 to the dollar, following gold prices lower.
Copper, oil and gold go into retreat
By Kevin Morrison, Financial Times
Published: May 19 2006 12:02
Commodity markets succumbed to another sharp sell-off yesterday with copper, oil and gold prices all falling sharply, resulting in large declines for the week.
Such a broad decline pointed to selling from the commodity index funds, which have been a popular route into commodity market for retail, pension funds, endowments and mutual funds.
Jeremy Goldwyn, head of industrial commodities at Sucden, said there had been a sell-off across the board on Friday, which suggested that it was related to commodity index fund selling as investors in those funds may be getting nervous about the outlook for commodity prices, following the declines this week.
“There are signs that it is index selling, given the breadth of the sell-off. It is unusual to see such a broad-based decline unless it is fund related,” he said.
IPE Brent crude for July delivery reversed early gains to drop 95 cents to $68.72 a barrel in late afternoon trade, having spent much of the session above $70.
This is the first time in five weeks that it has finished the week below $70 and it follows a 5 per cent slide this week.
June Nymex West Texas Intermediate shed 85 cents to $68.60 a barrel in early afternoon New York trade, and has now fallen about 9 per cent from its record high reached more than three weeks ago.
The US crude oil and petroleum inventory data this week proved to be the catalyst for the retreat, after petrol stocks rose for the third consecutive week, easing fears of a supply crunch during the summer driving period, which unofficially starts next weekend.
About $90bn of funds track commodity indices, a six-fold increase in the past four years. The index funds also represent the largest single investment grouping in commodity markets, and is understood to be larger than the amount of hedge fund money in commodity markets.
However, in spite of the surge in commodity prices this year, the price performance of the two most popular indices in the sector, the Goldman Sachs Commodity Index and the AIG Commodity Index, have not been so strong.
Commodity indices are unlike stock market indices. They are determined by the underlying commodity prices and the ‘roll yield’, which is the income derived from rolling forward commodity futures before the contract expiry into the next deliverable month.
Gold prices fell about 4 per cent on Friday to $658.10/$658.40 a troy ounce in late trade, down almost 10 per cent from the 26-year high of $730 last Friday.
The slide this week is in tandem with a rise in the dollar.
Silver hit a three-week low of $12.11 on Friday, representing a near 20 per cent decline from the metal’s 26- year high of $15.17 last Thursday.
Copper, which has come to symbolise the bull run in metals prices this year, dropped more than $500 or 6 per cent on the day to $7,530 a tonne, down more than 14 per cent from its record high 10 days ago.
Similar falls were seen in aluminium, nickel, tin and zinc, which had all reached record or long-term highs in the previous week.
Even US corn prices were caught in the sell-off. Corn had risen about 40 per cent in the past six months as a greater proportion of the US corn crop is used for ethanol production.
July corn futures on the Chicago Board of Trade eased 6.5 cents to $2.53 a bushel on Friday.
Richard Bernstein, US strategist for Merrill Lynch, said there was a 50 per cent speculative premium in commodity markets at the end of April.
“With that type of premium built into commodities, liquidity is probably the primary driver of pricing,” Mr Bernstein said.
“It should be no surprise therefore that commodities have recently fallen,” he added as the Fed Funds futures markets have started to discount a higher probability of a tightening of US monetary policy.
Summer in the city could be sticky
By Philip Coggan, Financial Times Published: May 19 2006 12:52
.....There are currently two all-encompassing views of the future of the global economy and financial markets. Both are plausible. Alas, they disagree violently. The recent market turmoil suggests the assumptions behind those views are being put to the test.
This week, Peter Oppenheimer of Goldman Sachs produced an excellent summary of the bullish case, albeit with the ugly title of Globology. His argument is that the opening-up of the global economy resembles the industrial revolution; it is producing a sustained rise in the economic growth rate without inflationary pressures.
A 25 per cent jump in the global labour force since 1990 (as ex-communist countries become part of the global economy) has shifted the balance of power in favour of the corporate sector and away from labour. The emergence of low-cost centres of production has slashed the prices of manufactured goods.
At the same time, the widespread use of technology has enabled companies to run their businesses much more efficiently.
All this has allowed profits to rise to a high level of gross domestic product (following a big dip after the bursting of the dotcom bubble). This level of profitability, believes Oppenheimer, can be sustained. Companies in the west have outsourced production (a significant source of volatility) to Asia. But the big rise in exports has allowed Asian countries to build up foreign exchange reserves, reducing the volatility of their economies.
A world of stronger growth, low inflation and less volatility should be very good news for risky assets. Those who took this view naturally had a positive outlook for equities.
The bears would dismiss these arguments as the classic “it’s different this time” rationalisation of the bulls. If profits are at a high, relative to GDP, that is a cyclical phenomenon. That should mean that investors give equities a lower valuation than average, as future profits growth is likely to be slower than GDP.
The bears argue that the sharp rise in asset prices is simply a function of loose monetary policy. A bear such as Marc Faber also argues that the US inflation rate is understated and the real rate is running at 5-6 per cent.
The rise in US core inflation, announced this week, will convince the inflation worriers they are on the right track. Whether things will become quite as apocalyptic as they suggest is hard to tell. But one thing does seem clear. The rosy assumptions of the optimistic school have come under question. The trade-off between growth and inflation may not be as good as they suggest.
Unless and until the data start to look benign again, investors may face a very tricky and very volatile summer.
Dollar fights back aided by proceeds from sell-off
By Steve Johnson, Financial Times Published: May 19 2006 12:08
Just as the travails of the diminishing US dollar hit the headlines of the world’s media, the greenback managed to post a rare gain.
A series of sharp falls had led the dollar to its lowest level since October 1997 in trade-weighted terms, leading to talk that this was the start of the structural decline many had long predicted.
That may still be so, but markets rarely move in straight lines and this week the dollar rose 1.6 per cent to $1.2727 to the euro, 2 per cent to Y111.86 against the yen, 1.1 per cent to $1.8737 versus sterling, 2.1 per cent to SFr1.2202 against the Swiss franc and 1.4 per cent to C$1.1253 against the Canadian dollar.
A myriad of explanations were presented to explain the move. One view was that the dollar was benefiting from a sell-off in equities, commodities and all things emerging market-related, with much of the proceeds being repatriated into dollars by US-based investors.
“This is a flow dominated market and we are seeing repatriation flows,” said David Bloom, currency analyst at HSBC. “People are cutting positions as volatility rises and getting their dollars back.”
The greenback also doubtless benefited from a retreat from risk in the currency market itself, amid signs that short-term speculative traders had built near record short-dollar positions.
However there were probably also other factors at play. A sharp dollar rally on Wednesday was driven by the first signs of pain in the eurozone. The market had been surprised by a wall of silence from European politicians and central bankers given the euro’s 9.4 per cent rise against the dollar so far this year, in sharp contrast to the howls of protest that ensued during the previous dollar sell-off in 2004.
But just as traders were starting to speculate that there might be some sort of tacit global accord to let the dollar fall evenly against all other major currencies, in the wake of the International Monetary Fund and G7 calling for greater currency flexibility, Thierry Breton, the French finance minister, broke ranks, saying that while the euro was currently in “tolerable ranges”, “everything” should be done to prevent it rising further.
Relative interest rate differentials, while losing much of their potency in the current market environment, also favoured the dollar this week. Strong US inflation data and hawkish commentary from Federal Reserve officials contrasted with diminished prospects for either a June Japanese rate rise or an imminent half-point hike in the eurozone.
However, the pound rose 0.5 per cent to £0.6790 against the euro and 0.7 per cent to Y209.60 against the yen as it emerged that one UK central banker voted for a rate rise this month.
Elsewhere a number of emerging market currencies struggled as newly risk averse-investors headed for the exits. The Turkish lira fell 6.2 per cent to TL1.483 to the dollar, while the South African rand fell 4.7 per cent to R6.5377 to the dollar, following gold prices lower.
Copper, oil and gold go into retreat
By Kevin Morrison, Financial Times
Published: May 19 2006 12:02
Commodity markets succumbed to another sharp sell-off yesterday with copper, oil and gold prices all falling sharply, resulting in large declines for the week.
Such a broad decline pointed to selling from the commodity index funds, which have been a popular route into commodity market for retail, pension funds, endowments and mutual funds.
Jeremy Goldwyn, head of industrial commodities at Sucden, said there had been a sell-off across the board on Friday, which suggested that it was related to commodity index fund selling as investors in those funds may be getting nervous about the outlook for commodity prices, following the declines this week.
“There are signs that it is index selling, given the breadth of the sell-off. It is unusual to see such a broad-based decline unless it is fund related,” he said.
IPE Brent crude for July delivery reversed early gains to drop 95 cents to $68.72 a barrel in late afternoon trade, having spent much of the session above $70.
This is the first time in five weeks that it has finished the week below $70 and it follows a 5 per cent slide this week.
June Nymex West Texas Intermediate shed 85 cents to $68.60 a barrel in early afternoon New York trade, and has now fallen about 9 per cent from its record high reached more than three weeks ago.
The US crude oil and petroleum inventory data this week proved to be the catalyst for the retreat, after petrol stocks rose for the third consecutive week, easing fears of a supply crunch during the summer driving period, which unofficially starts next weekend.
About $90bn of funds track commodity indices, a six-fold increase in the past four years. The index funds also represent the largest single investment grouping in commodity markets, and is understood to be larger than the amount of hedge fund money in commodity markets.
However, in spite of the surge in commodity prices this year, the price performance of the two most popular indices in the sector, the Goldman Sachs Commodity Index and the AIG Commodity Index, have not been so strong.
Commodity indices are unlike stock market indices. They are determined by the underlying commodity prices and the ‘roll yield’, which is the income derived from rolling forward commodity futures before the contract expiry into the next deliverable month.
Gold prices fell about 4 per cent on Friday to $658.10/$658.40 a troy ounce in late trade, down almost 10 per cent from the 26-year high of $730 last Friday.
The slide this week is in tandem with a rise in the dollar.
Silver hit a three-week low of $12.11 on Friday, representing a near 20 per cent decline from the metal’s 26- year high of $15.17 last Thursday.
Copper, which has come to symbolise the bull run in metals prices this year, dropped more than $500 or 6 per cent on the day to $7,530 a tonne, down more than 14 per cent from its record high 10 days ago.
Similar falls were seen in aluminium, nickel, tin and zinc, which had all reached record or long-term highs in the previous week.
Even US corn prices were caught in the sell-off. Corn had risen about 40 per cent in the past six months as a greater proportion of the US corn crop is used for ethanol production.
July corn futures on the Chicago Board of Trade eased 6.5 cents to $2.53 a bushel on Friday.
Richard Bernstein, US strategist for Merrill Lynch, said there was a 50 per cent speculative premium in commodity markets at the end of April.
“With that type of premium built into commodities, liquidity is probably the primary driver of pricing,” Mr Bernstein said.
“It should be no surprise therefore that commodities have recently fallen,” he added as the Fed Funds futures markets have started to discount a higher probability of a tightening of US monetary policy.
Summer in the city could be sticky
By Philip Coggan, Financial Times Published: May 19 2006 12:52
.....There are currently two all-encompassing views of the future of the global economy and financial markets. Both are plausible. Alas, they disagree violently. The recent market turmoil suggests the assumptions behind those views are being put to the test.
This week, Peter Oppenheimer of Goldman Sachs produced an excellent summary of the bullish case, albeit with the ugly title of Globology. His argument is that the opening-up of the global economy resembles the industrial revolution; it is producing a sustained rise in the economic growth rate without inflationary pressures.
A 25 per cent jump in the global labour force since 1990 (as ex-communist countries become part of the global economy) has shifted the balance of power in favour of the corporate sector and away from labour. The emergence of low-cost centres of production has slashed the prices of manufactured goods.
At the same time, the widespread use of technology has enabled companies to run their businesses much more efficiently.
All this has allowed profits to rise to a high level of gross domestic product (following a big dip after the bursting of the dotcom bubble). This level of profitability, believes Oppenheimer, can be sustained. Companies in the west have outsourced production (a significant source of volatility) to Asia. But the big rise in exports has allowed Asian countries to build up foreign exchange reserves, reducing the volatility of their economies.
A world of stronger growth, low inflation and less volatility should be very good news for risky assets. Those who took this view naturally had a positive outlook for equities.
The bears would dismiss these arguments as the classic “it’s different this time” rationalisation of the bulls. If profits are at a high, relative to GDP, that is a cyclical phenomenon. That should mean that investors give equities a lower valuation than average, as future profits growth is likely to be slower than GDP.
The bears argue that the sharp rise in asset prices is simply a function of loose monetary policy. A bear such as Marc Faber also argues that the US inflation rate is understated and the real rate is running at 5-6 per cent.
The rise in US core inflation, announced this week, will convince the inflation worriers they are on the right track. Whether things will become quite as apocalyptic as they suggest is hard to tell. But one thing does seem clear. The rosy assumptions of the optimistic school have come under question. The trade-off between growth and inflation may not be as good as they suggest.
Unless and until the data start to look benign again, investors may face a very tricky and very volatile summer.
Dollar doomed, America in shambles, the end is near, cry's the wolfs of nay and gloom...
Billions-------------Sept------Aug------Jul--------Jun------May 07
Trade Deficit -$56.5 -$56.8 -$59.0 -$59.4 -$59.6
Exports ------$140.1 $138.6 $137.7 $134.1 $132.4
Imports------ $196.6 $195.4 $196.7 $193.5 $192.1
Highlights
· September trade deficit -$56.45 bln.
Key Factors
· The lowest since May 2005 and far below assumptions in Q3 GDP -- should leave GDP revision well above 4%.
· Imports rose just 0.6% as declines in semiconductors and pharmaceuticals largely offset the effect from oil price gains.
· Exports rose 1.1% from industrial supplies and consumer goods as capital goods (incl aircraft) fell -1%.
· Weak dollar and global growth provide the improved outlook despite high imported energy prices.
· Exports are running at a 14% yoy gain, imports are at 5% yoy.
· China's piece of the trade deficit rose to 42%.
Big Picture
· The August 2006 deficit reached a record high -$68.6 bln which has fallen off to a 28 month low in September of -$56.5 bln. The weak dollar and strong global growth now provide a strong upward trend for exports as the deficit has fallen -18% from the peak. From a year ago exports have risen 14% as imports have risen 5%. Import growth carries a larger effect as they are about 40% larger than exports. The massive size of the deficit is eyed for effects on the dollar and interest rates. The trade deficit demands an equal but opposite investment inflow as the weaker dollar value reflects global demand for the dollar given the massive size of the trade deficit.
Keep in Mind that WORLD TRADE IS JUST OVER 11.4 Trillion Dollars annually.
Thru September 30th 2007;
Total, All Countries ( US Exports)-$851.4 ( Imports to US)$1,434.3 Total Trade$2,285.7 100.0%
Through only September 2007, US trade accounted for 20.05% of "ALL annual world trade" with only 5% of its population.
It uses 15,220,000 barrels of oil per day or 18.44% of the 82,532,000 barrels per day produced in the world.
Yet, produces on its own, 5,102,000 barrels per day or 6.18% of all the world oil produced per day, while importing 10,118,000 barrels per day or 12.26% of the world total for a total usage of 18.44% of all the worlds oil production while producing 33.51% of its total usage on its own.
Thus leaving 81.56% of all oil in the world for that 95% of the world population who produces or consumes 79.95% of all the worlds trade goods.
It is a myth that, in the context of production and consumption output, the US does use more oil than it creates in Trade in comparison to the rest of the world's out and inputs in trade.
http://www.eia.doe.gov/neic/quickfacts/quickoil.html
Want to REALLY GO GREEN and clean the planet!
STOP US DEPENDENCE ON FOREIGN OIL IMPORTS and you will by defacto, move faster to solve two of America's and the world's worst problems in the same process.
OIL INDEPENDENCE BY 2013!!!
http://www.census.gov/foreign-trade/statis...op/top0709.html
UK trade gap widens in September
The UK's monthly trade deficit widened to a record in September, following a rise in imports of consumer goods, according to official figures.
The Office for National Statistics (ONS) said the goods trade deficit reached £7.754bn in September, marking a rise on £6.948bn in August.
The trade gap with non-EU nations also hit a record at £4.711bn from £3.953bn.
Analysts say the deficit, though wider than expected, is unlikely to have a significant impact on monetary policy.
Imports of consumer goods went up, especially cars. In addition, Britain imported more oil from Norway.
George Buckley, an analyst with Deutsche Bank said: "The rise in import volume growth at a time when export volume growth is falling is a concern.
"The question is what happens going forward. If domestic consumption weakens quicker than world trade, then we could see this balance improve."
The increase in the value of the pound against the dollar has made it more expensive for people abroad to buy British goods.
http://news.bbc.co.uk/2/hi/business/7086592.stm
Europe 'set for slower growth'
Economic growth across the EU will slow in 2008 because of a weaker US economy and problems in global financial markets, the European Commission says.
Brussels is now forecasting 2.4% growth in the 27-member union in both 2008 and 2009, compared to 2.7% this year.
In the 13-member eurozone, growth is expected to slow to 2.2% next year, down from the 2.6% projected for 2007.
European banks have not been immune to the global credit crisis triggered by the slump in the US housing market.
'Turbulence'
Several German and French lenders have already experienced problems due to bad mortgage-backed investments, although not nearly on the same scale as in the US.
UK lender Northern Rock has been forced to borrow more than £20bn in emergency loans from the Bank of England, after the global credit squeeze meant it was unable to obtain funding from the financial markets.
The UK is one of several EU countries to have downgraded its growth forecasts because of the worsening economic situation in the US.
In its twice-yearly economic forecast, Brussels said it now expected inflation in the eurozone to remain at about 2% this year, rising slightly to 2.1% next year.
It is forecasting the average oil price will rise from $70.60 a barrel this year to $78.80 in 2008.
"Clouds have clearly gathered on the horizon with this summer's turbulence in the financial markets, the US slowdown and the ever-rising oil prices," said economic and monetary affairs commissioner Joaquin Almunia, unveiling the latest growth forecasts.
"As a result, economic growth is becoming more moderate and the downside risks have clearly increased."
http://news.bbc.co.uk/2/hi/business/7086797.stm
Billions-------------Sept------Aug------Jul--------Jun------May 07
Trade Deficit -$56.5 -$56.8 -$59.0 -$59.4 -$59.6
Exports ------$140.1 $138.6 $137.7 $134.1 $132.4
Imports------ $196.6 $195.4 $196.7 $193.5 $192.1
Highlights
· September trade deficit -$56.45 bln.
Key Factors
· The lowest since May 2005 and far below assumptions in Q3 GDP -- should leave GDP revision well above 4%.
· Imports rose just 0.6% as declines in semiconductors and pharmaceuticals largely offset the effect from oil price gains.
· Exports rose 1.1% from industrial supplies and consumer goods as capital goods (incl aircraft) fell -1%.
· Weak dollar and global growth provide the improved outlook despite high imported energy prices.
· Exports are running at a 14% yoy gain, imports are at 5% yoy.
· China's piece of the trade deficit rose to 42%.
Big Picture
· The August 2006 deficit reached a record high -$68.6 bln which has fallen off to a 28 month low in September of -$56.5 bln. The weak dollar and strong global growth now provide a strong upward trend for exports as the deficit has fallen -18% from the peak. From a year ago exports have risen 14% as imports have risen 5%. Import growth carries a larger effect as they are about 40% larger than exports. The massive size of the deficit is eyed for effects on the dollar and interest rates. The trade deficit demands an equal but opposite investment inflow as the weaker dollar value reflects global demand for the dollar given the massive size of the trade deficit.
Keep in Mind that WORLD TRADE IS JUST OVER 11.4 Trillion Dollars annually.
Thru September 30th 2007;
Total, All Countries ( US Exports)-$851.4 ( Imports to US)$1,434.3 Total Trade$2,285.7 100.0%
Through only September 2007, US trade accounted for 20.05% of "ALL annual world trade" with only 5% of its population.
It uses 15,220,000 barrels of oil per day or 18.44% of the 82,532,000 barrels per day produced in the world.
Yet, produces on its own, 5,102,000 barrels per day or 6.18% of all the world oil produced per day, while importing 10,118,000 barrels per day or 12.26% of the world total for a total usage of 18.44% of all the worlds oil production while producing 33.51% of its total usage on its own.
Thus leaving 81.56% of all oil in the world for that 95% of the world population who produces or consumes 79.95% of all the worlds trade goods.
It is a myth that, in the context of production and consumption output, the US does use more oil than it creates in Trade in comparison to the rest of the world's out and inputs in trade.
http://www.eia.doe.gov/neic/quickfacts/quickoil.html
Want to REALLY GO GREEN and clean the planet!
STOP US DEPENDENCE ON FOREIGN OIL IMPORTS and you will by defacto, move faster to solve two of America's and the world's worst problems in the same process.
OIL INDEPENDENCE BY 2013!!!
http://www.census.gov/foreign-trade/statis...op/top0709.html
UK trade gap widens in September
The UK's monthly trade deficit widened to a record in September, following a rise in imports of consumer goods, according to official figures.
The Office for National Statistics (ONS) said the goods trade deficit reached £7.754bn in September, marking a rise on £6.948bn in August.
The trade gap with non-EU nations also hit a record at £4.711bn from £3.953bn.
Analysts say the deficit, though wider than expected, is unlikely to have a significant impact on monetary policy.
Imports of consumer goods went up, especially cars. In addition, Britain imported more oil from Norway.
George Buckley, an analyst with Deutsche Bank said: "The rise in import volume growth at a time when export volume growth is falling is a concern.
"The question is what happens going forward. If domestic consumption weakens quicker than world trade, then we could see this balance improve."
The increase in the value of the pound against the dollar has made it more expensive for people abroad to buy British goods.
http://news.bbc.co.uk/2/hi/business/7086592.stm
Europe 'set for slower growth'
Economic growth across the EU will slow in 2008 because of a weaker US economy and problems in global financial markets, the European Commission says.
Brussels is now forecasting 2.4% growth in the 27-member union in both 2008 and 2009, compared to 2.7% this year.
In the 13-member eurozone, growth is expected to slow to 2.2% next year, down from the 2.6% projected for 2007.
European banks have not been immune to the global credit crisis triggered by the slump in the US housing market.
'Turbulence'
Several German and French lenders have already experienced problems due to bad mortgage-backed investments, although not nearly on the same scale as in the US.
UK lender Northern Rock has been forced to borrow more than £20bn in emergency loans from the Bank of England, after the global credit squeeze meant it was unable to obtain funding from the financial markets.
The UK is one of several EU countries to have downgraded its growth forecasts because of the worsening economic situation in the US.
In its twice-yearly economic forecast, Brussels said it now expected inflation in the eurozone to remain at about 2% this year, rising slightly to 2.1% next year.
It is forecasting the average oil price will rise from $70.60 a barrel this year to $78.80 in 2008.
"Clouds have clearly gathered on the horizon with this summer's turbulence in the financial markets, the US slowdown and the ever-rising oil prices," said economic and monetary affairs commissioner Joaquin Almunia, unveiling the latest growth forecasts.
"As a result, economic growth is becoming more moderate and the downside risks have clearly increased."
http://news.bbc.co.uk/2/hi/business/7086797.stm
Gold rings in record high
Happy New Year everyone!
QUOTE (CNN)
NEW YORK (CNNMoney.com) -- Gold prices surged into record territory Wednesday as lingering geopolitical concerns and a spike in oil prices fueled demand for the precious metal.
The price of gold jumped $23.30 to $861.30 per ounce by mid-day Wednesday after settling at $838 on Monday on the New York Mercantile Exchange.
"With global uncertainties, a big rise in crude prices and stocks wobbling, people are having memories of 1980," said Jon Nadler a Senior Analyst at Kitco Bullion Dealers in Montreal.
The price of gold jumped $23.30 to $861.30 per ounce by mid-day Wednesday after settling at $838 on Monday on the New York Mercantile Exchange.
"With global uncertainties, a big rise in crude prices and stocks wobbling, people are having memories of 1980," said Jon Nadler a Senior Analyst at Kitco Bullion Dealers in Montreal.
Happy New Year everyone!
And your point Tonky? All raw commodities are in a bull market. And most commodities are priced in dollars so it is a no brainer as the dollra hits record lows commodities are hitting record highs. I own gold but as a minor portion of overall holdings. Maybe you should drop the smugness and tell us why you feel gold will continue to tulip here..............................
BTY........... Happy New Year to you as well.
BTY........... Happy New Year to you as well.
QUOTE (Monsieur Le Tonk @ Jan 3 2008, 09:04 AM) 
Gold rings in record high
Happy New Year everyone!
Happy New Year everyone!
I would say Happy New Year to you there TONK, but I have never gotten the real impression that is a mental state you are quite comfortable with, at least here. So I will merely say A Le Tonk New Year to you as well.
I digress,
Gold 1975 to 2008
Historically speaking As usual the Doom and gloom’s French twist is without context and perspective…
For example as the blow graph show
Gold 1979 Adjusted to 2007 prices are as follows
1979-$750 – 2007 –$2,171.25
1979-$650 – 2007 - $1,881.75
1979-$500 – 2007 - $1,447.50
In reverse
2008 $859 – 1979 -$296.72
2007 $800 – 1979 - $276.34
Another out of context doom and gloom media hyped impression is the Sub Prime so called crises.
Left out of the major hype here is the price appreciation of housing as ration to specific area income particularly in the areas where ‘subprime” is 80% of the problem area, California, the North East, Florida, DC, Illinois and cities like Detroit, Chicago NY, Boston and every large metro area in California and Florida.
STANFORD GRADUATE SCHOOL OF BUSINESS—If you sold a house anywhere in the country within the past 20 years, chances are you made something of a killing. Housing prices have risen steadily for decades, up 7 percent a year since 1995—and as much as 12 percent a year in the San Francisco Bay Area. This has been great news for homeowners, but terrible news for home buyers. Rising prices have meant more and more first-time homebuyers are being locked out of the market.
That is on average for all housing an 87% increase in value over 12 years with some areas in California, Florida, Connecticut, NY ranging as much as 144% in 12 years. While average income increases have been less than 35% to 44% over that same 12 years.
As described in the background section above, 16% of the estimated U.S. $1.3 trillion in subprime mortgages were in default as of October 2007, or approximately $200 billion. Conversely 84% ARE NOT IN DEFAULT
** Historically mortgage foreclosure rates have been around 3 to 4.5 % overall, currently the numbers are on par historically, of course without 24/7 media and internet hype and distortions of doom and gloom of course that which makes the narcassistic cultural point, only bad things happen now and are never worst than now.
Considering that $500 billion in subprime mortgages will reset to higher rates over the next 12 months (placing additional pressure on homeowners) and recent increases in the payment default rate cited by the Federal Reserve, direct loss exposure would likely exceed the $200 billion figure.
As of November 22, 2007, analysts at a leading investment bank estimated losses on subprime CDO would be approximately U.S. $148 billion.
Now compare that to the S&L crisis; U.S. General Accounting Office estimated cost of the crisis to around USD $160.1 billion, about $124.6 billion of which was directly pay for by the U.S. government from 1986 to 1996. It starts in 1986, when the FSLIC was reported insolvent and end on December 31, 1995, when RTC was required to cease its operations. It does not include thrift insurance funds before 1986 or after 1996. It does not include state run thrift insurance funds or state bailouts.
That $160 billion Government bailout would equate to $306 billion in 2007 dollars.
Likewise this $160 Billion in 2007 dollars would equate to only $83.43 Billion in 1986 S&L crisis dollars.
That is all!!
Thanks, ustrader, for showing the figures adjusted for inflation. I think it shows that in the long term, gold has been a lousy investment. Also, inflation shows that homeowners cannot keep pace with property values and the cost of new mortgages. 3% interest doubles itself in 24 years; 8% interest doubles itself in 8 years. A homeowner eventually finds that the housing (rent or mortgage, including utilities and upkeep) costs more than 50% of their takehome pay, so they walk away.
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