Britain's six largest banks will start a 1.5 billion-pound ($2.4 billion) fund to help smaller companies to get financing after the government threatened to curb bonuses unless firms boost lending.
HSBC Holdings Plc, Barclays Plc, Royal Bank of Scotland Group Plc, Lloyds Banking Group Plc, Standard Chartered Plc and Banco Santander SA's UK unit will contribute to the fund "over a number of years," according to a report to be published on Wednesday. Executives from the banks will meet Chancellor of the Exchequer George Osborne and Business Secretary Vince Cable on Wednesday to present the Business Growth Fund report, a person familiar with the situation said on October 5.
The move follows pressure from business lobby groups and politicians urging banks to increase lending after accepting more than 1 trillion pounds in bailouts and guarantees during the financial crisis. Osborne said last week he would block the payment of large bonuses unless banks show they are extending credit to households and companies.
"This won't touch the real needs of small businesses," said Stephen Alambritis, a spokesman for the Federation of Small Businesses, which represents 215,000 entrepreneurs. "It is a drop in the ocean compared to what small businesses need from the banks."
The UK's largest banks may pay 7 billion pounds in bonuses to staff in the financial industry this year, the Centre for Economics & Business Research Ltd said. The banks will enable companies seeking to reorganize debts to have a "dialogue" with their lenders 12 months before the scheduled date of refinancing.
Thursday, October 14, 2010
Tuesday, October 5, 2010
Gold101.com - Wall Street falls as investors book gains
US stocks fell on Monday as disappointing economic data, combined with worries about euro zone debt, pushed investors away from riskier assets and sparked profit-taking after a recent rally.
Troubling economic news from Ireland , Portugal and Greece renewed concerns about the euro zone debts, hurting the euro currency and sending the safe-haven US dollar higher.
That hit commodity prices and related stocks. The S&P materials index led the decline, falling 1.7 percent.
Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said that investors were using the renewed risk aversion to take profits after September's 9 percent run-up in the S&P 500.
"We're coming off exceptionally strong performance in the month of September, he said. "You probably have a little bit of an element of profit taking that was maybe accelerated by the disappointing data points this morning."
The Dow Jones industrial average fell 104.63 points, or 0.97 percent, at 10,725.05. The Standard & Poor's 500 Index lost 12.04 points, or 1.05 percent, at 1,134.20. The Nasdaq Composite Index declined 30.73 points, or 1.30 percent, at 2,340.02.
Pending sales of previously owned US homes indicated the housing market was stabilizing at a very low level, while new orders received by US factories fell 0.5 percent in the same month.
Microsoft Corp was a drag on both the Dow and Nasdaq 100, dropping 2.3 percent to $23.83 after Goldman Sachs downgraded the software maker, citing a slow recovery in PC sales and competition from tablet computers, which do not include Windows software.
The falling US dollar pressured commodity-related stocks. Industrial materials shares fell, with US Steel Corp off 3.9 percent to $42.92 and Alcoa down 3 percent to $11.8. The Irish central bank said on Monday Ireland's economy will crawl to a virtual halt this year, while Greece forecast the economy will contract 2.6 percent next year after a 4.0 percent slump in 2010. Portuguese officials urged unity on austerity measures in the face of opposition.
The S&P 500 recently finished its best quarter in a year, although the index has been struggling to break out of the 1,130-1,150 range. The index fell back below the the 61.8 Fibonacci retracement of its April to July pullback at 1,140 and moved back towards support at 1,130, a level the index struggled against, finally climbing above it in late September. S&P 500 short-term technical indicators showed sell signals.
The benchmark index's 10-day momentum line fell below zero, indicating a short-term trend reversal, while the trend lines of the moving average convergence-divergence (MACD) indicator crossed at oversold levels. The third-quarter earnings season will begin unofficially this week with Alcoa's results on Thursday. Micron Technology Inc, PepsiCo Inc and Monsanto Co are also set to report this week.
Troubling economic news from Ireland , Portugal and Greece renewed concerns about the euro zone debts, hurting the euro currency and sending the safe-haven US dollar higher.
That hit commodity prices and related stocks. The S&P materials index led the decline, falling 1.7 percent.
Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia, said that investors were using the renewed risk aversion to take profits after September's 9 percent run-up in the S&P 500.
"We're coming off exceptionally strong performance in the month of September, he said. "You probably have a little bit of an element of profit taking that was maybe accelerated by the disappointing data points this morning."
The Dow Jones industrial average fell 104.63 points, or 0.97 percent, at 10,725.05. The Standard & Poor's 500 Index lost 12.04 points, or 1.05 percent, at 1,134.20. The Nasdaq Composite Index declined 30.73 points, or 1.30 percent, at 2,340.02.
Pending sales of previously owned US homes indicated the housing market was stabilizing at a very low level, while new orders received by US factories fell 0.5 percent in the same month.
Microsoft Corp was a drag on both the Dow and Nasdaq 100, dropping 2.3 percent to $23.83 after Goldman Sachs downgraded the software maker, citing a slow recovery in PC sales and competition from tablet computers, which do not include Windows software.
The falling US dollar pressured commodity-related stocks. Industrial materials shares fell, with US Steel Corp off 3.9 percent to $42.92 and Alcoa down 3 percent to $11.8. The Irish central bank said on Monday Ireland's economy will crawl to a virtual halt this year, while Greece forecast the economy will contract 2.6 percent next year after a 4.0 percent slump in 2010. Portuguese officials urged unity on austerity measures in the face of opposition.
The S&P 500 recently finished its best quarter in a year, although the index has been struggling to break out of the 1,130-1,150 range. The index fell back below the the 61.8 Fibonacci retracement of its April to July pullback at 1,140 and moved back towards support at 1,130, a level the index struggled against, finally climbing above it in late September. S&P 500 short-term technical indicators showed sell signals.
The benchmark index's 10-day momentum line fell below zero, indicating a short-term trend reversal, while the trend lines of the moving average convergence-divergence (MACD) indicator crossed at oversold levels. The third-quarter earnings season will begin unofficially this week with Alcoa's results on Thursday. Micron Technology Inc, PepsiCo Inc and Monsanto Co are also set to report this week.
Wednesday, September 29, 2010
Gold101.com - US banking system 'open to abuse'
One of the US's top fraud investigators is warning that America's policing of money laundering is wide open to abuse.
Eric Lewis will tell a Congressional hearing on terrorist financing that billions of dollars are slipping through the US banking system.
In a testimony ahead of the hearing on Tuesday he says that only international action can stop the laundering.
The US Committee on Financial Services is taking evidence on "trends in terrorism financing".
Mr Lewis will tell the hearing the "powerful tools" to stop the laundering of drug and terrorist money "are not being used as vigorously and consistently as they could be".
Mr Lewis was legal counsel to the liquidators of the collapsed Bank of Credit and Commerce and is an adviser to liquidators running down the companies of fraudster Bernard Madoff.
Continue reading the main story
“Start Quote
Only the US possesses the resources and tools to protect the global financial system”
End Quote Eric Lewis US lawyer
He also represents the al-Gosaibi family of Saudi Arabia, which has been involved in a long-running dispute with the billionaire head of another Saudi family, Maan al-Sanea.
The Gosaibi family have alleged that Mr Sanea siphoned off billions of pounds through the US banking system in a complex fraud. Mr Sanea categorically disputes the claim.
As an example, Mr Lewis says in his testimony that the Gosaibi case raises "fundamental concerns about the safeguards that have been put in place to prevent our banking institutions from becoming instruments of terrorist financing or fraud or other financial crimes".
Mr Lewis said the alleged fraud appeared to involve the transfer of funds "on a dizzying scale", "yet there appear to have been no questions asked", he claimed in his testimony.
Inadequate fines
He criticised Wall Street' s due diligence, saying that this "first line of defence" often failed because banks are "heavily incentivised to look the other way" when a large slice of business comes their way.
Fines imposed on banks are often too small to make an impact.
Mr Lewis said: "The bottom line is that fines are still viewed by banks as unlikely to occur, and if they do occur, they are a cost of doing business, and, until that changes, banks will not be good policemen."
He said that the global nature of fraud, in which transactions pass through many jurisdictions, meant that closer international cooperation was needed to help combat it.
However, Mr Lewis believes that only the US "possesses the resources and tools to protect the global financial system".
"If the US does not take on this responsibility, it will both undermine its own security and fail to do its part for global security interests," he said.
'Vulnerable'
Another expert witness at the hearing, Victor Comras, also felt that the US must give greater focus to banks and financial institutions abroad.
Mr Comras, special counsel at the Eren Law firm and former diplomat, said that the US had made great strides in cracking down on money laundering in America.
But he said in his pre-hearing testimony: "US banks are intricately networked into an international banking system and… remain awkwardly vulnerable to getting caught up in handling terrorist group-related transactions that originate overseas."
The problem was, US banks rely heavily on the accuracy of transactional information given to them by foreign banks. But very often US banks have to take that information on trust, he said.
"It is essential that we broaden the focus of our attention, when it comes to inhibiting the financing of terrorism, to include financial institutions beyond out shores," Mr Comras said.
BBC
Eric Lewis will tell a Congressional hearing on terrorist financing that billions of dollars are slipping through the US banking system.
In a testimony ahead of the hearing on Tuesday he says that only international action can stop the laundering.
The US Committee on Financial Services is taking evidence on "trends in terrorism financing".
Mr Lewis will tell the hearing the "powerful tools" to stop the laundering of drug and terrorist money "are not being used as vigorously and consistently as they could be".
Mr Lewis was legal counsel to the liquidators of the collapsed Bank of Credit and Commerce and is an adviser to liquidators running down the companies of fraudster Bernard Madoff.
Continue reading the main story
“Start Quote
Only the US possesses the resources and tools to protect the global financial system”
End Quote Eric Lewis US lawyer
He also represents the al-Gosaibi family of Saudi Arabia, which has been involved in a long-running dispute with the billionaire head of another Saudi family, Maan al-Sanea.
The Gosaibi family have alleged that Mr Sanea siphoned off billions of pounds through the US banking system in a complex fraud. Mr Sanea categorically disputes the claim.
As an example, Mr Lewis says in his testimony that the Gosaibi case raises "fundamental concerns about the safeguards that have been put in place to prevent our banking institutions from becoming instruments of terrorist financing or fraud or other financial crimes".
Mr Lewis said the alleged fraud appeared to involve the transfer of funds "on a dizzying scale", "yet there appear to have been no questions asked", he claimed in his testimony.
Inadequate fines
He criticised Wall Street' s due diligence, saying that this "first line of defence" often failed because banks are "heavily incentivised to look the other way" when a large slice of business comes their way.
Fines imposed on banks are often too small to make an impact.
Mr Lewis said: "The bottom line is that fines are still viewed by banks as unlikely to occur, and if they do occur, they are a cost of doing business, and, until that changes, banks will not be good policemen."
He said that the global nature of fraud, in which transactions pass through many jurisdictions, meant that closer international cooperation was needed to help combat it.
However, Mr Lewis believes that only the US "possesses the resources and tools to protect the global financial system".
"If the US does not take on this responsibility, it will both undermine its own security and fail to do its part for global security interests," he said.
'Vulnerable'
Another expert witness at the hearing, Victor Comras, also felt that the US must give greater focus to banks and financial institutions abroad.
Mr Comras, special counsel at the Eren Law firm and former diplomat, said that the US had made great strides in cracking down on money laundering in America.
But he said in his pre-hearing testimony: "US banks are intricately networked into an international banking system and… remain awkwardly vulnerable to getting caught up in handling terrorist group-related transactions that originate overseas."
The problem was, US banks rely heavily on the accuracy of transactional information given to them by foreign banks. But very often US banks have to take that information on trust, he said.
"It is essential that we broaden the focus of our attention, when it comes to inhibiting the financing of terrorism, to include financial institutions beyond out shores," Mr Comras said.
BBC
Thursday, September 23, 2010
Superior Gold Group - US is still in recession, says Warren Buffett
Billionaire investor Warren Buffett said US economy remains in recession , disputing this week's assessment by a leading arbiter of economic activity that downturn ended more than a year ago. "We're still in recession," Buffett said on Thursday. "We're not going to be out of it for a while, but we will get out."
On Monday, the National Bureau of Economic Research said the world's largest economy ended an 18-month recession in June 2009, but cautioned that its assessment did not mean normal activity had resumed . Buffett said he defines a recession differently from the NBER, saying it ends when real per capita GDP returns to its pre-downturn level.
President Barack Obama said that economic weakness is "still very real" for the millions of Americans who are out of work, have seen the value of their homes fall, or are mired in debt. Buffett, 80, runs Berkshire Hathaway Inc which has roughly 80 operating businesses . "A great majority" of these businesses are "coming back slowly," he said.
Berkshire's operations cover a broad swath of the economy, including the Burlington Northern Santa Fe railroad, Dairy Queen ice cream, Geico auto insurance , and luxury jewelers such as Borsheim's . Shipments at Burlington Northern are "61% of the way back," Buffett said. "Our carpet business, our brick business, our insulation business, they're not back 61%, they are moving back."
On Tuesday, the US Federal Reserve, which has already driven short-term lending rates to near zero, said it is prepared to provide additional stimulus to avert possible deflation. "We've used up a lot of bullets," Buffett said. "And we talk about stimulus. But the truth is, we're running a federal deficit that's 9% of GDP. That is stimulative as all get out." Buffett's $45 billion net worth makes him the second-richest American, trailing only Microsoft Corp cofounder Bill Gates.
Reuters
On Monday, the National Bureau of Economic Research said the world's largest economy ended an 18-month recession in June 2009, but cautioned that its assessment did not mean normal activity had resumed . Buffett said he defines a recession differently from the NBER, saying it ends when real per capita GDP returns to its pre-downturn level.
President Barack Obama said that economic weakness is "still very real" for the millions of Americans who are out of work, have seen the value of their homes fall, or are mired in debt. Buffett, 80, runs Berkshire Hathaway Inc which has roughly 80 operating businesses . "A great majority" of these businesses are "coming back slowly," he said.
Berkshire's operations cover a broad swath of the economy, including the Burlington Northern Santa Fe railroad, Dairy Queen ice cream, Geico auto insurance , and luxury jewelers such as Borsheim's . Shipments at Burlington Northern are "61% of the way back," Buffett said. "Our carpet business, our brick business, our insulation business, they're not back 61%, they are moving back."
On Tuesday, the US Federal Reserve, which has already driven short-term lending rates to near zero, said it is prepared to provide additional stimulus to avert possible deflation. "We've used up a lot of bullets," Buffett said. "And we talk about stimulus. But the truth is, we're running a federal deficit that's 9% of GDP. That is stimulative as all get out." Buffett's $45 billion net worth makes him the second-richest American, trailing only Microsoft Corp cofounder Bill Gates.
Reuters
Monday, September 6, 2010
Gold101.com - US investors seek pay for pre-WWII German bonds
More than 80 years ago, Germany sold tens of thousands of bonds to American investors in an effort to recover financially from World War I. Later, Adolf Hitler used some of the money raised by those bonds to build the powerful Nazi war machine that would ravage Europe during World War II.
Now, half a dozen US bondholders are turning to federal courts in an effort to force Germany to make good on its promise to repay the debts, which today could be worth hundreds of millions, if not billions, of dollars. Action has been heating up in lawsuits filed in Miami, New York and Chicago, including a victory for investors last month when an appeals court rejected Germany's attempt to dismiss their case.
If the bondholders ultimately win, their lawyers could ask judges to seize German assets in the U.S. to repay them, a tactic that has worked in other legal disputes over money owed by foreign governments.
But if Germany prevails, the bondholders argue, it could undermine the global system through which governments raise money by issuing bonds.
``Our position is not only correct under the law, it would avoid such a potentially far-reaching precedent,'' said investor attorney Sam Dubbin of Coral Gables, Florida, who has frequently represented Holocaust survivors in Nazi-related claims.
Enrico Brandt, a spokesman for the German Embassy in Washington, said the lawsuits are baseless. Brandt said the only way bondholders can redeem the securities is to go through a validation process mandated by a 1953 international treaty and later enshrined in German law.
`` Consequently, the efforts of the plaintiffs to outmaneuver the validation procedure by suing in the United States will fail,'' Brandt said in an e-mail. ``Any bond passing the validation procedure successfully will be honored.''
Even with the questions of the bonds' validity, a robust market has developed with people around the globe buying and selling them in hopes they one day can be redeemed.
Bondholders claim in their lawsuits Germany has erected a nightmarish maze of bureaucratic red tape around the validation process. One key issue for many bonds is a purported Soviet Red Army plunder of thousands of bonds in 1945 from a Nazi vault as the war ended. Germany said those bonds had already been redeemed to the government, but were still improperly resold around the world. Any from that batch would therefore be invalid, the government argues.
Court documents indicate that Germany has repeatedly cited a ``list of stolen bonds'' in denying payment, but attorneys for bondholders say Germany won't share its list or allow it to face public and legal scrutiny. The validation law also requires the difficult task of proving the bond wasn't physically present in Germany on Jan. 1, 1945, not long before Germany surrendered.
``There are so many problems with the validation process that there is no real validation process,'' said Tampa attorney James Lowy, who represents a group of investors separate from those Dubbin works for.
Dubbin said documents from a German archive show most of the looted bonds were returned by the Soviets, a conclusion echoed by historians hired by lawyers in the New York case.
Germany also has claimed it is not subject to U.S. court rulings regarding its bonds, a stance rejected by federal appeals courts in Atlanta and New York. The New York court, however, dismissed one bondholder lawsuit on grounds that they did not first seek repayment through the German validation process. The bonds in that case are valued at more than $400 million.
If Germany ultimately loses in American courts and still refuses to pay the bondholders, their U.S. attorneys could ask judges to seize German assets in this country or ask German courts to enforce the judgment. Lawyers in a separate case previously seized millions of dollars in Cuban assets frozen in the U.S. to pay lawsuit damages.
Richard Buxbaum, an international law professor at the University of California at Berkeley, said the U.S. government set up a fund for investors by seizing Chinese assets in a case involving unpaid bonds from pre-communist China. In the German bonds case, he said, the key for a U.S. judge will be to decide if Germany's system of authenticating the securities passes U.S. constitutional muster.
``You have to show some proof of ownership,'' Buxbaum said. ``My guess is that the American courts would apply the German law.''
Germany tried to win dismissal of the lawsuit filed by Dubbin's clients, World Holdings LLC, on grounds that the matter didn't belong in U.S. courts. But a federal judge in Miami rejected that and her decision was upheld Aug. 9 by the 11th U.S. Circuit Court of Appeals, which took pains to point out the issue remains unsettled. Germany could still appeal the decision.
None of the bondholders suing in U.S. courts would agree to comment for this story.
The U.S. court battles are only the latest intrigue to surround the bonds, first issued by Weimar Republic in the 1920s as Germany struggled to recover from World War I, which had ended in 1918.
The bonds were sold in the U.S. from 1924 to 1930 to help Germany invest in new projects and industries and pay war reparations. One series, known as the Dawes Bonds, raised $110 million in 1920s dollars _ the equivalent of about $1.2 billion today; another series called the Young Bonds generated more than $98 million _ about a billion today.
Investors were told the German bonds were guaranteed safe. Even President Calvin Coolidge urged Americans to snap them up.
But things changed after 1933, when Hitler and the Nazis rose to power. Hitler defaulted on the bonds and ordered that none be repaid, causing them to plummet in value worldwide. Then, Germany began quietly buying them up for pennies on the dollar before World War II began in 1939, stashing thousands in bank vaults and reselling others.
The upshot was that Germany got to keep all the money raised through the bond sales, leaving investors in the cold. And Hitler was able to use a chunk of the money ``to rebuild Germany's war machine,'' according to Dubbin's lawsuit.
Dubbin and Lowy argue the issue remains relevant today. ``It's a question of accountability,'' Lowy said. ``They are saying, 'We will build things with your money but we're not going to pay you.' You think these bonds are safe. They're not.''
Now, half a dozen US bondholders are turning to federal courts in an effort to force Germany to make good on its promise to repay the debts, which today could be worth hundreds of millions, if not billions, of dollars. Action has been heating up in lawsuits filed in Miami, New York and Chicago, including a victory for investors last month when an appeals court rejected Germany's attempt to dismiss their case.
If the bondholders ultimately win, their lawyers could ask judges to seize German assets in the U.S. to repay them, a tactic that has worked in other legal disputes over money owed by foreign governments.
But if Germany prevails, the bondholders argue, it could undermine the global system through which governments raise money by issuing bonds.
``Our position is not only correct under the law, it would avoid such a potentially far-reaching precedent,'' said investor attorney Sam Dubbin of Coral Gables, Florida, who has frequently represented Holocaust survivors in Nazi-related claims.
Enrico Brandt, a spokesman for the German Embassy in Washington, said the lawsuits are baseless. Brandt said the only way bondholders can redeem the securities is to go through a validation process mandated by a 1953 international treaty and later enshrined in German law.
`` Consequently, the efforts of the plaintiffs to outmaneuver the validation procedure by suing in the United States will fail,'' Brandt said in an e-mail. ``Any bond passing the validation procedure successfully will be honored.''
Even with the questions of the bonds' validity, a robust market has developed with people around the globe buying and selling them in hopes they one day can be redeemed.
Bondholders claim in their lawsuits Germany has erected a nightmarish maze of bureaucratic red tape around the validation process. One key issue for many bonds is a purported Soviet Red Army plunder of thousands of bonds in 1945 from a Nazi vault as the war ended. Germany said those bonds had already been redeemed to the government, but were still improperly resold around the world. Any from that batch would therefore be invalid, the government argues.
Court documents indicate that Germany has repeatedly cited a ``list of stolen bonds'' in denying payment, but attorneys for bondholders say Germany won't share its list or allow it to face public and legal scrutiny. The validation law also requires the difficult task of proving the bond wasn't physically present in Germany on Jan. 1, 1945, not long before Germany surrendered.
``There are so many problems with the validation process that there is no real validation process,'' said Tampa attorney James Lowy, who represents a group of investors separate from those Dubbin works for.
Dubbin said documents from a German archive show most of the looted bonds were returned by the Soviets, a conclusion echoed by historians hired by lawyers in the New York case.
Germany also has claimed it is not subject to U.S. court rulings regarding its bonds, a stance rejected by federal appeals courts in Atlanta and New York. The New York court, however, dismissed one bondholder lawsuit on grounds that they did not first seek repayment through the German validation process. The bonds in that case are valued at more than $400 million.
If Germany ultimately loses in American courts and still refuses to pay the bondholders, their U.S. attorneys could ask judges to seize German assets in this country or ask German courts to enforce the judgment. Lawyers in a separate case previously seized millions of dollars in Cuban assets frozen in the U.S. to pay lawsuit damages.
Richard Buxbaum, an international law professor at the University of California at Berkeley, said the U.S. government set up a fund for investors by seizing Chinese assets in a case involving unpaid bonds from pre-communist China. In the German bonds case, he said, the key for a U.S. judge will be to decide if Germany's system of authenticating the securities passes U.S. constitutional muster.
``You have to show some proof of ownership,'' Buxbaum said. ``My guess is that the American courts would apply the German law.''
Germany tried to win dismissal of the lawsuit filed by Dubbin's clients, World Holdings LLC, on grounds that the matter didn't belong in U.S. courts. But a federal judge in Miami rejected that and her decision was upheld Aug. 9 by the 11th U.S. Circuit Court of Appeals, which took pains to point out the issue remains unsettled. Germany could still appeal the decision.
None of the bondholders suing in U.S. courts would agree to comment for this story.
The U.S. court battles are only the latest intrigue to surround the bonds, first issued by Weimar Republic in the 1920s as Germany struggled to recover from World War I, which had ended in 1918.
The bonds were sold in the U.S. from 1924 to 1930 to help Germany invest in new projects and industries and pay war reparations. One series, known as the Dawes Bonds, raised $110 million in 1920s dollars _ the equivalent of about $1.2 billion today; another series called the Young Bonds generated more than $98 million _ about a billion today.
Investors were told the German bonds were guaranteed safe. Even President Calvin Coolidge urged Americans to snap them up.
But things changed after 1933, when Hitler and the Nazis rose to power. Hitler defaulted on the bonds and ordered that none be repaid, causing them to plummet in value worldwide. Then, Germany began quietly buying them up for pennies on the dollar before World War II began in 1939, stashing thousands in bank vaults and reselling others.
The upshot was that Germany got to keep all the money raised through the bond sales, leaving investors in the cold. And Hitler was able to use a chunk of the money ``to rebuild Germany's war machine,'' according to Dubbin's lawsuit.
Dubbin and Lowy argue the issue remains relevant today. ``It's a question of accountability,'' Lowy said. ``They are saying, 'We will build things with your money but we're not going to pay you.' You think these bonds are safe. They're not.''
Wednesday, September 1, 2010
Superior Gold Group - Wall Street closes with strong gains
Wall Street stocks soared on Wednesday after strong manufacturing data in the United States and China eased deep-running concerns over the state of the global economic recovery.
The Dow Jones Industrial Average jumped 254.75 points (2.54 percent) to 10,269.47 in closing trades, while the broader S&P 500 index gained 30.96 points (2.95 percent) to 1,080.29 points.
The tech-rich Nasdaq composite index rose 62.81 points (2.97 percent) to 2,176.84.
The Dow Jones Industrial Average jumped 254.75 points (2.54 percent) to 10,269.47 in closing trades, while the broader S&P 500 index gained 30.96 points (2.95 percent) to 1,080.29 points.
The tech-rich Nasdaq composite index rose 62.81 points (2.97 percent) to 2,176.84.
Monday, August 30, 2010
Superior Gold Group - Japan tries to boost growth
Japan's central bank eased monetary policy at an emergency meeting on Monday, seeking to contain a strong yen and mollify growing political pressure to revive a faltering economy.
The move, which disappointed investors and analysts hoping for bolder action, comes as Prime Minister Naoto Kan prepares a new set of economic stimulus measures.
To boost liquidity, the central bank unveiled a new six-month low-interest loan programme to financial institutions.
Combined with an existing three-month funds-supplying operation worth 20 trillion yen ($236.4 billion), banks will now have access to a total of 30 trillion yen ($355 billion).
AP
The move, which disappointed investors and analysts hoping for bolder action, comes as Prime Minister Naoto Kan prepares a new set of economic stimulus measures.
To boost liquidity, the central bank unveiled a new six-month low-interest loan programme to financial institutions.
Combined with an existing three-month funds-supplying operation worth 20 trillion yen ($236.4 billion), banks will now have access to a total of 30 trillion yen ($355 billion).
AP
Friday, August 27, 2010
Superior Gold Group - Boeing further delays delivery of first Dreamliner
Aerospace giant Boeing said on Friday it would further delay the delivery of its first 787 Dreamliner aircraft until early next year, in another set-back for the troubled jet programme.
Boeing said it now expects to deliver the first Dreamliner in the middle of the first quarter of 2011 as it continues to carry out tests on the beleaguered plane, which is already more than two years behind schedule.
Confirmation that Boeing will not be able to hand over the first aircraft to Japan's All Nippon Airways (ANA) this year came in a statement released in the US and Japan, after it warned in July it may have to delay.
The Chicago-based plane maker said the latest setback follows problems with the Rolls-Royce engines that will power the plane as it continues to test the aircraft.
"While Boeing works closely with Rolls-Royce to expedite engine availability, flight testing across the test fleet continues as planned," it said.
Boeing added that the scheduled revision will not affect the company's financial guidance.
Rolls-Royce said on Friday it was working closely with Boeing to rush through delivery of the engines.
The aviation giant is hanging its future on the mid-sized plane -- its first new model in more than a decade -- which draws on huge advances in aviation technology and can fly long-haul routes using up to 20 percent less fuel.
Boeing launched the Dreamliner programme in April 2004 and initially had planned to deliver the first plane to ANA in the first half of 2008.
But the aircraft, which can seat up to 330 passengers, only made its maiden flight in December last year.
The series of delays in the 787 programme has cost Boeing billions of dollars as airlines such as Russia's S7 and Australia's Qantas last year cancelled their orders.
Earlier this month flagship carrier Air India said it wanted compensation from Boeing for delays in the delivery of Dreamliner planes, with media reports saying the airline is demanding one billion dollars.
In July, Boeing warned that a series of issues, including problems with the "horizontal stabiliser" and instrumentation delays, could push the first delivery back into next year.
Boeing said it had detected a "workmanship issue" with the horizontal stabiliser, a component in the rear of the aircraft that is designed to stabilise it in flight. It is made by Italy's Alenia.
The Dreamliner's fuel efficiency is largely down to the fact that up to half the twin-aisle aircraft is made of lightweight composite materials, such as carbon fibre-reinforced resin, according to the company.
Japan's ANA has ordered a total of 55 Dreamliners as it looks to gradually replace its fleet of kerosene-hungry vehicles with more economically and environmentally friendly models.
"It is unfortunate since it is a very good aircraft and testing was going smoothly," an ANA statement said in reaction to the latest delay.
"We hope that (Boeing) will further improve the airframe and make the delivery as soon as possible," it said.
Meanwhile Boeing's fierce European rival Airbus is working on a new long-haul plane of its own -- the A350 XWB (Extra Wide Body). Another big project for Airbus is its long-delayed A400M military transport plane.
<!--9488d06bcb844dfdaae0efd03bde6f11-->
Boeing said it now expects to deliver the first Dreamliner in the middle of the first quarter of 2011 as it continues to carry out tests on the beleaguered plane, which is already more than two years behind schedule.
Confirmation that Boeing will not be able to hand over the first aircraft to Japan's All Nippon Airways (ANA) this year came in a statement released in the US and Japan, after it warned in July it may have to delay.
The Chicago-based plane maker said the latest setback follows problems with the Rolls-Royce engines that will power the plane as it continues to test the aircraft.
"While Boeing works closely with Rolls-Royce to expedite engine availability, flight testing across the test fleet continues as planned," it said.
Boeing added that the scheduled revision will not affect the company's financial guidance.
Rolls-Royce said on Friday it was working closely with Boeing to rush through delivery of the engines.
The aviation giant is hanging its future on the mid-sized plane -- its first new model in more than a decade -- which draws on huge advances in aviation technology and can fly long-haul routes using up to 20 percent less fuel.
Boeing launched the Dreamliner programme in April 2004 and initially had planned to deliver the first plane to ANA in the first half of 2008.
But the aircraft, which can seat up to 330 passengers, only made its maiden flight in December last year.
The series of delays in the 787 programme has cost Boeing billions of dollars as airlines such as Russia's S7 and Australia's Qantas last year cancelled their orders.
Earlier this month flagship carrier Air India said it wanted compensation from Boeing for delays in the delivery of Dreamliner planes, with media reports saying the airline is demanding one billion dollars.
In July, Boeing warned that a series of issues, including problems with the "horizontal stabiliser" and instrumentation delays, could push the first delivery back into next year.
Boeing said it had detected a "workmanship issue" with the horizontal stabiliser, a component in the rear of the aircraft that is designed to stabilise it in flight. It is made by Italy's Alenia.
The Dreamliner's fuel efficiency is largely down to the fact that up to half the twin-aisle aircraft is made of lightweight composite materials, such as carbon fibre-reinforced resin, according to the company.
Japan's ANA has ordered a total of 55 Dreamliners as it looks to gradually replace its fleet of kerosene-hungry vehicles with more economically and environmentally friendly models.
"It is unfortunate since it is a very good aircraft and testing was going smoothly," an ANA statement said in reaction to the latest delay.
"We hope that (Boeing) will further improve the airframe and make the delivery as soon as possible," it said.
Meanwhile Boeing's fierce European rival Airbus is working on a new long-haul plane of its own -- the A350 XWB (Extra Wide Body). Another big project for Airbus is its long-delayed A400M military transport plane.
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Tuesday, August 24, 2010
Superior Gold Group - New Fees Weighed for Mortgage Industry
The Obama administration may propose that any federal backing of mortgages be paid for through fees on the lending industry, according to people familiar with the internal discussions.
While the administration hasn't settled on a plan to revamp failed mortgage giants Fannie Mae and Freddie Mac, which are now under federal supervision, a consensus appears to be emerging that some type of government guarantee will be needed to keep the ailing mortgage market functioning.
Some conservatives don't believe the government should offer any type of guarantee, while others advocate limited, but explicit, backing. About nine in 10 new loans are currently backed by Fannie, Freddie or government agencies.
Policy makers face challenges determining what types of loans or mortgage-backed securities should be guaranteed and how the industry should be charged for government backing. Government officials want the cost of any explicit guarantee fully offset by the mortgage industry to avoid adding to the federal budget deficit.
But Washington must walk a fine line between pricing a guarantee high enough so it accurately reflects risk, while not charging so much that borrowing costs soar.
At a housing-finance conference last week, Treasury Secretary Timothy Geithner cited a "strong case" for a continued federal guarantee but said "the challenge is to make sure that any government guarantee is priced to cover the risk of losses, and structured to minimize taxpayer exposure."
Officials want to avoid a repeat of what happened to Fannie and Freddie, which had to be bailed out and taken over by the government in 2008 after losses destabilized the firms. Mr. Geithner and others have said the firms wrongly guaranteed increasingly risky mortgages without charging enough to cover the risk.
Others warn the government has a poor track record when deciding how to price guarantees. While guarantees provided by the Federal Housing Administration, which insures mortgages, have traditionally turned a profit for the U.S., in recent months that agency has depleted its reserves and risks running out of money.
"It's very hard to know what the right fee is," said Alex Pollock, resident fellow at the conservative American Enterprise Institute think-tank, who supports moving to a fully private mortgage market. "The argument will always be from homebuilders, realtors, affordable housing groups, consumer groups and members of Congress that you're charging too much and making it too expensive for borrowers."
The National Association of Realtors, for example, is asking the Treasury to reduce interest payments Fannie and Freddie must currently make to the government, arguing that easing the firms' expenses could produce more flexible lending standards. In a letter to Mr. Geithner this month, the organization said the Treasury should retroactively lower the 10% dividend the firms must pay on the $148 billion in taxpayer aid they have used.
The industry appears prepared to pay some type of premium to get the government's backing. Under proposals floated by two trade groups, the Financial Services Roundtable and the Mortgage Bankers Association, new private-sector entities created to securitize and insure mortgages would pay a fee into a government-insurance fund.
Researchers at the New York Federal Reserve Bank, writing on their own behalf, have proposed creating lender-owned cooperatives that would replace Fannie and Freddie. Private lenders would pay into a "mutualized loss pool" to provide guarantees for mortgage-backed securities, and members would also pay a reinsurance fee to the government for a separate fund to backstop additional losses.
Some investors and academics say a government backstop is needed if the U.S. wants to facilitate securitization markets, where investors buy bonds backed by pools of mortgages. While mortgages were once funded primarily through the banking system, securitization fueled the growth of the nation's $10 trillion mortgage market over the past 30 years, dwarfing the capacity of the nation's banking system to fund loans.
"To suggest the private market can come back in and take the place [of the government] is simply impractical. It won't work," said Pacific Investment Management's Bill Gross at last week's summit.
source: WSJ
While the administration hasn't settled on a plan to revamp failed mortgage giants Fannie Mae and Freddie Mac, which are now under federal supervision, a consensus appears to be emerging that some type of government guarantee will be needed to keep the ailing mortgage market functioning.
Some conservatives don't believe the government should offer any type of guarantee, while others advocate limited, but explicit, backing. About nine in 10 new loans are currently backed by Fannie, Freddie or government agencies.
Policy makers face challenges determining what types of loans or mortgage-backed securities should be guaranteed and how the industry should be charged for government backing. Government officials want the cost of any explicit guarantee fully offset by the mortgage industry to avoid adding to the federal budget deficit.
But Washington must walk a fine line between pricing a guarantee high enough so it accurately reflects risk, while not charging so much that borrowing costs soar.
At a housing-finance conference last week, Treasury Secretary Timothy Geithner cited a "strong case" for a continued federal guarantee but said "the challenge is to make sure that any government guarantee is priced to cover the risk of losses, and structured to minimize taxpayer exposure."
Officials want to avoid a repeat of what happened to Fannie and Freddie, which had to be bailed out and taken over by the government in 2008 after losses destabilized the firms. Mr. Geithner and others have said the firms wrongly guaranteed increasingly risky mortgages without charging enough to cover the risk.
Others warn the government has a poor track record when deciding how to price guarantees. While guarantees provided by the Federal Housing Administration, which insures mortgages, have traditionally turned a profit for the U.S., in recent months that agency has depleted its reserves and risks running out of money.
"It's very hard to know what the right fee is," said Alex Pollock, resident fellow at the conservative American Enterprise Institute think-tank, who supports moving to a fully private mortgage market. "The argument will always be from homebuilders, realtors, affordable housing groups, consumer groups and members of Congress that you're charging too much and making it too expensive for borrowers."
The National Association of Realtors, for example, is asking the Treasury to reduce interest payments Fannie and Freddie must currently make to the government, arguing that easing the firms' expenses could produce more flexible lending standards. In a letter to Mr. Geithner this month, the organization said the Treasury should retroactively lower the 10% dividend the firms must pay on the $148 billion in taxpayer aid they have used.
The industry appears prepared to pay some type of premium to get the government's backing. Under proposals floated by two trade groups, the Financial Services Roundtable and the Mortgage Bankers Association, new private-sector entities created to securitize and insure mortgages would pay a fee into a government-insurance fund.
Researchers at the New York Federal Reserve Bank, writing on their own behalf, have proposed creating lender-owned cooperatives that would replace Fannie and Freddie. Private lenders would pay into a "mutualized loss pool" to provide guarantees for mortgage-backed securities, and members would also pay a reinsurance fee to the government for a separate fund to backstop additional losses.
Some investors and academics say a government backstop is needed if the U.S. wants to facilitate securitization markets, where investors buy bonds backed by pools of mortgages. While mortgages were once funded primarily through the banking system, securitization fueled the growth of the nation's $10 trillion mortgage market over the past 30 years, dwarfing the capacity of the nation's banking system to fund loans.
"To suggest the private market can come back in and take the place [of the government] is simply impractical. It won't work," said Pacific Investment Management's Bill Gross at last week's summit.
source: WSJ
Saturday, August 21, 2010
Superior Gold Group - GM files for IPO, to raise $12-16bn
General Motors filed for a landmark public stock offering on Wednesday that would let the federal government begin selling off its stake in the automaker as well as raise money for GM's turnaround. GM said that it would offer both common stock and preferred stock in the offering, which could begin as early as October, when the Obama administration will be seeking to portray its aid to the auto industry as a success before midterm elections in November.
The IPO could raise between $12 and $16 billion and has the potential to be the second-largest in US history, after that of the credit card giant Visa, which raised more than $19 billion in March 2008. The common shares will be sold by GM's current shareholders, the largest of which is the federal government. It exchanged about $43 billion in aid to GM for a 61% interest in the automaker.
GM will offer preferred shares, which have fixed return like dividend, to institutional investors.
The IPO could raise between $12 and $16 billion and has the potential to be the second-largest in US history, after that of the credit card giant Visa, which raised more than $19 billion in March 2008. The common shares will be sold by GM's current shareholders, the largest of which is the federal government. It exchanged about $43 billion in aid to GM for a 61% interest in the automaker.
GM will offer preferred shares, which have fixed return like dividend, to institutional investors.
Tuesday, August 17, 2010
Superior Gold Group - What should Americans see in China's rise to Number Two?
This week, the latest GDP figures made official something that many have long assumed to be true - China is now the world's second largest economy, eclipsing Japan, which grew at anemic 0.4 percent in the second quarter.
According to a Japanese official, the island country's economic output in the second quarter was $1,228 billion, compared to $1,337 billion for China.
China is expanding so rapidly, in fact, that the government is taking dramatic measures to cut back on some of the growth, fearing that it will lead to an overheated economy. There are signs that a real estate bubble of possibly massive proportions has already formed, and its bursting could have global repercussions.
So is China hot on the tail of the United States? Already this summer, China moved past the U.S. in a rather more dubious achievement: it became the world's largest consumer of energy, mostly in the form of dirty coal-fired power plants.
In many ways, China's rise was inevitable. There are, after all, more than 1.3 billion human beings in the nation of China - Japan has just 125 million, the United States a bit over 300 million. Japan's per-capita GDP is still more than times higher than China's.
There was never much doubt, among serious economists, that China would reach this point. The question is what it means for the U.S.
In fact, China may find that ascending closer to the top of the podium brings new responsibilities. Nations around the world criticize China for its political, economic and monetary policies designed to promote an export-heavy economy, crowding out other manufacturing nations. Demand is limited, and not every nation can be an exporting power; to attempt to become one invites a damaging return to old-school mercantilism.
China is also developing some of the problems of big nations; its domestic industries are being undercut by cheaper competition in Vietnam, Indonesia and Bangladesh; a class of newly wealthy citizens are speculating in property and driving up prices; and some kind of subprime loan crisis is brewing in the nation's banks.
In response, there's growing demand in China - the world's largest producer of gold - for more and better ways to invest in physical gold. Culturally, many Chinese investors turn to precious metal assets like dealer gold and silver to protect their wealth.
With the People's Bank of China extending the right to import and export bullion to more banks, and a new moneyed class looking to preserve their wealth, China may be the site of the next bull market in gold - and precious metals investors the world over stand to benefit.
According to a Japanese official, the island country's economic output in the second quarter was $1,228 billion, compared to $1,337 billion for China.
China is expanding so rapidly, in fact, that the government is taking dramatic measures to cut back on some of the growth, fearing that it will lead to an overheated economy. There are signs that a real estate bubble of possibly massive proportions has already formed, and its bursting could have global repercussions.
So is China hot on the tail of the United States? Already this summer, China moved past the U.S. in a rather more dubious achievement: it became the world's largest consumer of energy, mostly in the form of dirty coal-fired power plants.
In many ways, China's rise was inevitable. There are, after all, more than 1.3 billion human beings in the nation of China - Japan has just 125 million, the United States a bit over 300 million. Japan's per-capita GDP is still more than times higher than China's.
There was never much doubt, among serious economists, that China would reach this point. The question is what it means for the U.S.
In fact, China may find that ascending closer to the top of the podium brings new responsibilities. Nations around the world criticize China for its political, economic and monetary policies designed to promote an export-heavy economy, crowding out other manufacturing nations. Demand is limited, and not every nation can be an exporting power; to attempt to become one invites a damaging return to old-school mercantilism.
China is also developing some of the problems of big nations; its domestic industries are being undercut by cheaper competition in Vietnam, Indonesia and Bangladesh; a class of newly wealthy citizens are speculating in property and driving up prices; and some kind of subprime loan crisis is brewing in the nation's banks.
In response, there's growing demand in China - the world's largest producer of gold - for more and better ways to invest in physical gold. Culturally, many Chinese investors turn to precious metal assets like dealer gold and silver to protect their wealth.
With the People's Bank of China extending the right to import and export bullion to more banks, and a new moneyed class looking to preserve their wealth, China may be the site of the next bull market in gold - and precious metals investors the world over stand to benefit.
Friday, August 13, 2010
Superior Gold Group - Deflation fears fade as consumer prices rise
The Bureau of Labor Statistics released its latest data on the Consumer Price Index today, showing that despite deflationary fears, inflation still appears to be the trend, if only slightly. Other economic fundamentals are dropping - unemployment and jobless claims remain stubbornly high - but prices still managed to edge up.
The CPI-U rose 0.3 percent in July on a seasonally adjusted basis. Over the past year, the index increased by 1.2 percent.
Food prices decreased, despite sharp rises in the price of key agricultural commodities like wheat and corn over the past month. Fuel was a significant driver of inflation - gasoline prices rose 4.6 percent in July on a seasonally adjusted basis.
Economists often cite inflation "minus food and fuel," because the prices of those two classes of items are volatile. However, that tends to obscure the real effect of inflation on the average consumer. Along with shelter, food and fuel tend to make up the bulk of many household budgets. Rising food prices does indeed constitute inflation for the average American.
A lot of economists still fear deflation, particularly in the housing sector. It's true that there's a glut of housing capacity, and the painful process of de-leveraging still has a long way to go. Indeed many analysts are now predicting a double-dip recession in the real estate markets, which may spread to other sectors of the economy.
"Housing is entering a double dip in prices," Paul Dales, chief economist at the Capital Economics research group, told CNBC. "They are headed down even more over the next 18 months by as much as 5 percent. Anyone looking for a short term gain by selling a property is heading for trouble."
Oil prices remain volatile, however, and supply shocks could lead to inflation in those sectors most sensitive to energy prices: fuel and food. It does the average American consumer little good if they experience inflation in the staple needs of daily life while deflation occurs in durable goods and the value of their homes.
With the Federal Reserve maintaining its balance sheet at around $2 trillion, the threat of deflation is far from gone. Investors should consider adding physical dealer gold to their portfolios in order to hedge against potentially catastrophic inflation in the price of the products most essential for daily life.
The CPI-U rose 0.3 percent in July on a seasonally adjusted basis. Over the past year, the index increased by 1.2 percent.
Food prices decreased, despite sharp rises in the price of key agricultural commodities like wheat and corn over the past month. Fuel was a significant driver of inflation - gasoline prices rose 4.6 percent in July on a seasonally adjusted basis.
Economists often cite inflation "minus food and fuel," because the prices of those two classes of items are volatile. However, that tends to obscure the real effect of inflation on the average consumer. Along with shelter, food and fuel tend to make up the bulk of many household budgets. Rising food prices does indeed constitute inflation for the average American.
A lot of economists still fear deflation, particularly in the housing sector. It's true that there's a glut of housing capacity, and the painful process of de-leveraging still has a long way to go. Indeed many analysts are now predicting a double-dip recession in the real estate markets, which may spread to other sectors of the economy.
"Housing is entering a double dip in prices," Paul Dales, chief economist at the Capital Economics research group, told CNBC. "They are headed down even more over the next 18 months by as much as 5 percent. Anyone looking for a short term gain by selling a property is heading for trouble."
Oil prices remain volatile, however, and supply shocks could lead to inflation in those sectors most sensitive to energy prices: fuel and food. It does the average American consumer little good if they experience inflation in the staple needs of daily life while deflation occurs in durable goods and the value of their homes.
With the Federal Reserve maintaining its balance sheet at around $2 trillion, the threat of deflation is far from gone. Investors should consider adding physical dealer gold to their portfolios in order to hedge against potentially catastrophic inflation in the price of the products most essential for daily life.
Monday, August 9, 2010
Superior Gold Group - Gold prices looks set to climb as Fed ponders more QE
Many market observers expect the price of physical, dealer gold - as well as futures - to rise in the next few days, as the Federal Reserve reconsiders its monetary policy at a meeting this week. Given the weak state of the economy, particularly with regards to employment, it seems likely that the central bank will consider engaging in further quantitative easing.
QE means that the bank will buy assets - probably Treasury notes or mortgage-backed securities - with freshly-printed dollars, adding to the supply of money and theoretically stimulating demand. Some, however, have compared these efforts to "pushing on a string" - given banks' and companies' current uncertainties about the economy, monetary policy and taxes, many are simply hoarding cash in case they have some lean years ahead.
If that remains the case, handing out more dollars won't do much beyond devaluing the greenback and increasing the threat of inflation.
In an inflationary environment, hard assets like dealer gold and silver are king and queen. Lately, the dollar and gold bullion have been rising in tandem, an unusual situation brought on by the recession. Many analysts, however, expect that relationship to reverse soon, with gold bullion and spot prices rising as the dollar falls.
QE means that the bank will buy assets - probably Treasury notes or mortgage-backed securities - with freshly-printed dollars, adding to the supply of money and theoretically stimulating demand. Some, however, have compared these efforts to "pushing on a string" - given banks' and companies' current uncertainties about the economy, monetary policy and taxes, many are simply hoarding cash in case they have some lean years ahead.
If that remains the case, handing out more dollars won't do much beyond devaluing the greenback and increasing the threat of inflation.
In an inflationary environment, hard assets like dealer gold and silver are king and queen. Lately, the dollar and gold bullion have been rising in tandem, an unusual situation brought on by the recession. Many analysts, however, expect that relationship to reverse soon, with gold bullion and spot prices rising as the dollar falls.
Friday, August 6, 2010
Superior Gold Group - What does China do to international gold markets?
China wields greater and greater influence in global financial markets with every passing day, as the world's largest nation transitions from its old role as a low-wage manufacturing center to a mature economy with higher consumption. For decades, it was America's consumers and investors who set the marching orders for economies around the globe, but when over 1.5 billion Chinese people began earning and consuming more, a shift was inevitable.
It stands to reason, therefore, that China will have an impact on the market for physical gold bullion, as well as the various gold investment vehicles. At present, only five banks in China are allowed to import and export gold. The People's Bank of China, though, issued a statement this week saying that it would open up the markets, giving more financial institutions permission to get involved in the bullion business.
Even more important than the financial dealers, though, may be the behavior of individual Chinese investors. The stunning rise in the price of gold over the past decade has been driven, as much as anything, by the realisation of more and more average Americans - and Europeans - that paper currency may not be the safe haven that many believed.
Fearing inflation, American investors have poured record-breaking amounts of money into physical gold, turning to one of the world's oldest stores of value.
In Asia, the important role gold bullion, jewelry and coins play in preserving wealth has been remembered better than it was here, across the Pacific. Asian investors have seen the devastating effects of inflation and currency crises first hand; the 1997 Asian Financial Crisis wiped out decades of progress in some nations
The collapse of the housing bubble was a pivotal moment for many Western gold investors. It's important, then, that China appears to be in the middle of its own real estate bubble.
Journalists in China report vast construction projects with no tenants, banks with enormous, hidden portfolios of non-performing loans and a government determined to wallpaper over the cracks in many circumstances.
As the world's largest producer of gold, China offers investors amazing access to the physical gold markets. If even a fraction of Chinese investors turn to gold in the same way that Americans have in the past few years, the global market could see an astonishing tightness in supply and further increases in the price of physical gold.
It stands to reason, therefore, that China will have an impact on the market for physical gold bullion, as well as the various gold investment vehicles. At present, only five banks in China are allowed to import and export gold. The People's Bank of China, though, issued a statement this week saying that it would open up the markets, giving more financial institutions permission to get involved in the bullion business.
Even more important than the financial dealers, though, may be the behavior of individual Chinese investors. The stunning rise in the price of gold over the past decade has been driven, as much as anything, by the realisation of more and more average Americans - and Europeans - that paper currency may not be the safe haven that many believed.
Fearing inflation, American investors have poured record-breaking amounts of money into physical gold, turning to one of the world's oldest stores of value.
In Asia, the important role gold bullion, jewelry and coins play in preserving wealth has been remembered better than it was here, across the Pacific. Asian investors have seen the devastating effects of inflation and currency crises first hand; the 1997 Asian Financial Crisis wiped out decades of progress in some nations
The collapse of the housing bubble was a pivotal moment for many Western gold investors. It's important, then, that China appears to be in the middle of its own real estate bubble.
Journalists in China report vast construction projects with no tenants, banks with enormous, hidden portfolios of non-performing loans and a government determined to wallpaper over the cracks in many circumstances.
As the world's largest producer of gold, China offers investors amazing access to the physical gold markets. If even a fraction of Chinese investors turn to gold in the same way that Americans have in the past few years, the global market could see an astonishing tightness in supply and further increases in the price of physical gold.
Monday, August 2, 2010
Superior Gold Group - Weakening dollar boosts silver
Some analysts see the price of silver rising, potentially faster than the price of gold. TheStreet.com reports that the sinking dollar and technical economic indicators might light a fire under the white metal.
Tuesday, silver rose nearly 2 percent to trade at $18.36 per troy ounce. Gold, on the other hand, was essentially at $1,184.80 per troy ounce.
This week's economic data will be closely watched: Nonfarm payrolls, in particular, will be critically important. Production and corporate profits have gained in the past months, but employment has lagged badly. Payrolls fell for the first time last month, as the U.S. census shed temporary jobs.
That process will continue for the next few months, increasing pressure on the labor markets. Any potential gain in private-sector employment might be swamped by the declining public payroll.
The dollar has been falling of late, slipping against the euro day by day. The European bank stress test, as inadequate as it may have been, helped reassure investors about the future of the euro and put the spotlight back on troubles in the U.S.
Technical analysis by TheStreet.com pointed out the close of silver prices above $18 per ounce last week, a psychological support level that could prove key.
Tuesday, silver rose nearly 2 percent to trade at $18.36 per troy ounce. Gold, on the other hand, was essentially at $1,184.80 per troy ounce.
This week's economic data will be closely watched: Nonfarm payrolls, in particular, will be critically important. Production and corporate profits have gained in the past months, but employment has lagged badly. Payrolls fell for the first time last month, as the U.S. census shed temporary jobs.
That process will continue for the next few months, increasing pressure on the labor markets. Any potential gain in private-sector employment might be swamped by the declining public payroll.
The dollar has been falling of late, slipping against the euro day by day. The European bank stress test, as inadequate as it may have been, helped reassure investors about the future of the euro and put the spotlight back on troubles in the U.S.
Technical analysis by TheStreet.com pointed out the close of silver prices above $18 per ounce last week, a psychological support level that could prove key.
Sunday, August 1, 2010
Superior Gold Group - Investors take a shine to gold and silver after disappointing GDP figures
Gold and silver futures both climbed on Friday, reacting to new information that showed a decreasing pace of economic growth in the U.S. According to gross domestic product data released by the Department of Commerce, the economy continued to expand - growing at an annual rate of 2.4 percent in the second quarter - but did so at a slower pace than the 3.7 percent annual rate seen in the first quarter of 2010.
Both quarters were disappointing compared to last year's GDP growth rate of 5 percent.
The news made it a promising day for the precious metals sector. The price of gold climbed almost .9 percent to $1,181.60 per troy ounce, while silver staged an astonishing surge of nearly 2.5 percent, past the $18 mark to trade at $18.05 per troy ounce.
Of the two, the general perception is that gold represents the more traditional haven asset when times are bad. However, some big ETFs and hedge funds have sold off gold recently, giving physical buyers some breathing room to move into the market and snatch up bullion at relatively discounted prices.
The demand for silver may also be driven by investors looking for a cheaper inflation hedge than gold, or by traders trying to walk a middle ground. Silver, after all, is split much more evenly than gold between those who use it as an investment and industrial consumers like the flat-panel television and solar module manufacturers.
As far as the economic fundamentals go, the problem lies with the persistent unemployment, which is sapping consumer confidence and bleeding the real estate markets dry. Without sustained job growth for several quarters, the U.S. economy will continue to limp along, wounded but not mortally so.
The fear of worsening conditions, which could bring back the specter of a double-dip recession, has some members of the Federal Open Market Committee pondering quantitative easing measures to pump liquidity back into the system.
In trying to avoid deflation, however, the Fed could drive straight into inflation. The consumer price index has risen 1.1 percent since June 2009 on a non-adjusted basis. That's quite a low rate, but it could easily be ratcheted up if the vast oceans of capital the Fed has pumped out start leaking out of the banks' coffers where they are locked up.
Both quarters were disappointing compared to last year's GDP growth rate of 5 percent.
The news made it a promising day for the precious metals sector. The price of gold climbed almost .9 percent to $1,181.60 per troy ounce, while silver staged an astonishing surge of nearly 2.5 percent, past the $18 mark to trade at $18.05 per troy ounce.
Of the two, the general perception is that gold represents the more traditional haven asset when times are bad. However, some big ETFs and hedge funds have sold off gold recently, giving physical buyers some breathing room to move into the market and snatch up bullion at relatively discounted prices.
The demand for silver may also be driven by investors looking for a cheaper inflation hedge than gold, or by traders trying to walk a middle ground. Silver, after all, is split much more evenly than gold between those who use it as an investment and industrial consumers like the flat-panel television and solar module manufacturers.
As far as the economic fundamentals go, the problem lies with the persistent unemployment, which is sapping consumer confidence and bleeding the real estate markets dry. Without sustained job growth for several quarters, the U.S. economy will continue to limp along, wounded but not mortally so.
The fear of worsening conditions, which could bring back the specter of a double-dip recession, has some members of the Federal Open Market Committee pondering quantitative easing measures to pump liquidity back into the system.
In trying to avoid deflation, however, the Fed could drive straight into inflation. The consumer price index has risen 1.1 percent since June 2009 on a non-adjusted basis. That's quite a low rate, but it could easily be ratcheted up if the vast oceans of capital the Fed has pumped out start leaking out of the banks' coffers where they are locked up.
Monday, July 26, 2010
Superior Gold Group - EU starts probe against IBM
European Union competition regulators launched two anti-trust investigations against IBM, suspecting it of abusing its dominant position in the mainframe computer market. One investigation followed complaints by emulator software vendors T3 and TurboHercules against IBM's practices, and focuses on the US computer group's alleged tying of mainframe hardware to its mainframe operating system.
The second probe, opened on the European Commission's own initiative, concerns alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services.
"The Commission has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services ... in particular by restricting or delaying access to spare parts for which IBM is the only source," said the Commission on Monday. The Commission enforces EU competition rules and can fine companies that break them. IBM rejected the allegations but promised to cooperate fully with the investigation.
"IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies," the company said in a statement. It said Microsoft and its other big competitors had inspired the commission's action. "The accusations made against IBM by TurboHercules and T3 are being driven by some of IBM's largest competitors — led by Microsoft," it said, adding that in this way the software supplier wanted to cement the dominance of its Wintel servers.
The second probe, opened on the European Commission's own initiative, concerns alleged discriminatory behaviour towards competing suppliers of mainframe maintenance services.
"The Commission has concerns that IBM may have engaged in anti-competitive practices with a view to foreclosing the market for maintenance services ... in particular by restricting or delaying access to spare parts for which IBM is the only source," said the Commission on Monday. The Commission enforces EU competition rules and can fine companies that break them. IBM rejected the allegations but promised to cooperate fully with the investigation.
"IBM is fully entitled to enforce its intellectual property rights and protect the investments we have made in our technologies," the company said in a statement. It said Microsoft and its other big competitors had inspired the commission's action. "The accusations made against IBM by TurboHercules and T3 are being driven by some of IBM's largest competitors — led by Microsoft," it said, adding that in this way the software supplier wanted to cement the dominance of its Wintel servers.
Friday, July 23, 2010
Superior Gold Group - Gold set to rise again as fundamentals reassert themselves
The price of gold may be set to stage another rise, Bloomberg News and various analysts report, now that the yellow metal has recovered from an eight-week low. Currently, physical gold trades at a five to six percent discount to the record $1,266.50 per troy ounce level that it set back in June.
"There’s been an upturn in physical buying, in Asia particularly. People see it is a cheap price. There’s been a bit of an improvement in risk appetite and gold can benefit on the back of portfolio flows," Dan Smith of Standard Chartered in London told Bloomberg News.
Long-time traders like Jim Rogers are advocating a commodities-heavy strategy in the coming years, as rapidly developing nations like China and India consume more and more raw materials to fuel their economies. China recently surpassed the U.S. as the world's greatest consumer of energy - although not yet of oil - and the relatively low per capital income and consumption of the Chinese people means that those figures could continue booming.
China has also been a steady investor in gold, with both the private and the public sector picking up stores of physical gold when the price dips temporarily. In the first half of 2010, the Shanghai Gold Exchange saw the equivalent of 3,174.5 metric tons of gold traded, a 59 percent jump from the same period in 2009.
It's not just private investors, either - the People's Bank of China has accumulated over 1,000 tons of gold, making it one of the world's biggest holders. The Chinese government is nervous about the possible effects of inflation on its massive dollar reserves, but it can't dump too many dollars at once without spooking the currency markets.
A big test for the global economy - and for the outlook on dealer gold - will come on Friday when European regulators announce the results of the "stress tests" they have been conducting on Europe's biggest banks.
One of the key questions is how many banks would be affected by a major sovereign default - such as a Greek or Portuguese bankruptcy - and how badly their holdings would fare.
If the banks look too weak, they'll be told to raise more capital.
Many, however, are skeptical and fear that the tests are not rigorous enough. In that case, become overconfident. Alternatively, investors could lose their remaining confidence in the eurozone and jump ship, which would precipitate exactly the crisis regulators hope to avoid.
"There’s been an upturn in physical buying, in Asia particularly. People see it is a cheap price. There’s been a bit of an improvement in risk appetite and gold can benefit on the back of portfolio flows," Dan Smith of Standard Chartered in London told Bloomberg News.
Long-time traders like Jim Rogers are advocating a commodities-heavy strategy in the coming years, as rapidly developing nations like China and India consume more and more raw materials to fuel their economies. China recently surpassed the U.S. as the world's greatest consumer of energy - although not yet of oil - and the relatively low per capital income and consumption of the Chinese people means that those figures could continue booming.
China has also been a steady investor in gold, with both the private and the public sector picking up stores of physical gold when the price dips temporarily. In the first half of 2010, the Shanghai Gold Exchange saw the equivalent of 3,174.5 metric tons of gold traded, a 59 percent jump from the same period in 2009.
It's not just private investors, either - the People's Bank of China has accumulated over 1,000 tons of gold, making it one of the world's biggest holders. The Chinese government is nervous about the possible effects of inflation on its massive dollar reserves, but it can't dump too many dollars at once without spooking the currency markets.
A big test for the global economy - and for the outlook on dealer gold - will come on Friday when European regulators announce the results of the "stress tests" they have been conducting on Europe's biggest banks.
One of the key questions is how many banks would be affected by a major sovereign default - such as a Greek or Portuguese bankruptcy - and how badly their holdings would fare.
If the banks look too weak, they'll be told to raise more capital.
Many, however, are skeptical and fear that the tests are not rigorous enough. In that case, become overconfident. Alternatively, investors could lose their remaining confidence in the eurozone and jump ship, which would precipitate exactly the crisis regulators hope to avoid.
Tuesday, July 20, 2010
Superior Gold Group - Gold climbs as housing starts falter
The price of gold rose on Tuesday morning as housing construction plunged to its lowest level since October. Figures from the Department of Commerce showed that the seasonally adjusted annual rate of new building fell 5 percent in June, to 549,000.
The biggest drops, the report found, were in the construction of condominiums and apartments. Single-family homes, meanwhile, were down only .7 percent.
Along with weak revenues from IBM and Goldman Sachs, the news pushed equities markets downwards. Commodities like gold and silver gained, however, as traders searched for a haven. The price of gold rose .25 percent to $1,184.90 per troy ounce.
Fear of a double-dip recession, particularly in the housing market, is growing. An $8,000 tax credit for new buyers, which was extended through this April, helped keep realtors and builders afloat for a while, but now efforts to re-inflate the housing bubble seem to be leaking.
This increases the chance that the government will try to fight back by pumping more capital and liquidity into the economy. Even if there are short-term deflationary pressures, in the longer term, inflation will become a serious concern.
Investors should look at hedging their portfolios with holdings of dealer gold and silver, which will resist inflationary tendencies on the part of central banks.
The biggest drops, the report found, were in the construction of condominiums and apartments. Single-family homes, meanwhile, were down only .7 percent.
Along with weak revenues from IBM and Goldman Sachs, the news pushed equities markets downwards. Commodities like gold and silver gained, however, as traders searched for a haven. The price of gold rose .25 percent to $1,184.90 per troy ounce.
Fear of a double-dip recession, particularly in the housing market, is growing. An $8,000 tax credit for new buyers, which was extended through this April, helped keep realtors and builders afloat for a while, but now efforts to re-inflate the housing bubble seem to be leaking.
This increases the chance that the government will try to fight back by pumping more capital and liquidity into the economy. Even if there are short-term deflationary pressures, in the longer term, inflation will become a serious concern.
Investors should look at hedging their portfolios with holdings of dealer gold and silver, which will resist inflationary tendencies on the part of central banks.
Monday, July 19, 2010
Superior Gold Group - Moody's cuts Ireland debt rating
In another blow to the euro-zone, Moody's cut the sovereign debt rating of Ireland from Aa1 to Aa2, almost exactly one year after it initially cut the island nation's rating from the top grade, Aaa.
The Irish National Treasury Management Agency, which is is responsible for the nation's sovereign debt, put a brave face on things. They pointed out that Moody's now rates the country's bonds as "stable" rather "than negative, possibly indicating that Ireland will hold the Aa2 rating for a while.
Tuesday will mark a major test for the country, as Ireland will attempt an auction of as much as 1.5 billion euros in six-year and 10-year notes.
Greece, Ireland, Spain and Portugal have all seen downgrades in recent months, as increased nervousness about the countries' financial stability drive up borrowing costs. So far, however, only Greece is classified as "junk" grade.
In the long run, these assessments of weakness in the bond market will be good news for investors in physical gold and silver, assets which tend to do well in times of economic distress. Despite some recent weakness in the precious metals sector, investors are beginning to realize that in the long run, shaky debt and the dangers of inflation threaten to undermine their hard-won gains.
The Irish National Treasury Management Agency, which is is responsible for the nation's sovereign debt, put a brave face on things. They pointed out that Moody's now rates the country's bonds as "stable" rather "than negative, possibly indicating that Ireland will hold the Aa2 rating for a while.
Tuesday will mark a major test for the country, as Ireland will attempt an auction of as much as 1.5 billion euros in six-year and 10-year notes.
Greece, Ireland, Spain and Portugal have all seen downgrades in recent months, as increased nervousness about the countries' financial stability drive up borrowing costs. So far, however, only Greece is classified as "junk" grade.
In the long run, these assessments of weakness in the bond market will be good news for investors in physical gold and silver, assets which tend to do well in times of economic distress. Despite some recent weakness in the precious metals sector, investors are beginning to realize that in the long run, shaky debt and the dangers of inflation threaten to undermine their hard-won gains.
Friday, July 16, 2010
Superior Gold Group - Recovery faltering as stock indexes slump
Impressive corporate profits weren't enough to jolt the bulls into action this week, as stock indexes described a perfect parabola from Monday to Friday. Despite gains of 2 to 3 percent at midweek, all three major indexes had collapsed back to their starting points by noon on Friday.
That's bad news for those hoping that surging stock values alone could drive the economy out of recession. It's corporate earnings season, and the news has generally been mixed. JPMorgan Chase, chip manufacturer Intel and aluminum producer Alcoa all posted better-than-expected results, but other companies didn't fare as well.
General Electric, Citigroup and Bank of America all missed estimates, while Goldman Sachs settled the suit brought against it by the SEC for $550 million.
That just boosted the investment bank's shares, though: As it turns out, the fine is equal to just 14 days of Goldman's first-quarter earnings.
The market signals point to sustained weakness in stocks, which is probably good news for hard assets like physical gold. The price of dealer gold has jumped almost 8.5 percent since the beginning of the year, and at one point it was up almost 15 percent.
By contrast, the S&P 500 never got past 10 percent gains in 2010, and it's currently down almost 4 percent.
That's bad news for those hoping that surging stock values alone could drive the economy out of recession. It's corporate earnings season, and the news has generally been mixed. JPMorgan Chase, chip manufacturer Intel and aluminum producer Alcoa all posted better-than-expected results, but other companies didn't fare as well.
General Electric, Citigroup and Bank of America all missed estimates, while Goldman Sachs settled the suit brought against it by the SEC for $550 million.
That just boosted the investment bank's shares, though: As it turns out, the fine is equal to just 14 days of Goldman's first-quarter earnings.
The market signals point to sustained weakness in stocks, which is probably good news for hard assets like physical gold. The price of dealer gold has jumped almost 8.5 percent since the beginning of the year, and at one point it was up almost 15 percent.
By contrast, the S&P 500 never got past 10 percent gains in 2010, and it's currently down almost 4 percent.
Monday, July 12, 2010
Superior Gold Group - BusinessWeek Identifies "Modern Day Gold Rush"
Bloomberg/BusinessWeek has written a long piece on the economic effects of the gold's rising price, identifying some of the unique opportunities that arise as gold hovers around $1,200 per ounce. Savvy entrepreneurs, inventors and investors have come up with new ways to make money off of the rising price of one of the world's most precious commodities.
One path to golden riches, the magazine found, was the most old-fashioned - prospecting for gold in streams and other potentially gold-rich locations. The Gold Prospectors Association of American, based in Temecula, California, says that its membership jumed 93 percent in 2008, with more than 62,000 members around the country.
Others have taken a more modern, entrepreneurial approach, as is the case with the magazine's profile of Arizona Gold Adventures founder Terry Soloman. The idea behind his company is simple - gold prospecting tourism, taking visitors out around Congress, Arizona to do a some prospecting for $350 daily fee.
The magazine also identified some more esoteric ways of playing the rise in gold, such as Hon Corporation's gold "vending machines." It has installed 20 machines in retail establishments around Korea, selling card-sized wafers of gold that weigh between .5 and 10 grams. It's trying to expand into the U.S. and Europe.
BusinessWeek also identified an interesting niche market that's benefited from increasing investment in gold - safe manufacturers. When buying physical gold, owning a safe and secure location that is easily accessible in case of emergency is an important consideration.
A high-end safe, proof against all but the most dedicated burglars, as well as natural disasters like flood and fire, is necessary if investors want to store their physical gold holdings on their own property. Dean Safe of Arleta, California told the magazine that 2009 brought the best sales in the company's 35-year history.
Overall the magazine paints a picture of an intriguing "gold economy" springing up as the metal generates fresh opportunities. With some analysts predicting gold prices as high as $2,000 or even $5,000 per troy ounce in the next five years, many investors are choosing this moment to diversify their investment portfolios with precious metals.
Add in fears of inflation, or worse, hyperinflation, and the economic picture being painted makes a pretty good case for the yellow metal.
One path to golden riches, the magazine found, was the most old-fashioned - prospecting for gold in streams and other potentially gold-rich locations. The Gold Prospectors Association of American, based in Temecula, California, says that its membership jumed 93 percent in 2008, with more than 62,000 members around the country.
Others have taken a more modern, entrepreneurial approach, as is the case with the magazine's profile of Arizona Gold Adventures founder Terry Soloman. The idea behind his company is simple - gold prospecting tourism, taking visitors out around Congress, Arizona to do a some prospecting for $350 daily fee.
The magazine also identified some more esoteric ways of playing the rise in gold, such as Hon Corporation's gold "vending machines." It has installed 20 machines in retail establishments around Korea, selling card-sized wafers of gold that weigh between .5 and 10 grams. It's trying to expand into the U.S. and Europe.
BusinessWeek also identified an interesting niche market that's benefited from increasing investment in gold - safe manufacturers. When buying physical gold, owning a safe and secure location that is easily accessible in case of emergency is an important consideration.
A high-end safe, proof against all but the most dedicated burglars, as well as natural disasters like flood and fire, is necessary if investors want to store their physical gold holdings on their own property. Dean Safe of Arleta, California told the magazine that 2009 brought the best sales in the company's 35-year history.
Overall the magazine paints a picture of an intriguing "gold economy" springing up as the metal generates fresh opportunities. With some analysts predicting gold prices as high as $2,000 or even $5,000 per troy ounce in the next five years, many investors are choosing this moment to diversify their investment portfolios with precious metals.
Add in fears of inflation, or worse, hyperinflation, and the economic picture being painted makes a pretty good case for the yellow metal.
Saturday, July 10, 2010
Superior Gold Group - Sell bonds and buy metals, commodities
The chairman of Rogers Holdings said that metals like silver and gold, as well as agricultural commodities like rice, will be the best investments over the next few years.
Although he holds both gold and silver currently, Rogers says he prefers the white metal right now because it has been less bullish than gold lately, and represents a better bargain.
Regardless, he thinks that gold will eventually hit more than $2,000 per troy ounce, by some undisclosed date. He advocates buying physical gold over gold shares, citing its liquidity, portability and "real" value.
The hedge fund manager is pessimistic about the state of the global economy and told an investors conference in Kuala Lumpur on Wednesday that "Bonds are not a good place to invest in. You should own commodities because that’s your only refuge."
Rogers gained international renown after calling the beginning of the global surge in commodities prices that began in 1999. In 1998, he created the Rogers International Commodity Index, which is a dollar-based basket of 36 commodities across three major sectors: agriculture, energy and metals.
The RICI includes gold, silver, palladium, platinum, crude oil, natural gas, rice, coffee, cocoa wheat and sugar.
Although he holds both gold and silver currently, Rogers says he prefers the white metal right now because it has been less bullish than gold lately, and represents a better bargain.
Regardless, he thinks that gold will eventually hit more than $2,000 per troy ounce, by some undisclosed date. He advocates buying physical gold over gold shares, citing its liquidity, portability and "real" value.
The hedge fund manager is pessimistic about the state of the global economy and told an investors conference in Kuala Lumpur on Wednesday that "Bonds are not a good place to invest in. You should own commodities because that’s your only refuge."
Rogers gained international renown after calling the beginning of the global surge in commodities prices that began in 1999. In 1998, he created the Rogers International Commodity Index, which is a dollar-based basket of 36 commodities across three major sectors: agriculture, energy and metals.
The RICI includes gold, silver, palladium, platinum, crude oil, natural gas, rice, coffee, cocoa wheat and sugar.
Tuesday, July 6, 2010
Superior Gold Group - Indian silver imports look to recover, driving up prices
India is the world's largest consumer of gold and one of the largest consumers of silver, so the trends in its imports tend to have a strong impact on the markets. With that in mind, the news from MineWeb that silver buying in the subcontinent is looking to have a strong recovery represents good news for the metal.
Bullion traders told the magazine that this year, India will buy far more than than the 1,000 tons of silver it bought last year, possibly as much as 1,500 tons. Much of the demand is due to silver's role as an investment and a hedge against inflation.
In many Asian countries, particularly India, investors are cautious of the dangers of inflation or national crises, and stockpiling precious metals like physical gold and silver is a longstanding tradition. There is also a significant component of demand for consumer use, primarily in jewelry. It is the manufacture of jewelry that consumes the majority of India's physical gold imports.
In New York trading, the price of silver futures rose by .46 percent to $17.80 per troy ounce.
Bullion traders told the magazine that this year, India will buy far more than than the 1,000 tons of silver it bought last year, possibly as much as 1,500 tons. Much of the demand is due to silver's role as an investment and a hedge against inflation.
In many Asian countries, particularly India, investors are cautious of the dangers of inflation or national crises, and stockpiling precious metals like physical gold and silver is a longstanding tradition. There is also a significant component of demand for consumer use, primarily in jewelry. It is the manufacture of jewelry that consumes the majority of India's physical gold imports.
In New York trading, the price of silver futures rose by .46 percent to $17.80 per troy ounce.
Sunday, July 4, 2010
Superior Gold Group - Gold recovers from five-week low as economies struggle
After a rough few days, gold futures rose 1 percent to trade at $1,210.55 per troy ounce in New York. Gold prices hit a record high of $1,266.50 per troy ounce in every major currency in mid-June, but fell for the rest of that month, briefly sinking below $1,200.
The specter of a double-dip recession, combined with inflationary fears that have been dogging the markets, combined to help support the yellow metal today. In Europe, a shift to austerity in England, Germany, Greece and Ireland could undercut growth and leave consumer demand and unemployment sluggish.
In the U.S., the states' budgets are in horrid shape and unemployment fell in June for the first time since 2009. A large portion of the drop in unemployment came from the ending of temporary contracts for census workers, a process which will continue for months, weighing on jobless figures.
If the federal government doesn't step in to artificially stimulate demand, the economy may slump - but if it does, it could trigger rapid inflation.
Investors hedge against both possibilites by putting their money in gold, relying on it as a store of value.
The specter of a double-dip recession, combined with inflationary fears that have been dogging the markets, combined to help support the yellow metal today. In Europe, a shift to austerity in England, Germany, Greece and Ireland could undercut growth and leave consumer demand and unemployment sluggish.
In the U.S., the states' budgets are in horrid shape and unemployment fell in June for the first time since 2009. A large portion of the drop in unemployment came from the ending of temporary contracts for census workers, a process which will continue for months, weighing on jobless figures.
If the federal government doesn't step in to artificially stimulate demand, the economy may slump - but if it does, it could trigger rapid inflation.
Investors hedge against both possibilites by putting their money in gold, relying on it as a store of value.
Monday, June 28, 2010
Superior Gold Group - Gold climbs as bad economic news persists
Concerns about sovereign debt, weak employment and a deflating housing market all helped push the price of gold up today. The yellow metal rose by $12.80 to $1,247.60 per troy ounce, off of its earlier record highs but its strongest performance this week.
Traders and economists fretting about Greece's continuing instability commanded the headlines today, with stocks plummeting after an indecisive day yesterday. Credit-default swaps (CDS) on Greek debt rose to a record high of 970 basis points, reported Bloomberg. CDS rates rose on Spanish and Portuguese bonds as well, which many experts believe could be the next dominoes to fall in Europe's debt game.
Stocks began pricing in these fears yesterday after the Federal reserve took a steady, predictable course and kept interest rates near zero. In their statement, the Federal Open Market Committee (FOMC) cited the continuing weakness and precarious situation of European sovereign debt as the chief problem going forward.
One piece of good news was word from the Department of Commerce that orders for durable goods were up almost one percent, possibly reflecting some long-term optimism about manufacturing or the economy as a whole.
However, the real news was in the housing market.
New home sales and existing home sales both collapsed last month, as a federal tax credit designed to support the real estate and construction industry expired. It seems likely that the market will remain depressed for a relatively long time, as the tax credit probably pushed many buyers into closing in the first half of the year.
The day's trading left gold and silver, along with copper and coffee futures, as the best-performing assets of the day. Once again, sustained economic weakness is good news for hard assets and commodities like gold, backed by inherent value rather than questionable loans or mortgages.
With gold having fallen back from the $1,260 per ounce level, it might be time to consider an investment in dealer gold and silver to hedge or even replace the increasingly volatile motion of stocks and equities. As the debt crisis seems to spread rather being contained, it's hard to say which country will be next to place its head on the block.
If the U.S. keeps issuing debt - and the Treasury will auction off another $30 billion of 7-year debt today alone - it could find itself on the wrong end of the CDS business, with investors paying a massive premium to insure their US debt and driving up the country's cost of borrowing.
Traders and economists fretting about Greece's continuing instability commanded the headlines today, with stocks plummeting after an indecisive day yesterday. Credit-default swaps (CDS) on Greek debt rose to a record high of 970 basis points, reported Bloomberg. CDS rates rose on Spanish and Portuguese bonds as well, which many experts believe could be the next dominoes to fall in Europe's debt game.
Stocks began pricing in these fears yesterday after the Federal reserve took a steady, predictable course and kept interest rates near zero. In their statement, the Federal Open Market Committee (FOMC) cited the continuing weakness and precarious situation of European sovereign debt as the chief problem going forward.
One piece of good news was word from the Department of Commerce that orders for durable goods were up almost one percent, possibly reflecting some long-term optimism about manufacturing or the economy as a whole.
However, the real news was in the housing market.
New home sales and existing home sales both collapsed last month, as a federal tax credit designed to support the real estate and construction industry expired. It seems likely that the market will remain depressed for a relatively long time, as the tax credit probably pushed many buyers into closing in the first half of the year.
The day's trading left gold and silver, along with copper and coffee futures, as the best-performing assets of the day. Once again, sustained economic weakness is good news for hard assets and commodities like gold, backed by inherent value rather than questionable loans or mortgages.
With gold having fallen back from the $1,260 per ounce level, it might be time to consider an investment in dealer gold and silver to hedge or even replace the increasingly volatile motion of stocks and equities. As the debt crisis seems to spread rather being contained, it's hard to say which country will be next to place its head on the block.
If the U.S. keeps issuing debt - and the Treasury will auction off another $30 billion of 7-year debt today alone - it could find itself on the wrong end of the CDS business, with investors paying a massive premium to insure their US debt and driving up the country's cost of borrowing.
Saturday, June 19, 2010
Gold101.com - China gives in, finally makes yuan more flexible
China’s central bank said on Saturday that it would make its yuan exchange rate more flexible, in what analysts said was an indication that Beijing was ready to scrap the dollar peg and allow its currency to rise.
However, the People’s Bank of China said there were no grounds for “large swings” in the currency, suggesting that policymakers would maintain a tight grip on the value of the yuan.
The announcement was welcomed by US Treasury Secretary Timothy Geithner, who said the move would make a “positive contribution” to global growth once implemented.
IMF chief Dominique Strauss-Kahn said it was a “very welcome” announcement that would help Chinese households and consumers.
The statement by the central bank was released amid pressure on Beijing to strengthen its currency and comes ahead of next week’s G20 nations’ meeting in Toronto, where the controversial policy is expected to be on the agenda.
“China’s central bank has decided to further promote the reform of the RMB (yuan) exchange rate mechanism, and strengthen the flexibility of the RMB exchange rate,” the central bank said on its website.
However, it stressed that it would continue to manage the floating exchange rate “within the band already announced”. Central bank adviser Li Daokui said he had no idea when the trading band would be widened.
However, the People’s Bank of China said there were no grounds for “large swings” in the currency, suggesting that policymakers would maintain a tight grip on the value of the yuan.
The announcement was welcomed by US Treasury Secretary Timothy Geithner, who said the move would make a “positive contribution” to global growth once implemented.
IMF chief Dominique Strauss-Kahn said it was a “very welcome” announcement that would help Chinese households and consumers.
The statement by the central bank was released amid pressure on Beijing to strengthen its currency and comes ahead of next week’s G20 nations’ meeting in Toronto, where the controversial policy is expected to be on the agenda.
“China’s central bank has decided to further promote the reform of the RMB (yuan) exchange rate mechanism, and strengthen the flexibility of the RMB exchange rate,” the central bank said on its website.
However, it stressed that it would continue to manage the floating exchange rate “within the band already announced”. Central bank adviser Li Daokui said he had no idea when the trading band would be widened.
Wednesday, June 16, 2010
Superior Gold Group - Greek debt downgraded to junk status
Moody's Investors Service downgraded Greece's debt from A3 to Ba1, officially classifying the worst-hit member of the euro-zone as a "junk" bond risk.
The Dow immediately plunged almost a hundred points after the news, undermining its strong performance early in the morning. However, the downgrade was far from unexpected - despite austerity measures and a massive if belated bailout by the EU, Greece's financial situation remains dire and it threatens to bring other countries, like Spain and Italy, down with it.
The downgrade will make it harder then ever for Greece to maintain the unsustainable cycle of borrowing to pay the debts coming due, possibly accelerating some kind of general default and contagion throughout euro-zone and global markets.
The euro crisis pushed gold to record levels last week, and further debt scares might light another fire under the price this week. Dealer gold and silver, along with other precious metals like platinum and palladium, represent an attractive and stable alternative to the debt-ridden paper currencies like the euro and the dollar. Irrational exuberance in the stock markets may depress the price of gold for a little while, but one way or another, Greece's debts will have to be paid. The ensuing chaos in the markets could well push dealer gold to fresh highs.
The Dow immediately plunged almost a hundred points after the news, undermining its strong performance early in the morning. However, the downgrade was far from unexpected - despite austerity measures and a massive if belated bailout by the EU, Greece's financial situation remains dire and it threatens to bring other countries, like Spain and Italy, down with it.
The downgrade will make it harder then ever for Greece to maintain the unsustainable cycle of borrowing to pay the debts coming due, possibly accelerating some kind of general default and contagion throughout euro-zone and global markets.
The euro crisis pushed gold to record levels last week, and further debt scares might light another fire under the price this week. Dealer gold and silver, along with other precious metals like platinum and palladium, represent an attractive and stable alternative to the debt-ridden paper currencies like the euro and the dollar. Irrational exuberance in the stock markets may depress the price of gold for a little while, but one way or another, Greece's debts will have to be paid. The ensuing chaos in the markets could well push dealer gold to fresh highs.
Monday, June 14, 2010
Superior Gold Group - National debt exceeds 90 percent of GDP
As the U.S. economy continues to be drained by an unsustainable national debt, job creation is likely to be one of the many areas that will take a hit in the coming years.
A recent Treasury Department report estimated that the total national debt for fiscal year 2010 will stand at $13.6 trillion, which is 93 percent of the gross domestic product.
With that in mind, Representative Dave Camp, a Michigan Republican who serves as ranking member of the Ways and Means Committee, recently pointed out that a national debt load above 90 percent of the GDP will start eroding the nation's economic growth.
"The debt is preventing us from creating the jobs America needs," said Camp. "This report is yet another warning that Congress cannot continue to pass unpaid-for spending without further hurting our recovery."
As the U.S. national debt continues to soar with little relief in sight, now may be the time for concerned investors to consult with silver and gold dealers about traditional safe harbor options.
A recent Treasury Department report estimated that the total national debt for fiscal year 2010 will stand at $13.6 trillion, which is 93 percent of the gross domestic product.
With that in mind, Representative Dave Camp, a Michigan Republican who serves as ranking member of the Ways and Means Committee, recently pointed out that a national debt load above 90 percent of the GDP will start eroding the nation's economic growth.
"The debt is preventing us from creating the jobs America needs," said Camp. "This report is yet another warning that Congress cannot continue to pass unpaid-for spending without further hurting our recovery."
As the U.S. national debt continues to soar with little relief in sight, now may be the time for concerned investors to consult with silver and gold dealers about traditional safe harbor options.
Friday, June 11, 2010
Superior Gold Group - Euro crisis pushes gold to yet another record
Long-term investors in dealer gold had their foresight rewarded yet again this week as the precious metal soared to another record high due to concern about the European debt crisis.
A Tuesday Reuters report noted that gold's new record price now stands at above $1,250 per ounce, while gold futures for August delivery stood at another record of $1,254.50. The wire service also noted that the gold prices have risen about 12 percent during the current quarter alone.
Elsewhere, a report from Bloomberg News quoted Paul Walker, CEO of GFMS, Ltd., as saying that gold prices could trade between $1,050 and $1,300 for the rest of this year, with the potential to soar as high as $2,000 per ounce if the current European debt crisis extends to other regions of the world.
The current sovereign debt crisis focuses on fears that Greece, followed by Spain and Portugal, will eventually default on its bond obligations, which would result in billions of dollars in fresh losses for European banks.
However, the United States and other countries, including Mexico and Great Britain, have been receiving their own levels of investor concern about heavy budget deficits and long-term fiscal problems.
A Tuesday Reuters report noted that gold's new record price now stands at above $1,250 per ounce, while gold futures for August delivery stood at another record of $1,254.50. The wire service also noted that the gold prices have risen about 12 percent during the current quarter alone.
Elsewhere, a report from Bloomberg News quoted Paul Walker, CEO of GFMS, Ltd., as saying that gold prices could trade between $1,050 and $1,300 for the rest of this year, with the potential to soar as high as $2,000 per ounce if the current European debt crisis extends to other regions of the world.
The current sovereign debt crisis focuses on fears that Greece, followed by Spain and Portugal, will eventually default on its bond obligations, which would result in billions of dollars in fresh losses for European banks.
However, the United States and other countries, including Mexico and Great Britain, have been receiving their own levels of investor concern about heavy budget deficits and long-term fiscal problems.
Monday, June 7, 2010
Superior Gold Group - Eurozone nations set up $1 trillion bailout fund
Eurozone nations have begun setting up a massive bailout fund that could rescue any member of Europe's currency union from default, aiming to soothe market jitters that have sent the euro to a new four-month low against the dollar.
The ``shock and awe'' financial rescue package from the European Union and the International Monetary Fund will total euro750 billion ($1 trillion) — money that can be lent to any indebted eurozone nation risking default, and intended to counter investor fears that Spain, Portugal or others could follow Greece in requiring a bailout to meet debt repayments.
The special purpose vehicle to borrow up to euro440 billion ($526 billion) will be ready this month, when countries formalize debt guarantees for some 90 percent of the package, said Luxembourg Prime Minister Jean-Claude Juncker, who led Monday's talks between eurozone finance ministers.
Another 60 billion euro managed by the EU's executive commission ``is available to cover urgent financial needs were it to arise'' in the meantime, he said, while the International Monetary Fund will provide another euro250 billion.
Germany, which will provide the largest chunk of the EU fund, has pressed other eurozone countries to make big budget cuts to reduce the chances of them needing a bailout.
Markets ``want to see not only actions but deeds'' to shore up the currency, German Finance Minister Wolfgang Schaeuble told reporters.
German Chancellor Angela Merkel vowed to ``set an example'' Monday by laying out plans to save euro80 billion through 2014 by reducing handouts to parents, cutting 15,000 government jobs and delaying projects such as construction of a replica of a Prussian palace in Berlin.
Juncker said eurozone finance ministers wanted Spain and Portugal to build on current ``significant and courageous'' spending cuts with further efforts ``needed beyond 2011 together with further progress'' on structural reforms, such as changes to pensions, welfare or labor systems.
EU Economy Commissioner Olli Rehn warned that they and others may need to prepare more budget reductions. He did not name which other countries should take action.
Eurozone nations said in a joint statement that they would draft bigger cuts and tax increases if they have to and would pursue ``structural reforms'' to slim state running costs — such as raising retirement ages to curb pension costs.
The International Monetary Fund called in a Monday report for eurozone countries facing market pressure to shun ``delayed or half-hearted'' budget cuts and draft more in case they can't make current targets to reduce budget deficits — the gap between government spending and income.
Juncker dismissed market volatility in recent days triggered by concern that Hungary — which does not use the euro — could be the next European government to follow Greece by risking a default.
Hungarian officials last week warned that the country's deficit is growing and the country is close to default, two years after it received a bailout from the EU and the IMF.
Hungary's government has downplayed those comments, which nevertheless kept the euro trading near the four-year lows it hit Friday, when it went below $1.19 for the first time since March 2006.
There is intense pressure on all eurozone countries to make cuts. However, trade unions warn that budget cuts could be going too far and could choke a fragile recovery that so far relies more on exports than domestic demand in European countries where people are still slow to spend and companies are reluctant to hire new workers.
Unemployment in the eurozone reached a 10-year high of 10.1 percent in April — adding extra welfare costs to governments struggling with higher outgoings, lower tax revenue and debt that has soared since they paid out hundreds of billions to shore up the region's banking system.
Monday's talks between eurozone finance ministers will be followed by a meeting of most EU finance ministers and EU officials who will thrash out plans for long-term ways to avoid a new economic crisis, including a proposal for more EU oversight of national budgets.
The ``shock and awe'' financial rescue package from the European Union and the International Monetary Fund will total euro750 billion ($1 trillion) — money that can be lent to any indebted eurozone nation risking default, and intended to counter investor fears that Spain, Portugal or others could follow Greece in requiring a bailout to meet debt repayments.
The special purpose vehicle to borrow up to euro440 billion ($526 billion) will be ready this month, when countries formalize debt guarantees for some 90 percent of the package, said Luxembourg Prime Minister Jean-Claude Juncker, who led Monday's talks between eurozone finance ministers.
Another 60 billion euro managed by the EU's executive commission ``is available to cover urgent financial needs were it to arise'' in the meantime, he said, while the International Monetary Fund will provide another euro250 billion.
Germany, which will provide the largest chunk of the EU fund, has pressed other eurozone countries to make big budget cuts to reduce the chances of them needing a bailout.
Markets ``want to see not only actions but deeds'' to shore up the currency, German Finance Minister Wolfgang Schaeuble told reporters.
German Chancellor Angela Merkel vowed to ``set an example'' Monday by laying out plans to save euro80 billion through 2014 by reducing handouts to parents, cutting 15,000 government jobs and delaying projects such as construction of a replica of a Prussian palace in Berlin.
Juncker said eurozone finance ministers wanted Spain and Portugal to build on current ``significant and courageous'' spending cuts with further efforts ``needed beyond 2011 together with further progress'' on structural reforms, such as changes to pensions, welfare or labor systems.
EU Economy Commissioner Olli Rehn warned that they and others may need to prepare more budget reductions. He did not name which other countries should take action.
Eurozone nations said in a joint statement that they would draft bigger cuts and tax increases if they have to and would pursue ``structural reforms'' to slim state running costs — such as raising retirement ages to curb pension costs.
The International Monetary Fund called in a Monday report for eurozone countries facing market pressure to shun ``delayed or half-hearted'' budget cuts and draft more in case they can't make current targets to reduce budget deficits — the gap between government spending and income.
Juncker dismissed market volatility in recent days triggered by concern that Hungary — which does not use the euro — could be the next European government to follow Greece by risking a default.
Hungarian officials last week warned that the country's deficit is growing and the country is close to default, two years after it received a bailout from the EU and the IMF.
Hungary's government has downplayed those comments, which nevertheless kept the euro trading near the four-year lows it hit Friday, when it went below $1.19 for the first time since March 2006.
There is intense pressure on all eurozone countries to make cuts. However, trade unions warn that budget cuts could be going too far and could choke a fragile recovery that so far relies more on exports than domestic demand in European countries where people are still slow to spend and companies are reluctant to hire new workers.
Unemployment in the eurozone reached a 10-year high of 10.1 percent in April — adding extra welfare costs to governments struggling with higher outgoings, lower tax revenue and debt that has soared since they paid out hundreds of billions to shore up the region's banking system.
Monday's talks between eurozone finance ministers will be followed by a meeting of most EU finance ministers and EU officials who will thrash out plans for long-term ways to avoid a new economic crisis, including a proposal for more EU oversight of national budgets.
Friday, June 4, 2010
Superior Gold Group - Spain hit by credit rating downgrade
Gold and silver dealers around the world are continuing to hear from anxious investors in light of a euro zone debt problem that seems to show no sign of ending.
Last month, the European Union and the International Monetary Fund unveiled a nearly $1 trillion financial bailout package for Greece aimed at calming the markets and putting the sovereign debt crisis to rest.
However, any easing of market concerns appears to have been only temporary, with the euro having hit recent lows this week as a result of the latest negative credit news from the region.
On Friday, an announcement from Fitch Ratings indicated that Spain's Instituto de Credito Oficial had been subjected to a downgrade in its credit rating from AAA to AA+, with an outlook of stable. The entity is a state financial entity run by the Spanish government.
The move in its own right was relatively minor, but combined with other recent downgrades for euro zone economies, it came as the latest red flag for investors. As these red flags continue to pile up in the euro zone, those who invest in dealer gold may find themselves well-positioned to ride out any remaining economic difficulties.
Last month, the European Union and the International Monetary Fund unveiled a nearly $1 trillion financial bailout package for Greece aimed at calming the markets and putting the sovereign debt crisis to rest.
However, any easing of market concerns appears to have been only temporary, with the euro having hit recent lows this week as a result of the latest negative credit news from the region.
On Friday, an announcement from Fitch Ratings indicated that Spain's Instituto de Credito Oficial had been subjected to a downgrade in its credit rating from AAA to AA+, with an outlook of stable. The entity is a state financial entity run by the Spanish government.
The move in its own right was relatively minor, but combined with other recent downgrades for euro zone economies, it came as the latest red flag for investors. As these red flags continue to pile up in the euro zone, those who invest in dealer gold may find themselves well-positioned to ride out any remaining economic difficulties.
Tuesday, June 1, 2010
Superior Gold Group - BP shares plunge as US opens criminal probe on Gulf oil spill
Faced a grim future on Tuesday as its failure to stop a Gulf of Mexico oil spill prompted a plunge in the energy giant's shares and the Obama administration opened a criminal investigation.
President Barack Obama, struggling to get on top of the worst oil spill in US history, vowed an overhaul of US laws and regulations needed to prevent a repeat of the April 20 rig explosion that killed 11 people and triggered the spill.
And after meeting co-chairs of a commission that will investigate the accident, Obama raised the prospect of criminal prosecutions and BP began a new strategy to end the six-week-old drama.
"If our laws were broken leading to this death and destruction, my solemn pledge is that we will bring those responsible to justice on behalf of the victims of this catastrophe and the people of the Gulf region," Obama said.
US Attorney General Eric Holder, on a visit to the region, said in New Orleans that the US government has launched a criminal probe and that federal agencies, including the FBI, are participating.
"If we find evidence of illegal behavior, we will be forceful in our response," Holder told reporters.
The oil giant's shares fell by as much as 17 percent in London on Tuesday before ending down 13 percent, at 430 pence. Later in New York, the American Depositary Receipts lost nearly 15 percent to close at 36.52.
The shares were hit hard by weekend news that its latest attempt to plug its blown-out seabed well had not worked, sparking fears oil could leak into the Gulf until August.
The shares have lost more than a third of their value, or about 46 billion pounds ($67 billion), since the leak started. The cost of dealing with the crisis now totals $990 million, and is rising.
Shares of other companies with stakes in the well were also down between 10 and 17 percent, including Anadarko, Transocean, Cameron and Halliburton.
In its next attempt to stop the mile-deep gusher, BP's next plan will use a dome to funnel oil to a tanker on the surface. Robotic equipment will use giant shears and a diamond saw to cut a pipe 35 feet (11 meters) above the wellhead that will allow BP to sit the dome on top of it.
President Barack Obama, struggling to get on top of the worst oil spill in US history, vowed an overhaul of US laws and regulations needed to prevent a repeat of the April 20 rig explosion that killed 11 people and triggered the spill.
And after meeting co-chairs of a commission that will investigate the accident, Obama raised the prospect of criminal prosecutions and BP began a new strategy to end the six-week-old drama.
"If our laws were broken leading to this death and destruction, my solemn pledge is that we will bring those responsible to justice on behalf of the victims of this catastrophe and the people of the Gulf region," Obama said.
US Attorney General Eric Holder, on a visit to the region, said in New Orleans that the US government has launched a criminal probe and that federal agencies, including the FBI, are participating.
"If we find evidence of illegal behavior, we will be forceful in our response," Holder told reporters.
The oil giant's shares fell by as much as 17 percent in London on Tuesday before ending down 13 percent, at 430 pence. Later in New York, the American Depositary Receipts lost nearly 15 percent to close at 36.52.
The shares were hit hard by weekend news that its latest attempt to plug its blown-out seabed well had not worked, sparking fears oil could leak into the Gulf until August.
The shares have lost more than a third of their value, or about 46 billion pounds ($67 billion), since the leak started. The cost of dealing with the crisis now totals $990 million, and is rising.
Shares of other companies with stakes in the well were also down between 10 and 17 percent, including Anadarko, Transocean, Cameron and Halliburton.
In its next attempt to stop the mile-deep gusher, BP's next plan will use a dome to funnel oil to a tanker on the surface. Robotic equipment will use giant shears and a diamond saw to cut a pipe 35 feet (11 meters) above the wellhead that will allow BP to sit the dome on top of it.
Friday, May 28, 2010
Superior Gold Group - Some economists wary of Chinese economic trends
Some investors have been optimistically looking to emerging nations like China and India to help the global recovery gain momentum in the coming months.
This is because both countries have seen their gross domestic product continue to expand in recent quarters, even as the recession held back growth in much of the rest of the world. An emerging middle class in both nations is seen as having the potential to provide new consumer spending markets for corporations.
Also, manufacturing activity, particularly in China, could help sustain the price of some commodities and strategic metals as economic conditions improve.
However, some economists are warning against becoming overly optimistic about this scenario. In fact, recent months have seen increased concern that China's economy could turn out to be a bubble, citing real estate prices in Beijing and heavy lending activity by banks that could turn out to be ill-advised. In fact, China's government appeared to respond to such concerns earlier this year when it took steps to scale back lending activity.
More recently, a report in the UK's Telegraph newspaper warned that "China's banks are veering out of control," while predicting that the country's "half-reformed" economy will not be able to absorb some $600 billion in loans issued since December.
The Telegraph cited another potential disturbing trend for investors where Shanghai's composite index has risen 70 percent in the past six months while the country's imports have fallen 25 percent over the past year.
The newspaper also noted that 40 percent of China's economy consists of exports, which happened to fall 26 percent in May. Another point cited the increasing tendency of U.S. consumers to save their money, which does not bode well for a sudden and dramatic improvement to China's export figures.
Another red flag for China is the ongoing debt crisis in the euro zone, since this could turn out to be one more blow to its export sector. The euro has fallen considerably in recent weeks, which means consumers could find themselves paying more for Chinese goods at a time when their respective governments are implementing significant new austerity measures.
If Chinese economic growth turns out to be more of an illusion than a reality, it would have a substantial impact on the global economy. Fortunately however, investors have long known that times like these often call for the stability that dealer gold and other precious metals can offer.
This is because both countries have seen their gross domestic product continue to expand in recent quarters, even as the recession held back growth in much of the rest of the world. An emerging middle class in both nations is seen as having the potential to provide new consumer spending markets for corporations.
Also, manufacturing activity, particularly in China, could help sustain the price of some commodities and strategic metals as economic conditions improve.
However, some economists are warning against becoming overly optimistic about this scenario. In fact, recent months have seen increased concern that China's economy could turn out to be a bubble, citing real estate prices in Beijing and heavy lending activity by banks that could turn out to be ill-advised. In fact, China's government appeared to respond to such concerns earlier this year when it took steps to scale back lending activity.
More recently, a report in the UK's Telegraph newspaper warned that "China's banks are veering out of control," while predicting that the country's "half-reformed" economy will not be able to absorb some $600 billion in loans issued since December.
The Telegraph cited another potential disturbing trend for investors where Shanghai's composite index has risen 70 percent in the past six months while the country's imports have fallen 25 percent over the past year.
The newspaper also noted that 40 percent of China's economy consists of exports, which happened to fall 26 percent in May. Another point cited the increasing tendency of U.S. consumers to save their money, which does not bode well for a sudden and dramatic improvement to China's export figures.
Another red flag for China is the ongoing debt crisis in the euro zone, since this could turn out to be one more blow to its export sector. The euro has fallen considerably in recent weeks, which means consumers could find themselves paying more for Chinese goods at a time when their respective governments are implementing significant new austerity measures.
If Chinese economic growth turns out to be more of an illusion than a reality, it would have a substantial impact on the global economy. Fortunately however, investors have long known that times like these often call for the stability that dealer gold and other precious metals can offer.
Tuesday, May 25, 2010
Superior Gold Group - Greek debt outlook offers many uncertainties
Economists appear to be divided on the prospects for a Greek debt default, according to recent survey data from the National Association for Business Economics.
The data found that 51 percent of economists surveyed do not believe that Greece will default on its debts, even though there is more of a consensus that the country will also need to restructure some debt to keep this from happening.
Another 12 percent in the survey said that they expect Greece to default on its debt in the next year, while 37 percent believe that a default will occur beyond that point after what is described as "short-term maneuvering" allows some extra time.
"Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects. Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished," said NABE President Lynn Rea.
Rea added that economists polled by NABE indicated that are "extremely concerned about large federal deficits going forward."
A Greek debt default could have considerable financial implications for world markets since it could expose a number of banking institutions, especially European ones, to billions of dollars in new financial losses. This would come at a particularly inopportune time since world markets have largely been moving beyond the recession of the past couple of years.
Greece ran up an unsustainable budget deficit in recent years and past governments have been accused of basically cooking the books in order to create the illusion of complying with European Union debt standards.
Also generating concern in Europe have been Spain and Portugal, which experienced their own recent credit rating downgrades and which have been taking steps to lower their budget deficits. Other countries, including England and Ireland, are expected to cut costs in the coming months in order to lower concerns about their own debt levels.
The NABE report added that economists are extremely concerned about the size of the U.S. deficit as well. Still, the economists projected that the employment situation will continue to improve in the coming months, while the gross domestic product is now expected to rise by 3.2 percent for both 2010 and 2011.
With uncertainty remaining very much a reality in world financial markets, now may be a good time to consult with silver and gold dealers about reliable investment options.
The data found that 51 percent of economists surveyed do not believe that Greece will default on its debts, even though there is more of a consensus that the country will also need to restructure some debt to keep this from happening.
Another 12 percent in the survey said that they expect Greece to default on its debt in the next year, while 37 percent believe that a default will occur beyond that point after what is described as "short-term maneuvering" allows some extra time.
"Although risks involving Europe have recently escalated, the outlook in this country has improved in most respects. Growth prospects are stronger, unemployment and inflation are lower, and worries relating to consumer retrenchment and domestic financial headwinds have diminished," said NABE President Lynn Rea.
Rea added that economists polled by NABE indicated that are "extremely concerned about large federal deficits going forward."
A Greek debt default could have considerable financial implications for world markets since it could expose a number of banking institutions, especially European ones, to billions of dollars in new financial losses. This would come at a particularly inopportune time since world markets have largely been moving beyond the recession of the past couple of years.
Greece ran up an unsustainable budget deficit in recent years and past governments have been accused of basically cooking the books in order to create the illusion of complying with European Union debt standards.
Also generating concern in Europe have been Spain and Portugal, which experienced their own recent credit rating downgrades and which have been taking steps to lower their budget deficits. Other countries, including England and Ireland, are expected to cut costs in the coming months in order to lower concerns about their own debt levels.
The NABE report added that economists are extremely concerned about the size of the U.S. deficit as well. Still, the economists projected that the employment situation will continue to improve in the coming months, while the gross domestic product is now expected to rise by 3.2 percent for both 2010 and 2011.
With uncertainty remaining very much a reality in world financial markets, now may be a good time to consult with silver and gold dealers about reliable investment options.
Monday, May 24, 2010
Superior Gold Group - U.S., UK both face long-term debt concerns
Concerns about rising sovereign debt levels are increasingly not limited to Europe these days. As Greece continues to struggle with its own deficit crisis, observers are taking note of the large annual deficits incurred by the United States in recent years.
Writing in the UK's Telegraph newspaper, Economics Editor Edmund Conway reports that the governor of the Bank of England is among those who suspect that the United States shares a number of the same budget problems that Europe has.
The U.S. national debt is rapidly approaching $14 trillion, but the country is not alone among large economies that could be stung by irresponsible deficit policies in the coming years. Conway goes on to note that the budget deficit is also "the single most pressing problem facing the United Kingdom."
The reason large deficits are of such concern to investors is that as these debts increase, they become increasingly expensive for countries to finance and tend to consume ever-larger percentages of the gross domestic product.
Another major concern presented by high budget deficits is the risk of a credit default. Given the market instability a default by a major economy could create, now may be the time to consider a dealer gold investment.
Writing in the UK's Telegraph newspaper, Economics Editor Edmund Conway reports that the governor of the Bank of England is among those who suspect that the United States shares a number of the same budget problems that Europe has.
The U.S. national debt is rapidly approaching $14 trillion, but the country is not alone among large economies that could be stung by irresponsible deficit policies in the coming years. Conway goes on to note that the budget deficit is also "the single most pressing problem facing the United Kingdom."
The reason large deficits are of such concern to investors is that as these debts increase, they become increasingly expensive for countries to finance and tend to consume ever-larger percentages of the gross domestic product.
Another major concern presented by high budget deficits is the risk of a credit default. Given the market instability a default by a major economy could create, now may be the time to consider a dealer gold investment.
Saturday, May 22, 2010
Superior Gold Group - Experts paying attention to rising U.S. debts
The current level of alarm over the growing U.S. federal deficit is likely to only become more pronounced in the coming years as debts account for a greater and greater share of the country's gross domestic product.
According to a recent report from the Committee for a Responsible Federal Budget, debt could account for up to 90 percent of the nation's gross domestic product by the end of this decade, and as much as 150 percent by the end of the 2020s.
Current projections cited by the group also suggest that the nation's debts could account for more than 150 percent of the gross domestic product. Even today, the government spends hundreds of billions of dollars each year simply paying interest on the national debt, which is projected to reach $14 trillion in the coming months.
"The large and growing debt puts the United States in a perilous position where if we do not act to change the budgetary course, a fiscal crisis in one form or another will surely ensue," stated the report, which also acknowledged that "it is not at all clear" how an actual U.S. deficit crisis would unfold.
The report also warned that "the longer it takes for us to get our fiscal house in order, the more at risk we are and the tougher adjustment will be in the end."
Another warning about the federal deficit and national debt came this week from former Federal Reserve Chairman Paul Volcker, who was quoted in a Bloomberg News report as saying that "today's concerns may soon become tomorrow's existential crises."
The financial news network also quoted Volcker as saying that ongoing events in European financial markets illustrate the danger of "uncontrolled borrowing" and that his concern about U.S. fiscal issues has remained high over the past five years.
One concern about a rising U.S. deficit is that it could help increase the risk of a credit downgrade, which could result in dramatic increases in borrowing costs and a potentially difficult financial burden to sustain.
Greece, Spain and Portugal all recently had their own credit ratings downgraded by varying degrees, due largely to their respective problems with high sovereign debt. Other countries, including Great Britain, are taking their own steps to lower government spending to keep the deficit under control and credit ratings in place.
Given the widespread uncertainty that surrounds world financial markets at this time, now may be a good time to consult with a silver and gold dealer about investment opportunities.
According to a recent report from the Committee for a Responsible Federal Budget, debt could account for up to 90 percent of the nation's gross domestic product by the end of this decade, and as much as 150 percent by the end of the 2020s.
Current projections cited by the group also suggest that the nation's debts could account for more than 150 percent of the gross domestic product. Even today, the government spends hundreds of billions of dollars each year simply paying interest on the national debt, which is projected to reach $14 trillion in the coming months.
"The large and growing debt puts the United States in a perilous position where if we do not act to change the budgetary course, a fiscal crisis in one form or another will surely ensue," stated the report, which also acknowledged that "it is not at all clear" how an actual U.S. deficit crisis would unfold.
The report also warned that "the longer it takes for us to get our fiscal house in order, the more at risk we are and the tougher adjustment will be in the end."
Another warning about the federal deficit and national debt came this week from former Federal Reserve Chairman Paul Volcker, who was quoted in a Bloomberg News report as saying that "today's concerns may soon become tomorrow's existential crises."
The financial news network also quoted Volcker as saying that ongoing events in European financial markets illustrate the danger of "uncontrolled borrowing" and that his concern about U.S. fiscal issues has remained high over the past five years.
One concern about a rising U.S. deficit is that it could help increase the risk of a credit downgrade, which could result in dramatic increases in borrowing costs and a potentially difficult financial burden to sustain.
Greece, Spain and Portugal all recently had their own credit ratings downgraded by varying degrees, due largely to their respective problems with high sovereign debt. Other countries, including Great Britain, are taking their own steps to lower government spending to keep the deficit under control and credit ratings in place.
Given the widespread uncertainty that surrounds world financial markets at this time, now may be a good time to consult with a silver and gold dealer about investment opportunities.
Tuesday, May 18, 2010
Superior Gold Group - Stocks fall, euro at 4-yr low, oil dips
Stocks fell for a third day on Monday on growing concerns that Europe's debt problems will hamper a global rebound. The Dow Jones industrial average fell about 80 points in late morning trading. The Dow fell 81.4 points, or 0.8%, to 10,538.6. It has fallen seven of the last nine days.
Stocks fell after the euro, which is used by 16 countries in Europe, fell to a four-year low. Investors are questioning whether steep budget cuts in countries including Greece, Spain and Portugal will hinder an economic recovery in Europe and in turn, the US traders are also concerned that loan defaults could ripple through to banks in stronger countries like Germany and France.
The austerity measures are required under a nearly $1 trillion bailout programme the European Union and International Monetary Fund agreed to last week. The rescue package provides access to cheap loans for European countries facing mounting debt problems.
The euro fell to as low as $1.223 early Monday before moving higher. The plunging euro has been driving trading around the globe in recent days. The weakness in the euro has helped boost the value of safe-haven investments like the dollar, Treasuries and gold. It has also driven commodities like oil lower.
Oil fell below $70 a barrel for the first time since February. Oil is priced in dollars so a stronger dollar deters investment in oil. Crude oil fell $1.76 to $69.8 per barrel on the New York Mercantile Exchange. That hit shares of energy companies.
A disappointing report on regional manufacturing from the New York Federal Reserve weighed on sentiment. A forecast from home-improvement retailer Lowe's Cos also fell short of expectations. The questions about Europe overshadowed other news and dominated trading. Investors in the US who had been growing more confident about a rebound in this country now are questioning whether the problems in Europe will disrupt a recovery.
Stocks fell after the euro, which is used by 16 countries in Europe, fell to a four-year low. Investors are questioning whether steep budget cuts in countries including Greece, Spain and Portugal will hinder an economic recovery in Europe and in turn, the US traders are also concerned that loan defaults could ripple through to banks in stronger countries like Germany and France.
The austerity measures are required under a nearly $1 trillion bailout programme the European Union and International Monetary Fund agreed to last week. The rescue package provides access to cheap loans for European countries facing mounting debt problems.
The euro fell to as low as $1.223 early Monday before moving higher. The plunging euro has been driving trading around the globe in recent days. The weakness in the euro has helped boost the value of safe-haven investments like the dollar, Treasuries and gold. It has also driven commodities like oil lower.
Oil fell below $70 a barrel for the first time since February. Oil is priced in dollars so a stronger dollar deters investment in oil. Crude oil fell $1.76 to $69.8 per barrel on the New York Mercantile Exchange. That hit shares of energy companies.
A disappointing report on regional manufacturing from the New York Federal Reserve weighed on sentiment. A forecast from home-improvement retailer Lowe's Cos also fell short of expectations. The questions about Europe overshadowed other news and dominated trading. Investors in the US who had been growing more confident about a rebound in this country now are questioning whether the problems in Europe will disrupt a recovery.
Friday, May 14, 2010
Superior Gold Group - US stocks slide, Dow slips 153 points on Euro debt crisis
US stocks dived for the second day running Friday as fresh concerns over the European debt crisis gripped Wall Street amid a tumbling euro.
The blue-chip Dow Jones Industrial Average slumped 153.72 points (1.43%) to 10,629.23 after surrendering more than 100 points a day earlier.
The tech-rich Nasdaq composite lost 51.42 points (2.15%) at 2,342.94 while the broad-market Standard & Poor's 500 index shed 20.13 points (1.74%) to 1,137.31.
Wall Street opened on a bearish note as markets elsewhere were slammed by fresh eurozone crisis concerns that also sent gold soaring to new record peaks.
The European single currency nosedived to an 18-month low amid the prospect of eurozone austerity cuts that could derail fragile economic recovery.
US stocks were under pressure "as festering fears regarding the euro-area's debt crisis and the impact of measures being implemented to try to restore sustainable fiscal policy on the global recovery are lassoing the bulls," analysts at Charles Schwab & Co said in a client note.
The concerns toward Europe were more than offsetting data showing a larger-than-expected increase in US retail sales in April, the analysts said.
US retail sales rose for the seventh straight month -- up 0.4% and slightly higher than the 0.2% expected by most analysts, according to data
The blue-chip Dow Jones Industrial Average slumped 153.72 points (1.43%) to 10,629.23 after surrendering more than 100 points a day earlier.
The tech-rich Nasdaq composite lost 51.42 points (2.15%) at 2,342.94 while the broad-market Standard & Poor's 500 index shed 20.13 points (1.74%) to 1,137.31.
Wall Street opened on a bearish note as markets elsewhere were slammed by fresh eurozone crisis concerns that also sent gold soaring to new record peaks.
The European single currency nosedived to an 18-month low amid the prospect of eurozone austerity cuts that could derail fragile economic recovery.
US stocks were under pressure "as festering fears regarding the euro-area's debt crisis and the impact of measures being implemented to try to restore sustainable fiscal policy on the global recovery are lassoing the bulls," analysts at Charles Schwab & Co said in a client note.
The concerns toward Europe were more than offsetting data showing a larger-than-expected increase in US retail sales in April, the analysts said.
US retail sales rose for the seventh straight month -- up 0.4% and slightly higher than the 0.2% expected by most analysts, according to data
Tuesday, May 11, 2010
Gold101.com - SEC looks into mysterious stock plunge
People who are wondering about the stability of the stock market got little reassurance this week as the Dow Jones Industrial Average suddenly plunged 1,000 points Thursday afternoon - a development that some are blaming on a trading error.
Soon after the market mysteriously dropped for a short time on Thursday, the Securities and Exchange Commission announced that it was working with other regulatory bodies to review "the unusual trading activity" that had taken place. The SEC added that it would make public the findings of its review, along with any recommendations that may come up in the process.
The market closed down about 370 points on Thursday and at one point nearly $1 trillion in wealth was wiped out by the plunge. Media speculation on Thursday suggested that an unnamed trader had accidentally sold 1 billion shares instead of 1 million.
Even without any suspected trading errors, the markets have been rattled this week by the sovereign debt crisis in Europe and related stories like civil unrest in response to Greek deficit-cutting measures, and concern about the long-term effectiveness of a bailout for Greece.
In light of the current conditions in the stock market, dealer gold is one attractive investment option to consider.
Soon after the market mysteriously dropped for a short time on Thursday, the Securities and Exchange Commission announced that it was working with other regulatory bodies to review "the unusual trading activity" that had taken place. The SEC added that it would make public the findings of its review, along with any recommendations that may come up in the process.
The market closed down about 370 points on Thursday and at one point nearly $1 trillion in wealth was wiped out by the plunge. Media speculation on Thursday suggested that an unnamed trader had accidentally sold 1 billion shares instead of 1 million.
Even without any suspected trading errors, the markets have been rattled this week by the sovereign debt crisis in Europe and related stories like civil unrest in response to Greek deficit-cutting measures, and concern about the long-term effectiveness of a bailout for Greece.
In light of the current conditions in the stock market, dealer gold is one attractive investment option to consider.
Saturday, May 8, 2010
Superior Gold Group - Report focuses on British budget deficit
While much media attention has been geared toward Greece, Spain and Portugal in recent weeks because of their deficit problems, they aren't the only countries that could end up facing sovereign debt woes in the foreseeable future.
A report in the UK's Guardian newspaper said that the United Kingdom's deficit is projected to be 12 percent of its gross domestic product, which would be the highest of all 27 members of the European Union - including Greece.
The newspaper noted that Greece expects to bring its own deficit down to 9.3 percent of GDP, and that the upcoming British elections are being seen as an important opportunity for the country to start getting its fiscal house in order.
Budget problems have already resulted in Spain, Portugal and Greece having their credit ratings downgraded, which will result in higher borrowing costs for those countries while also potentially undermining confidence in the euro.
The report also cited concern among some economists that the UK could join these countries in having its debt rating lowered if sufficient action is not taken on the budget deficit.
Concern about a future debt defaults has shaken the value of the euro in recent days, while also giving investors a good reason to consult with silver and gold dealers about traditional safe havens like precious metals.
Looking ahead, precious metals could be a good idea to invest in because a major credit default by a European Union member could have serious financial repercussions on world markets. Such a setback could also undermine worldwide confidence in the economic recovery, raising the specter of a double dip recession.
In the United States, officials have long dismissed the idea that the government would default on its own debt obligations. However, as the national debt makes its way toward $14 trillion, the government is already spending hundreds of billions of dollars per year just to finance the national debt.
With no end in sight to massive deficits, members of Congress may not have the political will that would be needed to bring the budget under control and begin paying down the national debt. As the national debt approaches unsustainable levels, investors in precious metals may be well positioned to ride out uncertainties.
A report in the UK's Guardian newspaper said that the United Kingdom's deficit is projected to be 12 percent of its gross domestic product, which would be the highest of all 27 members of the European Union - including Greece.
The newspaper noted that Greece expects to bring its own deficit down to 9.3 percent of GDP, and that the upcoming British elections are being seen as an important opportunity for the country to start getting its fiscal house in order.
Budget problems have already resulted in Spain, Portugal and Greece having their credit ratings downgraded, which will result in higher borrowing costs for those countries while also potentially undermining confidence in the euro.
The report also cited concern among some economists that the UK could join these countries in having its debt rating lowered if sufficient action is not taken on the budget deficit.
Concern about a future debt defaults has shaken the value of the euro in recent days, while also giving investors a good reason to consult with silver and gold dealers about traditional safe havens like precious metals.
Looking ahead, precious metals could be a good idea to invest in because a major credit default by a European Union member could have serious financial repercussions on world markets. Such a setback could also undermine worldwide confidence in the economic recovery, raising the specter of a double dip recession.
In the United States, officials have long dismissed the idea that the government would default on its own debt obligations. However, as the national debt makes its way toward $14 trillion, the government is already spending hundreds of billions of dollars per year just to finance the national debt.
With no end in sight to massive deficits, members of Congress may not have the political will that would be needed to bring the budget under control and begin paying down the national debt. As the national debt approaches unsustainable levels, investors in precious metals may be well positioned to ride out uncertainties.
Friday, May 7, 2010
Superior Gold Group - Stock market turmoil gives gold a boost
Recent setbacks in the stock market and with currencies like the euro have investors consulting with silver and gold dealers about precious metal opportunities.
The closely-watched euro zone debt problem is proceeding with few clear outcomes, as some financial analysts warn that the future of the currency itself could be at stake if budget problems in Greece, Portugal and other countries are not cleared up.
The stock market shed almost 350 points on Thursday amid investor concern about whether the Greek bailout package would be sufficient to stem an emerging sovereign debt crisis. Countries with high debt levels may be at increased risk for default if their borrowing costs are forced higher by concerns about their credit viability.
With these things in mind, a report from CNNMoney.com notes that gold went past the $1,200 per ounce mark on Thursday because investors were looking for a safe haven in light of fears in the stock market. Gold has long served as a safe haven investment during times of economic uncertainty.
The financial website also noted that gold prices have now hit their highest point since December 4, and that prices could eventually start to approach last year's high of $1,230 per ounce.
The closely-watched euro zone debt problem is proceeding with few clear outcomes, as some financial analysts warn that the future of the currency itself could be at stake if budget problems in Greece, Portugal and other countries are not cleared up.
The stock market shed almost 350 points on Thursday amid investor concern about whether the Greek bailout package would be sufficient to stem an emerging sovereign debt crisis. Countries with high debt levels may be at increased risk for default if their borrowing costs are forced higher by concerns about their credit viability.
With these things in mind, a report from CNNMoney.com notes that gold went past the $1,200 per ounce mark on Thursday because investors were looking for a safe haven in light of fears in the stock market. Gold has long served as a safe haven investment during times of economic uncertainty.
The financial website also noted that gold prices have now hit their highest point since December 4, and that prices could eventually start to approach last year's high of $1,230 per ounce.
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