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.

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.

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.

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.

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.

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 from the Commerce Department.

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.

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.

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.

Wednesday, May 5, 2010

Superior Gold Group - Treasury outlines upcoming borrowing needs

People who are concerned about the size of the U.S. federal deficit got little reassurance this week when the Treasury Department reported that it would issue $340 billion in net marketable debt during the second quarter of 2010.

The Treasury also reported that it plans borrow $376 billion in the third quarter of 2010, assuming an end-of-September cash balance of $270 billion.

In the first quarter, the Treasury issued $483 billion in debt. With a national debt rapidly approaching $14 trillion, the issue of government spending has been gaining more attention from policymakers, media outlets and taxpayers.

According to an Associated Press report, the federal government's projected borrowing needs for the current budget year will be $1.46 trillion - and yet will still mark an 18.3 percent decline from the record level established last year.

Much of the current attention to budget deficit problems has focused on European nations like Greece and Portugal. However, as the U.S. deficit continues to grow, investors may want to consider options like dealer gold as a way to ride out any potential economic uncertainties.