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
Monday, August 30, 2010
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.
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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.
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