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.
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