Investors got a new reason to consider investing in dealer gold this week from the U.S. Congress, which appears unlikely to take steps in the short term to deal with a rising national debt that has alarmed many economic experts.
Various media outlets are reporting that President Barack Obama is set to propose a three-year freeze in the growth of spending for many federal programs. However, on Tuesday he suffered a setback when a proposal for a bipartisan task force to try to reduce the deficit fell short of the 60 votes it needed for approval.
The proposed task force would have convened after the November elections to try to shield members from cost-cutting decisions that would have proven to be politically unpopular.
With efforts to reign in a deficit that now exceeds $1 trillion and a national debt that stands at more than $12 trillion, there is concern in many financial quarters that the costs of financing this debt alone will prove unsustainable in the long run, causing serious damage for the dollar's stability.
With this in mind, investing in gold and other precious metals can be a useful option when it comes to navigating any future economic uncertainty that may emerge.
Friday, January 29, 2010
Wednesday, January 27, 2010
Gold, equities top inflation hedges in Asia: Survey
Gold could increasingly be investors' top hedge against mounting inflationary pressures in Asia, a regional survey showed on Wednesday.
With economic growth in Asia expected to lead the world again in 2010, 45 percent of investors in the region's markets outside of Japan picked the precious metal as their most favoured tool to protect their returns from inflation, while 42 percent chose equities, according to a quarterly survey from ING.
In the final quarter of 2009, gold was still only the fourth-favourite choice among investors, even though the percentage of investors expecting a rise in inflation in 2010 climbed 6 percentage points to 77 percent, suggesting there is room for gold to rise.
"It's a perfectly rational response if you think inflation is going to pick up to shift more of your portfolio to commodities and gold. That has traditionally been the smart thing to do," said Paul Klug, regional general manager of ING Investment Management Asia Pacific.
The ING Investor Dashboard survey polled 3,700 high net worth investors in December.
Inflation expectations for 2010 showed the biggest quarterly rise in Thailand, with the share of investors expecting prices to climb more quickly nearly doubling to 85 percent. India was next, with 86 percent of those canvassed expecting inflation to accelerate, up 28 percentage points.
China remained among the countries with the highest proportion of investors predicting more price pressures this year, edging up 5 points to 87 percent in the fourth quarter.
Investors around the world have been reducing their exposure to risky assets and currencies after rampant lending in China spurred Beijing to tighten monetary conditions to prevent excess cash in the economy from fuelling inflation and asset bubbles.
So far in January, the MSCI index of Asia stocks outside Japan is down 5 percent and gold in the spot market is up 0.5 percent .
The investors in the survey remained very confident stock and real estate markets will hold ground in the first quarter of 2010. In Asia ex-Japan, 83 percent expect stocks to either stay near current levels or rise, and 86 percent see residential real estate prices steady or climbing.
"We're still very early in the recovery," said Klug.
"There's demand that is justified and I don't think we have reached a point where there is too much money chasing too few investment opportunities."
The survey's sentiment index for Asia ex-Japan rose for a fourth consecutive quarter to 147, up 101 percent on the year.
Source: Economic Times
With economic growth in Asia expected to lead the world again in 2010, 45 percent of investors in the region's markets outside of Japan picked the precious metal as their most favoured tool to protect their returns from inflation, while 42 percent chose equities, according to a quarterly survey from ING.
In the final quarter of 2009, gold was still only the fourth-favourite choice among investors, even though the percentage of investors expecting a rise in inflation in 2010 climbed 6 percentage points to 77 percent, suggesting there is room for gold to rise.
"It's a perfectly rational response if you think inflation is going to pick up to shift more of your portfolio to commodities and gold. That has traditionally been the smart thing to do," said Paul Klug, regional general manager of ING Investment Management Asia Pacific.
The ING Investor Dashboard survey polled 3,700 high net worth investors in December.
Inflation expectations for 2010 showed the biggest quarterly rise in Thailand, with the share of investors expecting prices to climb more quickly nearly doubling to 85 percent. India was next, with 86 percent of those canvassed expecting inflation to accelerate, up 28 percentage points.
China remained among the countries with the highest proportion of investors predicting more price pressures this year, edging up 5 points to 87 percent in the fourth quarter.
Investors around the world have been reducing their exposure to risky assets and currencies after rampant lending in China spurred Beijing to tighten monetary conditions to prevent excess cash in the economy from fuelling inflation and asset bubbles.
So far in January, the MSCI index of Asia stocks outside Japan is down 5 percent and gold in the spot market is up 0.5 percent .
The investors in the survey remained very confident stock and real estate markets will hold ground in the first quarter of 2010. In Asia ex-Japan, 83 percent expect stocks to either stay near current levels or rise, and 86 percent see residential real estate prices steady or climbing.
"We're still very early in the recovery," said Klug.
"There's demand that is justified and I don't think we have reached a point where there is too much money chasing too few investment opportunities."
The survey's sentiment index for Asia ex-Japan rose for a fourth consecutive quarter to 147, up 101 percent on the year.
Source: Economic Times
Tuesday, January 26, 2010
Gold dealers anticipate ongoing strength in market
Gold prices have settled somewhat in recent weeks, potentially providing investors with new opportunities to set themselves up to take advantage of longer-term price gains.
A report from Bloomberg News notes that gold prices had remained relatively unchanged in London during Friday's trading, while platinum and palladium prices had fallen somewhat.
The financial news provider quoted Afshin Nabavi of MKS Finance SA in Geneva as saying that "the physical market thinks these prices are fantastic to buy at," while adding that "the dollar is also a little bit lower."
One reason why the dollar has fallen somewhat this week is concern in the financial sector over new proposals by the Obama administration that would place new regulations on banks in response to the problems that plagued Wall Street earlier in the recession.
The strength of the dollar is often a factor to consider when gauging the potential for gold investments. However, gold and other precious metals have also been showing more signs of strength in recent months regardless of what the dollar does.
News brought to you by Gold101.com
A report from Bloomberg News notes that gold prices had remained relatively unchanged in London during Friday's trading, while platinum and palladium prices had fallen somewhat.
The financial news provider quoted Afshin Nabavi of MKS Finance SA in Geneva as saying that "the physical market thinks these prices are fantastic to buy at," while adding that "the dollar is also a little bit lower."
One reason why the dollar has fallen somewhat this week is concern in the financial sector over new proposals by the Obama administration that would place new regulations on banks in response to the problems that plagued Wall Street earlier in the recession.
The strength of the dollar is often a factor to consider when gauging the potential for gold investments. However, gold and other precious metals have also been showing more signs of strength in recent months regardless of what the dollar does.
News brought to you by Gold101.com
Tuesday, January 19, 2010
Gold forecast to hit $1,350 per ounce
A leading investment institution is predicting that gold dealers will continue to see strength in their sector in the coming year, despite concern about some pending economic factors.
The UK's Telegraph newspaper quoted a report from Goldman Sachs economists as predicting that the price of gold will reach $1,350 per ounce a year from now, based on the expectation that the Federal Reserve will not raise short-term interest rate targets either this year or next.
"We continue to expect that the resulting low real interest rate environment will continue to support gold prices," the newspaper quoted the report as saying, going on to note that last week, gold prices stood at about $1,139 per ounce and that investors will also be able to benefit from commodities like platinum and palladium in the coming months.
Some economists have warned that the size of the U.S. federal deficit and national debt could undermine the performance of the dollar in the longer term, which could also be a positive sign for gold investments.
Another trend to consider is the economic activity being seen in a number of developing economies, such as China and India, where materials like gold and silver are increasingly in demand for industrial applications and also because of a rapidly growing middle class.
News brought to you by Superior Gold Group
The UK's Telegraph newspaper quoted a report from Goldman Sachs economists as predicting that the price of gold will reach $1,350 per ounce a year from now, based on the expectation that the Federal Reserve will not raise short-term interest rate targets either this year or next.
"We continue to expect that the resulting low real interest rate environment will continue to support gold prices," the newspaper quoted the report as saying, going on to note that last week, gold prices stood at about $1,139 per ounce and that investors will also be able to benefit from commodities like platinum and palladium in the coming months.
Some economists have warned that the size of the U.S. federal deficit and national debt could undermine the performance of the dollar in the longer term, which could also be a positive sign for gold investments.
Another trend to consider is the economic activity being seen in a number of developing economies, such as China and India, where materials like gold and silver are increasingly in demand for industrial applications and also because of a rapidly growing middle class.
News brought to you by Superior Gold Group
Monday, January 18, 2010
Gold steady, seen rising on economic worries
Gold, little changed in London today, may climb as concern about the soundness of Greece's public finances boosts the metal's appeal as a haven. Palladium and platinum rose to the highest prices in at least 17 months.
European finance ministers meet today to discuss Greece's budget deficit. The country's worsening finances last month prompted credit-rating companies to cut its creditworthiness. The US Dollar Index, a six-currency gauge of the greenback's strength, fell as much as 0.3 per cent today. Gold typically moves inversely to the dollar.
``The market is very concerned about the situation in Greece,'' said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. ``Gold is having speculative interest, rather than real physical demand.''
Gold for immediate delivery added $US2.65, or 0.2 per cent, to $US1,133.57 an ounce at 4:38 p.m. local time, paring a climb of as much as 0.6 per cent. Bullion for February delivery gained 0.3 per cent to $US1,133.50 in electronic trading on the New York Mercantile Exchange's Comex division. Floor trading is closed today for the Martin Luther King Jr. holiday.
The metal declined to $US1,134.50 an ounce in the afternoon ``fixing'' in London, used by some mining companies to sell production, from $US1,135.75 at the morning fixing.
Gartman sees `upside'
``We see the recent consolidation pattern that has evolved since early January between $US1,120 and $US1,160 to be a consolidation that should resolve itself eventually with prices breaking to the upside,'' Dennis Gartman, a Suffolk, Virginia- based economist and hedge-fund manager, told clients in his Gartman Letter today.
Greece on Jan. 15 presented the European Commission with a three-year budget plan that includes deficit-reduction measures for this year to bring down Europe's biggest budget shortfall. The country won't default on its debt or abandon Europe's single currency, Luxembourg's Jean-Claude Juncker, who heads the group of euro-area finance ministers, said that day.
The US dollar index has slipped 1 per cent this year after a 4.2 per cent drop in 2009. The currency slumped last year as the Federal Reserve held interest rates near zero to revive the US economy and investors favored higher-yielding currencies and assets on expectations of a recovery from the world recession.
``Silver and gold are currently mainly driven by investment demand, and thus react more sensitively to changes in the dollar,'' Stefan Graber, an analyst at Credit Suisse Group AG, wrote in a note today.
SPDR Holdings
Bullion held by the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, fell for a second day, slipping 0.91 metric ton to 1,112.84 tons on Jan. 15, according to the company's Web site.
Palladium rose for a fourth day, heading for the longest rally since Nov. 16, 2009. The metal for immediate delivery climbed as much as 1.1 per cent to $US460.02 an ounce, the highest price since July 2008, and was last at $US458.50. Platinum added as much as 1.8 per cent to a 17-month high of $US1,628.50 an ounce and last traded at $US1,623.75. Both metals are used in catalytic converters that curb pollution from vehicles.
``Platinum and palladium are more closely linked to the business cycle than gold and silver, due to their heavy use in the car industry,'' Graber said. ``Given that we expect a continued recovery in global economic activity, we still think that platinum and palladium are likely to continue outperforming gold and silver over coming months.''
Palladium held in ETF Securities Ltd.'s exchange-traded commodities products rose 2.6 per cent to a record 679,938 ounces on Jan. 15, according to the company's Web site. Silver holdings added 226 ounces to a record 24.334 million ounces.
Silver for immediate delivery in London gained 1.1 per cent to $US18.615 an ounce.
Source: Sydney Morning Herald
European finance ministers meet today to discuss Greece's budget deficit. The country's worsening finances last month prompted credit-rating companies to cut its creditworthiness. The US Dollar Index, a six-currency gauge of the greenback's strength, fell as much as 0.3 per cent today. Gold typically moves inversely to the dollar.
``The market is very concerned about the situation in Greece,'' said Bernard Sin, head of currency and metals trading at bullion refiner MKS Finance SA in Geneva. ``Gold is having speculative interest, rather than real physical demand.''
Gold for immediate delivery added $US2.65, or 0.2 per cent, to $US1,133.57 an ounce at 4:38 p.m. local time, paring a climb of as much as 0.6 per cent. Bullion for February delivery gained 0.3 per cent to $US1,133.50 in electronic trading on the New York Mercantile Exchange's Comex division. Floor trading is closed today for the Martin Luther King Jr. holiday.
The metal declined to $US1,134.50 an ounce in the afternoon ``fixing'' in London, used by some mining companies to sell production, from $US1,135.75 at the morning fixing.
Gartman sees `upside'
``We see the recent consolidation pattern that has evolved since early January between $US1,120 and $US1,160 to be a consolidation that should resolve itself eventually with prices breaking to the upside,'' Dennis Gartman, a Suffolk, Virginia- based economist and hedge-fund manager, told clients in his Gartman Letter today.
Greece on Jan. 15 presented the European Commission with a three-year budget plan that includes deficit-reduction measures for this year to bring down Europe's biggest budget shortfall. The country won't default on its debt or abandon Europe's single currency, Luxembourg's Jean-Claude Juncker, who heads the group of euro-area finance ministers, said that day.
The US dollar index has slipped 1 per cent this year after a 4.2 per cent drop in 2009. The currency slumped last year as the Federal Reserve held interest rates near zero to revive the US economy and investors favored higher-yielding currencies and assets on expectations of a recovery from the world recession.
``Silver and gold are currently mainly driven by investment demand, and thus react more sensitively to changes in the dollar,'' Stefan Graber, an analyst at Credit Suisse Group AG, wrote in a note today.
SPDR Holdings
Bullion held by the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, fell for a second day, slipping 0.91 metric ton to 1,112.84 tons on Jan. 15, according to the company's Web site.
Palladium rose for a fourth day, heading for the longest rally since Nov. 16, 2009. The metal for immediate delivery climbed as much as 1.1 per cent to $US460.02 an ounce, the highest price since July 2008, and was last at $US458.50. Platinum added as much as 1.8 per cent to a 17-month high of $US1,628.50 an ounce and last traded at $US1,623.75. Both metals are used in catalytic converters that curb pollution from vehicles.
``Platinum and palladium are more closely linked to the business cycle than gold and silver, due to their heavy use in the car industry,'' Graber said. ``Given that we expect a continued recovery in global economic activity, we still think that platinum and palladium are likely to continue outperforming gold and silver over coming months.''
Palladium held in ETF Securities Ltd.'s exchange-traded commodities products rose 2.6 per cent to a record 679,938 ounces on Jan. 15, according to the company's Web site. Silver holdings added 226 ounces to a record 24.334 million ounces.
Silver for immediate delivery in London gained 1.1 per cent to $US18.615 an ounce.
Source: Sydney Morning Herald
Sunday, January 17, 2010
In Currency Markets, Back Commodities Plays
Boosted by growth in China and other emerging markets, commodity-backed currencies look set to outshine the dollar and euro in the near term.
The challenges evident in the U.S. labor market and real-estate sector have sapped December's optimism over a rapid U.S. economic recovery. The rebound isn't taking hold fast enough to convince investors that the Federal Reserve will raise interest rates soon, leaving the dollar to languish under ultralow rates, intended to stimulate the economy, that making it unappealing as an investment currency. The euro is weighed down by concerns about the stability of the financial systems of someeuro-zone members.
The currencies of the commodity-exporting economies of Australia, Canada and New Zealand stand to benefit the most from improving global conditions. These three currencies are often called the dollar bloc as they tend to advance or retreat in unison.
"The kind of countries we're investing in tend to play into a global recovery story," and emerging-market and commodity-backed countries are most attractive, said Geoffrey Pazzanese, co-manager of Federated Investors Inc.'s $710 million Intercontinental Fund.
Late Friday in New York, the euro was at $1.4379, down from $1.4499 late Thursday. The dollar was at 90.83 yen from 91.10 yen, while the euro was at 130.54 yen from 132.09 yen. The U.K. pound fell to $1.6259 from $1.6324, and the dollar firmed to 1.0267 Swiss francs from 1.0188 francs.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 77.222, from 76.729 on Thursday.
The euro this week should trade between $1.4370 and $1.4620, analysts said. The dollar should trade between 90.60 yen and 93.80 yen.
Despite a hiccup as fiscal concerns within the euro zone and a possible increased tightening in Chinese fiscal policy swept the market on Friday, the dollar-bloc currencies will outperform their competitors in the near term, analysts said.
As the global recovery picked up steam at the end of 2009, Investec Asset Management in London sold some investments in dollar-bloc currencies to take profits on positions that had run up big gains, said Thanos Papasavvas, head of currency management for the firm.
"We've put some of that risk back on," buying into the commodity-backed currencies in 2010, "because the overall environment is quite positive," said Mr. Papasavvas, whose firm manages more than $60 billion.
Dollar-bloc currencies should benefit from Thursday's release of fourth-quarter Chinese gross domestic product, which is expected to have grown 10.8% from the year-earlier quarter, according to a Dow Jones Newswires survey of economists.
Even if China continues on its path to slowly tighten fiscal policy, strong growth in emerging markets should keep demand stoked for commodities, helping prop the dollar-bloc currencies, said Robert Lynch, currency strategist at HSBC in New YorkThe Australian dollar hit a nearly two-month high against the U.S. dollar Thursday, while the Canadian dollar soared to a three-month high. Both slipped a bit Friday, but are expected to rebound.
The Australian dollar this week should trade around $0.9093 to $0.9330, while the U.S. dollar should trade around C$1.0200 to $C1.0420, analysts said. Late Friday in New York, the Australian dollar was at $0.9236, while the U.S. dollar was at C$1.0295.
"We're quite confident that the commodity currencies are going to have pretty well-supported levels," Mr. Papasavvas said. "Even if they don't rally against the [U.S.] dollar dramatically, we would expect them to appreciate."
For much of 2009, the euro would gain when the global economic picture brightened and investors decided to buy riskier assets, but that relationship has broken down so far this year. The currency will sag under the weight of fiscal worries in the euro zone, especially concerns about how Greece will reduce its outsized deficit, analysts said.
"The euro is a major currency that's just a baby, and is still going to be going through growing pains," said Jonathan E. Lewis, founding principal of Samson Capital Advisors, which has $6.5 billion under management and is slightly overweight in commodity-backed currencies.
"That doesn't mean it's not going to grow to be a fine currency when it gets to maturity, but it's not far from entering those difficult teenage years," he said.
Source: Wall Street Journal
Commodities to drive investments growth
Commodities-driven investments from China, Korea and the Middle East countries are going to fuel a conservative 10 percent investments growth in the country this year, the Board of Investments said.
Trade and Industry Undersecretary and BoI Managing Head Elmer C. Hernandez said that huge commodities (metals and agriculture) projects are expected to come in the first semester this year.
“Investments are coming in 2010. What I am aware of is 60 percent of those that we talked to in the Middle East are coming in with business delegation to look closely into their investment plans here,” Hernandez said.
Hernandez, who went to the Middle East countries late last year to promote investments, is working on a program for the upcoming visit of Middle East businessmen.
According to Hernandez, the investment promotions the BoI conducted in July last year in China and Korea are just starting to bear fruit. The Korean private sector led by the ASEAN Korean Center has recently sent a 15-man delegation with interest in various sectors from mining, manufacturing, IT, and construction.
The Chinese just paid a visit with a delegation from the Hangzhou Wahaha Group Co. Ltd., the leading beverage producer in China, which has keen interest in establishing an integrated fruit juice processing plant in the country for the Chinese market.
Wahaha has roughly 70 subsidiary companies and 40 manufacturing centers scattered throughout China. Wahaha employs about 20,000 workers. It is headquartered in Hangzhou, Zhejiang province.
“Both the Chinese and Korean groups are doing due diligence work,” Hernandez said.
Source: Manila Bulletin
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