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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/21/2007 : 17:53:34
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News & views,
My view-August used to be a slow news month, oh what a difference a new decade makes.
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July Central Bank gold sales total 67 tonnes as Swiss climb in
Sales under the current Central Bank Gold Sales Agreement, which ends on September 26th, are continuing at a high rate which may be a contributing factor towards the seemingly poor gold price performance of late.
Author: Lawrence Williams
Posted: Tuesday , 21 Aug 2007
LONDON -
Amidst reports today that the Swiss Central Bank sold no less than 34.1 tonnes of gold during the month of July - and Mineweb's earlier report of the Spanish Central Bank selling 25 tonnes, it is apparent from Central Bank Gold Agreement figures that Agreement signatories sold a total of 67 tonnes of gold during July, with the other 8 tonnes arising from smaller sales by other unspecified Central Banks.
Switzerland announced relatively recently that it planned to sell 250 tonnes of gold by the end of the 2009 sales period, but the level of sales in July exceeded expectations. If it carries on selling at this rate, the Swiss Central Bank will have offloaded its 250 tons by the end of January next year!
In part the high volume of sales in July by the Swiss may be to take advantage of the remaining shortfall of sales under the CBGA so far this year. These have totalled 353 tonnes up until the end of July, leaving the option open to the banks to sell a further 147 tonnes in the remainder of the Agreement which ends on September 26th.
But, with Spain continuing to be a relatively heavy seller, and the Swiss just starting their sales programme, it is possible that fairly close to the full 500 tonnes could be released in this Agreement year.
Overall, even if some of these sales are picked up by other Central Banks which may be building up gold reserves, the level of sales serves to be a dampener on the overall gold market, which may well account for the rise in gold price anticipated by some not having occurred. That gold has held up so well, though, despite the high sales levels should be seen as long term positive for the yellow metal.
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Is the fat lady still singing?
Where the Dow has fallen 7% from its peak, mining stocks have shed a massive 32%. What's next?
Author: Barry Sergeant
Posted: Tuesday , 21 Aug 2007
Johannesburg -
Mining stocks have taken a severe beating during the recent equity markets sell off, falling, on average, by nearly one third from record highs, most of which were posted in the past few months. This decline compares with the far more modest falls of the Dow Jones Industrial Index and Standard & Poor's 500, which have fallen 7% from recent peaks.
Gold stocks have declined by 31% while the global platinum sector has shed 36%. Higher quality stocks, those producers with established track records, have offered up the best performances, relative to peers and junior stocks.
The recent performance of mining stocks has highlighted the speculative nature of the overall sector, all but confirming the presence of weak speculative holders as significant players behind recent high stock prices. For years as well, brokers and their good friends whipped merger and acquisition speculation into a frenzy.
On the fundamental front, established mining stocks continue to offer sound value, when measured against historical metrics. As to the underlying fundamentals, the Bank Credit Analyst says that while commodities linked to housing such as lumber and copper remain under downward pressure as a result of the ongoing strain on the US housing and mortgage markets, the overall climate for commodities is healthy.
Weakness in the US housing market could be viewed as bullish for commodities, argues BCA Research, because it caps the cost of capital. Outside of the US, "plentiful liquidity conditions and savings keep the global risk-free interest rate low, boosting investor willingness to buy into risky assets such as commodities, both on a speculative basis and over the long term".
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Wishful Thinking?
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Coxe: Gold price ultimately will benefit from market drama
BMO's respected global portfolio analyst Don Coxe suggests that fixing markets will require re-adjustments in the dollar value, which may lead to significantly higher gold prices.
Author: Dorothy Kosich
Posted: Monday , 20 Aug 2007
RENO, NV -
What began as a problem in a small part of the U.S. financial system--subprime mortgages--has become a "crisis of the elites," requiring the type of market fixes, which BMO Global Portfolio Strategist Don Coxe suggested could ultimately be beneficial for the gold price.
In his weekly conference call, Coxe said that the actions of the European central banks and the Federal Reserve to pump money into the markets helped, but still doesn't ease the concerns of investors as to when and if the money markets will work normally again.
The problem was believed to have been generated by investors, including a number of yet to be identified hedge funds, who bought subprime securities by borrowing heavily from investment banks. When news got around that defaults were increasing among America households with less than stellar credit histories who had taken out mortgages, this hit both hedge funds and the banks. Meanwhile, banks compounded the problem through making loans to risky companies.
Although the crisis slammed stock markets last week, Coxe theorized that the reason why gold only made a $10/oz move on Friday is "the market is taking the view...that this is not the kind of thing that will lead to substantial dollar devaluation." This belief may have been reinforced by central banks pumping money into the markets as investors and institutions are cutting their debt through a period of de-leveraging.
While these actions provided a respite to prevent a short-term liquidity crisis from resulting in a market crash, Coxe suggested that more work needs to be done "in solving the question of problems that were created by a tiny number of rich elites."
"I hope this system does end where we get bailed out," Coxe declared. "What we need now is to destroy those elitists who caused the problem in the first place. If they get off Scot free than we've delivered the wrong message."
Instead, the long-term solution to fixing money markets will require "fundamentals of the kind of thing which are going to require further readjustments in the value of the dollar" which will "also mean significantly higher gold prices before of all this is finally cured and we can proclaim ‘all clear for the next bull market'," Coxe concluded.
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Wishful thinking II?
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US sub-prime crisis to boost gold price
Gold to reach new cycle highs above $732 an ounce in next 18 months.
Author: Tessa Kruger
Posted: Monday , 20 Aug 2007
Johannesburg -
The crisis in the US sub-prime mortgage market could bolster the gold price not only because gold provides a safe investment haven. The crisis is expected to slow GDP growth, spurring lower real interest rates and a weaker US dollar that will boost gold investment demand.
Supporting this view is the fact that gold recovered despite a rise in the US dollar caused by a European Central bank intervention that boosted liquidity in Europe.
In addition, gold's recovery took place despite a rally in other safe haven assets, such as long dated US treasuries, which often compete for the resources of nervous investors.
Richardson said persistent political risk in the current commodity cycle confirmed the yellow metal's role as a safe haven.
The metal continuously emerged as a ‘near universal currency proxy' over the past five years after the 2001 attacks on the United States led to political pressure across the Middle East."
This showed that gold's role as a risk diversifier was "alive and well".
"Interestingly, investors added to their positions by approximately 200-500k ounces a week despite volatility in the gold price. This occurred during the month (July) that sub-prime concerns really started showing up in global markets."
The apparent inexorable increase of ETFs and the associated increase in other forms of investment demand have had wide implications for the gold market.
The rising price has had a noticeable effect on gold fabrication demand, which fell from 3,200 t in 2001 to 2,570t in 2007, representing a decrease of 19.7%.
On the other hand, supply of all forms of gold has exceeded fabrication demand since 2000 and the margin is widening to reach 1,300t this year.
But investment demand, including ETFs, is estimated to reach 1,360t to "more than neutralise" the impact of weakening fabrication demand.
The first driver is the real purchasing power of the world's reserve currency - the US dollar - which is likely to continue its downtrend until 2011.
The long-term inverse correlation between gold and the US dollar and the persistent rise in gold investment demand since 2001 suggest that the US dollar will continue to cause investors to hedge through the gold market.
"If this is the case, gold will successfully challenge the 2006 cyclical high of $732/ounce over the next eighteen months to set new nominal highs for this cycle."
The other key factor influencing long term investment behaviour and gold prices since 1972 has been trends in real long-term interest rates in the US.
One of the key factors in the short and long-term cycle of the US currency, changes to real interest rate settings have also had a marked impact on investor perceptions about the attractiveness of gold as a hedge against this financial asset risk.
Historically, an inverse relationship between real interest rates and the US$ gold price can also be observed.
However, US interest rates have recently been rising along with the gold price.
In fact, US real interest rates are at their highest level since the first quarter of 2001 and are edging up higher to 4%. And the last time interest rates were this strong, the gold price was about 60% lower compared to today's level.
But indicators of gold investment demand, the longer-term trend in the US dollar and risks in financial markets all suggest that another move upward in the gold price is now more likely than a large fall in the gold price, said Richardson.
"The trigger will be a fall in real US interest rates and a further decline in the purchase power parity value of the US dollar."
As a result, the US sub-prime credit crisis could be particularly beneficial to the gold price.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
Edited by - pencilvanian on 08/31/2007 19:16:33 |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 08/21/2007 : 17:57:56
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Copper leads commodities bucking bearsFont Size: Decrease Increase Print Page: Print Scott Murdoch | August 21, 2007
LAST week's nerves about a possible end of the bull market in commodities were clearly premature, as trading in London on Friday and then here yesterday has just shown.
The spot price of commodities rallied strongly in London after Friday night's decision by the US Federal Reserve to reduce its discount rate -- with further upward commodity moves quite possible, according to analysts.
On Friday the London Metal Exchange index -- which tracks base metal prices across the board -- rose almost 3 per cent. The greatest shift was recorded in the spot price of copper, which gained 4 per cent to $US7010 a tonne, based on a three-month delivery contract.
The spot commodity prices were sharply off last week on the back of fears the sub-prime mortgage fallout would slow US economic growth.
Stock Resources senior analyst Grant Craighead said if the US slowed, China's powerhouse growth could also be dampened and that would leave Australian mining stocks vulnerable.
The greatest gains in the resources sector on the Australian market yesterday were by leaders BHP Billiton and Rio Tinto, while zinc miner Zinifex roared ahead by 10 per cent. Its shares closed up $1.72 at $16.40.
The metals and mining index on the ASX 300 surged 6.8 per cent to close the first session of the week at 4336.3.
"I think it all comes back to the macro view that the sub-prime meltdown is threatening to slow growth in the US, which is very commodity dependent," Mr Craighead said.
"Commodity prices are very strongly linked to global growth. The risk is that if the US slows down, then demand could slow from China. Chinese demand is a very big part of the commodity bull market."
The US Federal Reserve warned on Friday night that it was more concerned now with the likely moderation of growth, rather than the potential of inflation to increase.
A reduction in the funds rate, from the current 5.25 per cent to 5 per cent, is now fully priced into the market's expectations.
Mr Craighead said the global hedge funds had changed their positions in the commodity markets ahead and during the turmoil of last week.
He said such funds were "always the marginal investors in commodities and equities" and that some of them had moved in the past few weeks from being long to short commodities.
That means they have sold commodities they do not own in the hope of buying them back at lower prices. If prices move up, they will have to cover in a hurry.
Analysts believe investor sentiment has turned solidly towards any mining stocks that have production, solid cash flow and projects that are already funded.
But the junior end of the market has been hit hard by the credit crunch, which has made wholesale funding more expensive.
A $10 million capital raising was pulled last week by Eyre Energy, the uranium spin-off of Adelaide Resources.
Mr Craighead said copper was the best-positioned base metal at the moment, given that its supply is expected to fall into deficit during the year.
"The stocks which are the most vulnerable are those which have had the best bounce," he said. "Copper is one of the more robust (metals) in the market.
"Zinc is a little bit more vulnerable because it is moving into surplus," he added.
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Fanaticism is doubling one's efforts, yet forgetting one's purpose.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/22/2007 : 17:49:43
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Silver Junior news (and much like silver, nickel prices have been tarnished lately. Hopefully it is only temporary and nickel will shine once again.)
We said we would be surprised if nickel ended as high as it indicated this morning... and we are. We expected prices to hit bottom, but not to bounce so high, so fast. Either traders are betting inventories have maxed out and the market is getting interesting again, or we are witnessing a spurt of enthusiasm that will fizzle at the first hint of another large gain in inventories. For the third day in a row, the clues left by the inventory figures, hint at a potential turn around in the market. Another bullish day for nickel, which ended at $12.77/lb ($28,150/tonne), up over $2,000/tonne in as many days. (Dow Jones - more) (Reuters - more)
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Nickel Institute new articles
Japanese Club Promotes Stainless Steel Water Pipes - "There are many advantages of using stainless steel water pipes in countries where water resources are scarce and in countries such as Japan where water leakage is a problem." -
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Big Plans Take Off on the Arabian Gulf - "When it is completed in 2009, the new international airport in Doha, Qatar will be the first airport designed specifically to accommodate the Airbus A380 super jumbo." -
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Processing Perfect Poultry - "Stainless steels enable food processors to maintain hygienic conditions in long-lived equipment" -
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Copyright/courtesy Dow Jones - "LME nickel is seen averaging $28,300/ton ($12.84/lb) in 3Q and and $30,000/ton ($13.61/lb) in 4Q, says Standard Chartered. Notes the recent selloff has been overdone and that nickel demand will pick up as destocking by the stainless steel industry comes to an end. There is already strong evidence that nickel pig iron producers have made significant cutbacks, which will help tighten supplies, Standard Chartered adds. Sees nickel averaging $27,000/ton ($12.25/lb) in '08.
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Copyright/courtesy AFX Financial - "Nickel consumption increased by 11% to 744,000 tonnes in the first six months of 2007, compared with the same period last year, leaving the market 2,600 tonnes in deficit, said the World Bureau of Metals Statistics (WBMS). Mine production for the same period increased by 8% to 760,200 tonnes, while refined production was 11.8% higher, stemming mainly from China, Finland and Canada."
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A little bearish news for silver junior....
Copyright/courtesy Dow Jones Newswire - "Chinese customs data is bearish for LME nickel, says JP Morgan's Michael Jansen. He notes imports of nickel ore are a clear record at over 2 million metric tons, "implying that nickel in the pig iron sector remained broadly healthy in July and that talk of production cuts from this alternative source of nickel for stainless steel producers may remain a story for August/September." "Triland Metals notes nickel's rally surprised many in market, since other metals mostly weakened in Tuesday's session; technically, took out 10-day moving average, needs to break resistance at $27,500 to maintain upside momentum."
(While we would wish nothing but good news for our hoardes of metals, ignoring the not-so pleasant news is what the MSM tends to do. However by doing so the viewers and listeners of MSM are offered opinions presented as facts. This does not make for an informed public, no wonder the label sheeple is used so often.)
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BHP cashes in and begins search for new reserves
David Robertson
BHP Billiton, the world’s largest mining company, announced record posttax profits of $13.4 billion (£6.7 billion) yesterday as demand from China continues to drive the resources sector (see Commentary, facing page) Profits in the year to the end of June were up 28 per cent and BHP believes that the boom in commodities will continue for the foreseeable future.
The rapid industrialisation of China is creating enormous demand for BHP’s raw materials. For example, Chinese expenditure on BHP’s stainless steel materials, primarily nickel, has increased from $2 million in 2002 to $2.3 billion last year. That increase has led to a sharp rise in commodity prices and BHP expects this to continue as India joins China in rapidly industrialising its economy.
Chip Goodyear, the outgoing chief executive of BHP, said: “Today’s world is changing. China and India now represent the most significant consumers of our raw materials.”
As a result of BHP’s confidence in the strength of demand from China and India, the company will invest more than $1.2 billion searching for new mines and oil reserves, a 50 per cent increase on last year and three times as much as it spent five years ago. The company has identified new projects worth $50 billion that it hopes to bring to production. That is on top of previously announced projects worth $20 billion.
Mining companies traditionally are conservative about allocating exploration budgets, but the industry now believes that strong demand will continue. Rio Tinto and Anglo American are also increasing their exploration budgets but have not yet revealed figures for next year.
The boom helped BHP to increase its 2006-07 revenues by 21 per cent to $47.4 billion and underlying earnings rose 31 per cent to $20 billion. BHP has increased its dividend by 30 per cent to 47p per share but did not commit itself to a further share buyback. It announced this year it would buy $13 billion of shares and has so far acquired $6.3 billion. In London its share price rose 64p to £13.65.
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Copper Climbs for Fourth Session After Chinese Demand Soars
By Millie Munshi
Aug. 22 (Bloomberg) -- Copper in New York rose for the fourth-straight session as demand surged in China, the world's largest consumer of the metal.
China's refined-copper imports in July jumped 65 percent from a year earlier, the Beijing-based customs office said today. BHP Billiton Ltd., the world's biggest mining company, said global demand for commodities remains strong, driven by China. Copper, used in pipes and wires, has risen fourfold in the past four years as demand outpaced supplies.
``Globally, demand is holding up well,'' said John Gross, publisher of the Copper Journal in Cranston, Rhode Island. ``The environment is still one that would suggest continued strength in prices and volatile trading.''
Copper futures for December delivery gained 5.75 cents, or 1.8 percent, to $3.2225 a pound on the Comex division of the New York Mercantile Exchange. The price climbed 2.4 percent in the previous three sessions. The metal has climbed 12 percent this year.
``Demand growth from China is expected to remain robust,'' BHP said in a statement. The company reported an eighth consecutive record half-yearly profit on consumption in China and higher commodity prices.
China's refined-copper imports last month climbed to 103,089 metric tons. Imports in the seven months that ended in July more than doubled to 1.03 million tons. The country has bought more copper in the last seven months than in the whole of 2006.
Equities Gain
The metal also rose as stocks gained in the U.S., traders said. Copper fell 6.3 percent last week, the biggest weekly drop in three months, on concerns losses in equity markets would spread and slow the economy. The Dow Jones Industrial Average gained as much as 1 percent today and the Standard & Poor's 500 Index added as much as 1.1 percent.
``The market is trying to reassess what the fair value of copper is,'' Michael Gross, a futures analyst at Liberty Trading Group in St. Petersburg, Florida, said in an interview yesterday. ``Copper and a lot of the industrial metals are going to be tracking the stock market.''
BHP Billiton said a global credit crunch is unlikely to derail the five-year rally in commodity prices being driven by emerging economies such as China and India. ``Ongoing strength'' in Asia will continue to support global growth, the company said.
On the London Metal Exchange, copper for delivery in three months gained $175, or 2.5 percent, to $7,150 a metric ton ($3.25 a pound). The metal has still dropped 6.2 percent in the past 12 months.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/23/2007 : 18:26:38
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Rumours surface of 'massive' accounting hole at Harmony Gold
Harmony’s Financial Director Nomfundo Qangule quits amid rumours of a massive “hole” in Harmony’s accounts.
Author: Barry Sergeant
Posted: Wednesday , 22 Aug 2007
JOHANNESBURG -
Nomfundo Qangule, financial director of Harmony since July 2004, resigned with immediate effect on Wednesday amid rumours of a massive "hole" in Harmony's accounts. The dramatic announcement follows the resignation, also with immediate effect, of Bernard Swanepoel as Harmony CEO on August 6.
Those familiar with the situation say that problems with Harmony's accounts fell exclusively in the domain of honest incompetence, but concede that the extent of the number problems had triggered Swanepoel's departure. The ballpark figure mentioned is around R2bn (US$270 million) which, being historic, may be limited as to any further damage.
Harmony on Wednesday also unanimously approved, with immediate effect, the appointment of Frank Abbott as interim Finance Director of Harmony for a period of six months.
The resignation of Swanepoel, whose name was synonymous with Harmony, shocked investors, not least as to its immediacy and the patent lack of a succession plan.
Graham Briggs, MD of Harmony Australasia, was appointed with immediate effect to the position of acting CEO of Harmony. Harmony (NYSE: HMY, $8.77 a share; JSE: HAR, R66 a share) is down 49% on the New York Stock Exchange from its 12-month high, against an average 26% decline for peers in the Tier I group of global gold miners.
The first public hints of number problems at Harmony were unveiled on August 6 2007, when Harmony said that results for the quarter ending June 30 2007 were "expected to differ significantly from those of the three previous quarters as well as from the analysts' consensus".
Shareholders were advised that Harmony expected to announce a headline loss per share of between 130 and 160 South African cents for the June 2007 quarter, compared to the March 2007 quarter. Harmony attributed the quarter-on-quarter variance "to a combination of lower production and an increase in costs"
Harmony indicated that its cash costs would explode between 25% and 28% quarter-on-quarter. However, a further hint of number trouble was given in the attribution, in part, "to the newly installed accounting software system that resulted in some of the March quarter's costs being captured in the June 2007 quarter".
A further hint was given in the statement that unveiling of Harmony's quarter and year-end financial results had been postponed to Monday 27 August 2007, "due to the time taken to install new software" and also "the need to have externally audited numbers available". The installation of new software has apparently thrown further light on the "hole" in Harmony's accounts.
Nomfundo Qangule, a chartered accountant, worked previously as executive manager of Worldwide African Investment Holdings (WAIH), and also as a non-executive director of CS Holdings. The latter nearly went up in smoke under then-CSH CEO Annette van der Laan, also a chartered accountant. In February 2004, Van der Laan was accused of falsifying the accounts of CSH, and resigned within weeks, and apparently later fled South Africa.
At the time of the drama, majority shareholders in CSH were Reunert (RLO, R66.09) (with 32% of CSH) and WAIH, with 25%. The-then CSH non-executive chairman Thuli Zuma, also then-CEO of WAIH, and also a chartered accountant, resigned in the wake of the Van der Laan scandal. After the dust settled, CSH was taken over by the Bytes Technology Group (BTG, R17.25).
Frank Abbott started his association with Harmony as a non-executive director, and in 1997 was appointed as executive financial director. Following Harmony's merger with ARM (JSE, ARI, R110 a share) in September 2003, Abbott was appointed financial director of ARM, while retaining his Harmony board appointment as non-executive director.
Abbott, a chartered accountant, joined the Rand Mines/Barlow Rand Group in 1981, and was appointed in 1992 to the newly formed Randgold, and promoted to financial director of that group, comprising mainly Randgold & Exploration (currently suspended) and Randgold Resources (GOLD, $23.15) in October 1994.
Until 1997, Abbott was also a director of gold mining companies Blyvooruitzicht, Buffelsfontein, Durban Roodepoort Deep (DRD, R3.85) and East Rand Proprietary Mines and a non-executive director of Harmony, which culminated in his appointment as financial director of Harmony in the same year.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/28/2007 : 18:34:08
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Gold has a rough road ahead of it due to the financial crunch.
When investors need to raise cash fast, they dump the gold to cover their bets. Bad for gold's price, good for buying more for less.
Gold opinions...
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Serious Credit Collapse Could Strengthen Dollar and Hit Gold
By Chris Laird
In the emerging credit crisis, the corporate paper market is in chaos. This IS a crisis.
What started as flight from sub prime mortgage derivatives, now has spread to flight from many of the largest credit markets in general. The CP market (corporate paper that rolls over every 90 days) is $2.2 trillion in the US alone. Banks, financial institutions, and companies use it to finance daily operations. That market is funded heavily by Money Market funds, who invest in the CP market to get better yields for their depositors than, say, an FDIC insured CD.
The trouble with the CP market developed when, first, investors fled the mortgage derivative market, but then, as revelations of widespread of losses started appearing, lenders started to pull back from rolling over CP to everyone. That is because no one knew who held secret losses in mortgage derivatives, so banks and institutions and investors decided not to roll over their CP when the time came.
The entire CP market world wide froze in about a week.
This situation continues in the EU and the US and Canada.
This is forcing banks, institutions, and companies to hoard cash. The initial rise in the USD, in the week after BNP Paribas revealed they were freezing redemptions from two funds they had which had large mortgage derivatives, was due to people madly dashing into cash and getting as much cash as possible so they could operate, because short term money was not available. The USD strengthened significantly the first week. The short term money markets are in a real crisis.
Alternately, there was flight into gold as well, (second week) after the initial dash into dollars. The USD also benefited from flight into dollars and US Treasures for safety.
Last week’s panic buying of US Treasures, where short term 3 month yields dropped up to 2%, but recovered later in the week.
First, when a new scare appears, there is flight into the USD. Then, in real fear, there is flight into gold.
Short term credit markets totally freeze, and then we see the central banks madly flooding money into financial markets.
Central banks hoped this would stabilize the CP markets, but found that quite hard to do, as lenders did not want to be stuck holding the bag, if they rolled over their new CP to borrowers.
Now, what concerns me is that we have not seen a total credit meltdown yet. Even though the CP markets are reeling still, the central banks managed to stop a stampede (so far) out of equities, after their initial falls. I suspect that the central banks, and the financial industry are colluding to hold equity markets together, to prevent the Real Crash that is possible.
The other reason equity markets have held up so far, is because I think all the funds sent frantic emails to each other saying ‘for goodness sake, don’t sell right now!’
The central banks are doing their part, buying everything in sight at book value from troubled institutions, letting Citi, BoA, and Morgan move up to $25 billion of their capital to their brokerage units, in a relaxation of banking restrictions, and flooding well over $500 billion into direct infusions to troubled financial markets. (These are just a few examples of what CBs are doing. Not the least of which is to support panicky markets with their ‘Working Group on Markets – the so called plunge protection teams in the US and Japan).
The present credit meltdown is severe, but, if we see a real equity collapse due to forced selling, as funds see redemptions, then we will also see:
Derivative losses for institutions on a scale far greater than seen so far
Massive forced selling for fund redemptions
A total credit freeze where banks, institutions, and companies cannot get any short term money, and have no alternative but to hoard cash (dollars) to operate.
A possible huge spike up in the USD and the Yen, and drops in some of the stronger currencies of recent times.
Forced Yen carry unwinding, as several weeks ago, the Yen strengthened significantly in the onset of the equity sell offs after the Paribas incident and the EU banking crisis. The EU banking crisis, and the US’s is still in progress, but can get much worse.
Eventual flight into gold as the best cash available
A world stock crash like we have never seen in our lifetimes, if central banks cannot stay ahead of things. I expect them not to- they barely staved off the latest problems that are still with us, and presently equity markets look weak, rising last week on low volume.
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"Subprime & Gold"
By David Vaughn
Gold is slowly moving back to its previous equilibrium. A lot of buying and selling went on in the markets last week
And why did the price of gold momentarily drop a little in price during this perilous time?
"Several major subprime lenders filed for bankruptcy, and then troubled hedge funds were forced to sell off high-quality assets such as gold so they could make their bank payments. The mass selloff in turn drove down gold prices, Mr. Tal explained."
But make no mistake because even in this act of selling gold proved its usefulness as an insurance policy as it bailed out many a sinking subprime mortgage payment.
Well, are you scared? Have you wet your pants yet? Yes, the whole world is coming crashing down as this subprime mortgage scandal gets deeper and deeper. As the crisis develops households are being asked to give up and to sacrifice their first born sons.
In the mass panic investors are selling everything.
Their cars, their stocks and bonds,
their houses they can’t sell, but whatever is not nailed down is a candidate for a sale including the family cat and obstinate mother in law. While I make a little fun of the process happening today it is very serious
and is still in only its early phases of destruction.
"The Subprime Mess: "It's Just Going To Get Worse" "Many more borrowers could default when ARM rates rise" "The subprime storm isn't blowing over." " …there's still a lot the ratings agencies don't--and can't--know. That's because, from September through next June, a huge number of borrowers, many with subprime mortgages, will see their adjustable interest rates reset at higher levels. Many will default on their loans; the gnawing question is how many."
But in a severe panic like we have been witnessing investors will sell the sacred cow and even their own children if they can find a buyer.
Until the panic subsides expect for all markets to be in a state of crisis.
..........(All markets, precious metals too.)
"About $900 billion of subprime adjustable-rate mortgages will reset at higher interest rates by the end of 2008, according to Bank of America Corp. analysts."
Now as things begin to settle down you will see a resurgence of sanity and investors will pull their money out from under the mattress and look for real assets to invest in again. While precious metals stocks and particularly gold have also been whacked don’t worry as this sector will readjust rather quickly and play catch up mighty fast.
And this mess will also affect higher quality borrowers as the text below explains.
"Countrywide Financial, for example, recently published a report which showed that higher-quality borrowers are starting to suffer.
Several big issuers of "Alt-A" loans - mortgages for people whose credit is strong enough so that they don't require income verification - are starting to report increases in non-performing assets.
That's bad news and will make mortgage issuers antsy." "The year ahead” “Put all of the events together and you are looking at a very interesting fall.
More than $50 billion in adjustable-rate mortgages are due for a re-set in October,
and the re-set level will remain above $30 billion per month through September of 2008."
This is a cancer spreading throughout every sector of our society.
"Could the subprime mortgage market’s misery infect others" "In a worst case scenario, the wave of anticipated defaults on subprime mortgages and tighter lending standards could combine to drive down home values. That could make all homeowners feel a little less wealthy, contributing to a gradual decline in their spending.
Less consumer spending eventually weakens the economy, prompting companies to start laying off workers in a vicious cycle that causes households to become even more frugal."
How much longer do we have before this mess pans out?
"It traditionally takes 20 to 25 months before the peak in subprime delinquencies occurs."
So the bad news really is far from over?
"The bad news is likely far from over" "U.S. mortgage default rate [is] expected to soar as higher borrowing costs kick in" "Asked how thousands of Americans with bad credit histories who defaulted on their debts ended up roiling the global international financial markets, Benjamin Tal, a senior economist with CIBC, explains it this way: Borrowers with a murky financial history in the U.S., who were rejected by traditional sources of credit such as banks, turned to other companies that engage in so-called "subprime" or second-chance lending." ...
.....So you are still worried over the gold price? Long term the price of gold has to go up just to reflect the US dollar sliding downhill. I continue to receive emails of desperation like the following one below.
Dave,
"If China dumps US dollars the global repercussions, of which China would be included, would be horrendous. I cannot see that China would want to shoot themselves in the foot because they might have to amputate the whole leg. Regards,"
Dale T.
Will the cat get indigestion after eating whole the field mouse? If China redeems her US dollars is it guaranteed she will lose in the larger economic picture?
I always like to study the comparison between ancient Carthage and ancient Rome. Carthage for hundreds of years was the undisputed leader of the Great Sea (Mediterranean). And when this small growing upstart and new power called Rome came a knockin’ through heavy competition mighty Carthage laughed.
And the end of the story is that Rome eventually totally conquered almighty Carthage and destroyed the city by plowing salt in the ground after ravaging the land and selling the Carthaginians into slavery. Moral of the story? Pride comes before a fall. And that’s all I have to say about that.
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
Edited by - pencilvanian on 08/31/2007 19:12:22 |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 09/02/2007 : 15:04:43
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Copper Heads for Second Weekly Increase on U.S. Growth Outlook
By Millie Munshi
Aug. 31 (Bloomberg) -- Copper rose, capping a second straight weekly gain, on signs that U.S. economic growth may buoy metals demand.
Consumer spending, wages and orders placed with U.S. factories rose more than forecast in July, reports showed today. The Federal Reserve will ``act as needed'' to limit the economic fallout from a housing recession, Chairman Ben S. Bernanke said.
``There's a whole catalyst of events that are pointing toward a better economic outlook,'' said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. ``There's a restored level of confidence in the market.''
Copper futures for December delivery rose 4.9 cents, or 1.5 percent, to $3.397 a pound on the Comex division of the New York Mercantile Exchange. That's the highest closing price since Aug. 13 and pushed the contract to a 1.4 percent gain this week.
The metal has still lost 6.9 percent in the past month on speculation losses tied to defaults on subprime mortgages would slow expansion in the U.S., the world's second-largest copper consumer after China.
``There's a better sentiment toward the economy,'' said Patrick Chidley, an analyst at Barnard Jacobs Mellet LLC in Stamford, Connecticut. ``There's still a strong supply and demand situation in these markets.''
Consumer Spending
Consumer spending in the U.S. rose by 0.4 percent in July after a 0.2 percent increase in June that was bigger than initially estimated, the Commerce Department said today. Incomes increased 0.5 percent and factory orders gained 3.7 percent.
Bernanke, speaking in Jackson Hole, Wyoming, said the Fed ``will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in the financial markets.'' President George W. Bush today pledged to help people who've fallen behind in their mortgages keep their homes.
``The entire tone of the financial markets has shifted from extremely negative to positive today,'' Logic Advisor's O'Neill said. ``The gloom and doom about the U.S. economy seems to have reversed.''
On the London Metal Exchange, copper for delivery in three months gained $60, or 0.8 percent, to $7,460 a metric ton.
To contact the reporter on the story: Millie Munshi in New York at mmunshi@bloomberg.net .
Last Updated: August 31, 2007 14:13 EDT
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Fanaticism is doubling one's efforts, yet forgetting one's purpose.
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All posts either by the members, moderators, and the administration of You must be logged in to see this link. are for entertainment purpose only. It is not the intent of realcent.forumco.com to provide investment, medical, legal or tax advice and nothing posted here should be considered to be so. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/05/2007 : 17:47:06
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Not much news to report, except not-so-good news, price declines due to the end of summer, the housing slump, etc. Better some news than none.
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Metals hit by weaker equity markets, U.S. data
"Industrial metals lost ground on Wednesday after worse-than-expected U.S. jobs data triggered further selling in global equity markets and escalated worries about the resilience of the U.S. economy."
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Metals Insider - "China’s appetite for nickel ore still huge"
"The latest trade figures for July showed that China’s appetite for nickel laterite ore—the input for the country’s booming nickel pig iron production—is as huge as ever." -
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Goldman Forecast - (found posted on investors blog)
"Strong demand from BRICs power our metal price increases. Despite market uncertainty over US credit concerns, GS economists believe the global economy remains relatively healthy, driven by BRICs economies, led by China. We have raised our metal price forecast for copper, molybdenum, aluminum, zinc, nickel, silver and iron ore on the back of higher Chinese growth forecasts, factoring a 2008 GDP growth of 10.9% (versus 10% previously). Our economists believe that headwinds in the US are unlikely to precipitate a sharp slowdown due to the “decoupling” of the US economy with BRICs and other economies. We favor metals that China requires for its continued infrastructure build, but is forced to import due to lack of natural resource endowment, namely copper and iron ore. Nonetheless, we believe our metal consumption growth expectations have improved zinc and aluminum fundamentals, because the supply surge seen in these metals in 2007 is unlikely to be repeated in 2008-2009."
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I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 09/14/2007 : 18:31:22
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From the Nightly Business Report Sept 14
From Stan Wienstein of Global Trend Alert
Gold: At $640 there could be a problem for gold, but if gold goes to $732 gold could really shine.
I have kept my postings on metals to a minmum since I don't want to jinx it, though if any forum member wants to post news about gold, silver, copper or nickel, A K A silver junior, be my guest.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 10/01/2007 : 18:37:38
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Sorry I have been neglecting gold news lately, I just was worried I might jinx the price rise somehow...
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Gold-diggers wanted
By Niko Mchedlishvili
YELI, Georgia (Reuters Life!) - When the water from melting mountain snow slows to a shallow trickle in autumn, villagers in the Svaneti region of northwest Georgia lock up their cows and hike up to the river to prospect for gold.
Village teacher Roland Khvibliani draws a cloth across his small wooden trough and lays it on the bed of the Engury river to catch what he can of the tiny gold flakes floating downstream.
Gold prices have almost tripled since 2001, but that is of little concern to him: he is performing a ritual that his ancestors carried out for centuries before him. Georgian historians believe it also inspired the Greek myth of the Golden Fleece.
In that myth, Jason and the Argonauts sailed across the Black Sea to the Kingdom of Kolchis -- what is today the coast of western Georgia.
The golden fleece bestowed with regal powers was the equivalent of Khvibliani's cloth: centuries ago local people would dip sheep fleeces into the river to catch floating particles of gold, then hang them glistening to dry.
Inhabitants of Yeli village recall how Soviet dictator Josef Stalin -- himself an ethnic Georgian whose real surname was the typically Georgian Dzhugashvili -- sent Russian engineers and geologists to the region to mine gold in industrial quantities.
That plan was short-lived: the region was too remote and the underground seams of gold proved too elusive to make it viable.
Prospecting has returned to being a part-time pursuit for local people, though there is much less to be found after a landslide upriver earlier this year sent a cliff into the Engury, blocking the river and limiting the flow of gold.
Starve the Trolls, don't feed or encourage them.
Destroy the Moonbat breeding caves.
Moonbat, A winged troll. |
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Bullion news, views & thoughts #5
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