31 May 2006

German Sales Beat Forecasts

Bloomberg.com: Top Worldwide: "May 31 (Bloomberg) -- Confidence in Europe's economy unexpectedly rose to the highest in five years in May as German retail sales jumped and unemployment fell, cementing the case for higher interest rates next week. Bonds fell.
A European Union index of economic sentiment in households and companies in the dozen euro nations climbed to 106.7, up from 105.7 last month and the highest since April 2001. Retail sales in Germany, the continent's largest economy, rose 2.8 percent in April after dropping in the two previous months. Both reports were stronger than forecast. "

Copper may rise up to 50% on fund demand, Sucden says - Metals News - Metals Place

Copper may rise up to 50% on fund demand, Sucden says - Metals News - Metals Place: "Copper prices in London may increase by as much as 50 percent in the next year as global demand from hedge funds and cablemakers outstrips supply, according to Sucden U.K. Plc, which trades on the London Metal Exchange.
Prices of the metal have surged 87 percent this year, and reached a record $8,800 a ton on May 11, as hedge and pension funds poured money into commodities in pursuit of higher returns than those offered by stocks and bonds. Global supply may not rise quickly enough to meet demand, Jeremy Goldwyn, global head of industrial commodities at Sucden, said in Shanghai yesterday.
'Many pension and mutual funds see commodities as a natural home for three to five percent of their money,' Goldwyn told a futures conference. 'They have a massive influence on the price and use commodities as a hedge for their traditional investments' such as stocks and bonds. Sucden is one of 11 companies that trade on the floor of the London Metal Exchange, the world's biggest metals bourse.
Economic growth in the U.S. and Europe meant the high copper price hasn't eroded demand, he said. Cumerio, the copper producer spun off by Belgian metals producer Umicore SA, said last month first quarter deliveries of wire rods and shapes rose 10 percent in the first quarter.
'We don't feel there's a great deal of demand destruction' from the high prices, while copper miners haven't been able to increase output because of problems such as labor disputes, and a shortage of skilled engineers and mining equipment, Goldwyn said.
Increasing prices
'We certainly would not be surprised to see copper at $9,000, $10,000 or $12,000 in the next six, nine or 12 months,' he said. Index-linked funds and other passive investors had placed $80 billion to"

Is It Tableware or a Leading Indicator? - New York Times

Is It Tableware or a Leading Indicator? - New York Times: "But to a cadre of economists who use the price of gold as their crystal ball, those brides and grooms should not be the main object of our sympathy. The United States economy should be.
The boom in gold and silver, these economists say, is a sign that this country is finally going to pay for years of easy money, mounting debt, cheap Asian imports and trillion-dollar budget deficits. Welcome to your new job, Henry Paulson.
GOLD and silver have provided a reality check for profligate governments as far back as ancient Rome. Starting with the little-loved emperor Nero, Roman rulers began to use less and less metallic content in their coins so they could mint more money, as Peter L. Bernstein, the longtime Wall Street consultant, wrote in his book 'The Power of Gold' (Wiley, 2000).
When the Roman people figured out what was going on, the value of the coins began dropping rapidly. In one 44-year period, prices of everyday Roman items rose by a factor of 20. Only when the emperor Constantine issued a nearly pure new coin called the solidus did inflation come under control."

Meltdown May for Hedgefunds

: "BOSTON, May 29 (Reuters) - For hedge funds, May has been a miserable month that may mark the end of earning easy money and the beginning of tough trading conditions, managers, investors and industry analysts said.
Nothing has gone smoothly in the $1.2 trillion hedge fund industry since a sell-off in precious metals prices spilled on emerging markets and soon affected developed markets. In the absence of a real catalyst, analysts blame fears of inflation and rising rates for the sudden drop.
Many of the world's roughly 8,000 funds lost between 3 and 6 percent in the first three weeks of May with some having seen swings of 10 percent or more, investors and researchers said.
'People have given back a lot of profits and the rest of the year will be much more difficult to trade, with people becoming more sensitive to risk and making fewer bold moves,' said Philippe Bonnefoy, who runs fund of funds Cedar Partners.
Now hedge fund managers, who earned strong returns by simply being long on equities, will have to make savvier stock picks, and any bets on commodities may have to be a little bit quicker with more moves in and out, industry analysts said.
That may be a shock for the legions of managers who earned more money in the first four months of 2006 than all of 2005 simply by jumping on trends that were too good to pass up.
Several hedge fund managers said many in the lightly regulated industry held onto metals bets far longer than they should have and may now face the consequences as this month's heavy losses could trigger another round of industry closings.
'The weaker players could get knocked out and that would be a good thing, said Aaron Smith, managing director of Superfund Asset Management, wh"

Ronald Rosen _ Esoteric Gold Price Predictions!

Kitco - Contributed Commentaries - Ronald Rosen: "The actual highs and lows are indicated on the chart using # to indicate when they arrived. The numbers in the circle at the edge of the chart, top and bottom, indicate when the highs and lows are due. The next Delta medium turning point for gold is a high due July 12. The range for arrival is between June 28th and August 9th. In a strong bull move the highs tend to arrive late. You can see that there was a very powerful move up to the recent # 1 high. The reverse is true for powerful down moves. The colored vertical lines are the “Laser” light that Jim Sloman discovered. They produced the Holographic effect that allows us to know when the highs and lows will occur. The number of turning points is different for different groups of commodities and stocks. The four vertical colored lines repeat ad infinitum. The number of turning points between the vertical colored lines remains constant for each commodity, stock group, and index as far into the future as you want to go. There always are the same number of turning points between the colored vertical lines. The Delta turning points are truly an amazing discovery. They are not perfect accuracy. They give us the perfect order of highs and lows within an approximate period of time. The period of time has been researched using a massive computer study and going back 200 years."

Apples to Elephants

Hussman Funds - Weekly Market Comment: May 30, 2006 - Apples to Elephants: "Among the frequent bullish arguments from analysts these days is the notion that stock P/E ratios are fair or even low – an assertion that is often made so straight-faced that you get the definite impression that the analysts actually believe it. And why not? It's well known that the historical average P/E ratio is about 15, so why not compare S&P 500 valuations to that benchmark?
Unfortunately most analysts base their P/E measures on “forward operating earnings.” 'Forward' meaning next year or even two years out. 'Operating earnings' meaning a measure not even defined under generally accepted accounting principles – GAAP – that typically excludes anything that reduces the predictability of earnings, and certainly excludes “extraordinary losses” even if those losses are taken routinely. The resulting, whitewashed earnings measure can easily be 25% or more above trailing net earnings (the prior-year's earnings as defined under generally accepted accounting principles).
As Anne Casscells and Cliff Asness pointed out a couple of years ago, it's absurd to compare P/E's based on “forward operating earnings” with a historical average P/E based on “trailing net earnings.” Asness calculated that the historical average P/E on forward operating earnings is closer to 12, and is probably lower since the average includes the late-90's bubble, but excludes valuations prior to the late 1970's (which is the earliest the data is available). Given that my own measure – price/peak earnings – has averaged less than 10 when S&P 500 earnings have been close to the top of their long-term 6% peak-to-peak growth channel, my guess is that the appropriate norm for forward operating P"

Market Observations: Building the right shoulder.

Market Observations: Building the right shoulder.: "This is turning out to be a terrific 6.5 month Head and Shoulders top. This is a major top formation and it has the abiliity to produce the next bear market. The right shoulder has started building. The sell off today is within the normal process of building that pattern.
I think it will take some more consolidation to build some serious momentum to the downside, therefore I am looking for another attempt to rally as soon as tomorrow. The high of last Friday at 1281 will most likely get retested and maybe will be marginally broken. This process can last anywhere from 4-6 weeks and we are chewing into the first week so far. The window of opportunity is closing for the longs."

Colonial's Shields Holds BHP Amid Selloff on China

Bloomberg.com: Australia & New Zealand: "May 31 (Bloomberg) -- Simon Shields, Australia's biggest fund manager, isn't concerned by this month's global sell-off in mining shares. He's betting it was a blip in a multi-decade rally sparked by China's industrialization.
BHP Billiton and Rio Tinto Group, the world's biggest and third-biggest mining companies, tumbled more than 10 percent in the week after reaching records on May 11 and 12 as commodities posted their biggest declines in 25 years. For Shields, the plunge made the two mining stocks even more attractive.
``BHP and Rio are extremely undervalued by the market,'' said Shields, 40, who manages $10 billion at Colonial First State in Sydney, in an interview on May 22. ``What we're seeing now is a long term upswing that could last 20 to 30 years. We're buying shares that are unashamedly geared toward a tectonic shift in global growth.'' "

30 May 2006

new portal for stock blogs

Home | invesLogic: "

Hand selected to ensure quality and high relevancy, InvesLogic offers the most comprehensive collection of news feeds and expert opinions found on the net."

Dongtan Eco-city, Shanghai, China

Dongtan Eco-city | East Asia | Arup: "We are working as a strategic partner with Shanghai Industrial Investment Corporation (SIIC) on the integrated masterplanning for the world’s first sustainable city.

At three quarters the size of Manhattan and located on the third largest island in China at the mouth of the Yangtse river, Dongtan will be developed on 630 hectares of land as a sustainable city to attract a range of commercial and leisure investments.

Ecologically sensitive design will be a key element of the masterplan. The site is mostly agricultural land adjacent to a huge wetland of global importance. This will be a significant opportunity to apply our integrated sustainability and urban planning expertise to the benefit of the eco-city.

Dongtan Eco-city Location Map
Priority projects for phase 1 include capturing and purifying water, waste management recycling, reducing landfills that damage the environment, and creating combined heat and power systems, linked to the use of renewables, that will provide the technology to source clean and reliable energy."

How to Buy a $450K Home for $750K

charles hugh smith-How to Buy a $450K Home for $750K: " recently came across this ad in a major American newspaper and was struck by the 'truth in advertising' which was apparently imposed on a typical real estate pitch aimed at the naive and greedy (as opposed to the experienced and greedy).

The ad went on to list 'The cutting-edge secrets to buying real estate at 30% to 50% above market value:' "

Asian Development Bank sounds alarm on dollar - Business - International Herald Tribune

Asian Development Bank sounds alarm on dollar - Business - International Herald Tribune: "Asian countries need to prepare for a possible sharp fall in the dollar and should allow their currencies to appreciate collectively if that happens, a senior Asian Development Bank official said Tuesday.

'Any shock hitting the U.S. economy or the global market may change investors' perceptions, given the existing global current account imbalance,' Masahiro Kawai, the bank's head of regional economic integration, said at a news conference.

'Our suggestion to Asian countries is, don't take this continuous financing of the U.S. current account deficit as given. If something happens, then East Asian economies have to be prepared.'

Kawai said the chances of a rapid fall in the dollar were still small, but it could cause a significant turmoil in Asia if it happened.

'If the U.S. dollar goes down in the future, it would be best for East Asian countries to allow appreciation collectively,' so that the costs of adjustment could be divided among them, he said.

'I don't think the possibility is high,' Kawai said of a dollar plunge, 'but it is like avian flu: the possibility of avian flu spreading all over Asia or the world is limited, but once it spreads, it would have tremendous impact.'

Kawai said that by East Asia, he meant emerging East Asian markets, excluding Japan.

Kawai said the Manila-based development bank's planned establishment of an Asian currency unit, made up of a basket of Asian currencies, would help monitor the collective path of regional currencies in relation to the dollar.

The benchmark has been delayed by disputes over inclusion of the Taiwan dollar.

But Kawai played down suggestions that an Asian currency unit, or"

''Soaring Commodity Prices Point Toward Dollar Devaluation''

PINR - Soaring Commodity Prices Point Toward Dollar Devaluation: "In late 2005, the Commodity Research Bureau's broad commodity price index, known as the C.R.B. Index, quietly surpassed record high levels set in the early 1980s. By the third week of May 2006, the C.R.B. Index gained another 12 percent. Behind this year's rise in the C.R.B. Index have been unprecedented price rallies of individual commodities. In the first five months of 2006, crude oil prices have increased by a mere 14 percent followed by gains in corn and wheat of about 10 percent. Price gains for other commodities have far outpaced the gains of oil and grains.

Zinc prices have doubled in the past five months, copper prices are up 80 percent, silver has risen by 60 percent and palladium, tin, gold, aluminum and platinum have gained 50 percent, 40 percent, 39 percent, 36 percent and 35 percent, respectively. Prices for other commodities including lead, iron and scrap iron have followed a similar path this year. While these commodities have vastly varied uses from industrial to food production, they all have one common feature -- they are denominated and traded internationally in U.S. dollars. "

Bears in the woods

The markets and the world economy | Bears in the woods | Economist.com: "IF YOU meet a bear in the woods, try not to panic or scream; on no account should you turn your back and run. As markets around the world have turned grizzly over the past two weeks, some investors seem to have forgotten the old hikers' maxim. After three years of big gains, many stockmarkets have tumbled by 10% or more in less than ten days. The loudest growls have echoed around emerging markets and commodities. Europe has surrendered most of this year's gains. Americans have so far escaped lightly, but they would be unwise to take comfort. Their housing market, the recent rock of their economy, is where a much grizzlier creature lies in wait.
Most investors tend to look first at equity markets—and they have certainly had a good run virtually everywhere. Yet a repeat of the slump after the bursting of the dotcom bubble in 2001-02 remains highly unlikely. In 2000 shares were wildly overvalued. Today price/earnings ratios in most stockmarkets are near, if not below, their long-term averages. This suggests that the slide in shares could be short-lived."

How much longer can the dollar reign supreme?

How much longer can the dollar reign supreme?: "Saddam Hussein stopped trading his oil for dollars before Iraq was invaded. Iran gets set to open a new oil bourse and futures market that will trade in euros, while Venezuela is said to be mulling over whether to follow suit.
Now Russia has joined the bandwagon. On May 10, President Vladimir Putin announced the creation of a Russian oil and gas bourse along with his intention to convert the ruble into a convertible currency that would be used for the trade.
Russia has recently swapped some of its dollar reserves for euros.
Together Iran, Venezuela and Russia corner some 25 percent of the export market in oil. If the three countries do away with the petrodollar, this could seriously buffet the US currency, forcing up interest rates, increasing the cost of imports in the US and contributing to an inflationary economy or a recession.
William Clark writing in the Energy Bulletin says, “What we are witnessing is a battle for oil currency supremacy. If Iran’s oil bourse becomes a successful alternative for international oil trades, it would challenge the hegemony currently enjoyed by the financial centers in both London (IPE) and New York (NYMEX) . . .'
At the same time, nations in this region have been exchanging percentages of their dollar reserves for other currencies.
In March, following the Dubai Ports World debacle, the UAE Central Bank said it was considering converting 10 percent of its dollar reserves to euros. Kuwait and Qatar have hinted that they might do the same.
The Commercial Bank of Syria has exchanged all its dollar devise for euros, following a call from Washington urging US banks to cease acting as correspondents for Syrian financial institutions, ostensibly because of money-laundering concerns.
Last month, Sweden cut the dollar share of i"

26 May 2006

Base metals volatile again - Metals News - Metals Place

Macquarie: JBM - Base metals volatile again - Metals News - Metals Place: "Another day, and another highly volatile and at times illiquid trading day on the London Metals Exchange (LME) overnight. Most LME Base Metals finished the session lower as the previous session's rally faded. – copper down by 4.6% and aluminium down by nearly 2%. Zinc was the only metal to record an increase, climbing by 1.3%. With LME inventories falling, and tightness looking especially acute in the nickel market, Macquarie Research Equities (MRE) reiterates its view on nickel producer Jubilee Mines (JBM).
Nickel softened overnight, along with most other base metals, but at $21,950, down $245, was cushioned by falling warehouse stocks and increased technical tightness. LME inventories were down 420 tonnes at 18,948, the lowest since early-November 2005, while the cash/threes backwardation widened to $600/645 at one point, the tightest since June 2005. On Tuesday nickel hit a fresh record high of $22,250, boosted by potential labour stoppages at Inco's Sudbury plant. MRE believes that this tightness in nickel is highly apparent and is increasingly getting more acute."

25 May 2006

Copper Gains on Speculation That Demand Will Outpace Supply

Bloomberg.com: Latin America: "May 25 (Bloomberg) -- Copper rose on the London Metal Exchange on speculation that production may not meet demand this year because of strikes and declining output at some mines.
Mexican miners yesterday began a blockade at Grupo Mexico SA's Cananea copper mine, the country's largest. There's been a strike at La Caridad mine, Mexico's second-biggest, for two months. Codelco, the world's No. 1 copper producer, yesterday warned production will decline this year and next. Demand will rise 5.2 percent this year, HSBC Holdings Plc said yesterday.
``The fundamentals of copper are very supportive,'' Roy Carson, a London-based metals analyst at Triland Metals Ltd., which trades on the floor of the LME, said today by phone. ``Codelco will produce less and strikes are still on.''
Copper for delivery in three months on the LME advanced as much as $150, or 1.9 percent, to $7,980 a metric ton. The contract was $140 higher at $7,970 as of 9:26 a.m. in London, taking its gain this year to 81 percent. Copper reached a record $8,800 May 11.
Codelco, which supplies about 11 percent of the world's copper, yesterday said its output this year will be 1.713 million tons, or 0.6 percent less than last year. Production next year will be 1.652 million tons, Codelco forecast."

Why it isn't a commodity bubble

Telegraph | Money | Rare metals outstrip copper demand: "Barclays Capital cited the roaring bull market for these niche metals as proof that real demand, fuelled by Asia's industrial revolutions, is the real driver of the global commodities boom.
'When market commentators use the simplistic argument that industrial metals are being driven by investment bubbles, they would do well to look at price performance in some of the non-exchange traded minor metals markets,' said the bank's commodity analyst, Kevin Norrish.
'These metals cannot be invested in, but prices are being driven higher by the same structural changes in fundamental demand as copper, increasingly classed as a speculative bubble.'
Tungsten, used in drills and light bulbs, is up 330pc; while iridium has soared 328pc on its use in compasses and pen tips. Molybdenum is up eightfold; ruthenium fivefold; both cadmium and antimony have more than tripled.
The US fund giant Pimco also disputed claims that a dotcom-style bubble had developed in commodities, insisting that hard demand was driving the boom.
'To have a speculative bubble, you need to lose all concept of an objective measure of value.
'That doesn't hold for commodities,' said Bob Greer, vice-president in charge of commodities.
He doubted that a fresh wall of money from pension funds and big institutions pouring into commodity tracker funds - thought to be anywhere between $100bn and $200bn - was causing prices to lose touch with economic reality.
'I do not believe that index investors are driving prices. Pimco is the largest manager of commodity index mandates in the world.
'Yet Pimco does not own one barrel of crude oil, one bushel of soybeans, one ounce of gold. We"

US outmaneuvered by the Chinese

Rockford's Newspaper Rock River Times | rockford illinois news information: "Question: what is the connection between building skyscrapers and economic depression? New York’s Empire State Building recently marked its 75th anniversary. Asia Times says it is a great irony, but every time a record high skyscraper has been built, it has been linked to financial collapse.
The Empire State was begun in the 1920s and finished in the Great Depression of the 1930s.
Today, the Burj Dubai is being built in the Persian Gulf city-state of that name. Parallel to that is the sharp plunge in the Dubai stock market since December. The Dubai market has slid down 53 percent in four months, a collapse a major Wall Street firm’s analyst called “an adjustment phase.”
He told a newspaper: “We believe that Dubai is the Shanghai and Hong Kong of the Middle East.” That is not a great prediction. The Shanghai Stock Index is down 42 percent from its bull-market high point almost five years ago. Hong Kong’s Hang Seng Index is down 13 percent from its peak in March 2000.
Three buildings remain on the New York skyline as reminders of the exuberant Jazz Age. They are the Chrysler Building, the Empire State Building and the Manhattan Company Building on Wall Street.
Today, there also are three contenders for tallest building in the world—one in Malaysia, one in Taiwan and the one in Dubai. The first two held the title of tallest for only a few months.
Edward R. Dewey, who studied this ironic link in the 1940s, said the “world’s tallest” sell signal for stocks comes when a tower is conceived as it takes some time to complete. A new highest skyscraper always is occupied in the wake of a bull market that prompted the building’s creation. The Malaysian project to"

24 May 2006

E2020 -Crisis is now!

Seven concrete consequences for economic and political players and decision-makers
Last February, LEAP/E2020 anticipated that a global systemic crisis was to be triggered at the end of March. Today, three months later, LEAP/E2020 can anticipate that the initial phase of this crisis is about to be finished and that, as soon as the beginning of June 2006, the crisis will enter a phase of acceleration. Before detailing the main features of this new phase (described in GEAB Nr5), LEAP/E2020 would like to clarify the 4 different phases of a global systemic crisis.

A global systemic crisis develops following a complex process where 4 phases can be distinguished, overlapping one another:
• in the first so-called “trigger” phase, a variety of until then un-related factors, start converging and interacting in a way that is perceptible mostly by careful observers and central players
• in the second “acceleration” phase, a large majority of players and observers suddenly become aware that a crisis is there and that it has already begun to affect a growing amount of the system’s components
• in the third so-called “impact” phase, the system starts to transform radically (implosion and/or explosion) under the strain of cumulated factors, simultaneously affecting the whole system
• in the fourth and last “decanting” phase, the features of the new system born from the crisis begin to appear.

In the present situation, LEAP/E2020 estimates that the initial trigger-phase is about to finish and that, during June 2006, the world will enter a phase of acceleration of the crisis.
Indeed, in less than three months, many certainties as to the future were turned upside down (« inescapable » dollar-denomination, « return » to cheap oil, « peaceful » solution to the Iran/USA conflict, « sustainability » of the US real-estate bubble, US « domination » over two other key global players – China and Russia,…) and a great number of indicators now point at converging directions, all of them sources of unbalance for the current system (vertiginous rise in gold and precious metals prices, escalation of inflationary pressures, increase of the interest rates, EURUSD approaching 1.30, large amounts of central banks’ reserves being switched to Euros, rise of Asian currencies, stock market and currency crises developing in various areas in the world, growing amounts of articles published in the international and national press using words such as « krach, crisis, collapse, risk, conflict, … » ).

23 May 2006

Safe Haven | Conspiracy Theories and the Global Stock Market Melt-down

Safe Haven | Conspiracy Theories and the Global Stock Market Melt-down: "Do you believe in conspiracy theories? Sometimes they are difficult to refute. Such was the case last week, just after the Euro had soared towards a 12-month high of $1.30, and the British pound, itself ridden with large trade and budget deficits, stood mighty tall at $1.90, with traders setting their sights for $2 for the pound. The US dollar lost 7% in just six weeks against America's main trading partners, and was 28% lower since January 2002, to stand just 1% above its 1995 low.
Then on Sunday May 14th, currency traders in London, picked up an obscure report from the UK's Observer newspaper, that indicated the International Monetary Fund was in behind-the-scenes talks with the EU, Japan, the US, China and other major powers to arrange a series of top-level meetings to tackle imbalances in the global economy, and address the dollar sell-off that was rattling global stock markets."

Dollar Bottom? Elliott Soup!

Yelnick: Dollar Bottom? Elliott Soup!: "After a precipitous fall, below most pundits' support levels, the Dollar has managed a tickle of an impulse wave back up. The most likely scenario over the rest of the year is for stocks to fall much further, albeit with a possible retest of the recent highs first, and the Dollar to rebound as the Fed continues to increase short-term rates. The STU has been pointing out that all markets have become linked worldwide, with the Dollar going countertrend. Hence they are looking for the Dollar to go quite a ways back up (more than 10% on the Dollar Index) while stocks take their four-year cycle dip (more than 10% down). Let's take a look at what other Ewavers are predicting, and what this means.
Several of you did an excellent job calling the recent stock peak & sharp drop. Dominick is now a reformed bull, having hit this to the day. Prechter also claims a small victory, as he had made May 5 the 'final' turn date about six months ago, and came within a week of it in the Dow and hit it on the head on the S&P. Before we get a bunch of Prechter bashers, remember that the boy who cried Wolf! Wolf! was right in the end. (And yes, the people he was protecting got eaten alive.) Glenn Neely has been watching this ending process with amazement, but last week he notified his readers that the top was nigh, and called it very closely to the day. He now sees the sharp drop as clearly setting up a year-long drop of at least a third off the rise since Mar03. His NeoWave service gives a specific target. He also expects that gold has peaked - the rise of $100 in 10 days is the type of parabolic rise that ends badly; one just never knows how far it will spike. It now appears to have reversed.
What is the implication? Is it the Big One yet? Nope. When the Dollar tru"

22 May 2006

Iraq is disintegrating as ethnic cleansing takes hold

Independent Online Edition > Middle East: "Across central Iraq, there is an exodus of people fleeing for their lives as sectarian assassins and death squads hunt them down. At ground level, Iraq is disintegrating as ethnic cleansing takes hold on a massive scale. "

Oil-Price Connection on NRO Financial

John Tamny on The Dollar/Oil-Price Connection on NRO Financial: "Indeed, meat prices were rising at a 75 percent annual rate in 1973. From 1972 to 1973 the cost of a bushel of wheat rose 240 percent. Soybeans rose from $3.50 a bushel in 1972 to $12.00 in 1973. Since commodities are priced in dollars, a change in the dollar’s value has an instantaneous impact on the spot price of those commodities. The greenback’s fall in the aftermath of Bretton Woods in a sense made a broad commodity rally inevitable. Looked at in this light, while the Arab factor coupled with regulations and price-caps on fuels in the U.S. were largely to blame for the 1970s energy crisis, Fed policy unhinged from the disciplines of Bretton Woods must take part of the blame.

Moving to the late 1970s, the consensus view is that OPEC’s failure to boost output amidst the Iranian revolution explains the oil shock that closed the decade. The facts suggest otherwise. The price of a barrel of oil did increase, but it was largely a United States phenomenon relating to the falling dollar. While the dollar price of oil rose 43 percent from 1975 to 1979, the price of oil in Japanese yen rose just 7 percent, and in German marks it rose just 1 percent. In Swiss francs the price of oil actually fell 7 percent.

With oil presently trading in the $70 range, today we hear that greedy oil executives, historically high demand in China and India, political uncertainty in Iran, excessive consumerism, and restraints on domestic drilling and refining have combined to bring on the 164 percent rise of oil since the summer of 2001. That list is pretty good if you leave out the greedy CEOs and the gluttonous consumers — the Herbert Steinesque exogenous factors that have nothing to do with expensive oil. What is inappropriately left off that "

Capitulation of Noted Pundits: A Momentous Event for the Economy and Financial Markets?

Safe Haven | Capitulation of Noted Pundits: A Momentous Event for the Economy and Financial Markets?: "During 1997-98, when the US stock market had exceeded all prior valuations and all historical signs of warnings were being ignored, it was clear to me that a new mood of carelessness had taken root among the America's 'educated' class; there was a widespread lack of cautious attitude; and an unhealthy lack of skepticism existed about the promoters and business leaders, including the Federal Reserve. I concluded then that whenever this ends, and it has definitely not ended yet, it would end badly. At the time I shared an insight with a colleague at Cisco stating that the worst will not come until those who are cautious and issuing warnings either capitulate or are discredited, primarily because of the length of time during which they have maintained their negativity about the future. All this is part of human nature. The past ten years, especially, in the US, have been a period of extraordinary speculation among the middle class, first in stocks and later in housing, the two largest asset classes. All indications are that speculation in housing is coming to an end, very rapidly.
It appears that we are now at a point in time when the worst that some of us doom-and-gloomers have been predicting might be near. The reason for this assessment is that something very important transpired during the past few weeks that has gone mostly un-noticed - four noted pundits, two economists and two investment gurus, employed by the most powerful and influential financial firms in America, who were cautious for a long time, capitulated.
Two of them, Rich Bernstein and David Rosenberg, work for one firm, Merrill Lynch, and their capitulation could be taken as a result of a common conclusion. The other two, Stephen Roach of Morgan Stanley and Bill Gross of PIMCO, ha"

Bendigo Mining still aiming for June start

OptusNet News: "Bendigo Mining still hopes to start gold production about the end of June, despite a delay caused by an industrial dispute.
More than 100 contract workers building the processing plant at Kangaroo Flat stopped work for several days last week over a safety issue.
Bendigo Mining managing director Doug Buerger says an agreement was reached on Friday on procedures for such disputes, and work on the plant has resumed."

21 May 2006

Markets ‘are like 1987 crash’ - Sunday Times - Times Online

Markets ‘are like 1987 crash’ - Sunday Times - Times Online: "CONDITIONS in the financial markets are eerily similar to those that precipitated the “Black Monday” stock market crash of October 1987, according to leading City analysts.
A report by Barclays Capital says the run-up to the 1987 crash was characterised by a widening US current-account deficit, weak dollar, fears of rising inflation, a fading boom in American house prices, and the appointment of a new chairman of the Federal Reserve Board.

All have been happening in recent months, with market nerves on edge last week over fears of higher inflation and a tumbling dollar, and the perception of mixed messages on interest rates from Ben Bernanke, the new Fed chairman.
“We are very uncomfortable about predicting financial crises, but we cannot help but see a certain similarity between the current economic and market conditions and the environment that led to the stock-market crash of October 1987,” said David Woo, head of global foreign-exchange strategy at Barclays Capital.
Apart from the similarities in economic conditions, during the run-up to the 1987 crash there was a sharp rise in share prices worldwide and weakness in bond markets, Woo pointed out. “Market patterns leading to the crash of 1987 resemble the markets today,” he said. "

20 May 2006

Metals and Mining Shares – What A Difference A Week Makes! - GoldSeek.com

Metals and Mining Shares – What A Difference A Week Makes! - GoldSeek.com: "By Peter Grandich

On Thursday May 11, 2006, at 1:00 p.m., I issued a special Alert that said, “An overbought/oversold indicator of mine that I’ve used since before the 1987 stock market crash, has given the most overbought reading ever for both copper and gold… I’m going to suggest that risk in gold, silver and copper is now equal to, or much higher, than reward in these markets for the near term. The long awaited sharp correction is within hours or days away at the most.”

I appeared on Canada’s “Report on Business Television” (by far, North America’s best financial network) on Friday, May 12th http://www.grandich.com/robtv.05.12.06a.htm and stated that I believed the day before began a correction that could see us drop 10% to 15% in just days or weeks (go to about the 56 minute mark in the interview).

I gave my thoughts to several media outlets, but my comments to the Daily Telegraph –U.K.,
http://www.grandich.com/docs/telegraph_05-15-06.pdf created the most “fan” reaction. I guess that was due in part that the reporter used this headline “Unsustainable gold on the brink of crash, says US metals guru.” Never do I recall using the word crash to describe my outlook, but I assume he took it upon himself to assume that was my theme after I told him. He quotes me in the article:

“I think there will be a very short, sharp correction of 10 to 15pc, in the worst case reaching a floor of around $575 an ounce.” I hardly think that’s a crash.

It’s been an interesting week or so, to say the least!"

Oxiana undertakes aggressive exploration program

ASIA’s Resource Communications, publishers of The ASIA Miner magazine and The ASIA Miner weekly electronic news service - Oxiana undertakes aggressive exploration program: "Oxiana has an aggressive exploration program planned this year at its Sepon operations in Laos with more than $10m to be spent on exploring ground around the operating mine. The aim is to identify both extensions to the existing deposits and locating entirely new deposits.
The potential for further gold and copper discoveries in the 400 square kilometre Sepon mineral district continues to be clearly demonstrated with new resources, deposits and prospects discovered each year, both around the existing pits and in new parts of the district.
Last year seven new gold prospects were generated and two potential new gold deposits were discovered. Mineable Reserves of oxide gold have so far been outlined at the Discovery ( Main , East, Colluvial), Discovery West, Nalou , Nam Kok (West and East), Vang Ngang and Luang deposits.
The total oxide resources at Sepon stand at 1.6Moz. These near surface oxide variants of the primary sulphide hosted gold mineralisation at depth have been the main focus of exploration to date, with the potential for primary sulphide hosted gold mineralisation remaining highly under-explored. Total known primary resources are 2Moz.
Last year wide-spaced drilling to test the down-dip continuity between the Discovery Main and Luang deposits confirmed continuity of both oxide and primary mineralisation. Some high grade results were returned including 10m @ 13.7g/t gold (from 90m), 19m @ 5.4g/t (from 46m), 7m @ 17.64g/t (from 100m), 16m @ 5.65 g/t (from 51m) and 7m @ 18.9g/t (from 24m). "

19 May 2006

Copper Heads for 1st Weekly Drop

Bloomberg.com: Latin America: "May 19 (Bloomberg) -- Copper in London headed for its first weekly decline in ten weeks on speculation U.S. interest rates may rise, making dollar-denominated metals more expensive for holders of euros and other currencies.
Copper for delivery in three months on the London Metal Exchange rose $5, or 0.1 percent, to $8,095 a metric ton as of 8:08 a.m. local time. A close at the level would mean a 4.3 percent weekly decline.
Copper has risen 84 percent this year, and traded at a record $8,800 a ton on May 11.May 19 (Bloomberg) -- Copper in London headed for its first weekly decline in ten weeks on speculation U.S. interest rates may rise, making dollar-denominated metals more expensive for holders of euros and other currencies.
Copper for delivery in three months on the London Metal Exchange rose $5, or 0.1 percent, to $8,095 a metric ton as of 8:08 a.m. local time. A close at the level would mean a 4.3 percent weekly decline.
Copper has risen 84 percent this year, and traded at a record $8,800 a ton on May 11."

US$: Revolt, Downgrade & Disorder

Kitco - Contributed Commentaries - Jim Willie CB: "t is hard to say how far this correction in commodity stocks might go. Surely, the mainstream press enjoys what they proclaim as the end of the bull. However, they forget that only a global recession will interrupt this commodity bull market. They forget that energy stocks were the biggest single engine in the S&P500 index last calendar year. A case in point is the strong and growing global demand for gold bullion as the USTBond erodes in confidence. A case in point is the relentless twin deficits indicative of extreme hemorrhage and foreign capital dependence. A case in point is the 20% decline in official copper inventory at the exchange warehouses, the challenge to Indonesia copper supply, the socialist (and water) threat to Andean copper supply in Peru. Sorry, but these three factors remain very much alive, either without evidence in any way, or not even addressed.
Three requirements are necessary before the commodity bull is interrupted:
1) emerging developing economies must stall in growth altogether, like China, India, Southeast Asia, including the construction boom in the Middle East
2) the multi-year USDollar decline must come to an end, in a real sense from remedy to its crippled fundamentals in astronomical trade deficits and burgeoning federal budgets
3) the imbalances whereby global commodity demand overwhelms commodity supply must find equilibrium in the midst of historically low inventories and supplies at risk.
Sorry, but none of these requirements has been met, as all are still in force."

Timing Profit Taking Corrections

Kitco - Exclusive Commentaries - Roger Wiegand: "Investors and traders would prefer to buy something and have it rally forever. This simply cannot happen as human nature says take profits when you see them. Further, outside mitigating circumstances often thrust themselves onto markets disrupting things prematurely. These confusing market moving events can make big trouble as large accounts are quicker to invest and slower to exit. Some large investors are critical of little traders as their perspectives do not match. The big boys don’t need the cash and are in for the long pull with a primary objective of retaining capital and protecting it as opposed to the secondary objective of earning more. The smaller traders are striving and straining to maximize earnings so they are busy swing trading, day trading and holding only a partial core position for the longer term in favorite quality stocks. Both sides say they are right with others being wrong. In reality, both sides are right but only at certain times. One dyed-in-the-wool buy–and-hold-forever investor scoffed at this when discussing timing ideas with a Chicago screen trader. “He said, you couldn’t possibly make money doing that.” The screen trader laughed and replied, “Want to see my fleet of Mercedes cars in my new mansion garage?”
We have a reverent adulation for the achievements of Warren Buffet who is now 75 years old and still investing. However, in our view, trading and investing circumstances are radically changed from Warren’s lengthly adult market experience. The difference now is the United States of America is no longer as market friendly and lightening fast computers have the trading world wired for incredible speed; not only in the States but in all advanced investing societies.
We understand the values of compound interest, and allowing stocks e"

"The Bearish Evidence Is Overwhelmning" by Bob Bronson 05/17/2006

Financial Sense "The Bearish Evidence Is Overwhelmning" by Bob Bronson 05/17/2006: "Well before the U.S. stock market made its all-time high on a capitalization-weighted basis on March 24, 2000, we presented our case for the beginning of a secular bear market period, or what we quantify as a Supercycle Bear Market Period.

The Supercycle Bear Market Period, which started before that stock market high point, is ongoing, since the risk-free rate of return continues to cumulatively outperform the total return (dividends reinvested) of the S&P 500 index, with returns of about 18% vs. -6%, respectively, since the market high in 2000. This 25% higher performance differential is especially significant, given the total return of 90-day Treasury bills has no drawdown or redemption risk, while the stock market is always highly volatile and has already had a drawdown of 50% during this period.

History shows that during Supercycle Bear Market Periods, an economic slowdown like the present one is not a “pause that refreshes,” as widely promoted by the bullishly-biased CNBC talking heads. Rather, it almost always turns into a full-fledged recession, which is typically twice as frequent and twice as severe (magnitude and duration), on average historically, as during Supercycle Bull Market Periods. This record is demonstrated by our 110-year stock market and economic timing model, SMECT: model

Furthermore, our work shows the current Supercycle Bear Market Period – the fifth since 1870 -- is only about half over, with the worst psychological impact on investors yet to come when the stock market makes lower lows. This is because the current consensus mood of investors, which has been bullish and complacent, especially at the recent stock market highs, has been fueled by the fi"

Will Not Sell any Commodities: Jim Rodgers

Will not sell any commodity, despite fall: Jim Rogers - Metals News - Metals Place: "Commodities have been extremely volatile over the past one-week. Copper, aluminium, and zinc have all cracked under heavy speculative trading. On Wednesday, prices rebounded sharply, but only for a while, before slipping once again. Investment Guru, Jim Rogers says that all markets have big reactions and consolidations and it may be so with commodities as well.
But he further adds that he will not sell any commodities even if they correct 30-40%. Rogers says that copper and zinc were overdue for correction.
In his opinion, commodities may have peaked for the moment but will not stay that way for a decade. China is the only emerging market that Rogers is invested in.
He is bearish on the US dollar and hence advises people to sell the dollar.
Excerpts from CNBC-TV18's exclusive interview with Jim Rogers:
Q: Was the crack we saw in commodities only a technical crack or is it the beginning of a downturn?
A: All markets have reactions and consolidations even within the context of the bull market. In the 1970s, gold went up 600% and then it went down 50% over a two-year period only to turn around and go up another 800%. So there may be big reactions and we may be overdue for one. Although I don't have a clue, I am not selling any commodities, even if they go down 30-40% because they will be going back up later.
Q: Will all commodities go back up because some people are saying that industrial base metals may not reach the tops again?
A: I can see that copper and zinc and few things have gone straight up for a few months and they are certainly overdue for a correction. But one has to know that nobody has opened any mines in years and all the existing mines are depleted.
In Asia, India and China are growing. Some of these people may have"

18 May 2006

Market Wrap

Safe Haven | Market Wrap: "As Dennis Gartman's friend was fond of saying: 'when they're yellin we're sellin, and when they're cryin we're buyin.' Sounds good to us - and so it is.
We are very fond of the following words of wisdom - for several self-evident reasons:
'Gold would have value if for no other reason than that
it enables a citizen to fashion his financial escape from the state.'
[William F. Rickenbacker]"

Orderly Stampede

Kitco - Contributed Commentaries - Richard Daughty: "The famous letter that Iran sent Bush has been completely dismissed by the White House and by the American press, but not here at the Mogambo Bunker. And the reason is that it said that democracy has failed, and boy, oh boy, are the Iranians ever right about that!
It is democracy run amok here in America that has produced a huge, suffocating, expensive, socialist, communist, fascist system of local, state and federal government that consumes almost half of the income in the country. And then gives a monthly check to almost half of the people in America. And it is a government system that employs one out of every six workers in the whole country.
And why is the government doing this? Because the people, democratically, have created that kind of government! Year after year after year, decade after decade, they elected and re-elected people who actually campaign on a platform of providing a free lunch to more, and then more, and then yet more 'deserving' people and organizations. This is insane! This is absolutely, preposterously, my-head-is-exploding, I-can't-believe-I'm-seeing-this insane! And if that ain't failure of democracy, then what in the hell is it?
And as for the Iranian's call for a more 'religion-based' economy, the Bible is full of timeless, correct, and classic economic wisdom, all the way from the insistence on honest weights and measures to the admonition to 'neither a borrower nor a lender be.'
If we had merely (if nothing else!) adhered to the requirement of honest weights and measures, for example, then our money would still be gold (or function like it), inflation would always be zero, and there would be no frightening income mal-distributions (which is the condition where there are some people who are very, very"

DJ INTERVIEW: Australia's Tanami Avoids Gold Hedging Trap

Welcome to Jim Sinclair's MineSet: "PERTH (Dow Jones)--Australia's Tanami Gold Ltd. (TAM.AU) doesn't plan to hedge any gold from its new Coyote mine in Western Australia, despite the recent dip in world bullion prices.
Perth-based Tanami has not sold forward, or hedged, any of its gold to help fund the development of Coyote, executive chairman Denis Waddell told Dow Jones Newswires in an interview Wednesday.
Instead, it raised A$20 million in a recent share issue that is sufficient to 'fund the entire project,' Waddell said.
A forecast 60,000 ounces a year mine in the outback desert of central Australia, Coyote is due to be officially opened next week by Michael Jeffery, Governor-General of Australia.
The project is due to pour its first gold bar in late June, adding to Australian gold production that has slumped in recent years due to rising costs and declining exploration levels.
Waddell said that Tanami is fully exposed to gold prices, which have fallen more than 5% from a 26-year-high of around US$727 an ounce hit a week ago. It was trading at about US$706 in Asian trade Wednesday afternoon, up about US$16.
Waddell remains comfortable with the company's exposure to the spot market. 'Had we debt funded, we would've needed to have hedged,' he said.
'Thankfully we didn't because we would be prettily heavily under water at the moment,' he said, adding that gold prices have risen by around US$200 since Tanami approved the development in December.
Hedge books can be a severe burden if prices move the wrong way and a mine has unexpected production issues, Waddell said.
'If there are any hiccups and the banks get nervous, having a hedge book out of the money is something you want to avoid.'
Sons of Gwalia, formerly one of Australia's biggest gold producers, fell into administration in August 2004 "

17 May 2006

Saudis Nix Pictures of Women in Newspapers - Yahoo! News

Saudis Nix Pictures of Women in Newspapers - Yahoo! News: "RIYADH, Saudi Arabia - King Abdullah has told Saudi editors to stop publishing pictures of women as they could make young men go astray, newspapers reported Tuesday.

The king's directive, made in a meeting with local editors, caused surprise as the monarch has been regarded a quiet reformer since he took office in the ultra-conservative country last August.
In recent months, newspapers have published pictures of women — always wearing the traditional Muslim headscarf — to illustrate stories with increasing regularity. Usually the stories have had to do with women's issues. The papers have also started publishing a range of views on causes that are not generally accepted in Saudi Arabia — such as women having the right to drive and vote.
The king told editors on Monday night that publishing a woman's picture for the world to see was inappropriate.
'One must think, do they want their daughter, their sister, or their wife to appear in this way. Of course, no one would accept this,' the newspaper Okaz quoted Abdullah as saying.
'The youth are driven by emotion ... and sometimes they can be lead astray. So, please, try to cut down on this,' he said.
Although the king has broached topics — such as women eventually acquiring driving licenses — that were previously seen as nonstarters, his instruction to editors indicates that Islamic conservatives remain a powerful force in the kingdom and brake on reform.
The country adheres to a strict interpretation of Islamic law. Women are not allowed to vote and stand in municipal elections — the only type of election permitted in the kingdom.
The king also calle"

16 May 2006

Backdoor Found in Diebold Voting Machines

PCWorld.com - Backdoor Found in Diebold Voting Machines: "Last week, the voting watchdog organization Black Box Voting published a report detailing how Diebold's TS6 and TSx touch-pad voting machines could be compromised by taking advantage of 'backdoor' features designed to allow new software to be installed on the systems.
Finnish security researcher Harri Hursti discovered backdoors in the systems boot loader software, in the OS, and in the Ballot Station software that it runs to tabulate votes.
'These are built-in features, all three of them,' said Black Box Voting Founder Bev Harris. If a malicious person had access to a Diebold machine, the back doors could be exploited to falsify election results on the system, she said"

Metal Rally May Resume

Bloomberg.com: U.S.: "May 16 (Bloomberg) -- Metals such as copper and zinc may resume their rally to record highs as hedge funds and other investors return to buying commodities after price declines.
Copper plunged as much as 9 percent in London yesterday before paring its losses and ending the day down 3.2 percent. Zinc, at one point down 12 percent yesterday, the most in 16 years, finished down 6.7 percent. The partial recovery from bigger losses gave bullish traders and investors more confidence that prices may rise again to new peaks.
``It's a lot of small players selling and the big funds are still in,'' said Jan Johansson, chief executive officer of Stockholm-based Boliden AB, a copper and zinc producer, in an interview yesterday. ``People following the market aren't worried at all.''
Some investors who poured money into commodities grew concerned the rally was over and that rising global interest rates may slow economic growth. Copper almost tripled in the past year and aluminum jumped 82 percent as China increased its use of raw materials and investment funds bought commodities seeking better returns than stocks and bonds.
Robert Shiller, an economist at Yale University in New Haven, Connecticut, and author of ``Irrational Exuberance,'' said last week commodities markets resemble the technology-stock bubble of the 1990s.
``A bull market is not a bubble,'' said Michael Purdy, vice president of metals trading at ABN Amro Bank in New York. ``We've had every reason in the world for these markets to rally. The fundamentals have been rock solid -- good, solid demand and supply problems. It's not a bubble by any stretch of the imagination.'' May 16 (Bloomberg) -- Metals such as copper and zinc may resume their rally to record highs as hedge f"

Khaleej Times Online - Gold to hit $1,000 mark; Oil likely to strike $100

Khaleej Times Online - Gold to hit $1,000 mark; Oil likely to strike $100: "ABU DHABI — The gold will continue to glitter by year-end, as its prices are likely to hit $1,000 per ounce from $704 level, while prices of black gold — Oil — will touch $100 per barrel even if the current Iran stand-off is resolved, claimed Mehmood Suliman-Rey, Division Head MENA & Asia of Switzerland's, Liechtensteinische Landes Bank (LLB).
'While commodity strategists were cautious in price projections for gold and oil, LLB stood-out with a right forecast since past one-year... the price behaviour is even better than what we had indicated,' Mehmood told Khaleej Times yesterday. He said that silver will hit $25-26 per ounce by year-end.
Speaking about reasons for the current price scenario which can undermine global economic growth, he said oil demand is slowing in China against all predictions, however, the economies of China and India will continue leading other comparatively smaller Asian economies and oil would be the fuel they will need to grow. On the other hand, with middle class growing, and purchasing parities increasing, gold will continue to be ideal commodity in those economies.
Mehmood said that during the last one year, gold prices have gone up by 65 per cent, silver up 106.24 per cent, aluminium prices climbed up 68 per cent, while copper rose by 177 per cent, as per the forecast.
Commenting on the heavy fluctuations on the domestic securities markets, he advised caution to the investors with large exposure to shares and securities.
He said LLB had successfully launched two investment funds for investors, who want to sustain their gains in the long-term. Black Gold Capital Protected note, he said was a three-year ma"

15 May 2006

The Observer: IMF acts to avoid markets meltdown

The Observer | Business | IMF acts to avoid markets meltdown: "The International Monetary Fund is in behind-the-scenes talks with the US, China and other major powers to arrange a series of top-level meetings about tackling imbalances in the global economy, as the dollar sell-off reverberates through financial markets.
Amid tumultuous trading, which sent the dollar to its lowest level in a year against the euro in late trading on Friday and gave the FTSE its worst day for three years, the IMF was working privately to exercise its new powers to bring decision-makers together.
At the IMF's Spring Meetings last month, its managing director, Rodrigo de Rato, was handed new responsibilities to carry out 'multilateral surveillance', assembling groups of relevant countries to discuss critical issues in the global economy. With the long-predicted dollar bear market sending ripples throughout the world, the IMF is keen to use its powers as soon as possible.
Analysts believe the weakening of the dollar is the beginning of a long-awaited readjustment in the global economy. After the Federal Reserve appeared to hint last week that it could pause in its series of interest rate rises, attention in the markets switched to the weaknesses of the US economy."

Good news for some as world commodity prices soar

Business: "The prices of commodities such as oil, copper, aluminum, platinum and sugar are smashing records -- and will head higher owing to fierce demand from economic powerhouses India and China, analysts say.
With sizzling rates of growth in the two emerging giants, home to one third of the world's population, supplies of raw materials will likely be stretched even further.
Low global inventories, limited production, supply disruptions and fierce demand prompted frenzied speculative buying across much of the metals complex last week.
Platinum, aluminum, zinc, nickel and copper struck historic peaks, while silver and gold hit the highest level since 1980. Copper forged a record US$8,800 per ton and gold reached US$730.40 per ounce.
China is the world's biggest consumer of copper, platinum, wool, cotton and rubber, and the second biggest market for crude oil after the United States.
India, meanwhile, is the largest consumer of gold and silver.
'With strong (economic) growth in the emerging markets and further acceleration in Japan and Europe expected to continue... we maintain a positive outlook for commodity returns, despite the recent price rally,' said Jeffrey Currie, London-based analyst at US investment bank Goldman Sachs.
'Growth in emerging countries and in China in particular is expected to become an ever-larger share of global economic growth, which we believe will underpin commodity demand growth.'
China's economy is expected to grow at around 9.5 percent this yearThe prices of commodities such as oil, copper, aluminum, platinum and sugar are smashing records -- and will head higher owing to fierce demand from economic powerhouses India and China, analysts say.
With sizzling rates of growth in the two emerging giants, home to one third of the world's "

14 May 2006

Gibson inspired by 'fear-mongering' Bush - Yahoo! News UK

Gibson inspired by 'fear-mongering' Bush - Yahoo! News UK: "Film star and director Mel Gibson has launched a scathing attack on US President George W Bush, comparing his leadership to the barbaric rulers of the Mayan civilisation in his new film Apocalypto.
The epic, due for release later this year, captures the decline of the Maya kingdom and the slaughter of thousands of inhabitants as human sacrifices in a bid to save the nation from collapsing.
Gibson reveals he used present day American politics as an inspiration, claiming the government callously plays on the nation's insecurities to maintain power.
He tells British film magazine Hotdog, 'The fear-mongering we depict in the film reminds me of President Bush and his guys'. "

13 May 2006

Life, death and the lure of war - World - smh.com.au

Life, death and the lure of war - World - smh.com.au: "Any US attack on Iran's nuclear facilities will, officials hint, spark massive retaliation by Iran's allies across the Middle East, notably against globally vital oil facilities and the already beleaguered coalition forces in Iraq.
The threat of economic sanctions is openly scorned. War - like the production of weapons-grade plutonium in one of Iran's secret facilities - may seem a long way off, but not nearly as long as when Mr Ahmadinejad took office.
Most struggling Iranians are not nearly as sanguine about the threat of war - still less the more likely imposition of sanctions - as their hardline leaders. Yet it seems that Mr Ahmadinejad is onto a winner with his confrontational nuclear strategy.
It matters little that few in the world worry less about energy than Iranians: the country is OPEC's second-largest oil producer and has the world's second largest gas reserves; state-subsidised petrol costs eight US cents a gallon.
Where the regime has succeeded brilliantly is in selling the acquisition of nuclear power - it vehemently denies seeking arms - as a point of national pride, a patriotic endeavour.
The fact that a fraction of the money spent on the nuclear program would produce a much greater financial return if invested in production and refining - Iran imports refined petrol, due to lack of capacity - is not something you will read in the increasingly state-controlled press.
'I think we should have nuclear power,' says Amir Kasslimi. 'If we have nuclear power we can sell more of our petrol and use the money to help our country. Lots of countries have nuclear power now, so why can't we?'
Even the President's critics are not immune. In central Iran, the city of Esfehan's 17th"

U.S. Consumer Slowdown On Its Way

BCA Research - Independent Investment Research Since 1949: "The headwinds to spending are gaining momentum: the combined drag from high energy prices and rising interest payments is the largest in two decades. Until recently, housing wealth had been the key offset to these headwinds, but housing activity is well off the boil, and a mild economic slowdown is in the pipeline. Yesterday, the Fed reaffirmed that the future path of policy will depend on the tone of the data in the months ahead. While consumer spending is not yet weak enough to justify a pause, the housing slowdown, and drag from energy and interest payments, should ensure that a further downshift in spending growth occurs"

Rove Informs White House He Will Be Indicted

Rove Informs White House He Will Be Indicted: " Within the last week, Karl Rove told President Bush and Chief of Staff Joshua Bolten, as well as a few other high level administration officials, that he will be indicted in the CIA leak case and will immediately resign his White House job when the special counsel publicly announces the charges against him, according to sources.
Details of Rove's discussions with the president and Bolten have spread through the corridors of the White House where low-level staffers and senior officials were trying to determine how the indictment would impact an administration that has been mired in a number of high-profile political scandals for nearly a year, said a half-dozen White House aides and two senior officials who work at the Republican National Committee.
Speaking on condition of anonymity, sources confirmed Rove's indictment is imminent. These individuals requested anonymity saying they were not authorized to speak publicly about Rove's situation. A spokesman in the White House press office said they would not comment on 'wildly speculative rumors.'
Rove's attorney, Robert Luskin, did not return a call for comment Friday.
Rove's announcement to President Bush and Bolten comes more than a month after he alerted the new chief of staff to a meeting his attorney had with Special Prosecutor Patrick Fitzgerald in which Fitzgerald told Luskin that his case against Rove would soon be coming to a close and that he was leaning toward charging Rove with perjury, obstruction of justice and lying to investigators, according to sources close to the investigation.
A few weeks after he spoke with Fitzgerald, Luskin arranged for Rove to return to the grand jury for a fifth time to testify in hopes of fending off an indictment related to Rove's role in the CIA leak, sources said.
That "

Metals super cycle rolls on

Townsville Bulletin: Metals super cycle rolls on [ 13may06 ]: "IT seems too good to be true. Commodity prices were at fresh records again this week.

Gold prices hit a 26-year high of $US721 an ounce yesterday, 2 1/2 times the low of $US269.50 reached in May 1999.
Copper briefly hit an all-time record of $US8790 a tonne, six times its 2001 price. Zinc, at $US3880, is 500 per cent up on its price just three years ago. Nickel at $US21,200 a tonne has increased fivefold since 1998.
Far from losing steam, the commodities boom is gathering fresh strength and is poised to reshape the face of business and the economy.
The upward march of the resource companies is set to continue, accompanied by a rising Australian dollar.

Manufacturers and export service industries, such as tourism, have complained loudly about the strength of the currency, but those who track the relation of the Australian dollar to mineral resource prices say it is seriously undervalued. Markets agree.
The federal Government, which was expecting no further gains in commodity prices in 2006-7, and declines after that, will again be swamped by an abundance of company tax revenue in next year's budget.
It will face increasingly shrill calls to redistribute gains to those the boom has left behind.
The idea of a super cycle in commodities has shifted from the realm of theory and is fast becoming a reality.
Base metals prices have risen by more than 40 per cent this year in the face of rising world growth and falling stocks.
'It is not just metals. Almost every commodity asset class, whether it is crude oil, precious metals, industrial metals, sugar or even bananas is going bananas,' says ABN-Amro's global head of commodities, Nicholas Moore.

12 May 2006

Super Battery

Wired 14.03: START: "The M1, based on the same lithium-ion technology used in your cell phone and laptop, is the first product from MIT spinoff A123 Systems. Cofounder Yet-Ming Chiang, a materials science professor, succeeded in shrinking to nanoscale the particles that coat the battery's electrodes and store and discharge energy. The results are electrifying: Power density doubles, peak energy jumps fivefold (the cells pack more punch than a standard 110-volt wall outlet), and recharging time plummets. Going nano also solves a safety problem. Regular high-capacity Li-ion batteries tend to explode under severe stress, like if they're dropped from a ladder.
The rechargeable battery industry, dominated by Asian giants like Sanyo, Sony, and Toshiba, is worth more than $6 billion a year. A123 - whose inves­tors include Motorola, Qualcomm, and the Pentagon's VC arm, OnPoint Technologies - aims to radically expand that market, by both cutting the cords on conventional plug-in tools and home appliances and powering brawny electric versions of everything from lawn mowers to military surveillance drones.
A123's real target, however, is your car. Chiang says A123's cells could lighten a Toyota Prius' 100-pound battery by as much as 80 percent and help boost any hybrid's performance. The quick recharging time - the M1 takes five minutes to reach 90 percent capacity - plus high peak power also would be ideal for plug-in versions of gas-electric vehicles. With a bit more research, the world's roads may someday see fast, zero-carbon autos that zip past gas guzzlers and tank up from the grid faster than a rest-stop Starbucks can serve you a latte. - Spencer Reiss"

On watch for the next LTCM crisis - MarketWatch

On watch for the next LTCM crisis - MarketWatch: "NEW YORK (MarketWatch) -- All eyes are on the Fed, and one respected institutional service thinks there are reasons to dislike what they're seeing.
It's nearly eight years since the Long-Term Capital Management hedge fund cratered. At that time, the Federal Reserve engineered an extraordinary bailout on the (highly debatable) theory that the financial markets would otherwise be fatally disrupted.
What would happen if there was another LTCM today?
The Connecticut-based institutional service Bridgewater Daily Observations, which itself manages over $150 billion, has been asking this disturbing question and getting a fairly disturbing answer.
In recent issues, Bridgewater pointed out that money invested in hedge funds is now five times higher than in 1998, when the LTCM debacle occurred.
Bridgewater also tried to show through a sophisticated analysis that hedge funds do tend to march in lockstep. That means, paradoxically, that they are vulnerable to the same things: 'tight credit, widening credit spreads, and falling equity markets.'
Bridgewater's summary: 'We estimate that an unfavorable environment, in degrees comparable to 1994, 1998, and 2000/01 will cost ...equally to about 2/3 of the S&L crisis and twice the size of the Mexican default in 1994 - i.e. it is material, but not system threatening.'
That's the good news. The bad news: ''the system can withstand a moderate economic crisis (like those that occurred post-1993) but not a major one (like 1974).'
Bridgewater estimates that losses with the current hedge fund regime would have been $80-$100 billion in the post-1993 crises, $300-$350 billion in 1974 (and $500-$600 billi"

11 May 2006

Pink- Dear Mr President - Live

The acoustic protest number makes a strong comeback.
YouTube - Pink- Dear Mr President - Live: "Pink performs Dear Mr President Live in NYC. It's a controversial song from her new album that all people should hear"

10 May 2006

Copper hits record high above $8,000

RTE Business - Copper hits record high above $8,000: "The price of copper smashed through $8,000 a tonne for the first time today, following the closure of a mine in key producer Mexico.
In morning trade on the London Metal Exchange, three-month copper prices reached $8,010 a tonne - the highest point since the metal was first listed in 1877.
The price of copper, used for electrical wiring and plumbing, has been boosted in recent months by supply problems, limited output and soaring demand from the booming economies of China and India.

Meanwhile, gold prices breached $700 for the first time in 25 and a half years in both London and New York yesterday as investors ploughed cash into the precious metal amid rising concerns over the Iranian nuclear crisis.
On the Comex, a division of the New York Mercantile Exchange, gold for June delivery touched $701.50 an ounce - the highest level since October 1980. On the London Bullion Market, the price of gold reached $700.80 an ounce for the first time since September 1980.
Platinum also climbed to a record high $1,236.50 an ounce on the London Platinum and Palladium Market. Investors have sought refuge in gold and platinum because both precious metals are seen as a safe store of value in times of geo-political uncertainty, notably the current Iranian nuclear energy crisis.The price of copper smashed through $8,000 a tonne for the first time today, following the closure of a mine in key producer Mexico.
In morning trade on the London Metal Exchange, three-month copper prices reached $8,010 a tonne - the highest point since the metal was first listed in 1877.
The price of copper, used for electrical wiring and plumbing, has been boosted in recent months by supply problems, limited output and soaring demand from the booming economies of China and Indi"

Et tu, Stephen? - Bill Bonner

*** We are in a late stage of empire...when pandering to the masses has degraded many of our most important institutions. Congress faces the biggest challenges of our time - war and bankruptcy - like a jackass staring at a computer screen. The dumb beast knows something is going on, but he is incapable of figuring it out. Do voters "throw the bums out?" Not at all. They re-elect them more often than ever before.

And over in the private sector, corporate managers live it up at shareholders' expense, and no one seems to notice. Lee Raymond, former chairman of Exxon Mobil, was paid $686 million over 12 years - an amount equal to $144,573 per day. What did he do that was so valuable it couldn't have been done by some other clock-puncher at 1/100th of the price? No one knows.

Or take William McGuire, former CEO of UnitedHealth Group. The man took shareholders for $1.6 billion during his stay in the executive office.

At this stage of decay, the masses cannot tell a decent politician from an ordinary one; nor control the pay of their own hired hands.

*** Et tu, Stephen?

We think the end is nigh, because Stephen Roach, who can usually be depended upon for a view of the world economy as gloomy as our own, has suddenly brightened up. What happened to him? Some kind of brain event? Something new in the water? We don't know, but now that the last bear has capitulated, the collapse can begin.

"World on the Mend," is the title of his recent essay. In it, he explains why the world is not going to hell in a handcart after all. "I am feeling better about the prognosis for the world economy for the first time in ages," he writes. "No, I am not prepared to give an unbalanced world the green light. But it's time to give credit where credit is due: First, to globalization for holding down inflation. Second, to central banks for collectively embarking on policy normalization campaigns."

Roach sums up by saying, "I am delighted that the global economy finally seems to be taking its medicine. Let's hope the cure works."

What is this medicine the world is taking? What is this miracle elixir that cures debt and deficits? What panacea has been developed in the secret laboratories underneath the Fed's headquarters in Washington? How does it heal the sick trade imbalances and wipe away the ugly debt that blemishes the poor in America's suburban ghettos?

Roach does not exactly say. We presume he refers to rate increases in the United States and the lack of rate increases in Europe. Now, he claims, "the world is going to collectively alter its game plan and respond...to the problems."

Oh, of course. That explains it.

Apparently, Mr. Roach has much more faith in public officials and public policy than we do.

We always turn back to the fundamentals...back to the essentials...back to basics. When a debt is run up, it must be paid off - by someone, somehow, sometime.

Sinning is more fun than repenting. A boom is more fun than a bust. Paying off a debt is likely to be less pleasant than contracting it.

Against those verities we have Mr. Roach's newly found faith that the managers, manipulators, kibbitzers and regulatory parasites. The world's central banks have found a way to coordinate their policies so as to "rebalance" the planet's financial system and sustain its balmy growth indefinitely. Even if the Morgan Stanley economist had come to believe it, our guess is that he'll regret having said anything.

9 May 2006

Commodity Investment Summit 2006

Commodity Investment Summit 2006 - The Inaugural Pan-European Conference On Commodity Investment: "In an environment of increasing pension fund deficits coupled with poor expected returns from traditional assets, pension funds have begun to look increasingly hard at alternative asset classes. Although the appetite for commodities amongst pension funds is clearly there and building, a number of hurdles stand in the way of investment mandates. The Commodity Investment Summit will provide a platform for asset managers, investment banks and brokers, and pension funds to address the core knowledge gaps about commodity investing."

The peak oil crisis: a frenzy in Washington | EnergyBulletin.net | Peak Oil News Clearinghouse

The peak oil crisis: a frenzy in Washington | EnergyBulletin.net | Peak Oil News Clearinghouse: "Last week the peak oil phenomenon reached a turning point when official Washington began to realize it has a problem. The problem, however, is currently being framed as high-gas-prices-going-into-the-next-election rather than worldwide oil depletion. Thus the first round of solutions being proposed ranged from the bizarre to unachievable.

The fun started on Sunday of last week, right after oil has reached a new high of $75 a barrel, when Senator Arlen Specter said the US should back a plan to tax away the excess profits of the oil companies. The senator opined that that the US has allowed too many oil companies to merge so that we have reduced competition and higher prices.

On Monday, Presidential spokesman Scott McClellan revealed that the President had directed the Energy and Justice Departments to investigate 'illegal manipulation of gasoline markets' and that the President would unveil a set of plans the next day to deal with high oil prices.

On Tuesday morning, the Washington Post weighed in with a story on how the President and congressional Republicans were beginning to feel the heat from high gas prices and were starting to fear what the electorate would do next November. After consulting various energy experts, the Post concluded that anything the President or Congress could do to increase the supply of oil or reduce demand would take years to have an impact.

Later that day, the President appeared before the Renewable Fuels Association to announce his plan for dealing with $3+ gasoline prices. In addition to the previously announced efforts to root out illegal price gougers and oil company collusion, the President said he would temporarily suspend the requirement to replenish the Strategic Petroleum Reserve with oil that had been borro"

India is on the road to a transport revolution

Guardian Unlimited Business | | India is on the road to a transport revolution: "When Yohan Poonawalla took delivery of the first Rolls-Royce Phantom sold in India last year, the car was everything that he was promised. Inside the 2.5-tonne, 20ft vehicle was a hand-crafted walnut dashboard featuring a humidor. The tinted windows had electronically controlled curtains. Open the doors and out popped a silver-handled umbrella.
But the £500,000 vehicle's first miles in the country were traumatic for Mr Poonawalla. Picking it up from Mumbai, the 34-year-old scion of a wealthy industrial family had to drive the car to his home in Pune, 180km away. Despite its immense power - the Phantom zooms from 0 to 62mph in under six seconds - the car slowly picked its way through the maze of Mumbai's decrepit backstreets and gridlocked intersections"

A Look Into Jim Rogers' Crystal Ball

Resource Investor - Interviews - A Look Into Jim Rogers' Crystal Ball: "JOHANNESBURG (Business Day) -- Jim Rogers shoots to prominence as co-founder of Quantum with U.S. multi-billionaire George Soros. The international best-selling author more recently achieves investment cult status with prophetic views on commodities. Below is an interview with Classic Business Day on the current state of the market.
LINDSAY WILLIAMS: Jim Rogers has been on Classic Business Day a few times, and his preference for commodities has proved spectacularly correct - maybe more correct than even Jim thought! Jim, as I said in my introduction, commodities continue moving up, but it seems to be gathering momentum - have these moves surprised you at all?

JIM ROGERS: Not in general terms - it has more than tripled in the last seven-and-a-half years. As you may remember I started a commodities index fund on 1 August 1998 - it’s up maybe 250% since then, which is a pretty hefty move - but it’s seven-and-a-half-years. In the end - as with all bull markets - when we get to the end in five, 10 or 15 years it’s going to startle everybody, including me, and I’m the bull. But that’s the way bull markets are - who would’ve thought that the Nasdaq would have gone up 10 times, who would’ve thought that Cisco would’ve gone up 100 times in the stock bull market - but that’s what happens in bull markets.
LINDSAY WILLIAMS: The bull market in oil has continued to surprise people it got very close to $75 a barrel the other day, maybe we could start with that - has it still got legs?
JIM ROGERS: Sure, and how. There may well be some setbacks - there should be - but adjust it for inflation and oil should be over $100 a barrel, and it’s going to go there because nobody�"

Bric's forex, gold holdings cross G7's for first time ever- The Economic Times

Bric's forex, gold holdings cross G7's for first time ever- The Economic Times: "TOKYO: Brazil, Russia, India, and China (referred to as BRIC group), which currently manifest the world’s highest economic growth rate, have surpassed G7 countries in their forex/gold holdings for the first time in history.

As of the end of March, the aggregate holdings of BRIC amounted to $1,292,200m, according to estimates published on Thursday in the Nihon Keizai, Japan’s leading economic newspaper.

As compared with the state of affairs in this respect as of the end of ’04, the forex/gold holdings of BRIC went up by 40%. At the same time, the forex/gold reserves of G7 countries (Britain, Germany, Italy, Canada, the United States, France and Japan) amounted to $1,253,900m.

At present, China accounts for 68% of forex/gold reserves of BRIC countries. However, according to Japanese experts’ estimates, the growth of its forex/gold reserves has slowed down while those of Russia, India and Brazil now increase by more than 10% a year.

Russia, which ranks second in forex/gold reserves in BRIC after the PRC, rivets particular attention in this connection.

BRIC countries, the Nihon Keizai writes, will continue to increase their influence on the world currency market while having mounting impact on the rate of the US dollar, in particular. "

8 May 2006

White House said it is "unaware" of a letter

Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor: "WASHINGTON (AFX) - The White House said it is 'unaware' of a letter from Iranian President Mahmoud Ahmadinejad to US President George Bush, which an Iranian government spokesman said Ahmadinejad had written in an attempt to smooth the tensions between the two countries."

Commercial capitulation in Silver

KultaKeskus.com: "It's been 4 weeks since I wrote my last article Big moves ahead in silver. Silver was trading then around $12. After that we have seen a climb up to almost $15, a plunge of more than $3 in less than 24hrs and a recovery up to levels above $14. These have been quite big moves IMO, but we are bound to see much bigger.
The good news is that based on this weeks COT data the moves are likely to be to the upside. All the long term fundamentals favor silver. The launch of the Silver ETF with good trading volume has put the commercials with their backs against the wall and now we can see their capitulation in the COT numbers. We have very interesting times ahead of us. This kind of commercial short covering to higher silver prices has never happened before."

Van Eck Seeks SEC Approval for Gold Shares ETF

www.mineweb.net | sections | whats new Van Eck Seeks SEC Approval for Gold Shares ETF: "RENO--(Mineweb.com) In the wake of the resounding success of gold bullion-backed ETFs, New York-based Van Eck Associates has filed a registration statement with the SEC for approval of the first U.S. ETF that would focus on gold and silver mining company stocks."

Where the rubber meets the road

Dude, where's the Dharma: "t seems to me, after reading the latest from Stephen Roach, that critiques similar to mine found their way to him. He acknowledges that deciding to do a thing is not the same as doing it. Yet, I still believe Mr. Roach's sanguinity on the expected rebalancing of international accounts is premature. I am less confident than he that the current US administration will allow financial solvency arguments to trump security arguments in their deliberations.

This perspective shifts the argument from one of policy recommendation, i.e. the job of a pure economist, to one of policy implementation, i.e. where the rubber meets the road. I agree with Mr. Roach's prescription, the dollar needs to fall to a more realistic level, but I don't agree that such considerations will be very influential if President Bush thinks we are fighting World War III and Vice President Cheney thinks Reagan taught us deficits don't matter. The buck, after all, stops with them.

(Blogosphere debate note: whether they actualy said such things is less important than whether they believe them, as their policy choices seem to indicate.)

While the esteem in which Central Bankers are held has risen markedly during the Greenspan era, this was, I contend, mainly a function of his easy money policies. And even Greenspan's suggestions of fiscal discipline fell on deaf ears with this administration. They are, as they have repeatedly said, on a mission to which other concerns are subordinated. As Arthur Burns related in his Anguish of Central Banking, it is easy to accomodate in a monetary sense, very difficult to restrict.

This development is not unique to the Bush administration. Each President's focus varies. Moreover, the virtues accruing to the issuer of the world's reserve currency have lent empirical credence to the view that deficits"

Mob cheers as bodies found in wreckage

Scotland on Sunday - Mob cheers as bodies found in wreckage: "CHEERING crowds punching the air as columns of smoke billowed upwards yesterday symbolised another grim turn in the relationship between British forces and Iraqis after three years of occupation.
Minutes earlier, a British helicopter had exploded in a fireball after being shot out of the sky above Basra. Iraqi fire-fighting crews rushed to the scene and reported they had found charred bodies amid the wreckage.
British forces also headed for the area to seal it off while they recovered their dead and anything important from the helicopter. But they were met by a frenzied, jubilant mob.
As the UK forces arrived, backed by armoured vehicles, a hail of stones came from the crowd of hundreds. They jumped for joy and raised their fists in triumph as the plume of thick smoke rose into the air from the blazing crash site.
The crowd also set fire to British armoured vehicles using petrol bombs, but eyewitnesses said the soldiers inside escaped unhurt. British forces fired weapons into the air in an effort to disperse the crowd.
Speaking from Basra, spokesman Major Sebastian Muntz, said: 'It has been quite tense and British troops who secured the area came under attack with a variety of weapons. One hopes this is just an isolated incident and we can get on with sorting out Basra.'
Although British officials would not confirm the number of dead, the owner of one of the houses near the crash site said he had seen the bodies of five crew members.
'One of them belonged to a major, I could see his rank,' said the man, Abu Zaid. 'I saw the remains of the others.'
As the chaos worsened, shooting broke out between the British soldiers and armed militiamen, and at least four people, including a child, were reported to have been killed in the mayhem.
The c"

Gold price to kick into full gear: Faber

Inside Business - 07/05/2006: Gold price to kick into full gear: Faber: "ALAN KOHLER: Well, the death of the Greenback, gold at $US6,000 an ounce with commodity and energy prices rising vertically, spurred on by growing international tensions and war - no, that's not the background to the latest sci-fi pot boiler, but the tentative vision of one of the world's most respected contrarian economic forecasters, Marc Faber. Dr Faber must be taken seriously though because of his record in predicting, among other things, the global stock market crash of 87, Japan's collapse in 1990 and the Asian meltdown of 1997 - forecasts that earned him the moniker Dr Doom. He's also the editor and publisher of the influential The Gloom, Boom and Doom Report. And, as you'll hear, he has some very interesting views on the relative merits of the Australian and US central banks. I spoke to Marc Faber from New York this week.
Marc Faber, just to put this week's interest rate increase in Australia into a global perspective, do you think the developed world in general is in a process of increasing interest rates and reducing liquidity that has a way to run yet?
MARC FABER, 'THE GLOOM, BOOM AND DOOM REPORT': Yes, I think so because we have a global boom and interest rate increases have been very slow. In other words, in the US, we went from 1 per cent on the Fed fund rate in June 2004 to 4.75 per cent, but I think that inflation is higher than 4.75 per cent. And if you look at long growth in the US and credit market growth, then we haven't had tight money yet because if money was tight, then asset markets wouldn't rally as they do at the present time.
ALAN KOHLER: There is a lot of debate in the financial markets about whether the US will have a pause in its interest rate tightening cycle. What do you think?

7 May 2006

Over 3 Million Chinese Travel by Air During Holiday

Over 3 Million Chinese Travel by Air During Holiday: "More than 3 million Chinese traveled by planes during the week-long National Day holiday, which ended on Friday, an official with the General Administration of Civil Aviation of China (CAAC) told Xinhua Saturday.

From Oct. 1 to 7, CAAC dispatched 26.459 domestic flights carrying 3.03 million travelers, up 6.8 percent and 17.5 percent year-on-year, respectively, statistics from CAAC showed.

On Oct. 1, the National Day, alone, CAAC dispatched a record 3,423 flights. The airports in Beijing, Shanghai and Guangzhou handled a total of 971,000 passengers, 160,000 more than in the same period of last year, the official said. "

Golden Week Benefits China's Neighbors

Golden Week Benefits China's Neighbors: "Statistics with the Thailand tourism authority show Chinese tourists made more than 100,000 trips to Phuket Island in 2005, and the figure is expected to top 150,000 this year.

A Chinese expert said China's holidays have benefited more and more neighboring countries since China began its first full week holiday to celebrate National Day in October 1999.

Having an entire week off means that Chinese tourists have enough time to head out the country. During this week's golden holiday, the neighboring countries have been the top choices for Chinese tourists, according to latest figures from the National Tourism Administration.

The Southeast Asian countries, including Singapore, Malaysia and Thailand, have attracted the majority of Chinese tourists, said the tourism authority.

Chinese tourists have been the main source for increased profits of scenic spots, restaurants and department stores in Singapore, the authority said.

Singapore has also become a stop for Chinese tourists who are visiting countries in Africa or around the Indian Ocean. The World Tourism Organization predicts China will become a major exporter of tourists in 10 years, which will help boost Singapore's role as an international shipping center. "

NYT humor the Gold Bugs - But get it wrong

(BTW - I'm quite certain, from my own research, that Mr Sinclair and Mr Murphy are generally correct and that the NYT is factually WRONG on significant points, no surprise!)

IT'S a splendid spring day in Connecticut's horse country and James E. Sinclair, perhaps the best-known gold speculator of his era, is sitting before his trading terminal, contemplating the upward thrust of gold on his trader's chart.

The sun, bursting through the bay windows, catches the glint of gold that is everywhere in Mr. Sinclair's home office: on the coins near his computer, on his chunky Rolex watch, on the rings on three of his fingers, on the cuff links on his monogrammed shirt, and — could it be? — a hint of it in his one working eye.

"I love gold, O.K.?" he said, his voice rising in excitement. "Gold has made me wealthy. It feels nice. It's exchangeable. It's money."

On his television set, which is tuned to CNBC, news breaks of a terrorist attack in Egypt, the price of oil pushes higher and traders continue to sell the dollar, which is approaching a one-year low against the euro.

With gold trading at $683.80 an ounce, a 25-year high, it's a good time to be a gold bug like Mr. Sinclair, especially if, like him, you own a gold exploration company (his is in Tanzania) and were a buyer when the metal sank as low as $250 an ounce in 2001. Now Wall Street, traditionally a laggard when it comes to making the investment case for gold, has jumped on Mr. Sinclair's bandwagon.

Investment banks like J. P. Morgan and Goldman Sachs are putting out bullish research notes, retail investors are heavy buyers through exchange-traded funds and hedge funds; and the trading desks of investment banks have been piling into the market, especially in the last week.

For Mr. Sinclair, who rode the last bull market in gold to its peak, in 1980, the surging price of his beloved metal is sending out clear signals that take him back to the 1970's, when inflation, a weak dollar and an oil spike driven by turmoil in the Middle East propelled gold to a high of $875 an ounce, or more than $1,800 in current dollars after adjusting for inflation. His ultimate price target now is not far from that: $1,650 an ounce, assuming that things become really bad.

"Gold is a barometer of the common stock of a country, and right now gold is sniffing out weakness in the management of the United States as a business," said Mr. Sinclair, 65, a lifelong Republican who twice voted for President Bush. "Iran is becoming a nuclear power. The chairman of the Federal Reserve is on a puppet string controlled by the White House, and there is no such thing as a strong-dollar policy when the dollar is heading south."

For more than two decades, the apocalyptic lament of Mr. Sinclair and other gold bugs has been largely dismissed as the United States has experienced — aside from a few hiccups — a 25-year bull market in a range of assets, from stocks and bonds to real estate and art.

Sustained by a continuing flood of liquidity, these assets have continued their mighty climb, even as crucial gauges of economic health in the United States — the budget and current account deficits — have continued to worsen. But now, with gold making a run for $700, dedicated gold investors are getting a wider hearing.

THEIR passion notwithstanding, gold bugs tend to be small-time investors. Gold's recent surge has instead been underpinned by a rush of mainstream investors, including hedge funds, commodity-based mutual funds and exchange-traded funds.

For these investors, gold is less a way of life than it is hedge against inflation and a prudent measure of diversification during an increasingly worrisome time. The extent to which this new wave of capital remains invested in gold will determine if the recent spike is just another anomaly or the onset of the second coming of the great gold bull market that the true believers have been calling for since the price of gold crashed a quarter-century ago.

Of course, many investors say that given gold's sharp recent climb, a correction would not be surprising. It's another asset bubble, they say, the latest investment fad. But for Mr. Sinclair and a small clutch of other self-exiled Wall Streeters, the metal's recent climb is just deserts for their unwavering, if not mystical, devotion to gold as an investment, an adornment, a means of exchange and, more than anything else, a moral bulwark in a corrupting sea of paper money, credit and what they see as insidious financial instruments.

Mr. Sinclair, who in the 1970's ran his own trading firm, achieved his renown by selling 900,000 ounces of gold at an average price 0f $810 in early 1980. That was when the metal was capping a decade-long bull market that commenced in 1971, when President Richard M. Nixon severed once and for all the dollar's link to gold.

In addition to selling his hoard, Mr. Sinclair sold his trading business, took his total net gain of $18 million and retreated here to the Connecticut countryside where he built his own private Shangri-La. It is indeed, as Mr. Sinclair likes to call it, "the house that gold built."

On the outskirts of Sharon, a village at the foot of the Berkshires, the sprawling 38-acre estate includes an indoor swimming pool and pistol range, horse stables and a specially equipped garage that once housed his collection of racing cars. It's a lot of property for a solitary man — his wife of 40 years died in a car crash in India two years ago. Now, he uses his Web site (jsmineset.com), books, DVD lectures and cartoons that he commissions to proselytize about the virtues of gold and the depredations of central bankers.

"This will be my last great ride," he said of the current spike in gold prices. "Everybody loves to be right."

In Spain, they call the obsession of some people to dig large holes in the ground to search for the elusive ounce of gold "mal de piedra," or the sickness of rocks — one way, perhaps, to describe the condition that affects Mr. Sinclair and his coterie of gold investors.

With their missionary zeal and weakness for conspiracy theories, gold lovers can seem a touch afflicted. They also collect and pass around offbeat, brain-teasing findings. One is that the dollar has lost 98 percent of its value since 1913, when the Federal Reserve System was established. Another is an assertion by the American Institute for Economic Research, an obscure research outfit in Great Barrington, Mass., that since 1945, inflation has eroded $15.8 trillion from the savings accounts of United States citizens.

Both findings underscore their benchmark precept: that a currency not tied to gold becomes debased when central banks print money and governments spend freely. Perhaps Alan Greenspan, who before his run as chairman of the Federal Reserve was highly regarded in gold-bug circles, captured this point best. "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation," he wrote in 1966, when he was an economic consultant. "Gold stands in the way of this insidious process."

The great liquidity explosion that occurred under Mr. Greenspan has made him a turncoat in the eyes of the gold-bug crowd. But his successor, Ben S. Bernanke, or "Helicopter Ben" as they call him, inflames its passions all the more. To this group, Mr. Bernanke's passing allusion — before he became Fed chairman — to a helicopter dropping money over a recession-bound economy confirmed its deepest fears that a monetary system not anchored by gold was essentially inflationary if not downright immoral.

All the same, most mainstream economists accept that a return to the gold standard and its restrictive covenants would be not only unfeasible but also deflationary. Gold bugs may cry, and be correct, about the creeping impact of inflation, but it is also true that the same climb in prices, aided by the great liquidity boom, has made some of them millionaires, as houses they bought for less than $100,000 in the 1960's are now worth millions.

Like Mr. Sinclair, William J. Murphy III is also a Wall Street refugee. After a one-year stint in 1968 as a wide receiver for the New England Patriots, he began a career as a commodities trader, working for a number of firms, including Shearson and Drexel Burnham. Convinced that the price of gold was being suppressed by an unholy alliance between the central banks and major investment banks, he formed the Gold Anti-Trust Action Committee, known as GATA, that seeks to publicize facts and assertions that support his point, namely that the gold reserves in central banks are significantly overstated.

GATA for the most part is a one-man show — Mr. Murphy, dressed in his sweatsuit, perched in front of the computer in his home in suburban Dallas. With his excitable manner and his outré theories about gold, he is generally thought to exist on the outer fringe of the gold-bug movement.

Indeed, his central thesis — that Goldman Sachs and other banks have conspired to keep a cap on the price via short sales to back the government's strong-dollar policy, especially while a former Goldman senior partner, Robert E. Rubin, was Treasury secretary in the late 1990's — is far-fetched.

With the price of gold surging, Mr. Murphy is convinced that Goldman Sachs, J. P. Morgan and others are frantically buying now to cover for the gold they sold short over the years. Goldman Sachs and J. P. Morgan declined to comment about their gold trading positions or strategies.

"What a day," Mr. Murphy said one day last week as gold broke through $670. Goldman Sachs and J. P. Morgan were big buyers that day on Comex, the division of the New York Mercantile Exchange where gold contracts trade. Sputtering at the joy of it all, Mr. Murphy could well have been a prospector hitting the Mother Lode. "These guys are short, and they are panicking to get out of their positions," he said. "They are sweating bullets, and it couldn't happen to a nicer bunch of guys."

There is a kernel of truth to what Mr. Murphy says. Central banks have been aggressive sellers of gold, especially in the late 1990's, when gold was touching record lows. But most economists say that there was no grand design involved, just a badly timed attempt to shift into higher-yielding assets like bonds.

As for investment banks, they are sellers and buyers of any given asset at any given time. But it is also true that they have hardly been enthusiastic advocates for gold as an investment, especially when the stock market was king. Even now, as they have issued positive reports about the metal, their price targets seem oddly out of sync with its relentless rise.

Goldman's forecast for a year-end price is $625 an ounce; J. P. Morgan's target, which is currently under review, is $560, and Morgan Stanley's is $550.

Compared with Mr. Murphy and his boylike excitability, James Turk speaks with an assured gravity consistent with his background as a commercial banker at Chase Manhattan. But his views about gold as the ultimate store of value in a financial world on the verge of collapse are no less doctrinaire.

Indeed, Mr. Turk has established his own online payment system, GoldMoney.com, through which he and his fellow gold bugs may enjoy the thrill of buying goods and services via gold, not cash.

IN some ways, it is a symbolic exercise. While the payment system is supported by $100 million worth of gold, no merchants have agreed to take bullion as payment, although Mr. Turk hopes that day may come. More than anything else, the site demonstrates his disdain for the dollar and all other forms of paper money — a view that he often heard from his parents, who experienced the ravages of hyperinflation in Austria in the 1920's.

"It's not gold going up; it's the dollar going down," Mr. Turk said by phone from Australia, where he was speaking at an investment conference. Gold has held its value much better than the dollar against commodities like oil, he said.

With oil hitting new highs — it has hovered around $70 a barrel for weeks — Mr. Turk foresees a return to the 1970's, when high inflation and a volatile Middle East drove gold to its peak. "If we get close to $850 this year, it's most probable that we will see a four-digit gold price in 2007," he said. Four-digit gold — an ounce of bullion selling for $1,000 or more — is the gold bugs' equivalent of a visit from the Messiah.

But for the growing number of hedge funds that are piling into the commodity, gold is less a virtuous investment than it is a mercenary one.

China and India are buying more gold. Iran is becoming more bellicose in its stand toward the West. And, most important, liquidity is making a broad shift to commodities and out of stocks.

"Do I think that gold is God? No," said Monty Guild, who runs Guild Investment Management, a hedge fund in Malibu, Calif. "I'm a gold opportunist. When it's good, we like it; when it's not, we stay away. Gold does well during wars, and we believe there will be more wars."

And for those not in gold, or any other highflying commodity, for that matter, the feeling can be lonely. William H. Miller III, portfolio manager of the $19 billion Legg Mason Value Trust, which has beaten the Standard & Poor's 500-stock index for 15 consecutive years, has no gold in the fund. His view is that inflationary expectations, if not prices themselves, remain quiescent, and that gold — like oil, emerging markets and small-cap stocks before it — has become the latest investment craze, propelled upward by a wave of hot money, a term for speculative short-term capital.

"Gold certainly looks extended from here," said Mr. Miller, whose fund is currently trailing the S.& P. 500 for the year. "It's easy to make money when you are trend-following," he added. "But if you are worried that the end is near, the last thing I want is gold because of all the hot money."