Even though it's a failed strategy, the pressure is rising on Ben Bernanke to institute another round of quantitative easing to give the appearance something is being, and can be done, to stimulate the economy.
With no hint in the minutes from the latest FOMC meeting the Federal Reserve is close to pulling the trigger on QE3, it does appear pressure is growing for something to be done, as unemployment remains high, as no job growth is really happening, as the few jobs being created doesn't even keep up with those entering the job market for the first time, let alone those in the job market for years continuing to look for jobs without success.
The growing consensus is the Fed won't wait until the job market further deteriorates to institute more easing. It can't afford to look like they waited too long and are now behind the economic curve.
But whether the idea of QE3 is attractive to you or not, it's going to come, and for investors they must prepare accordingly in the areas they're prepared to put their money into.
There is no doubt commodity and commodity-related companies will largely benefit from the next round of stimulus. The U.S. dollar will start to plummet again after the recent outrageous upward climb, based upon nothing else than it being perceived as the only safe place to park one's money during that period of time.
At this time investors will have to wait until it happens, in the meantime building up their strategy as to how the next round of easing will affect the market.
Showing posts with label Quantitative Easing. Show all posts
Showing posts with label Quantitative Easing. Show all posts
Thursday, July 12, 2012
Wednesday, March 21, 2012
Gold Could Jump on Inflation, Dollar, India Jewelry Demand
Gold prices may be poised to rebound as several elements are combining to give the yellow metal a probable boost.
Federal Reserve Chairman Ben Bernanke made a statement that rising oil prices could spark inflation, the U.S. dollar has been under pressure, and jewelers in India are ending a 5-day shutdown protesting proposed tax increases from the Indian government; all of which could push gold prices up quickly over the short term.
Another major factor is the ongoing sovereign debt crisis in Europe, which continues to weigh down the Zone. The media has neglected it recently, so it hasn't been part of the conversation, even though it's a significant factor in the movement of gold prices.
Bernanke was extremely bearish on European banks, which points to the fact there will be more quantitative easing coming, which is also very bullish for gold.
So far in 2012 gas prices in the U.S. have soared 18 percent, reaching a ten-month high of $3.864 a gallon Wednesday. Not only is inflation a trigger for gold prices to rise, but in the case of higher gas prices, it takes away from consumer spending, which weakens the economy, which also can push gold prices higher.
Gold for April delivery on New York Mercantile Exchange the Comex division of the New York Mercantile Exchange settled at $1,650.30 an ounce, up $3.30, or 0.2 percent.
Federal Reserve Chairman Ben Bernanke made a statement that rising oil prices could spark inflation, the U.S. dollar has been under pressure, and jewelers in India are ending a 5-day shutdown protesting proposed tax increases from the Indian government; all of which could push gold prices up quickly over the short term.
Another major factor is the ongoing sovereign debt crisis in Europe, which continues to weigh down the Zone. The media has neglected it recently, so it hasn't been part of the conversation, even though it's a significant factor in the movement of gold prices.
Bernanke was extremely bearish on European banks, which points to the fact there will be more quantitative easing coming, which is also very bullish for gold.
So far in 2012 gas prices in the U.S. have soared 18 percent, reaching a ten-month high of $3.864 a gallon Wednesday. Not only is inflation a trigger for gold prices to rise, but in the case of higher gas prices, it takes away from consumer spending, which weakens the economy, which also can push gold prices higher.
Gold for April delivery on New York Mercantile Exchange the Comex division of the New York Mercantile Exchange settled at $1,650.30 an ounce, up $3.30, or 0.2 percent.
Wednesday, August 31, 2011
Alcoa (AA), Caterpillar (CAT) Push Dow Up
After solid reports from the Chicago purchasing managers' index and factory orders, shares of Alcoa (NYSE:AA) and Caterpillar (NYSE:CAT) helped push the Dow up, as it moved slightly into positive territory on the year.
In early trading the S&P 500 (SPX) climbed 10 points, or 0.9%; and the Nasdaq Composite (COMP) was up 21 points, or 0.8%.
On Friday the August report for jobs will be released, with expectations of the economy adding about 80,000 new jobs. The unemployment rate should remain at 9.1 percent.
It also appears there will be another round of quantitative easing, with the question apparently only what form it'll take, not if it'll be implemented. That will put downward pressure on the U.S. dollar and push gold and other commodities up.
Alcoa was trading at $12.77, up $0.41, or 3.32 percent, as of 11:59 AM EDT. Caterpillar was at $91.70, jumping $1.87, or 2.08 percent.
In early trading the S&P 500 (SPX) climbed 10 points, or 0.9%; and the Nasdaq Composite (COMP) was up 21 points, or 0.8%.
On Friday the August report for jobs will be released, with expectations of the economy adding about 80,000 new jobs. The unemployment rate should remain at 9.1 percent.
It also appears there will be another round of quantitative easing, with the question apparently only what form it'll take, not if it'll be implemented. That will put downward pressure on the U.S. dollar and push gold and other commodities up.
Alcoa was trading at $12.77, up $0.41, or 3.32 percent, as of 11:59 AM EDT. Caterpillar was at $91.70, jumping $1.87, or 2.08 percent.
Monday, August 22, 2011
Gold Jumping on QE3 Speculation
Speculation the Federal Reserve will introduce another round of quantitative easing had the price gold surpassing the $1,890 mark early in the trading day, as investors continue to migrate toward safety in the volatile and weak economy.
Gold broke $1,890 in New York and London, as the failed Obama economic policies continue to weigh on the global economy.
While some continue to talk double-dip recession, we at Everything Gold have maintained we've never left the recession, as the data continue to confirm.
Others who believed in the recovery myth are now talking entering a recession, which has helped offer support to the price of gold, as well as the ongoing sovereign debt debacle in Europe. An earlier-than-expected QE3 adds more fuel to the gold price fire, and could cause an inevitable correction in gold to be somewhat subdued in comparison to what it may have been.
Barrick Gold (NYSE:ABX) was trading at $52.61, gaining $1.83, or 3.60 percent, as of 11:48 AM. Yamana Gold (NYSE:AUY) was trading at $15.94, jumping $0.43, or 2.77 percent. Newmont Mining (NYSE:NEM) was at $63.23, climbing $3.15, or 5.24 percent. Goldcorp was trading at $53.96, increasing $2.31, or 4.47 percent. Eldorado Gold was at $20.12, up $0.73, or 3.76 percent. Novagold was trading at $10.05, gaining $0.49, or 5.13 percent.
Gold broke $1,890 in New York and London, as the failed Obama economic policies continue to weigh on the global economy.
While some continue to talk double-dip recession, we at Everything Gold have maintained we've never left the recession, as the data continue to confirm.
Others who believed in the recovery myth are now talking entering a recession, which has helped offer support to the price of gold, as well as the ongoing sovereign debt debacle in Europe. An earlier-than-expected QE3 adds more fuel to the gold price fire, and could cause an inevitable correction in gold to be somewhat subdued in comparison to what it may have been.
Barrick Gold (NYSE:ABX) was trading at $52.61, gaining $1.83, or 3.60 percent, as of 11:48 AM. Yamana Gold (NYSE:AUY) was trading at $15.94, jumping $0.43, or 2.77 percent. Newmont Mining (NYSE:NEM) was at $63.23, climbing $3.15, or 5.24 percent. Goldcorp was trading at $53.96, increasing $2.31, or 4.47 percent. Eldorado Gold was at $20.12, up $0.73, or 3.76 percent. Novagold was trading at $10.05, gaining $0.49, or 5.13 percent.
Friday, March 4, 2011
Federal Reserve’s Assets Soar to $2.55 Trillion
Bond purchases by the Federal Reserve of $11.9 billion in the second round of its quantitative easing, has brought the total assets held by the central bank to $2.55 trillion.
As of Wednesday, the Fed increased the amount of Treasuries held by $22.8 billion to $1.24 trillion. Mortgage-backed securities held by the Fed dropped by $9.27 billion to $948.9 billion. Federal agency debt was cut by $870 million to $143.2 billion.
Since November 12, the Federal Reserve has acquired $396.1 billion in Treasuries. Through June the central bank has a goal of acquiring $600 billion in government debt. They will also reinvest capital from maturing mortgage debt as well.
For the week ending February 21, the M2 money supply increased by $10.6 billion, according to the Fed. That means it's growing at an annual rate of 3.9 percent over the last year.
The difference between M1 and M2 ways of measuring the money supply is that M2, which is followed more than M1, includes savings and private holdings in money market, while M1 only measures capital held by companies and consumers for spending, in checking accounts and travelers checks.
M1 rose $25.7 billion, and over the last year jumped 9.2 percent.
As of Wednesday, the Fed increased the amount of Treasuries held by $22.8 billion to $1.24 trillion. Mortgage-backed securities held by the Fed dropped by $9.27 billion to $948.9 billion. Federal agency debt was cut by $870 million to $143.2 billion.
Since November 12, the Federal Reserve has acquired $396.1 billion in Treasuries. Through June the central bank has a goal of acquiring $600 billion in government debt. They will also reinvest capital from maturing mortgage debt as well.
For the week ending February 21, the M2 money supply increased by $10.6 billion, according to the Fed. That means it's growing at an annual rate of 3.9 percent over the last year.
The difference between M1 and M2 ways of measuring the money supply is that M2, which is followed more than M1, includes savings and private holdings in money market, while M1 only measures capital held by companies and consumers for spending, in checking accounts and travelers checks.
M1 rose $25.7 billion, and over the last year jumped 9.2 percent.
Friday, January 7, 2011
Bank of America (NYSE:BAC) on U.S. Dollar, Euro
Bank of America Corp.'s (NYSE:BAC) head of Americas G- 10 currency strategy at Bank of America Corp. in New York, Paresh Upadhyaya, commented on the relationship of the U.S. dollar and the euro after the U.S. payrolls report, which was considered disappointing.
Upadhyaya said, “Overall, the tone for the dollar should be stronger as most of the data has been coming in on the stronger side and that funding problems still weigh on Europe.”
As for the payrolls report, Upadhyaya added “They were clearly disappointing. The market had high hopes of a strong number due to the rising employment component in the regional manufacturing surveys.
“It is mixed data and therefore the dollar’s reaction is likely to be choppy.”
Because the U.S. dollar is the reserve currency of the world, it maintains the unique position of being able to go up in value even when it is weak itself, as its relationship with the euro shows.
That's why the dollar and gold can break its usual inverse relationship at times and move up together in value.
Long term this won't help the dollar, as it continues to be flawed because of the policies of the Federal Reserve.
But it will trade up at times as the real story of weakness in the EU and by extension, the euro, continues to unfold.
Upadhyaya said, “Overall, the tone for the dollar should be stronger as most of the data has been coming in on the stronger side and that funding problems still weigh on Europe.”
As for the payrolls report, Upadhyaya added “They were clearly disappointing. The market had high hopes of a strong number due to the rising employment component in the regional manufacturing surveys.
“It is mixed data and therefore the dollar’s reaction is likely to be choppy.”
Because the U.S. dollar is the reserve currency of the world, it maintains the unique position of being able to go up in value even when it is weak itself, as its relationship with the euro shows.
That's why the dollar and gold can break its usual inverse relationship at times and move up together in value.
Long term this won't help the dollar, as it continues to be flawed because of the policies of the Federal Reserve.
But it will trade up at times as the real story of weakness in the EU and by extension, the euro, continues to unfold.
Tuesday, January 4, 2011
C.H. Robinson Worldwide (NASDAQ:CHRW) to Benefit from Bush Tax Cuts, QE2
Noting C.H. Robinson Worldwide (NASDAQ:CHRW) is a pure domestic play, UBS (NYSE:UBS) sees them benefiting from the extension of the Bush tax cuts as well as implementation of QE2 by the Federal Reserve.
UBS said, "Given the recent uptick in sentiment regarding the near-term outlook for the US domestic economy - driven in part by the Fed’s QE2 program and Congress’ extension of the Bush tax cuts - we are raising our price target on C.H. Robinson, which remains largely a US domestic play...UBS price targets are defined as a 12-month outlook and we roll forward every quarter; so we’re now basing our target multiple on 2012 EPS ($3.23) rather than Q4/11-Q3/12 EPS ($3.09). The net impact is obviously to take our target higher."
UBS maintains a "Buy' on C.H. Robinson Worldwide, which closed Monday at $81.51, up $1.32, or 1.65 percent. UBS boosted their price target on them from $78 to $89.
UBS said, "Given the recent uptick in sentiment regarding the near-term outlook for the US domestic economy - driven in part by the Fed’s QE2 program and Congress’ extension of the Bush tax cuts - we are raising our price target on C.H. Robinson, which remains largely a US domestic play...UBS price targets are defined as a 12-month outlook and we roll forward every quarter; so we’re now basing our target multiple on 2012 EPS ($3.23) rather than Q4/11-Q3/12 EPS ($3.09). The net impact is obviously to take our target higher."
UBS maintains a "Buy' on C.H. Robinson Worldwide, which closed Monday at $81.51, up $1.32, or 1.65 percent. UBS boosted their price target on them from $78 to $89.
Wednesday, December 15, 2010
Bank of America (NYSE:BAC) Says Renminbi at Fair Value
Contrary to the assertions from some politicians and academics in America, Bank of America's (NYSE:BAC) T.J. Bond, chief Asia economist at Bank of America, said he sees the renminbi at "close to fair value."
Bond said, “We don’t agree with what academics and politicians in the United States are saying, that the renminbi is significantly undervalued.”
The renminbi is just another name for the yuan, the Chinese currency.
“For the first time in many years, we actually think Asian currencies are roughly fairly valued,” Bond added. “Given the strength of the story: strong growth, rising inflation, we think Asian currencies will continue to appreciate, but as they’ve reached fair values, we don’t actually expect much appreciation against the U.S. dollar.”
That assessment could be wrong based on the additional $600 million in so-called quantitative easing being implemented by the Federal Reserve, which will continue to debase the U.S. dollar
Bond said, “We don’t agree with what academics and politicians in the United States are saying, that the renminbi is significantly undervalued.”
The renminbi is just another name for the yuan, the Chinese currency.
“For the first time in many years, we actually think Asian currencies are roughly fairly valued,” Bond added. “Given the strength of the story: strong growth, rising inflation, we think Asian currencies will continue to appreciate, but as they’ve reached fair values, we don’t actually expect much appreciation against the U.S. dollar.”
That assessment could be wrong based on the additional $600 million in so-called quantitative easing being implemented by the Federal Reserve, which will continue to debase the U.S. dollar
Best Buy (NYSE:BBY) Bought Economic Reporting Kool Aid
The reporting by the financial or economic press has been largely dismal, especially in relationship to the so-called recovery, as they circled the wagons around Obama. Unfortunately for Best Buy (NYSE:BBY) they drank the media kool aid, believing there was some type of recovery going on, and so focused on brand-name high-end consumer items which people couldn't afford.
Best Buy Chief Executive Brian Dunn said noted, "The newer technologies, like 3D and IPTV (Internet Protocol TV), which we assort more broadly than anyone, have been slower to take hold."
It's easy to see a lot of people being fooled by the reporting that we're in an economic recovery, but a CEO of a giant retail chain like Best Buy should know better.
Anybody that believes Americans are all ready to open their wallets like they did in the past are delusional, as the Best Buy fiasco shows.
Anyone understanding business at all knows people are bargain hunting, and even though November retail sales were reported as better-than-expected by the U.S. Commerce Department, the vast majority of that will be found to come from bargain hunters and stores that met their needs and pocketbooks.
Reporting that consumers in the United States were buying more is misleading as well, as they are buying more of less expensive items, not necessarily spending more money.
When retailers report their earnings, we'll find out revenue was generated by sacrificing margins. It's as simple as that.
A small few may escape that outcome, but the vast majority of retailers will have lower earnings next quarterly report.
The fact of the misguided implementation of another round of quantitative easing should have been a warning to everyone that the economy is still in a recession. Even Warren Buffett has admitted to this.
If the economy is doing so well, why is the Federal Reserve ready to throw another $600 billion into it in an attempt to give it a boost? The answer is obvious: the economy is still in a recession, and that will continue on for some time.
The point for Best Buy and their management, is how could they have made such a bad decision. They should have known the general and mainstream financial media was going to paint the most positive picture they could, picking out any tidbit that makes it look like a recovery.
Best Buy closed Tuesday at $35.52, down $6.18, or 14.82 percent. Volume was almost 10 times the 3-month daily average.
Best Buy Chief Executive Brian Dunn said noted, "The newer technologies, like 3D and IPTV (Internet Protocol TV), which we assort more broadly than anyone, have been slower to take hold."
It's easy to see a lot of people being fooled by the reporting that we're in an economic recovery, but a CEO of a giant retail chain like Best Buy should know better.
Anybody that believes Americans are all ready to open their wallets like they did in the past are delusional, as the Best Buy fiasco shows.
Anyone understanding business at all knows people are bargain hunting, and even though November retail sales were reported as better-than-expected by the U.S. Commerce Department, the vast majority of that will be found to come from bargain hunters and stores that met their needs and pocketbooks.
Reporting that consumers in the United States were buying more is misleading as well, as they are buying more of less expensive items, not necessarily spending more money.
When retailers report their earnings, we'll find out revenue was generated by sacrificing margins. It's as simple as that.
A small few may escape that outcome, but the vast majority of retailers will have lower earnings next quarterly report.
The fact of the misguided implementation of another round of quantitative easing should have been a warning to everyone that the economy is still in a recession. Even Warren Buffett has admitted to this.
If the economy is doing so well, why is the Federal Reserve ready to throw another $600 billion into it in an attempt to give it a boost? The answer is obvious: the economy is still in a recession, and that will continue on for some time.
The point for Best Buy and their management, is how could they have made such a bad decision. They should have known the general and mainstream financial media was going to paint the most positive picture they could, picking out any tidbit that makes it look like a recovery.
Best Buy closed Tuesday at $35.52, down $6.18, or 14.82 percent. Volume was almost 10 times the 3-month daily average.
General Electric (NYSE:GE) Buying Back Berkshire (NYSE:BRK-A) Preferred Securities
General Electric (NYSE:GE) Chief Executive Officer Jeffrey Immelt announced the company has the goal of buying back the $8 billion in preferred securities he sold to Warren Buffet's Berkshire Hathaway Inc. (NYSE:BRK-A) in the latter part of 2008.
After siphoning billions off of taxpayers, General Electric has ended up in a much stronger position, but the ongoing recession could change that extremely quickly, although the misguided $600 billion quantitative easing program being implemented by the Federal Reserve could artificially prop up the economy and GE again.
Immelt also clarified GE's strategy going forward, which will be to continue to pursue strategic acquisitions, repurchase shares, and eventually boost the dividend.
Also causing some nervousness among shareholders in GE was Immelt's statement the company may be flush with over $30 billion in cash by 2013.
Concerns over the ability to integrate large acquisitions was the immediate response to the large size of the possible cash holdings of GE.
Immelt responded saying, “We are not going to let it go to $30 billion.” He said the $30 billion estimate was meant to be only conceptual; to get shareholders "dreaming."
After siphoning billions off of taxpayers, General Electric has ended up in a much stronger position, but the ongoing recession could change that extremely quickly, although the misguided $600 billion quantitative easing program being implemented by the Federal Reserve could artificially prop up the economy and GE again.
Immelt also clarified GE's strategy going forward, which will be to continue to pursue strategic acquisitions, repurchase shares, and eventually boost the dividend.
Also causing some nervousness among shareholders in GE was Immelt's statement the company may be flush with over $30 billion in cash by 2013.
Concerns over the ability to integrate large acquisitions was the immediate response to the large size of the possible cash holdings of GE.
Immelt responded saying, “We are not going to let it go to $30 billion.” He said the $30 billion estimate was meant to be only conceptual; to get shareholders "dreaming."
Bank of America (NYSE:BAC) Sees QE Extending Past Current Parameters
Bank of America (NYSE:BAC) economist Ethan Harris said he believes there's a strong possibility the Federal Reserve will continue the implementation of quantitative easing past the end of the first half of 2011.
Another round of quantitative easing to the tune of $600 million will be flushed into the economy, with little expectation it'll do any good, as past QE actions have shown.
Harris said, "I think the dark cloud in this otherwise sunny outlook is we have no plan for the budget deficit." I'm not sure what sunny outlook he's talking about, but the quantitative easing is definitely a dark cloud that will continue to get darker with no political will to deeply slash the unsustainable deficits in America.
Ben Bernanke and most politicians continue to kick the can down the road and hope the fallout won't happen on their watch. The day of reckoning will come, and it'll be extremely painful for most Americans.
With little hope QE2 will do anything to boost the job market, we could say an unknown extension of quantitative easing will be the way of life in America, as the government can never do anything to create jobs, neither the so-called independent Federal Reserve.
Expectations are until the unemployment rate plummets, the Fed will continue to pump money into the economy, no matter what the future consequences will be.
Unemployment today stands at 9.8 percent.
Another round of quantitative easing to the tune of $600 million will be flushed into the economy, with little expectation it'll do any good, as past QE actions have shown.
Harris said, "I think the dark cloud in this otherwise sunny outlook is we have no plan for the budget deficit." I'm not sure what sunny outlook he's talking about, but the quantitative easing is definitely a dark cloud that will continue to get darker with no political will to deeply slash the unsustainable deficits in America.
Ben Bernanke and most politicians continue to kick the can down the road and hope the fallout won't happen on their watch. The day of reckoning will come, and it'll be extremely painful for most Americans.
With little hope QE2 will do anything to boost the job market, we could say an unknown extension of quantitative easing will be the way of life in America, as the government can never do anything to create jobs, neither the so-called independent Federal Reserve.
Expectations are until the unemployment rate plummets, the Fed will continue to pump money into the economy, no matter what the future consequences will be.
Unemployment today stands at 9.8 percent.
Monday, December 6, 2010
Gold Prices Today Rise on Bernanke's QE Increase Talk
Early in the trading session gold prices surged on the comments made by Federal Reserve chairman Ben Bernanke that he was open to increasing the $600 billion the central bank has already committed to injecting into the economy.
The already-applied $1.7 trillion has done nothing to create jobs, so it's hard to know why Bernanke would institute an even larger amount of money to waste and throw away, while ultimately created a huge increase in inflation.
Gold prices have pulled back right after noon, as usual, when prices skyrocket quickly, as traders and speculators take advantage of the quick jump.
Long term though, every time Bernanke asserts he's going to increase the money supply, it's good news for gold investors, as it's a prelude, over the long term, for gold prices to continue to soar, which they will for some time.
Gold prices went slightly negative after traders sold, with spot gold down to $1,414.40 an ounce, dropping $0.10 as of 1:30 PM EDT.
The already-applied $1.7 trillion has done nothing to create jobs, so it's hard to know why Bernanke would institute an even larger amount of money to waste and throw away, while ultimately created a huge increase in inflation.
Gold prices have pulled back right after noon, as usual, when prices skyrocket quickly, as traders and speculators take advantage of the quick jump.
Long term though, every time Bernanke asserts he's going to increase the money supply, it's good news for gold investors, as it's a prelude, over the long term, for gold prices to continue to soar, which they will for some time.
Gold prices went slightly negative after traders sold, with spot gold down to $1,414.40 an ounce, dropping $0.10 as of 1:30 PM EDT.
Friday, November 19, 2010
Teck (NYSE:TCK), Freeport (NYSE:FCX), Southern Copper (Nasdaq:SCCO) Boosted by Higher Metal Prices
After several days of a stronger U.S. dollar pushing the prices of metals and commodities down, Teck Resources (NYSE:TCK), Freeport-McMoRan (NYSE:FCX), Southern Copper (Nasdaq:SCCO) rebounded as the greenback fell again on news the sovereign debt crisis in Europe will receive another band-aide by Ireland being bailed out to the tune of over $100 billion.
The weakened euro caused investors to put their money in the U.S. dollar as commodity prices fell during the period of uncertainty, pushing down the price of most miners as well.
Freeport closed Thursday at $99.85, soaring by $3.01, or 3.11 percent. Tech Resources was up to $49.19, increasing by $1.67, or 3.51 percent. Southern Copper exploded upward to close at $44.34, rising by $1.81, or 4.26 percent.
The decision by China on whether or not they will increase interest rates to battle inflation still awaits, and that could pull commodity prices and commodity companies down again.
Even if that happens, it'll only be temporary, as the primary driver of gold prices during this season of time will continue to be the implementation of quantitative easing which will offer long-term support to gold.
The weakened euro caused investors to put their money in the U.S. dollar as commodity prices fell during the period of uncertainty, pushing down the price of most miners as well.
Freeport closed Thursday at $99.85, soaring by $3.01, or 3.11 percent. Tech Resources was up to $49.19, increasing by $1.67, or 3.51 percent. Southern Copper exploded upward to close at $44.34, rising by $1.81, or 4.26 percent.
The decision by China on whether or not they will increase interest rates to battle inflation still awaits, and that could pull commodity prices and commodity companies down again.
Even if that happens, it'll only be temporary, as the primary driver of gold prices during this season of time will continue to be the implementation of quantitative easing which will offer long-term support to gold.
Thursday, November 18, 2010
Barrick (NYSE:ABX), Newmont (NYSE:NEM), Goldcorp (NYSE:GG) Enjoy Rebound as Gold Prices Soar Again
Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM), Goldcorp (NYSE:GG) are moving up again as gold prices rebound on news the U.S. dollar has gone back to its usual practice of falling in value.
The temporary strengthening of the dollar came from the fall in value of the euro because of the ongoing sovereign debt crisis in Europe. That seems to be priced into the dollar and gold, and so the greenback will go back to losing value on the Federal Reserve's inflating or printing of the currency, which hides behind the name now of "quantitative easing."
Spot gold and gold futures were both up by almost $20, with spot gold reaching $1,354.10 an ounce at about 2:00 PM EDT, gaining $18.30.
Barrick was trading at $50.02, rising by $0.85, or 1.73 percent, as of 2:03 PM EST. Newmont was at $60.70, increasing $1.11, or 1.86 percent. Goldcorp was up to $45.98, gaining $1.11, or 2.47 percent.
The temporary strengthening of the dollar came from the fall in value of the euro because of the ongoing sovereign debt crisis in Europe. That seems to be priced into the dollar and gold, and so the greenback will go back to losing value on the Federal Reserve's inflating or printing of the currency, which hides behind the name now of "quantitative easing."
Spot gold and gold futures were both up by almost $20, with spot gold reaching $1,354.10 an ounce at about 2:00 PM EDT, gaining $18.30.
Barrick was trading at $50.02, rising by $0.85, or 1.73 percent, as of 2:03 PM EST. Newmont was at $60.70, increasing $1.11, or 1.86 percent. Goldcorp was up to $45.98, gaining $1.11, or 2.47 percent.
Wednesday, November 17, 2010
Bank of America (NYSE:BAC) Says Unwinding of Reflation Trade Could Accelerate
After the announcement by Ben Bernanke concerning implementing another round of quantitative easing, investors have had a nice bump up in profits as expectations that inflation would rise began to be fulfilled. Bank of America (NYSE:BAC) says that could be temporarily halted going forward.
“Reflation trades have gone a long way since Jackson Hole, and positioning alone makes them vulnerable. We estimate that the aggregate position of QE2/reflation trades now sits at a three-year high. The unwinding of the reflation trades that started with the sell-off in Treasuries is now spilling into the cyclically sensitive assets, may have more room to go,” said Bank of America.
“The size of these positions no doubt reflects the strong consensus that easy U.S. monetary policy and emerging market decoupling will keep U.S. interest rates low and global growth strong,” the bank wrote in the note. “However, vulnerability is beginning to show, and further position unwinding seems increasingly probable as we had into year-end.”
Assets which benefit from inflating the economy through printing money, including commodities in general, and gold, have fallen back since November 3.
There are other factors involved, of course, like the EU sovereign debt crisis and uncertainty as to China and how they'll battle inflation.
“Reflation trades have gone a long way since Jackson Hole, and positioning alone makes them vulnerable. We estimate that the aggregate position of QE2/reflation trades now sits at a three-year high. The unwinding of the reflation trades that started with the sell-off in Treasuries is now spilling into the cyclically sensitive assets, may have more room to go,” said Bank of America.
“The size of these positions no doubt reflects the strong consensus that easy U.S. monetary policy and emerging market decoupling will keep U.S. interest rates low and global growth strong,” the bank wrote in the note. “However, vulnerability is beginning to show, and further position unwinding seems increasingly probable as we had into year-end.”
Assets which benefit from inflating the economy through printing money, including commodities in general, and gold, have fallen back since November 3.
There are other factors involved, of course, like the EU sovereign debt crisis and uncertainty as to China and how they'll battle inflation.
Monday, November 15, 2010
US Dollar, Economic Influence, Waning on Global Stage
The rebuke and rejection of the request by the U.S. to pressure China to into increasing the value of the renminbi by the G-20 underscores the declining economic influence of America in the world, as well as the U.S. dollar, which has become a disaster.
Not only was the idea of pressuring China on their currency rejected, but the U.S. and the disastrous Federal Reserve were castigated by economic powerhouses like China, Germany, Brazil, France and Korea for their policy of acquiring U.S. government debt and flooding the world with U.S. dollars.
Even with all of that being true, it's interesting to see European countries hit out at the U.S. when Europe is still a disaster as far as sovereign debt goes, although Germany and France are healthy in that regard.
It's the unwillingness of the Obama administration to introduce austerity measures like most countries in Europe have that is outrageous to most, who have said the U.S. must stop the economic strategy of growth through going into deeper debt.
Europe has already proven these socialist plans don't work, and even though there will be a lot more pain to go through in Europe, the pain is coming from taking the right steps, not from misguided policies.
Many laugh at the foolishness in Europe from their coddled classes who have become "kept" by the governments, but how far is the U.S. behind that scenario, as the inability to pay for reckless promises by the U.S. government over the decades is coming home to roost.
As far as the trade surplus that always comes up in difficult economic times, American consumers have made the decision to buy quality and inexpensive products from China and other countries. This same nonsense was brought up when Mexico was producing many of the goods Americans bought.
That has to do with the overpaid American workers, especially those in unions who can't compete with their counterparts in other areas of the world. Until those problems are addressed, America will have this problem no matter which country is the latest to enter the manufacturing sector.
The Obama administration, as have most previous administrations, give lip service to this to play to their base, but the cat has been long out of the manufacturing bag, and there's no bringing back what has been a past that is no longer relevant.
America's economic day is over. They've allowed the Federal Reserve to destroy the value of the U.S. dollar and create a class of consumers based on debt consumption, which had been driving the global economy. That day is now past, and will never return to levels before the economic crisis hit.
The only reason the U.S. dollar even remains the reserve currency of the world is no one else really wants to allow their currency to replace it, as it would drastically reduce the flexibility they now enjoy.
If a country like China eventually were to allow their currency to become the reserve currency, it would only be done for national pride and not for any benefit to themselves. I wonder if they'll end up getting suckered into that?
Some nations in the East have already been making transactions without the U.S. dollar being part of it, and calls for a variety of different ways of going forward have already been suggested, including possibly a basket of currencies, or even returning to some type of gold or commodity standard currency could be based upon.
For the U.S., they need to drop their being the policeman of the world, drop being a nanny state, and get their hands out of the free market. Until that happens, the country will continue to spiral downward economically itself, and in its economic influence around the world.
Not only was the idea of pressuring China on their currency rejected, but the U.S. and the disastrous Federal Reserve were castigated by economic powerhouses like China, Germany, Brazil, France and Korea for their policy of acquiring U.S. government debt and flooding the world with U.S. dollars.
Even with all of that being true, it's interesting to see European countries hit out at the U.S. when Europe is still a disaster as far as sovereign debt goes, although Germany and France are healthy in that regard.
It's the unwillingness of the Obama administration to introduce austerity measures like most countries in Europe have that is outrageous to most, who have said the U.S. must stop the economic strategy of growth through going into deeper debt.
Europe has already proven these socialist plans don't work, and even though there will be a lot more pain to go through in Europe, the pain is coming from taking the right steps, not from misguided policies.
Many laugh at the foolishness in Europe from their coddled classes who have become "kept" by the governments, but how far is the U.S. behind that scenario, as the inability to pay for reckless promises by the U.S. government over the decades is coming home to roost.
As far as the trade surplus that always comes up in difficult economic times, American consumers have made the decision to buy quality and inexpensive products from China and other countries. This same nonsense was brought up when Mexico was producing many of the goods Americans bought.
That has to do with the overpaid American workers, especially those in unions who can't compete with their counterparts in other areas of the world. Until those problems are addressed, America will have this problem no matter which country is the latest to enter the manufacturing sector.
The Obama administration, as have most previous administrations, give lip service to this to play to their base, but the cat has been long out of the manufacturing bag, and there's no bringing back what has been a past that is no longer relevant.
America's economic day is over. They've allowed the Federal Reserve to destroy the value of the U.S. dollar and create a class of consumers based on debt consumption, which had been driving the global economy. That day is now past, and will never return to levels before the economic crisis hit.
The only reason the U.S. dollar even remains the reserve currency of the world is no one else really wants to allow their currency to replace it, as it would drastically reduce the flexibility they now enjoy.
If a country like China eventually were to allow their currency to become the reserve currency, it would only be done for national pride and not for any benefit to themselves. I wonder if they'll end up getting suckered into that?
Some nations in the East have already been making transactions without the U.S. dollar being part of it, and calls for a variety of different ways of going forward have already been suggested, including possibly a basket of currencies, or even returning to some type of gold or commodity standard currency could be based upon.
For the U.S., they need to drop their being the policeman of the world, drop being a nanny state, and get their hands out of the free market. Until that happens, the country will continue to spiral downward economically itself, and in its economic influence around the world.
Thursday, November 11, 2010
Moody's (NYSE:MCO) Upgrades China's Credit Citing Strong Economy
Moody's (NYSE:MCO) upgraded China's debt today from A1 to Aa3, saying the sound balance of payments and the strong economic performance of the company has found support and will continue on, generating a positive outlook for their credit.
Moody's senior vice president Tom Byrne noted, "The record of the past year demonstrates that China's policy response to the 2008 crisis has been effective. Real GDP growth initially rebounded rapidly in response to the stimulus measures, and is moderating to a more sustainable rate of growth, which seems likely to be around 9%-10% this year, and perhaps 8%-9% in 2011."
This upgrade follows the opposite for the credit of the U.S., which was recently downgraded by Dagong, a rating agency based in China.
They felt the U.S. was entering into debt waters which aren't sustainable, and the U.S. won't be able to repay what it owes. They also believe the U.S. government's intention of paying the debt is suspect.
U.S. debt was downgraded because of the implementation by the Federal Reserve of another round of quantitative easing, this time $600 billion over the next eight months.
Other countries like Germany has stated similar concerns, as the first stimulus did nothing to help the economy, and this one will be a huge waste of money America can no longer afford.
Moody's senior vice president Tom Byrne noted, "The record of the past year demonstrates that China's policy response to the 2008 crisis has been effective. Real GDP growth initially rebounded rapidly in response to the stimulus measures, and is moderating to a more sustainable rate of growth, which seems likely to be around 9%-10% this year, and perhaps 8%-9% in 2011."
This upgrade follows the opposite for the credit of the U.S., which was recently downgraded by Dagong, a rating agency based in China.
They felt the U.S. was entering into debt waters which aren't sustainable, and the U.S. won't be able to repay what it owes. They also believe the U.S. government's intention of paying the debt is suspect.
U.S. debt was downgraded because of the implementation by the Federal Reserve of another round of quantitative easing, this time $600 billion over the next eight months.
Other countries like Germany has stated similar concerns, as the first stimulus did nothing to help the economy, and this one will be a huge waste of money America can no longer afford.
Tuesday, November 9, 2010
Sarah Palin Tells Bernanke "Cease and Desist" from QE2
Citing the hyperinflation experienced by Germany in the early part of the 20th century, Sarah Palin took aim at Ben Bernanke and the Federal Reserve, saying "maybe it's time for Chairman Bernanke to cease and desist," from printing more money and inflating the money supply through acquiring more government debt, "When Germany, a country that knows a thing or two about the dangers of inflation, warns us to think again," she said.
Palin rightly noted there's no certainty the printing of money will work, and I would add more strongly: it won't work. What about the abysmal failure of the first round of quantitative easing doesn't Bernanke or the Federal Reserve understand?
"We don't want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings," concluded Palin speaking to the Specialty Tools and Fasteners Distributors Association.
Again, last time the so-called stimulus failed to do anything, but the debt is still owed, and no jobs created.
That is proven by the fact when the gimmicks and money that actually went into the economy ended, the economy reverted back to what it really was: a disaster.
Or, it simply revealed itself for being as weak and anemic as it had always been. And even with the hundreds of billions spent, no jobs were created whatsoever, other than the, for the most part, temporary government jobs.
The Federal Reserve is under increasing pressure as Americans slowly but surely understand the devastating and unchecked institution this is, and how they control the quality of their financial lives.
The genie is out of the bottle, and there's no putting it back. Slowly we'll see this out-of-control institution weakened, and hopefully, ended.
Until then, chiseling away at the edges by people like Sarah Palin is a good way to keep in front of the American people the carnage the Fed creates through its actions.
Gold prices will continue to benefit from the horrid policies of the Fed, which seem to be committed to printing money until by what they consider the power of their actions can push the economy into growth.
When the economy recovers, we all need to know it's not from the Federal Reserve, but in spite of it.
Palin rightly noted there's no certainty the printing of money will work, and I would add more strongly: it won't work. What about the abysmal failure of the first round of quantitative easing doesn't Bernanke or the Federal Reserve understand?
"We don't want temporary, artificial economic growth bought at the expense of permanently higher inflation which will erode the value of our incomes and our savings," concluded Palin speaking to the Specialty Tools and Fasteners Distributors Association.
Again, last time the so-called stimulus failed to do anything, but the debt is still owed, and no jobs created.
That is proven by the fact when the gimmicks and money that actually went into the economy ended, the economy reverted back to what it really was: a disaster.
Or, it simply revealed itself for being as weak and anemic as it had always been. And even with the hundreds of billions spent, no jobs were created whatsoever, other than the, for the most part, temporary government jobs.
The Federal Reserve is under increasing pressure as Americans slowly but surely understand the devastating and unchecked institution this is, and how they control the quality of their financial lives.
The genie is out of the bottle, and there's no putting it back. Slowly we'll see this out-of-control institution weakened, and hopefully, ended.
Until then, chiseling away at the edges by people like Sarah Palin is a good way to keep in front of the American people the carnage the Fed creates through its actions.
Gold prices will continue to benefit from the horrid policies of the Fed, which seem to be committed to printing money until by what they consider the power of their actions can push the economy into growth.
When the economy recovers, we all need to know it's not from the Federal Reserve, but in spite of it.
Gold Futures Prices, Spot Gold Soar as Investors Seek Safety
Gold futures and spot gold broke records again, this time with gold for December delivery settling at $1,403.20 an ounce at the Comex division of the New York Mercantile Exchange.
Spot gold rose to as high as $1,407.20, and was trading at $1,410.20 after hours.
Investors fled to safety on the heels of the out-of-control Federal Reserve and Ben Bernanke, which have announced another round of quantitative easing to the tune of $600 billion, disrupting a number of markets, including Forex.
Gold ignored the temporary strengthening of the US dollar, as it has at certain times throughout the gold bull market because of forces overcoming the usual inverse relationship the two have.
One major factor, again, has been the incredibly weak and threatened economic condition of Europe, which financial outlets continue to ignore, as far as the threat goes.
Every time the threat emerges, the media seems to surround the wagons and make it look like it's just another glitch the EU is experiencing, when in fact nothing has improved, and the sovereign debt risk in Europe remains extraordinary, whether media wants to admit it or not.
Other than a few ignorant cheerleaders, the latest move by Bernanke is considered an economic disaster, and places the global economy, not just the American economy, at extreme risk.
Gold will continue to benefit greatly from these and other suppport mechanisms, and no matter what type of temporary correction comes along the way, will continue to move up in price for some time to come.
Spot gold rose to as high as $1,407.20, and was trading at $1,410.20 after hours.
Investors fled to safety on the heels of the out-of-control Federal Reserve and Ben Bernanke, which have announced another round of quantitative easing to the tune of $600 billion, disrupting a number of markets, including Forex.
Gold ignored the temporary strengthening of the US dollar, as it has at certain times throughout the gold bull market because of forces overcoming the usual inverse relationship the two have.
One major factor, again, has been the incredibly weak and threatened economic condition of Europe, which financial outlets continue to ignore, as far as the threat goes.
Every time the threat emerges, the media seems to surround the wagons and make it look like it's just another glitch the EU is experiencing, when in fact nothing has improved, and the sovereign debt risk in Europe remains extraordinary, whether media wants to admit it or not.
Other than a few ignorant cheerleaders, the latest move by Bernanke is considered an economic disaster, and places the global economy, not just the American economy, at extreme risk.
Gold will continue to benefit greatly from these and other suppport mechanisms, and no matter what type of temporary correction comes along the way, will continue to move up in price for some time to come.
Monday, November 8, 2010
Rand Paul Says U.S. Debt Unsustainable
In an interesting comment which is somehow being spun as being in agreement with Federal Reserve chaiman Ben Bernanke, Rand Paul said on "This Week" on ABC, that “We need to do something about it," referring to Bernanke saying in the past that U.S. "debt is unsustainable."
With many bankers and others on Wall Street uncomfortable with the negative exposure the Federal Reserve policies are getting, along with Bernanke's hand in them, it's strange to see Paul's agreeing to Bernanke's statement as construed sort of starting point to work with by some.
Rand Paul knows Bernanke is the problem, as the huge amount of debt the U.S. owes is largely from the hands of Bernanke and his attempt to stimulate the economy by printing money, which he's now calling "quantitative easing."
The idea has also been thrown around that Paul could have a chance at being seated on the Senate Banking Committee, which would no doubt quickly eliminate the idea he's in any way supportive of Bernanke and his policies.
Paul has called for spending cuts in a number of areas, including the military and other areas, understanding there's no way Washington can proceed doing business as usual.
With many bankers and others on Wall Street uncomfortable with the negative exposure the Federal Reserve policies are getting, along with Bernanke's hand in them, it's strange to see Paul's agreeing to Bernanke's statement as construed sort of starting point to work with by some.
Rand Paul knows Bernanke is the problem, as the huge amount of debt the U.S. owes is largely from the hands of Bernanke and his attempt to stimulate the economy by printing money, which he's now calling "quantitative easing."
The idea has also been thrown around that Paul could have a chance at being seated on the Senate Banking Committee, which would no doubt quickly eliminate the idea he's in any way supportive of Bernanke and his policies.
Paul has called for spending cuts in a number of areas, including the military and other areas, understanding there's no way Washington can proceed doing business as usual.
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