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Yo yo week for gold bullion

2008-06-12T21:13:00.000-06:00

The gold price shot up to a 2-week high on Monday, before retreating again as the week wore on. Market watchers see possible further falls although they mostly consider the downside is limited.

Investors in gold have been having a nerve wracking ride of late with several false dawns promising a return to the high $900s - and even bringing out predictions from some analysts of a rapid return to the $1,000 level seen earlier in the year. But, with the US dollar showing signs of strength and oil moving up and down as well, gold has tended to follow the direction suggested by the strengths and weaknesses of these other key influences, rather than plough its own furrow on fundamentals alone.

Gold is primarily looked at by the broader investment market, rather than by the strong gold bug element, as providing a hedge against inflation and against major political turmoil and unrest. Recent statements by Ben Bernanke, the Chairman of Governors of the US Federal Reserve, have suggested that inflation could be becoming a problem and has hinted that the recent spate of cuts in US interest rates to help stimulate the economy may be at an end, and that interest rate rises may be on the horizon to clamp down on inflation due to higher food and commodity prices - not least oil.

This, in turn, has seen a strengthening of the value of the dollar against other currencies (although not a very certain one as occasional bouts of poor economic data tend to reverse the perceived sentiment) and at times when the dollar strengthens and oil falls back from its peaks, the gold price tends downwards.

That is undoubtedly what has occurred over the past few days with a briefly weak dollar and surging oil pulling gold back above the $900 level, only to see it tumble back to the $860s this morning amid fears that it could fall even lower.

But, consider the inflation scenario. The high food, metal commodity and oil prices are filtering through and it is not only the US which may be considering interest rate rises to try and combat inflationary trends, but also the European Central Bank and the Bank of England among others, which have also intimated they may be set on the interest rate rise route. This may mean, should this all come about, that the relative strength of the US dollar engendered by an interest rate increase in the US may be negated by similar, or bigger, interest rate rises elsewhere.

Be that as it may, there are still some fairly serious political tensions in the Middle East, the gold price is getting to a level where jewellery gold purchases may start rising again, world mine supply may well fall again this year, the US economy is still close to recession, inflation is beginning to strike hard in countries like China. All these should be pointers to gold price strength in the medium term.

As we have pointed out here before, investment interest in gold by the greater investment community is very much based on economic perceptions. The past week has seen the pessimists on the economic front take a breather perhaps, but it wouldn't take much in the way of adverse news to bring the doomsayers back and the gold price could then yo yo back up again as fast and as far as it has come down.

The northern hemisphere summer is here. Activity in the markets which drives stock and commodity prices is traditionally at a lower level at this time of year, but come August returning analysts, fund managers and individual investors will be taking a hard look at what they see ahead for the rest of the year and unless the economic situation has shown further improvement, which at this time looks to be increasingly unlikely, the factors which have driven the gold price upwards over the past few years could be back in force again.

Analysts specialising in the gold market seem almost unanimous that the second half of the year will see a rising gold price trend again (although there are some notable exceptions). In the meantime the downside risk is probably limited - but is certainly there - and probably the majority of gold investors will be hanging in for better times ahead. Analysts see good downside resistance in the $850s and $860s. Watch the US indicators. They, and the dollar, and oil, look to continue to set the gold price trend in the immediate future.

See What People Are Saying About... Speculators Gone Wild

2008-06-12T21:10:00.000-06:00

There's definitely no inventory shortage -- when it comes to Fast Money viewer opinions over the rampant speculation in commodities, particularly crude.

Rick from Florida puts it succinctly, "Why are 'gas' and 'distillate' inventories INCREASING while crude oil inventories are DECREASING over several weeks?"

Fast Money fan Shannon in North Carolina offers a regulatory suggestion to curtail the out-of-control speculation: "make a restriction that traders must maintain the capacity to take delivery and show proof of that."

And Miller Tabak strategist Tony Crescenzi's prediction on Tuesday's show of a possible 500-point rebound next week continues to be met with doubt. Fast Money viewer Frank reminds us that consumer buying power has all but been killed by high energy prices and so Q2 earnings "will not be rosy."

Gold tumbles as retail sales hike demand for dollar

2008-06-12T21:08:00.000-06:00

NEW YORK (MarketWatch) -- Gold futures on Thursday fell to their lowest level since early May, upended after stronger U.S. retail sales bolstered demand for the dollar and tarnished the precious metal's allure as another asset option and hedge against inflation.
"The market's roller-coaster pattern continued amid the high-noon standoff developing between the Fed and the U.S. dollar's morticians," said Jon Nadler, senior analyst, Kitco Bullion Dealers.
That view was also strengthened by comments from Philadelphia Federal Reserve President Charles Plosser, who told the CNBC television network Thursday morning, "We need to act pre-emptively." Read The Fed.
After sliding to a session low of $131.55 an ounce, gold for August delivery recovered slightly to end $10.90 lower at $872.00 an ounce on the New York Mercantile Exchange.
Another loser in Nymex metals dealings, July silver fell 70 cents to settle at $16.48 an ounce.
In electronic trade late Thursday on Globex, gold for August delivery fell $1.00 to $871.00 an ounce.
The Commerce Department reported an unexpected 1% rise in retail sales last month, marking the fastest increase in six months. Read Economic Report.
The dollar gained strength in the belief that a rebound in retail sales would back the case for the Federal Reserve to hike U.S. interest rates, with the dollar index (DXY:US Dollar Index Future - Spot Price
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DXY 73.74, +0.45, +0.6%) , which tracks the greenback against major currency rivals, gaining nearly 0.9% to 73.88. See Currencies.
"Soaring prices will continue to plague the Fed, and keep policy on hold at the June FOMC meeting with a renewed bias in the balance of risk toward higher inflation -- despite ongoing concerns about the economy," said analysts at Action Economics. The Federal Open Market Committee sets U.S. monetary policy and benchmark interest rates.
Metals investors largely bypassed a Labor Department report that initial jobless claims jumped by 25,000 last week to 384,000. See more.
Another report from the Labor Department indicated that prices of goods imported into the country climbed 2.3% in May, less than the 2.7% growth that analysts had been looking for. Read full story.
Bullion's sharp retreat stands in contrast to gains on Wednesday, with bullion prices on a volatile roller-coaster ride tracking the movements in crude-oil prices. Investors buy gold for its appeal as a hedge against oil-generated inflation but have tended to sell the precious metal when the price of crude moves lower.
On Thursday, crude futures climbed 36 cents to close at $136.74 a barrel on Nymex, after spending the bulk of the day on the decline.

Oil declines to $132 as greenback posts gains

2008-06-12T21:05:00.000-06:00

Oil prices fell sharply yesterday as the dollar moved higher and forced crude to lose some of its appeal as a hedge against inflation.

Light, sweet crude for July delivery fell $4.38 to $132 a barrel on the New York Mercantile Exchange.

Given the volatile price moves of recent days, oil's decline was not seen as a sign of a changing trend. Prices have gone through several sharp swings over the past week, rising more than $16 last Thursday and Friday as the dollar weakened, falling more than $7 earlier this week as the greenback gained, and jumping back more than $5 on Wednesday as supplies and the dollar fell.

Analysts say oil is range trading, waiting for direction from a significant move in the dollar or change in supply and demand fundamentals.

Many analysts believe the market's overall sentiment remains bullish, and the new records are a real possibility in coming days. Oil reached its latest trading record of $139.12 on Friday.

"The price movement of crude has been ... dictated by what we've seen in the greenback," said Edward Meir, an analyst at an analyst at MF Global UK, in a research note.

Yesterday, the dollar gained ground after the Commerce Department said retail sales rose in May by the biggest amount in six months as 57 million tax rebate checks reached consumers. The 15-nation euro fell to $1.5409 from $1.5571 late Wednesday.

Investors who bought commodities such as oil to protect against inflation when the dollar was falling tend to sell when the greenback gains ground. Also, a stronger dollar makes oil more expensive to investors overseas.

The dollar's protracted decline has been a major factor behind the doubling of oil prices over the past year.

Recent statements by U.S. Federal Reserve Chairman Ben Bernanke and U.S. President George W. Bush emphasising the importance of strengthening the dollar helped the U.S.

currency gain ground. But analysts believe more than words are needed to turn the tide; an actual interest rate increase is needed to send the dollar definitively higher, and oil prices down, said Stephen Schork, an analyst and trader in Villanova, Pennsylvania.

In other Nymex trading, July natural gas futures rose 14 cents to $12.80 per 1,000 cubic feet after the Energy Department said inventories rose last week by 80 billion cubic feet, at the low end of analyst estimates.

In London, July Brent crude fell $3.55 to $131.47 on the ICE Futures exchange.

Gulf shares advance on dollar gains

2008-06-12T21:03:00.000-06:00

Dubai: Gulf shares advanced on speculation the dollar's gain to a three-month high against the yen will lower companies' costs and boost profits.

Abu Dhabi National Energy Co gained after the company's board approved a plan to sell convertible bonds. Qatar Islamic Bank rose to the highest in almost three years as Investor Daily Indonesia reported the bank may soon open a branch in the country. Kuwait Financing and Investment Co jumped on plans to increase capital and convert to an Islamic firm.

"The dollar's gain is good for the region's companies as it makes purchases, of raw materials and other products from non-dollar countries, cheaper," Karim Helmy, assistant vice president at Shuaa Securities, said from Abu Dhabi.

The Abu Dhabi Securities Exchange General Index rose 0.4 per cent to 5,125.89. Qatar's Doha Securities Market Index added 0.5 per cent, bringing the six-day rally to 4.4 per cent. The Kuwait Stock Exchange Index advanced for a fifth day, increasing 0.3 per cent.

The dollar rose to 107.13 yen, the highest since late February, before trading at 106.77 yen at 5.15pm in Dubai. Against the euro, the US currency increased to $1.5510.

Abu Dhabi National Energy jumped 4.4 per cent to Dh4.02, its biggest one-day gain since April 30.

Bond sale

The state-controlled energy company, known as Taqa, said its board approved a plan to sell convertible bonds worth Dh4.15 billion ($1.13 billion).

Qatar Islamic Bank climbed 4.1 per cent to 165.9 riyals, its highest close since October 2005. The country's biggest Islamic bank may open its first office as early as next week, Investor Daily Indonesia reported, citing Alwi Shihab, Indonesian President Susilo Bambang Yudhoyono's envoy to the Middle East.

Kuwait Financing and Investment surged 3.5 per cent to 300 fils. The board of the commercial and personal-financing firm will meet today to discuss plans to increase its capital and convert to an Islamic financing company.

Saudi Arabia's Tadawul All Share Index fell 0.1 per cent. The Muscat Securities Market 30 Index rose 0.5 per cent, while the Bahrain All Share Index dropped 0.2 per cent. The Dubai Financial Market General Index declined 1.2 per cent.

Fed, Dollar bears take away Gold's gains

2008-06-12T21:02:00.002-06:00

Gold's midweek gains were undone in a hurry overnight as the roller-coaster pattern continued amid the standoff developing between the Fed and dollar bears.

Depressed by a surging (up .64 to 73.87 on the index) US dollar and a $3 slide in crude oil (to $133.50) the precious metal gave back all of yesterday's gains and fell to a low of $864 ahead of the New York opening this morning.

Strong anti-inflation rhetoric from the Fed's Mr. Plosser (he said "interest rates will have to rise) augmented expectations of US interest rate hikes and pushed their possible date of enactment closer to the present. Adding to the dollar's rise were reports expecting retail sales in the US to show a decent gain in the wake of stimulus cheques which were mailed to US taxpayers finding their way into store cash registers in lieu of bank savings accounts as some had expected.

New York spot trading opened with a $15 (1.72%) loss, quoted at $865 bid per ounce, as players reevaluate the possibility that this could be the week (or indeed, the day) during which gold breaks through the $863 low and heads towards the $850 critical support area.

We now look for this break to materialize shortly. The gain in retail sales (up 1% to the strongest level in six months) adds to the case being made for a hike in interest rates. Initial jobless claims moved higher, adding 25,000 individuals to those filing for benefits and import prices rose 2.3% due largely to oil values.

The US dollar broke through the 74 level shortly after the retail numbers hit the wires. Silver was off 50 cents to $16.38 while platinum lost $38 to $2005 and palladium fell $2 to $423 per ounce. Gold's losses widened to $21 and hit a low of $859.50 within five minutes of the retail figures' release. The markets are now pricing in a 125 basis point rate hike by this time next year.

Gold prices fall on rising dollar, demand to pick up

2008-06-12T21:02:00.001-06:00

Gold futures and spot prices eased in Indian markets mirroring the international weakness in the metal. The 05 July Contract on Multi Commodity Exchange of India (MCX) fell by 1.02 percetn to 12,331 as against previous close of Rs 12458.

In global markets gold extended losses on Tuesday and dropped below $890 an ounce after the US dollar gained on expectations of a possible interest rate hike, reducing the metal's appeal as an alternative investment.

Gold declined to $889,80/890,70 an ounce from $894,00/896,00 late in New York on Monday. Jewellery makers were taking a wait and watch attitude in expectation of further fall in prices, dealers said.

The dollar hit a three-month high against the yen and rose against other currencies after Federal Reserve chairperson Ben Bernanke said the rise in oil prices added to inflation risks, stoking expectations for rate hikes this year.

Oil was up 68 cents at $135,02 a barrel on Tuesday, having settled $4.19 lower the previous day. US crude jumped to a record $139,12 on Friday in its biggest one-day gain ever.

Silver edged up to $17,07/17,14 an ounce from $17,06/17,16 late in New York on Monday, when it hit a high of $17,67 an ounce, its highest since May 27.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange fell $4,4 an ounce to $893,7.

The most active Tokyo platinum contract for April 2009 delivery on the Tokyo Commodity Exchange fell 48 yen per gram to 6 826 yen despite a weaker yen, under pressure from a weak cash market.

Spot platinum fell to $2 022/2 042 an ounce from $2 037,50/2 057,50 late in New York.

Palladium firmed to $424,00/429,00 an ounce from $422,00/427,00.

The benchmark August contract on MCX was trading at Rs 12335 down by 1.05 percent from previous close of Rs 12462.

Gold trading gets a boost in China

2008-06-12T21:01:00.000-06:00

SHANGHAI: Shanghai Gold Exchange (SGE), China's only spot gold trading bourse, has got a golden boost after banking major HSBC begin tradin the bourse for the first time.

Besides HSBC, two other foreign banks including Standard Chartered Bank (China) Ltd. and the Bank of Nova Scotia (Guangzhou Branch) have received approval from Chinese government to trade gold on SGE.

Chinesse government has not paced any extra criteria on foreign banks such as trading volume or type when compared with other SGE members.

Official said the involvement of foreign banks could boost gold trading on the SGE. China's domestic gold market began opening up last June, when five foreign banks, HSBC, Standard Chartered, the Bank of Nova Scotia, UBS AG and Societe Generale, were granted preliminary approvals from the PBOC to become SGE members.

It has taken almost a year for HSBC to begin trading gold on the SGE after receiving preliminary approval from the PBOC. The lengthy assessment period was to ensure that the opening of the domestic gold market is in the nation's interests.

The increased participation of banks will expand market liquidity while making arbitrage between the domestic and international markets more common.

Foreign institutions are not yet allowed to trade on the gold futures market, which opened in January. However, as foreign institutions increase their standing in the domestic spot market, it will put added pressure on regulators to liberalize and open up other commodity markets to foreign participation as well.

'Gold price will continue to rise'

2008-06-12T21:00:00.002-06:00

Louis Goluboff, managing director of Emerald Capital Investment International, a newly launched financial consulting firm, talks about the influences and pressures weighing on the precious metals sector. His company's flagship fund, The Emerald Explorer Fund, focuses on mining and exploration primarily in the Canadian resources market. In this exclusive interview with The Gold Report, Goluboff tells us why he thinks the juniors are a good play and discusses a few of his favorite names.

TGR: How do you explain what's going on with gold?

LG: I think both the fundamentals as well as speculative investors were pushing the market up. A lot of hedge funds started to sell out of the high end of their valuations, so the gold price dropped down a little bit. But the fundamentals remain unchanged.

TGR: You're saying that both the fundamentals and the speculative side are strong for gold?

LG: That's right. But I'm mostly looking at the U. S. economy and what’s happened with the currency—the credit crisis and the Bear Stearns bailout. I don’t think that’s over—maybe you’ve hit a bit of a bottom with the bailout, but there's still a mortgage crisis in progress. This will keep weighing on the U.S. dollar and that's good for the gold price.

TGR: Why hasn't gold gone up? The Fed took another quarter point off the interest rates in late April and gold went down.

LG: Well, I think it's because of all the sales coming from the speculative side of the market. As those funds get squeezed, they’ve got to sell what’s liquid, and if gold is liquid, they sell it. That’s why a lot of the equities have also been underperforming this past year. The juniors have been hit hardest. The large caps have traded more in line with the price of gold.

TGR: What should an investor be doing with gold—hoarding it or selling it?

LG: Gold's recent pullbacks certainly provide good buying opportunities. I think you'd be well off to invest in gold at these prices. When gold goes up over $1000 and into the $1100 range, you might want to sell in the short term. Overall, I think the price of gold is going to continue to rise.

TGR: Do you care to speculate about how far it’s going to rise?

LG: I don’t think you’re going to see $2000 gold so fast, but it'll be back over $1000 by the end of the year.

TGR: You expect it to go above $1000 before the summer ends?

LG: I think you will see it back above $1000 in the early fall.

TGR: As gold drifts higher in the $900 range and into $1000, what does that mean for our equity plays— both the majors and the juniors?

LG: Right now there’s a lot of cash on the sidelines for a lot of funds. You’re going to start seeing some of that cash go back into market. As the price of gold goes back up, the seniors will be the first to benefit from that. Then some of the money will start going into the juniors. Some of these companies are trading at their 52-week lows despite the rise in commodities prices.

TGR: Will the seasonally lower prices of the metals influence that?

LG: The late summer and early fall are seasonally strong, but even if the price of the underlying commodities drifts down a little bit, I think that the equities will start to trade up with the rest of the equity markets as money starts to come back into play.

TGR: So, you're predicting that the market will start going up?

LG: Yes.

TGR: How do you think the juniors will do over the next six months?

LG: People will reconsider the juniors. There will be quite a bit of consolidation in the market this year and over the next couple of years as some of the seniors go looking for production. They will look to the juniors—let them do the hard work and then, as they get closer to production and defining resources, the seniors will build their own resource base by taking a position in a junior, doing a joint venture, or acquiring the company outright.

TGR: What guidelines do you use to determine which juniors make a safer investment?

LG: Investors have to keep in mind that when they’re investing in the junior mining sector or in any small cap for that matter, whether it is the tech sector or biotech or whatever, that these are very risky securities. It’s fine to have them as a piece of your portfolio, but you should be diversified regardless. So, I don’t think you could ever say that they’re “safe investments.”

TGR: What are your guidelines regarding countries or things to avoid?

LG: There are parts of Africa I won’t invest in and I tend to stay away from politically unstable countries like Venezuela. Where there's the risk of government appropriation of mining concessions, you really have to ask yourself whether it's worth getting involved in a play like that.

TGR: On the other hand, some investors say that when things look really bad, that’s the time to start investing.

LG: That can be a great philosophy and it's why I like the junior sector right now. When you get a lot of speculative buying the market gets too hot, generally that’s a good time to take some profits. When people get pessimistic and fearful, that can be a good time to make an investment. But you always have to balance the risks you’re taking with the rewards you’re hoping to get.

TGR: Are you looking for juniors that are pre- 43-101? How do you evaluate juniors even in stable countries?

LG: We really judge them on a case-by-case basis. We’ll look at private companies that are about to complete a 43-101. Generally you do like to see a 43-101, and you want to see them publicly traded.

TGR: Do you have any preference for the more unusual precious metals?

LG: I prefer gold and gold stocks. There’s been some difficulty on the base metal side, but I do like uranium, zinc, copper and nickel.

TGR: Uranium has really come way off of its highs.

LG: Uranium has gone into a difficult spot but people forget that the long-term contract price is what counts. If the long-term contract price starts to come down, that’s when you have to question what’s happening. A very small percentage of the actual volume of trades takes place at the spot price or on the market. Most of the purchasing by the utilities is done off the market in and around the long-term contract price. And the long-term contract price has remained pretty stable.

TGR: Would you advise an investor to be overweight or underweight with regard to precious and base metals?

LG: I’d definitely be overweight in the uranium sector, especially since a lot of investors have focused on the spot price and considering what’s happened in the junior market overall. I think there’s a real good opportunity here to be investing in junior uranium companies. Again, you have to be careful since juniors are risky, but I think there will be a lot of consolidation in that market. There's a real gap between supply and demand with the potential for supply disruptions.

TGR: Do you have any specific companies you could discuss for our readers?

LG: NFX Gold Inc. (NFX.V) is a perfect example of a junior exploration company in the gold sector that’s really been hurt by the downturn in the junior equity markets. You can find a real upside in stocks like NFX. Their 52-week high was at $1.25, and they’re down to $.45 today. The junior market revolves around finding potentially good deposits. NFX has a joint venture with Maximus at Larder Lake and their recent results point to a significant deposit three miles west of the old Kerr Addison Mine, which was an 11-million ounce producer.

That's not their only potential. They do have joint ventures with other companies, but certainly this is their most interesting. They have a 40,000-meter drill program going on right now in the area in a previously significant gold camp. It's in northern Ontario—a mining-friendly district. Sometimes half the battle is getting drills on the property and good people. There are a lot of good people in Larder Lake and the surrounding areas.

Who sets global Crude Oil prices?

2008-06-12T21:00:00.001-06:00

As Crude Oil is setting the global economy on fire and fears of recession, there is a frequent question people ask. Who sets the oil prices?

The answer generally comes: oil price is set by the Organization of Petroleum Exporting Countries (OPEC), a permanent intergovernmental oil organization, created in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

But the fact is that it is not OPEC that sets the global oil price. One of the most common misconceptions about OPEC is that the Organization is responsible for setting crude oil prices.

Although OPEC did in fact set crude oil prices from the early 1970s to the mid-1980s, this is no longer the case. It is true that OPEC's Member Countries do voluntary restrain their crude oil production in order to stabilize the oil market and avoid harmful and unnecessary price fluctuations, but this is not the same thing as setting prices.

In today's complex global markets, the price of crude oil is set by movements on the three major international petroleum exchanges, all of which have their own Web sites featuring information about oil prices.

They are the New York Mercantile Exchange (NYMEX, http://www.nymex.com), the International Petroleum Exchange in London (IPE, http://www.ipe.uk.com) and the Singapore International Monetary Exchange (SIMEX, http://www.simex.com.sg).

OPEC does not control the oil market. OPEC Member Countries produce about 45 per cent of the world's crude oil and 18 per cent of its natural gas.

However, OPEC's oil exports represent about 55 per cent of the crude oil traded internationally. Therefore, OPEC can have a strong influence on the oil market, especially if it decides to reduce or increase its level of production.

How big is the global Gold investment market?

2008-06-12T20:59:00.002-06:00

Gold is attracting growing interest from a small number of pension funds, some of whom may already be building their exposure to gold, usually as part of a basket of commodities. Why is gold attracting people? And why is it that people love to invest in gold?

Find out here why gold lures people:

Why do people invest in gold?
People around the world invest in gold for many different reasons. Many people view gold as a reliable source of value in times of trouble. Gold offers insurance against stock market failure and has proved to be a liquid, transportable asset for refugees needing to flee their countries. More and more people understand that by investing in gold, they are protecting themselves against a range of risks, such as weakness of the US dollar; unexpected inflation; and low returns on other assets. Some people simply want to own as asset they can trust, because it is real and holds its value over the long term.

Is gold really a good hedge against inflation?
There is substantial evidence to support the view that gold is a good long run hedge against inflation. In the short-run, the gold price may deviate from its long run inflation hedge value, and may take a number of years to revert to this constant. Gold is not a perfect hedge against inflation, but it is the only hedge that has been tried and tested over centuries that have seen currencies rise and fall.

Is gold a global currency?
Gold has retained its role as a monetary asset. Central banks around the world still hold around 12 per cent of their reserves in gold, and even private individuals can and do use gold to settle payments. However, gold is not “issued” by any particular government and is not beholden to any political regime. In this sense, it is a truly global, international currency, free of political or national association and liability.

Is gold a commodity?
Gold is used for different purposes, and these certainly include commodity uses. Industrial applications of gold account for about 10% of demand each year. Demand for gold as jewellery absorbs around 75% of the gold supplied to the market each year, with the balance made up by investment. Gold is certainly included in the leading tradable commodity indices. So for many practical purposes, gold is viewed as a commodity.

How can gold be both a currency and a commodity? Isn’t this a contradiction?
For most of history, currencies have been backed by commodities, or metals were used as money directly. Even today, when national currencies are no longer backed by real assets, gold maintains its value as an independent, international currency but at the same time is used as a commodity, and certainly viewed as a commodity, by many investors around the world. Gold’s ability to play this dual role successfully underpins its usefulness to investors.

Is gold a high risk or low risk investment?
In general, gold is considered a low risk investment because its price is typically not very volatile. The gold price tends not to fluctuate more than the world’s largest blue-chip stock market indices like the S&P 500. That is why many investors with low-risk profiles are attracted to gold. However, investors in high risk assets also find gold useful because they can use it to manage their risk.

What types of returns does gold offer investors?
Although very large investors can lend their gold out and receive a “gold” interest rate, in practice this yield is very low. So the main return on gold is capital gain or loss which is realised by selling some gold. This is no different from many other assets, including, for example, zero coupon bonds.

How big is the gold investment market?
In 2005, the overall gold market saw inflows of US$ 56 billion, of which nearly US$ 9 billion represented investment flows. Ultimately, the size of the gold investment market is some proportion of all the gold that has ever been mined. On this basis, gold represents around 4% of the market capitalisation of global bonds and equities.

How can I invest in gold?
There are many ways to invest in gold and these are explained fully on www.gold.org/value. How an individual chooses to invest in gold depends on the size of the investment, his/her reason for investing, and the purpose of the investment. People invest directly in bars and coins; through gold futures, options, warrants and certificates. They may also hold gold in metal accounts with their bank in just the same way they could have a foreign currency account. The most popular, fastest-growing form of gold investment is also the newest: gold traded in the form of a security on stock exchanges around the world, generally referred to as “gold ETFs”.

It is appropriate for pension funds to invest in gold?
Gold certainly merits the attention of pension funds who are seeking good portfolio diversifiers and wish to reduce the volatility of their returns, particularly in response to changes in International Accounting Standards and as part of a liability-matching strategy. Gold is attracting growing interest from a small number of pension funds, some of whom may already be building their exposure to gold, usually as part of a basket of commodities.

Dollar rises, gold suffers

2008-06-12T20:59:00.001-06:00

Gold’s sheen may a be a bit off this week due to the strengthening of dollar and fall in crude oil prices.

According to experts, the yellow metal will keep low profile this week.

Investment funds are also invariably shifting towards other asset classes including equity, currency and bonds.

Market analysts said the US Federal Reserve would either keep interest rates unchanged or revise them upwards.

Therefore, fundamentals continue to weaken in the valuable asset class.

The price of the yellow metal is expected to slump to $852 an ounce (oz) in London. But it is unlikely to provide any relief to the Indian consumers as the rupee is depreciating against the dollar.

Since the peak of below 40, the rupee has depreciated by about 7-8 per cent, while gold has fallen by above 13 per cent.

Gold had reached $1,033.90 on March 17, the highest-ever price, as the euro and crude oil set previous records.

Surprisingly, the domestic demand has hardly witnessed any major impact of the price rise or the fall because of auspicious days and seasonal buying on occasions like weddings and festivals.

This week, standard gold slumped by 4.65 per cent to Rs 12,205 per 10 grams, while pure gold nosedived by 4.67 per cent to Rs 12,260 per 10 grams in Mumbai. In London, the yellow metal fell by 4.50 per cent to $885.75 an ounce.

Gold Rush: When price is up, hunt for Gold is hot

2008-06-12T20:56:00.000-06:00

When gold price is up, hunt for the precious metal surges. In the last few months, as global gold prices surged, here in California, there has been a gold rush going on.

The current high price of gold brings back memories of the Californian gold rush when hundreds of thousands of people flocked to the US state in search of the precious metal, according to the World Gold Council web site.

Quoting well known gold analyst Colleen Stanley Bare, the WGC site siad that panning for gold has become what is described as a "hot recreational activity".

Indeed, hovering at around $1,000 an ounce, gold prices have encouraged many people to set out in search of their own fortune just as they did in 1849.

The Californian gold rush began when James Marshall discovered gold at Sutter's Mill in Coloma, California. After news of his discovery spread around 300,000 people arrived in California from across the world to pan for gold in streams and riverbeds.

Brent Shock, who runs gold-panning tours in Jamestown, told the BBC that because of the high price of gold there is a "tremendous" amount of interest from people looking to follow in the footsteps of the so called forty-niners and take part in gold prospecting.

Why oil prices shot up to extreme highs

2008-06-12T20:55:00.000-06:00

By Gary Dorsch
After watching crude oil's parabolic rise – doubling from a year ago, to above $130 a barrel in May – central bankers who under-estimated the power and resiliency of the "crude oil vigilantes" are now praying for this apparent bubble to burst under its own weight, and at a moment's notice, writes Gary Dorsch of SirChartsALot.com...

In an interview with The Daily Telegraph in London, one of the world's biggest hedge fund traders, George Soros, said that although the weak US Dollar, depleting supplies from aging oil fields, government fuel subsidies, and record Chinese and Indian demand could explain the surge in energy prices, the crude oil market is also significantly inflated by speculation.

"Speculation is increasingly affecting the price, which has a parabolic shape, which is characteristic of bubbles," said Soros.

However, he also warned that the oil bubble won't burst until both the US and British economies slipped into recession, after which event, oil prices could fall dramatically.

"You can also anticipate that the [oil] bubble will eventually correct, but that is unlikely to happen before the recession actually reduces the demand. The rise in the price of oil and food is going to weigh and aggravate the recession."

It's dangerous to pick a top in a raging bull market, since bubbles can inflate more than anybody ever imagined. On May 20th, T.Boone Pickens – the legendary oil trader and investor – told CNBC he expected crude oil prices to keeping going up, even from here.

"I think we'll get to $150 this year," he reckoned. The next day, soon-to-be deposed Israeli prime minister Ehud Olmert called for a US naval blockade of Iran. If that happens, crude oil could shoot to $200 per barrel.

Who is Inflating the Oil Bubble?

Chief culprit is the Federal Reserve, the US central bank. By slashing 325-basis points off the Fed funds rate – taking it to a negative 2% after adjusting for inflation and expanding the US broad money supply by 16.5% from a year ago in a desperate effort to stop the slide in the sinking US banking sector – the Fed encourages speculation in commodities by pushing down the Dollar.

That, in turn, pushes up the price of Dollar-denominated commodities such as crude oil, soy beans and Gold.

So far, the Fed's aggressive rate cuts haven't found any meaningful traction in the S&P Banking Index, which is still languishing at its March lows, some 40% lower from a year ago.

Banks continue to post hundreds of billions in losses from toxic sub-prime mortgage debt. But the Fed's single focus on rescuing the banking sector, with no regard for the inflationary consequences of its actions, has led to the emergence of the "crude oil vigilantes".

Much like the famed "bond market vigilantes" of the late '70s and early '80s – who sold US Treasuries hard, pushing up bond yields and forcing the Fed to raise its interest rates – these traders are now punishing central bankers who have too abusive with the world's money supply. The crude oil vigilantes merely swap bonds for oil prices.

In the past, a sharp slowdown in the US economy, the world's biggest oil guzzler, usually pushed the price of crude oil and other commodities lower. But the Fed was caught by complete surprise after crude oil prices doubled, even as America's economy slipped into a recession in the first quarter.

"The current oil price has no relation to market fundamentals," explained Saudi oil chief Ali al-Naimi on March 5th. "It is linked to tremendous speculation in crude oil futures. There are even those who buy futures and speculate that oil prices will reach $200 in 2013."

On April 28th, Opec chief Chakib Khelil observed that crude oil prices were climbing "even though supply is adequate, because the market is driven by the dollar's slide. Each time the Dollar falls 1%, the price of the barrel rises by $4, and of course vice versa.

"If for instance, the US Dollar would strengthen by 10%, it is probable that oil prices will fall by 40%."

But such simple logic has its limitations. China, India, Russia and the Middle East combined are now consuming more crude oil than the United States, burning 20.7 million barrels a day – some 4% from than a year ago, according to the IEA.

The emerging economies are picking-up the slack in the oil market, more than offsetting the 1.3% contraction in US oil demand forecast this year to 20.3 million barrels per day. Thus a mild recession in the Western economies and Japan might not weaken global demand for oil.

Oil Bubble: A Hedge for Much More Than the US Dollar

What's more, big oil exporters like Russia, Mexico and Opec itself are growing so fast economically that their need for energy within their own borders will limit how much they can sell abroad.

Internal oil demand in Saudi Arabia, Russia, Norway, Iran and the United Arab Emirates grew 6% last year, and their exports declined 3%. Mexico's oil output fell 9% in the first four months of 2008. If these trends continue, global crude exports could fall by 2.5 million barrels a day by the end of 2010, adding new strains to the global oil market.

Yet it was shocking to hear Minneapolis Fed chief Gary Stern on May 28th, refuting the linkage between the US Dollar's sharp decline and soaring energy prices, and denying any responsibility for the global Oil Bubble – also known as the "Oil Shock".

"I'd be careful about mistaking correlation and causation. Just because energy prices and the Dollar seem to move together, that doesn't mean that there's causation there. If you're thinking about energy prices, bear in mind that there's been some very significant changes in the global economy that have something to do with this.

"I would point to the very rapid growth in China and India in recent years, and places like that."

Crude oil speculators on the Nymex were buying "black gold" as a hedge against the US Dollar's slide against the Euro, the world's No.2 reserve currency. And perhaps traders in London – also picking up the mantle of "crude oil vigilantes" – have been buying North Sea Brent as a hedge against the British Pound's devaluation, too.

The Bank of England engineered the British Pound's sharp devaluation against the Euro by joining the Fed's rate cutting spree last November. Over the last 8 months, it's made three quarter-point rate cuts to 5.0%.

The European single currency – still paying less to cash savers, but with the European Central Bank (ECB) and its "anti inflation" rhetoric behind it – soared 17% to break above 80 pence per Euro. At the same time, North Sea Brent crude oil prices doubled to $130 per barrel.

Flipped the other way round, the British Pound buys around €1.25, down from €1.50 last summer, making European imports considerably more expensive. For Ivory Tower economists, the Euro's ascent against the British Pound and US Dollar – both of which closely tracked crude oil prices – was just a statistical coincidence.

But for crude oil speculators, the sharp devaluations of the Pound and US Dollar translated into enormous windfall profits in their brokerage accounts.

Whatever the truth of the Oil Bubble's beginning – and the part played by crude oil vigilantes in the London and New York markets – it's always good to have the basic fundamentals on your side when riding the waves of a strong bull market.

Oil production is shrinking in 54 of the world's top 60 oil producing nations, including Britain's North Sea fields – where output peaked in 1999, and has already plunged by half.

The UK began importing liquid gas for the first time in history in July 2005, and its North Sea oil reserve is dwindling at an 8.5% annual rate. Indeed, the curtain might fall on North Sea Brent by 2012 if enough isn't done to maintain development and exploration, according to the UK Offshore Oil Industry.

But political pressure on the Bank of England for more rate cuts could intensify after British housing prices dropped for the eighth straight month in May, down 2% from a year ago. The average selling time for UK homes has climbed to almost 10 weeks, compared to 5.8 weeks in May 2007. And a further slide in home prices could topple the UK's asset-based economy into recession, deepening losses for British banks.

Another round of BoE rate cuts could renew selling pressure on Sterling and buoy Brent crude prices, oil bubble or not. But currency devaluations do not fully account for crude oil's dramatic rise to $135 per barrel last week. "Peak Oil" theorists have an equally strong explanation, and Saudi Arabia's threat to ramp-up oil production by 2012 is sounding hollow.

Currency swings do magnify the volatility and price trends in the crude oil market, however, the same way the "Yen carry" trade magnifies swings in the global stock markets. The massive volatility in Gold Prices – a proxy for global faith in paper currencies – only adds to the pressure on central banks applied by crude oil vigilantes.

No market travels in a straight line forever, and shakeouts in the crude oil market are designed to wipe-off the speculative froth. However, a British and US economic recession would not necessarily burst the oil bubble, especially not if the net result is another sharp devaluation of the British Pound and US Dollar in the foreign exchange market, which would support high oil prices.

Oil Bubble: Subsidies Foil Supply & Demand in China

The basic laws of supply-and-demand don't work in an economy where the government intervenes with price controls. And in China, gasoline prices haven't gone up since last November, even though crude oil prices have gone up 35%.

Beijing controls gasoline prices to limit their effect on inflation, and it prevents refiners from passing on higher oil import costs to consumers. Without the price controls on energy distillates, Chinese inflation would already be in the double digits, threatening social unrest.

China Petroleum & Chemical (Sinopec) said its first-quarter net profit fell 69% from a year earlier due to surging crude oil costs. Sinopec imports about 80% of its total oil needs, and its refineries break even if oil import prices are $76 a barrel or lower.

To cover its losses, SNP received a government subsidy 4.9 billion Yuan ($700m) in the fourth quarter and 7.4bn Yuan ($1.1bn) for the first quarter of this year.

Gold ends lower, as traders eye dollar, crude moves

2008-05-12T21:26:00.002-06:00

SAN FRANCISCO (MarketWatch) -- Gold futures closed lower Monday, pressured by some strength in the U.S. dollar and a retreat in oil prices, but the precious metal held its ground above the $880-an-ounce level after gaining more than 3% last week.
"Gold is watching while the dollar weakens ... and is battling to find direction," said Julian Phillips, an analyst at GoldForecaster.com. The market has not responded well to the recent record oil prices and to Monday's weaker dollar, he said in emailed comments.

— Julian Phillips, GoldForecaster.com
"We are headed into the quiet season for gold [May to the end of August] but at any moment, reports of another systemic fracture in the financial system could liven it up as happened last year when the sub-prime crisis emerged from the shadows," Phillips said.
Gold for June delivery closed at $884.90 an ounce on the New York Mercantile Exchange, down 90 cents for the session. It climbed as high as $888.80.
For the moment, gold remains capped by trend-line resistance at the $890 mark, said James Moore, analyst at TheBullionDesk.com.
"Given the metal's reaction to pockets of dollar strength, it seems gold will find it tough to rally significantly," Moore said in a research note.
On the currency markets Monday, the dollar rose against some of its currency rivals in the aftermath of a weekend Wall Street Journal report that U.S. officials are attempting to put a floor under the greenback.
A shift in language in the statement that followed last month's meeting of Group of Seven finance ministers and central bankers highlighted concerns over excess volatility in currency markets.
This was interpreted at the time as meaning European officials were worried about the weak dollar's impact on euro-zone exporters. An unnamed U.S. Treasury official, however, said the change was pushed by Washington as part of an international effort to halt the dollar's slide, according to the Journal. See Currencies.
In energy trading, crude-oil futures fell, retreating after their record-breaking run in which they rallied more than 8% last week. Crude for June delivery closed down $1.73 at $124.23 a barrel in New York. See Futures Movers.
Bullish factors stay in place
The weakness in gold prices follows last week's gain of 3.2%, or $27.80.
"Many of the factors that have supported the bull market for the precious metals remain in place," according to analysts from Natixis Commodity Markets Ltd.
"Inflationary pressures associated in part with the dramatic rise in commodity prices are continuing; uncertainty in the financial markets as the sub-prime crisis continues to unravel remains an issue," they said in a second-quarter metals review issued Monday.
And another supportive factor is the "increasing acceptance of commodities as an asset class," they said.
All of these have been contributing to gold's price climb, but "these positive fundamentals do not necessarily justify a straight progression for precious metals prices," they said.
Natixis expects prices for gold to average $875 in 2008. That suggests that it may have already seek a peak for the year, when prices briefly exceeded $1,000 per ounce, the analysts said.
In other metals trading Monday, July silver futures tacked on 32 cents to end at $17.23 an ounce and July copper added 3 cents to finish at $3.75 a pound. July platinum tacked on $21.50 to close at $2,123.30 an ounce and June palladium added $2.95 to close at $446.80 an ounce.
Natixis expects silver prices to shadow, but slightly under perform gold. It predicts that silver prices will average $16.50 for this year, which "implies slightly weaker prices as the year progresses," they said.

Gold Slips as "Sea Change" Spied in Forex Market, Inflation for UK Factories Hits 23%

2008-05-12T21:26:00.001-06:00

THE SPOT PRICE OF GOLD slipped $10 early in London on Monday, trading below $890 per ounce as world stock markets ticked higher and government bonds sold off.

The Euro picked up 1.5¢ against the Dollar from last week's two-month beneath $1.5300.

Crude oil slipped 0.5% from a new overnight record above $126 per barrel.

"Although financial markets are more optimistic about the outcome of the credit crisis," notes Walter de Wet in his latest Gold Market note for Standard Bank in Johannesburg, "current concerns are rising inflationary pressures and higher interest rates."

This week both Ben Bernanke of the US Federal Reserve and Jean-Claude Trichet of the European Central Bank will speak on the economic outlook, notes de Wet – and "the market will want their thoughts on the inflation/growth trade-off."

This week also brings a slew of global inflation data, with producer-price and consumer price data due from both the United States and Europe between now and Thursday.

Today China said its cost of living rose at a near 12-year record last month. Food prices rose by more than one-fifth from April '07.

Here in the United Kingdom, manufacturers suffered a 23.1% rise in input prices last month according to the Office for National Statistics, the sharpest producer-price inflation on record.

"The consumer slowdown will mean that retailers will be forced to absorb the bulk of these cost increases in their margins," reckons Paul Dales at Capital Economics in London.

Corn and wheat prices continued to rise in early trade Monday after wet, cold weather in the America mid-west delayed planting yet again at the weekend.

In the New South Wales region of Australia, in contrast, some 48% of the state is now in drought, meaning that the "winter crop may yet again be savaged" according to NSW's minister for primary industries.

"Although the outlook for the Gold Price is looking up again," says today's Gold Market note from Mitsui in London, "it is important to note that since the middle of March, this market has been trending downwards.

"The trend line comes in at $895 on the spot Gold Price. Look for a clear and confirmed break of this level to point to higher prices."

The latest Gold futures data, released Friday evening, showed the total number of contracts outstanding growing by 1.6% in the week-to-Tuesday, reaching a seven-week high.

But open interest still remains almost 25% below January's record high.

Over on the currency markets, "there is kind of a sea change taking place at the moment," believes Mitul Kotecha at Calyon investment bank in London. The net-position of forex speculators has turned bearish on the Euro – and bullish on the US Dollar – for the first time in two and a half years.

"It's probably the early sign of perhaps a more sustained turnaround," reckons Kotecha, repeating the new consensus that the Federal Reserve's much-signaled pause in cutting US interest rates will put a floor beneath the Dollar.

The broad Dollar Index has now gained 3.7% from its record low of March 17th – the day that Gold hit its new record high of $1,032 per ounce. Gold also hit record highs vs. the Euro, British Pound, and the Canadian and Australian Dollars that day, too.

Now the Fed is expected to keep interest rates on hold for the time being, rather than slashing them further. But this apparently pro-Dollar stance leaves the rate of interest for US cash savers at half the rate of US consumer inflation.

Real interest rates, after accounting for current growth in the cost of living, stand at minus 2%.

"It certainly wouldn't be wise for someone to take all of their money out of the stock market and put it in foreign currencies," believes Jeff Dobyns, manager for Raymond James Financial Services in Brentwood and Nashville, speaking to the Tennessean.com this weekend.

"It's probably too late in the game. Now might be a good time to sell. Whenever anyone says it's off the charts, that's a good indication it's getting ready to change."

In the stock market Monday, however, MBIA – the bond insurance giant that lost 87% of its value since May 2007 – reported its third quarterly loss on the run for the Jan. to March period, running a net loss of $2.4 billion.

Here in London, losses by the UK's three largest banks will reduce their combined tax payments for last year by £2.5 billion ($4.9bn) according to the Financial Times.

That's more than 5% of the corporation tax receipts forecast for 2007-08.

"In the US, the credit turmoil has led to a 13.6% in corporate tax receipts," the FT goes on.

Mining's Glittering Future

2008-05-12T21:23:00.002-06:00

For investors looking to ride the growth of emerging economies, no sector has produced more spectacular results than once-sleepy mining and minerals. Boosted by soaring demand from China, India, and other fast-growing countries, commodities producers have racked up huge revenue and profit gains even as other companies have faltered in the wake of the credit crunch and slowing Western economies.

Topping the list of high-fliers are Rio Tinto (RTP), which ranks No. 7 on this year's European BusinessWeek 50, and its rival and would-be suitor, BHP Billiton (BHP), which ranks No. 24. Both have benefited mightily from a boom that has seen the price of base metals and minerals double or triple in the past 18 months. Shareholders have benefited as well: Rio Tinto shares are up 84% in the past 12 months, while BHP Billiton's are up 54%.

The surge of cash into both companies' coffers has allowed them to open new mines and acquire rivals. And last November it prompted the most audacious consolidation play of all: BHP proposed to acquire Rio Tinto for an eye-popping $142 billion in stock, which offer Rio swiftly rejected [BusinessWeek.com, 11/9/07]. Two months later, China's largest aluminum maker, Chinalco, and Pittsburgh-based Alcoa (AA) raised the ante by plunking down $14 billion for a 12% stake in Rio [BusinessWeek.com, 2/01/08]. The value of BHP's offer has now risen to $160 billion, but Rio continues to resist it.

Commodities Bubble? Despite such gigantic valuations -- and the drama of a drawn-out takeover bid -- analysts see still more potential. Charles Cooper, mining analyst at London's Evolution Securities, figures both BHP and Rio have strong growth prospects, particularly in their core iron ore businesses. Iron prices are expected to increase an additional 40% to 60% this year alone, and BHP and Rio together control almost 40% of the world's production.

There's also room for their share prices to appreciate. Jeremy Gray, mining analyst at Credit Suisse (CS), reminded investors in a recent research note that the cost of lead -- up 200% since January, 2007 -- has risen at twice the rate of BHP's share price over the same period. "Mining equities have underperformed and a catch-up appears imminent," Gray says.

To be sure, some observers worry about a commodities bubble. If Western financial volatility and economic weakness spread to emerging economies, demand for raw materials could slacken just as BHP and Rio bring new mines online. Thanks to such increases in capacity, the supply of raw materials inevitably will catch up with demand at some point. But one surprising factor that could keep prices high well into 2010 is a global shortage of equipment, transportation capacity, and qualified engineers to oversee new projects.

Fighting Over Their Companies' Futures The protracted mating dance between BHP Billiton and Rio Tinto also could be a distraction to management. Rio continues to spurn the offer, but market-watchers expect BHP may sweeten the deal with a cash component. Complicating matters is the fact that the hostile bid has led to public animosity between Rio CEO Tom Albanese and his BHP counterpart, Marius Kloppers.

With so much at stake, it's no wonder Albanese and Kloppers have turned the fight over their companies' futures into a personal competition. Buoyed by strong demand from emerging markets, BHP Billiton and Rio Tinto are at the forefront of the mining sector's 21st century gold rush. And that has earned them, once again, a place in the European BW 50.

Power demands pushing metal prices up

2008-05-12T21:23:00.001-06:00

WASHINGTON, May 12 (UPI) -- A global increase in energy demands have triggered price jumps in metals, as power shortages from Chile to South Africa have limited production, analysts say.

The power it takes to run an aluminum smelter in China could supply 2 million people with enough power for a year, The Washington Post reported Sunday.

Power shortages have contributed to price increases in platinum, aluminum, and copper, up 24, 21 and 26 percent this year respectively, the report said.

"There will be a sustained level of risk from power shortages in the commodities markets," Michael Lewis, the head of commodities research at Deutsche Bank told the Post.

"We are pricing bigger supply losses as a result," he said.

The demand for metals may have waned in the United States, where consumer spending is down, but emerging markets are keeping global demand intact, analysts said.

"To allow China and India to have a middle class, we need to go back to the drawing board and boost investments in power infrastructure, " Francisco Blanch, a commodities researcher at Merrill Lynch said.

"And if this doesn't happen, we're going to see even more brown-outs," Blanch said.

Dollar Bulls Gain Control as Euro May Be Near Peak

2008-05-12T21:22:00.002-06:00

(Bloomberg) -- For the first time since December 2005, futures traders are turning bullish on the dollar.

The difference in the number of wagers by hedge funds and other large speculators on a gain in the greenback versus the euro, known as net longs, was 21,315 on April 29, figures from the Commodity Futures Trading Commission in Washington show. There were net-short positions in each of the previous 123 weeks. At the same time, traders have stepped up their purchases of options that profit from the dollar's appreciation.

The measures are making long-suffering proponents of the dollar optimistic that this time the currency's rally may hold, especially if the Federal Reserve's Open Market Committee refrains from additional interest-rate cuts. The Dollar Index traded on ICE Futures in New York, which tracks the currency against six trading partners, is up 3.7 percent from an all-time low of 70.698 set on March 17.

``There is kind of a sea change taking place at the moment,'' said Mitul Kotecha, head of foreign-exchange research in London at investment bank Calyon, whose forecasts on the euro-dollar exchange rate in the first quarter were more accurate than those of the two biggest currency traders. ``It's probably the early sign of perhaps a more sustained turnaround.''

The Dollar Index fell 0.1 percent to 73.006 by 10:19 a.m. in London. The dollar has appreciated 3.3 percent to $1.5493 since dropping to $1.6019 per euro on April 22, the lowest since the European currency's debut in 1999. The dollar will strengthen by the end of the year to $1.50, according to the median estimate of 40 strategists surveyed by Bloomberg News.

Gaining Traction

The dollar's rebound gained traction last month after the Open Market Committee said ``substantial'' rate cuts since September would help foster growth. U.S. employers also eliminated fewer jobs in April than forecast by economists.

Meanwhile, a slide in business confidence in Germany and France, which account for about half the euro-region economy, renewed speculation the European Central Bank will reduce rates this year. An end to lower rates in the U.S. and the possibility of cuts in Europe raises the appeal of dollar-denominated assets.

``The recent shift to a neutral FOMC stance and from a very hawkish European Central Bank stance, together with U.S. data pointing to a stagnation rather than a deep contraction, have already contributed to the dollar's rally,'' said Marc Chandler, global head of currency strategy in New York at Brown Brothers Harriman Inc. Chandler said he expects the dollar to reach $1.44 per euro by year-end.

Rate Futures

Interest-rate futures on the Chicago Board of Trade show an 84 percent chance the Fed will keep its target unchanged at 2 percent when policy makers next meet on June 25, with the balance of the odds calling for a quarter-percentage point cut.

The ECB will lower its 4 percent main refinancing rate to 3.75 percent by the end of September and 3.50 percent by year- end, according to the median estimate of 31 economists surveyed by Bloomberg.

As declining home sales and mortgage losses curbed economic growth, investor sentiment grew so negative on the dollar that even longtime pessimists such as Jim Rogers, chairman of Rogers Holdings, say the U.S. currency is due to rebound.

``I expect a nice rally in the American dollar because so many have been bearish on the American dollar, including me,'' he said on May 8 in Singapore. Rogers, who co-founded the Quantum fund with George Soros in the 1970s and correctly predicted the start of the commodities boom in 1999, cited the benefit of surging prices for U.S. agricultural products.

Contrarian Indicator

Futures can be viewed as a contrarian indicator because traders often rush to reduce positions when momentum in a currency shifts. The last time net longs were this high, in December 2005, the dollar was nearing the end of a one-year, 13 percent rally versus the euro. It weakened 11 percent in 2006 and depreciated by the same amount in 2007.

``It is more likely than not that reasons for speculators returning to selling the dollar will be greater than reasons for them to sell the euro,'' said Derek Halpenny, head of global- currency research in London at Bank of Tokyo-Mitsubishi UFJ Ltd., who expects the euro to reach a record high within three months. ``I see risk that the ECB doesn't do anything this year and expect the Fed will ease again in 2008.''

Between May 2005 and the end of that year, futures traders were net long the dollar versus the euro 73 percent of the time. The U.S. currency gained 7.9 percent in that period.

Call Options

Net-short positions versus all currencies fell to $10 billion in the week ended April 29, from $22 billion in the prior period, according to CFTC data tracked by Morgan Stanley. Speculators had net-long bets on the dollar versus the pound and the euro. Hedge funds and other large speculators were net-short the euro for a second week in the period ended May 6.

In another bullish signal for the dollar, demand for one- month options that grant the right to sell the euro is greater than for those allowing for purchases. The so-called risk- reversal rate had a 0.44 percentage point premium for euro puts relative to calls on May 9.

As recently as March, demand for call options was greater than put options. On Jan. 28, the premium for euro calls reached 0.495 percentage point, the highest since April 2007.

``We may very well have seen the bottom in the dollar,'' said Stephen Jen, the global head of currency research at Morgan Stanley in London, who forecasts the dollar will rise to $1.40 per euro by year-end. ``The dollar has regained some traction lately. Against the euro, the U.S. dollar is around 25 percent undervalued.''

Platinum hits 2-week high

2008-05-12T21:22:00.001-06:00

SINGAPORE: Platinum jumped to its best level in more than two weeks on Friday on speculative buying ahead of the launch of new platinum exchange-traded notes, while gold held near a one-week high on firm euro and record high oil.

The two ETNs -- UBS E-Tracs Long Platinum ETN and UBS E-Tracs Short Platinum ETN -- will start trading soon on the NYSE Arca platform, according to CNBC television and NYSE Euronext exchange data.

Dealers also reported platinum purchases in Japan, Europe and the United States as auto makers stocked up for their second-quarter requirements, but the metal was still more than $200 below a lifetime high of $2,290 an ounce hit on March 4.

Spot platinum rose as high as $2,043 an ounce, its highest since April 18, up from $2,008.50/2,028.50 late in New York on Thursday. "Automobile makers start to buy, therefore the price will increase rapidly. By the end of May, the price may be $2,100," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.

But jewellery makers weren't buying because of the high prices, using recycled metal instead to meet demand, said Sonoda. Platinum's major industrial use is in catalysts, particularly in diesel catalysts, as it helps cleanse environmentally damaging fumes from motor exhausts. It is also used in jewellery.

The benchmark platinum contract for April 2009 delivery on the Tokyo Commodity Exchange rose 187 yen per gram higher at 6,590 yen. Gold hit a high of $884.55 an ounce, not far from Thursday's one-week high of high at $885.25 an ounce, before dipping to $883.80/884.80 an ounce, still up from $881.40/882.60 an ounce late in New York. "The euro has reversed after finding some support around the 1.5821 region.

That provides some support for gold," said Adrian Koh, an analyst at Phillip Futures in Singapore. "Higher oil prices and the platinum news are also supportive. So basically, it's a string of good news for gold." The euro edged up to $1.5414 after rebounding from a two-month low on reduced expectations for European Central Bank rate cuts. Oil spiked to another record near $125 a barrel on Friday on fund buying.

In the physical market, steady purchases from jewellers in Indonesia, Thailand and Vietnam pushed up premiums for gold bars to 80 US cents an ounce to the spot London prices in Singapore, from 75 cents last week India, the world's largest gold consumer, was active an buyer earlier this week ahead of Akshaya Tritiya, a festival when many Hindus buy gold with the belief it will give them lasting prosperity Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange added $2.8 an ounce to $884.9 an ounce.

Gold demand low as prices remain firm

2008-05-12T21:21:00.001-06:00

India's gold demand remained low on Monday as prices remained firm, prompting buyers to wait for a fall, dealers said.

"The demand has come down after good sales during Akshaya Tritiya," said Dipen Mandelia, director of Ahmedabad-based LKS Bullion Import and Export Pvt Ltd.

Akshaya Tritiya, an auspicious festival for buying gold, ended on Thursday.

Domestic gold prices erased early losses and moved higher in afternoon trade.

People are cautious of high prices and they are keeping themselves away from the market, said Ashwin Choksi of Mumbai-based Jamnadas M. Choksi Jewellers.

Some people are now shifting to diamond jewellery as prices are comparatively stable there, he said.

Gold bounces back on global cues

2008-05-12T21:20:00.000-06:00

old prices bounced back on the bullion market here on Monday on renewed demand from stockists on the back of higher global advices.

Silver also inched up on mild demand from industrial users.

Some of the investors might have shifted to equity market for early gains, traders said.

Standard gold (99.5 purity) shot up by Rs 75 per 10 grams to Rs 11,995 from the last weekend's level of Rs 11,920. Pure gold (99.9 purity) also rose by a similar margin to Rs 12,055 from Rs 11,980.

Silver ready (.999 finess) moved up by Rs 30 per kilo to Rs 23,415 from Rs 23,385.

In the London market, gold was fixed higher in the morning at USD 882.50 per ounce as against USD 876.00 per ounce.

Will India ban futures trading in Gold?

2008-05-12T21:19:00.002-06:00

NEW DELHI: Less a than week after the Indian government banned futures trading in commodities like rubber, chana, soya oil and potato, a section of bullion traders are pressing for a similar ban on gold futures.

On Sunday, the All India Sarafa Association, an umbrella body for bullion traders, sent a memorandum to India's Prime Minister Manmohan Singh and Finance Minister P Chidambaram asking for an immediate ban on futures trading in gold and silver.

According to the Assoication President Sheel Chand Jain, gold prices are going up and up these days becuase of futures trading, and the speculative trading undertaken by commodity players.

"The gold market in India has become unstable thanks to sudden rise and fall in the prices of yellow metal. In fact, the price flutuation in bullion prices, many times in a day, has created instability in the minds of consumers and adversely affected the bullion trade in India," Jain said.

Therefore, he said just as the government banned futures trading in agri commodities like rubber and soya oil, it is high time the government acted fast to ban forward trading in gold and silver.

Jain pointed out that India is the largest consumer of gold in the world, and futures trading has not helped the common man. "Gold prices have been volatile becuase of futures trading. People in India are genuine buyers of gold. But they are left high and dry these days because of the high prices of gold," he said.

Jain said the Association will meet Finance Minister Chidambaram to request him to ban futures trading in gold.

Gold rises above $882 as dollar falls

2008-05-12T21:19:00.001-06:00

NEW YORK: Continuing its upward journey, gold rose to $882.10 a troy ounce on the Comex division of the New York Mercantile Exchange on Thursday.

June gold raised $10.90 to settle at $ 882.10 as the US dollar fell and the euro gained.

As gold was closing, the euro was up to $1.5411 from $1.5396 yesterday. At the same time, the ICE Futures US dollar index was down 0.13 per cent.

July silver rose 17.5 cents to $16.87 an ounce. July platinum raised $73.30, or nearly 4 per cent, to settle at $2042.30 an ounce while June palladium gained $10.15, or more than 2 per cent, to close at $435.90. The most-active July copper contract fell 4.65c to settle at $3.7875 a pound, hurt by technical sales.

Gold falls below $ 872 on sturdy dollar

2008-05-12T21:18:00.002-06:00

NEW YORK: Gold prices fell Wednesday after a three-day winning streak as the dollar rebounded against the euro.

Gold futures for June delivery dropped $6.50, or 0.7%, to $871.20 an ounce on the Comex division of the New York Mercantile Exchange. The price gained 3.1% in the previous three sessions.

Silver futures for July delivery declined 16.5 cents, or 1%, to $16.695 an ounce. The price gained 0.6% in the past week and 22% in the past 12 months.

Silver will average $15.76 this year and $12.80 in 2009, UBS said today in a quarterly report. Futures averaged $13.47 in 2007.

The dollar rose on speculation the Federal Reserve may raise interest rates to curb inflation. Gold has climbed 26% in the past year, reaching a record $1033.90 an ounce on March 17, after sliding borrowing costs sent the dollar to an all-time low against the euro.

The dollar rose as much as 1.1% today against the euro after dropping 0.7% in the previous two sessions. The Fed cut interest rates 3.25 percentage points to 2% from September to April. The euro hit $1.6019 on April 22, the highest ever. The currency traded as low as $1.5366 today.

Gold rallied 31% last year when consumer prices rose 4.1%, the most since 1990. Crude-oil futures climbed to a record for a third time this week, touching $123.56 a barrel.

Gold rises to Rs 11,820 on buying spree

2008-05-12T21:18:00.001-06:00

Gold rose to Rs 11,820 per 10 gram mainly on heavy buying by stockists and jewellery fabricators prior to Akshayatrithiya here at the bullion market on Wednesday.

Precious metal prices surged further by Rs 150 again on firming trend in overseas markets.

Standard gold and ornaments rose by Rs 150 each to Rs 11,820 and Rs 11,670 per 10 gram respectively. Sovereign held unchanged at Rs 9875 per piece of eight gram.

Silver also rose further on brisk buying by funds. Silver ready rose further by Rs 320 to Rs 22,620 per kg and weekly-based delivery by Rs 500 to Rs 22,450 per kg.

Silver coins, on the other hand, continued to be asked at previous levels of Rs 26,600 for buying and Rs 26,700 for selling of 100 pieces.

The buying activity picked up on reports that the gold rose in Asia for a fourth day as crude oil traded near 122 dollar a barrel, boosting the appeal of the precious metal as a hedge against inflation.

Gold has gained 5.2 per cent this year in overseas markets, while oil soared 27 per cent. Bullion for immediate delivery gained 5.03 dollar to 881.43 dollar an ounce. The domestic bullion market normally take guidance from global markets.

IMF approves sale of 403.3 tons of gold reserves

2008-05-12T21:17:00.000-06:00

WASHINGTON: The IMF on Tuesday approved the sale of 403.3 tons of gold reserves as part of a financial overhaul that will allow the Fund to generate revenues from a variety of sources.

IMF Managing Director Dominique Strauss-Kahn said "With this decisive endorsement, the Fund's members have once again demonstrated their support for reforming key components of the institution's framework, including its financial structure".

The sale, amounting to some 12 percent of the IMF's gold reserves, could yield around 11 billion dollars.

This would help finance a reorganization of the institution as it seeks to survive a downturn in lending to troubled countries, its main income source.

As more and more developing countries began rejecting financial aid, the IMF is trying to find new ways that can provide steady sources of income to it. The institution faces a budget shortfall of some 140 million dollars for the fiscal year 2008 that ends on April 30.

Gold futures fall sharply on dollar, oil

2008-04-29T15:16:00.002-06:00

NEW YORK (MarketWatch) -- Gold futures fell sharply Tuesday, as strength in the U.S. dollar and declining oil prices pressured investment demand for the precious metal. Gold for June delivery dropped $18.70 to end at $876.80 an ounce on the New York Mercantile Exchange.
"Anticipation about the Fed meeting's eventual results turned into apprehension that the massive slide in rates seen since September will not only come to an end shortly, but will likely be partially reversed after a period of no action," said Jon Nadler, senior analyst at Kitco Bullion Dealers.
The Federal Reserve's interest-rate meeting begins Tuesday afternoon. The statement will be released on Wednesday at 2:15 p.m. Est. See The Fed.
Most economists expect a quarter-percentage point cut from the central bank. The rate cut would bring the Fed's target for overnight interest rates to 2%, the lowest level since December 2004.
Many economists said they wouldn't be surprised if the Fed paused at this meeting. Some want the Fed to pause to signal that it is prepared to get tough about inflation.
"I think the main driver today is the pricing in of the next Fed rate cut and the strength in the dollar," said Zachary Oxman, a senior trader at Wisdom Financial.
"It is quite possible that the Fed has cut to the point where credit will be loosening, which would signal a renewal for the U.S. economic growth cycle," Oxman said. "If this is the case, watch for a rotation out of gold and flight-to-quality trades and back to the stock market."
The dollar held onto most of its gains Tuesday. The dollar index, which tracks the performance of the greenback against a basket of other major currencies, gained 0.3% to 72.83

"Gold is again under pressure with the dollar continuing to strengthen and oil continuing to sell off, but caution remains the predominant theme ahead of the Federal Reserve's interest rate decision," said Mark O'Byrne, executive director of Gold and Silver Investments Ltd., in a research note.
Crude-oil futures fell sharply, as strength in the U.S. dollar and news that BP's Forties pipeline will restart operation within days pressured energy prices.

Gold, Silver Futures Decline on Dollar, Interest-Rate Outlook

2008-04-29T15:16:00.001-06:00

(Bloomberg) -- Gold fell to a four-week low as the dollar climbed against the euro, eroding the appeal of precious metals and commodities as alternative investments. Silver also declined.

The dollar rose as much as 0.7 percent versus the euro on speculation the Federal Reserve will signal that it's close to pausing after six interest-rate reductions. Before today, gold and commodities gained more than 30 percent in the past 12 months, while the dollar slumped 13 percent against the euro.

``If, as we suspect, the Federal Reserve stands pat on rates, or signals that it is done for the time being, we could see the dollar strengthen, and lead to another bout of profit- talking in commodities,'' Edward Meir, an analyst at MF Global Ltd., said in a report.

Gold futures for June delivery fell $14, or 1.6 percent, to $881.50 an ounce at 9:29 a.m. on the Comex division of the New York Mercantile Exchange. The price earlier touched $878.60, the lowest for a most-active contract since April 1.

The Fed reduced borrowing costs by 3 percentage points to 2.25 percent from Sept. 18 to March 18. Gold reached a record $1,033.90 an ounce on March 17.

The U.S. currency headed for its first monthly advance this year against the euro as traders increased bets the Fed will stop lowering borrowing costs after a quarter-percentage point reduction tomorrow.

Silver futures for July delivery declined 46.3 cents, or 2.7 percent, to $16.66 an ounce. Before today, the price gained 26 percent in the past 12 months.

The Reuters/Jefferies CRB Index of 19 commodities dropped as much as 1.3 percent.

US STOCKS-Market wavers as drugs weigh, Fed looms

2008-04-29T15:11:00.000-06:00

(Reuters) - U.S. stocks ended little changed on Tuesday as setbacks for two drugs weighed down the pharmaceutical sector, offsetting the relief from a retreat in record high crude oil prices.

Trading volume was scant as investors turned cautious with the Federal Reserve's two-day meeting under way. Policy makers are expected to trim interest rates and signal an end to a series of deep cuts started in September.

The prospect of steady rates helped support the dollar and contributed to a 2.5 percent drop in oil prices from a record high. Crude's decline sparked a rally in airlines, but dragged on energy-related shares.

Merck & Co Inc (MRK.N: Quote, Profile, Research) shares fell more than 10 percent a day after the company said U.S. regulators rejected a new cholesterol drug, prompting brokerages to cut price targets on the stock.

Further dragging on the drug sector, biotechnology companies Genentech Inc (DNA.N: Quote, Profile, Research) and Biogen Idec Inc (BIIB.O: Quote, Profile, Research) said a study of one of its cancer treatments failed to show the drug was also effective for treating lupus. [ID:nWNAS0367]

"Pharmaceuticals used to be the traditional recession play, but it seems they have so many negative stories, they can't get out of their own way," said Mark Schlarbaum, head trader at Global Capital Management in Conshohocken, Pennsylvania.

If the drug companies could overcome that trend, Schlarbaum said they would attract some interest because "they're all cheap. It's hard to say where is the relatively safe trade in this environment."
The Dow Jones industrial average .DJI was down 39.81 points, or 0.31 percent, at 12,831.94. The Standard & Poor's 500 Index .SPX was down 5.43 points, or 0.39 percent, at 1,390.94. The Nasdaq Composite Index .IXIC was up 1.70 points, or 0.07 percent, at 2,426.10.

About 1.23 billion shares changed hands on the NYSE, well below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.75 billion shares traded, below last year's daily average of 2.17 billion.

Merck shares slid 10.4 percent to $37.14 on the New York Stock Exchange, while Genentech (DNA.N: Quote, Profile, Research) dropped 7.2 percent to $67.93. On the Nasdaq, Biogen Idec shares declined 5.2 percent to $61.33.

The American Stock Exchange pharmaceutical index .DRG was down 1 percent.

June crude CLM8 dropped $3.12 to settle at $115.63 a barrel -- sharply below Monday's record near $120 a barrel.

Shares of Northwest Airlines (NWA.N: Quote, Profile, Research) surged 22.8 percent to $9.36 and Delta Air Lines jumped 14.6 percent to $8.24. High fuel costs have pummeled airline shares and have even grounded some carriers.

Shares of Schlumberger Ltd (SLB.N: Quote, Profile, Research), an oilfield services firm, slid 3 percent to $99.26. Oil and gas producer Apache Corp (APA.N: Quote, Profile, Research) dropped 3.8 percent to $132.68 on the NYSE.

It wasn't all gloom in the oil patch. Goldman Sachs upgraded the integrated oil sector to "attractive" from "neutral," saying risk/reward was most favorable for the "super majors" such as ConocoPhillips (COP.N: Quote, Profile, Research) and Chevron Corp (CVX.N: Quote, Profile, Research).

Chevron shares rose 2.4 percent to $94.74, supporting both the Dow and the S&P. ConocoPhillips stock gained 1.2 percent to $85.45.
The latest economic data increased investors' fears of recession.

Consumer confidence hit a five-year low in April as Americans faced the worst jobs outlook since late 2004, with expectations that inflation would accelerate to a pace last seen in the early 1980s, according to the Conference Board, a private research group. That outlook worries Wall Street because consumer spending accounts for two-thirds of U.S. economic activity.

Adding to the worry list: U.S. home foreclosure filings surged in the first quarter of the year, real estate data firm RealtyTrac said. And in a separate report, the Standard & Poor's/Case Shiller home price index showed prices of existing U.S. single family homes fell further in February.

Oil Falls More Than $3 as BP Restarts Pipeline, Dollar Rises

2008-04-29T15:09:00.000-06:00

Crude oil fell more than $3 a barrel, the biggest decline in four weeks, after BP Plc restarted a North Sea oil pipeline and the dollar strengthened, reducing the appeal of commodities to investors.

``The Forties Pipeline System is back in operation,'' Richard Grant, a BP spokesman in Aberdeen, Scotland, said today. The pipeline closed April 27 during a two-day strike at the Grangemouth refinery, which supplies the network with power. The dollar rose to a three-week high against the euro.

``The reopening of the Forties Pipeline is taking fear out of the market,'' said Rick Mueller, director of oil practice at Energy Security Analysis Inc. in Wakefield, Massachusetts. ``The dollar is rising as well, which is taking some of the financial pressure out of commodity markets.''

Crude oil for June delivery dropped $3.12, or 2.6 percent, to settle at $115.63 a barrel at 2:58 p.m. on the New York Mercantile Exchange, the lowest close since April 17. It was the biggest one-day decline since March 31. Futures surged to a record $119.93 a barrel yesterday. Prices are 74 percent higher than a year ago.

Prices closed above the Bloomberg Trender support line today, as they have since April 7, indicating crude oil will probably extend gains. The Trender is a technical study that signals a price's direction based on the speed and variance of past changes.

Brent crude for June settlement fell $3.31, or 2.8 percent, to settle at $113.43 a barrel on London's ICE Futures Europe exchange. It was also the biggest drop since March 31 and the lowest close since April 17. The contract touched a record $117.56 on April 25.

`Buying-With-Abandon'

``For the first time in weeks we have some bearish factors in the forefront,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``We are finally seeing a stop to the buying-with-abandon.''

Shutting the Forties link forced 70 North Sea fields to halt production of oil and gas. Plans are in place to begin increasing offshore production today and the pipeline will return to full capacity in ``several days,'' Joanne McDonald, a spokeswoman for BP, said earlier.

Record oil prices pushed oil-company profits higher. BP, Europe's second-biggest oil company, posted a 63 percent jump in first-quarter net income to $7.62 billion. Royal Dutch Shell Plc, Europe's biggest oil producer, said profit rose 25 percent to $9.08 billion.

Futures contracts on the Chicago Board of Trade show an 82 percent chance the Fed will trim its target for overnight lending between banks by 0.25 percentage point to 2 percent tomorrow. The European Central Bank has not cut rates because of rising inflation, which has led to the dollar falling against the euro.

Commodity Records

Oil has risen 42 percent and the dollar has dropped 12 percent against the euro since the Federal Reserve began lowering interest rates on Sept. 18. Gold, corn, soybeans and rice also rose to records this year as the dollar dropped.

The UBS Bloomberg Constant Maturity Commodity Index, which tracks 26 raw materials, fell 1.8 percent to 1485.937 today, the lowest since April 11. The index is up 33 percent from a year ago.

An Energy Department report tomorrow will probably show that U.S. crude-oil supplies advanced 950,000 barrels in the week ended April 25 from 316.1 million barrels, according to the median of responses from 12 analysts surveyed by Bloomberg News.

``The dollar's strength and news that the Forties pipeline will be up and running in a couple days are moving us lower,'' said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut. ``There won't be a major retracement in the near term because of supply disruptions, specifically in Nigeria.''

Exxon Strike

A senior Nigerian oil workers' union continued its strike against a unit of Exxon Mobil Corp. for a sixth day, halting 860,000 barrels a day. Olusola George-Olumoroti, chairman of the branch of the Petroleum & Natural Gas Senior Staff Association of Nigeria, or Pengassan, said the union will meet today with Exxon, government officials and the head of the state-owned oil company.

The strike, combined with a one-week spree of militant attacks against four crude-oil pipelines operated by a Royal Dutch Shell Plc venture, has cut Nigerian oil output by about 50 percent, allowing Angola to overtake it as Africa's biggest oil producer. Violence by militants in the Niger River Delta has cut Nigeria's oil output since the start of 2006.

``Exxon's problems will probably be temporary but that's not the case with Shell,'' McGillian said. ``The situation in the delta has been a bullish factor in the market for two years now and there are no signs that it will end any time soon.''

President George W. Bush dismissed calls by Congress to stop oil purchases for the Strategic Petroleum Reserve at a press conference today at the White House. A group of 14 Senate Republicans earlier asked Bush to stop filling the reserve to ease price pressures, matching a similar request previously made by Democrats in the House.

Dollar Rises to Three-Week High on Bets Fed Will Signal Pause

2008-04-29T15:07:00.000-06:00

(Bloomberg) -- The dollar strengthened to a three- week high against the euro on speculation the Federal Reserve will signal that it's done lowering interest rates.

The currency is headed for its first monthly advance against the euro this year, and also gained versus the Norwegian krone and pound today, as interest-rate futures show the Fed may reduce borrowing costs tomorrow and then pause. The pound was poised for its biggest monthly drop against the dollar in 2008 as mortgage approvals in the U.K. plunged last month.

``If the Fed is not at the end of the easing cycle, it's near the end,'' said Jeff Gladstein, global head of currency trading at AIG Financial Products in Wilton, Connecticut. ``I don't think the dollar will strengthen aggressively by any stretch, but I do think it's trying to bottom.''

The dollar rose 0.6 percent to $1.5563 per euro at 4:25 p.m. in New York, from $1.5657 yesterday. It touched $1.5541, the strongest level since April 3. The yen increased 0.1 percent to 104.04 against the dollar, from 104.19 yesterday. It advanced 0.7 percent to 161.93 versus the euro, after touching 161.12, the strongest since April 16.

The U.S. currency has risen 4.3 percent against the yen and 1.4 percent versus the euro this month. The dollar fell to $1.6019 against the euro on April 22, the lowest level since the European currency debuted in 1999. The euro is up 2.7 percent versus the yen in April.

Futures on the Chicago Board of Trade show an 82 percent chance the Fed will cut the target rate for overnight lending by a quarter-percentage point to 2 percent tomorrow and odds of 71 percent that the rate will be held at that level in June.

New Zealand Dollar

New Zealand's dollar weakened against most of the major currencies after a government report showed the annual trade deficit unexpectedly widened in March. The kiwi declined 1.4 percent to 77.49 U.S. cents after touching 77.27, the lowest level since Jan. 28.

The yen rose against all of the major currencies on speculation investors reduced carry trades in which they get funds in a country with low borrowing costs and purchase assets where returns are higher.

Higher-yielding assets were less attractive before the Fed's decision on interest rates tomorrow and the release of economic reports on gross domestic product and payrolls later this week, according to Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto.

``There is perhaps still a little more value in the safe havens,'' said Osborne. ``The markets are perhaps worried about equities fading again in May if we get weak GDP and payrolls.''

Yen's Advance

Japan's currency increased 1.5 percent to 80.71 versus the New Zealand dollar and 1.2 percent to 61.01 against Brazil's real. Japan's target lending rate of 0.5 percent compares with 11.75 percent in Brazil and 8.25 percent in New Zealand.

The British pound dropped 1 percent to $1.9694 and was down 0.8 percent for the month as the Bank of England reported that mortgage approvals in the U.K. fell in March to the lowest level in at least nine years.

Australia's dollar dropped 0.5 percent to 93.46 U.S. cents after the New York-based Conference Board's Australian index of leading economic indicators fell in February for a third month.

The euro was under pressure as the Bloomberg purchasing managers index showed today that European retail sales dropped the most in more than four years in April. Another report showed French consumer confidence dropped this month to a record low as accelerating inflation squeezed incomes.

Slowdown `Spreading'

``The slowdown in the U.S. is spreading to other countries,'' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. ``The dollar, which has been on its knees, is in a short-term bottoming process.''

Investors should sell the euro against the dollar over the next several weeks because two-year German bunds have lost some of their yield advantage over comparable-maturity Treasuries, said Citigroup Inc., one of the 10 biggest currency traders. The yield difference, or spread, between the two securities has decreased to 1.46 percentage points, from 1.85 on March 31, which was the most since the euro was launched.

European Central Bank policy makers have held the main refinancing rate at a six-year high of 4 percent since June to contain inflation. The U.S. central bank has cut its fed funds target 3 percentage points to 2.25 percent since September.

``The weak economic data looks increasingly out of the step with the ECB's hawkish stance,'' said Todd Elmer, currency strategist at Citigroup Global Markets Inc. in New York. ``It's a more benign environment for the U.S. dollar.''

The Conference Board's index of U.S. consumer confidence dropped to 62.3 this month, the lowest level since March 2003, from a revised 65.9 in March, the New-York-based research group reported today.

Gold firm amid record oil but caution reigns

2008-04-29T14:03:00.000-06:00

London: Gold drifted higher on Monday as oil roared to a record high near $120 a barrel but investors remained cautious ahead of this week's meeting of the US Federal Reserve on interest rates.

Bullion rose as high as $894.25 an ounce and was quoted at $890.40/$891.10 at 1408 GMT, against $886.90/$888.30 in New York late on Friday.

Gold was supported by strong oil prices, but analysts said bullion's upward movement was not as impressive as it was last month when soaring oil and a record low dollar propelled gold to a lifetime high of $1,030.80 on March 17.

"Sentiment towards gold is not nearly as bullish as it was, not least because the outlook for the dollar is considerably less bearish," said Tom Kendall, metals strategist at Mitsubishi Corporation.

"If we get more positive US data this week that surprises on the upside, or if the tone of the statement following the Fed meeting gives people confidence that it has come to the end of its interest rate easing cycle, then it would not be surprising to see gold pushed lower."

The metal has fallen 13 per cent since then and has been struggling to regain $900. It hit a three-week low of $877.60 on Friday before a surging oil market lifted gold's appeal as a hedge against inflation.

Oil hit a new record near $120 a barrel, boosted by a string of bullish factors that include big disruptions to Nigeria's output and a UK refinery strike.

"I do expect gold to drift around $900 for a little while, until we really see another strong shift in sentiment. Even the spike in oil is failing to really fire up the gold market," said Daniel Hynes, metals strategist at Merrill Lynch.

"After such a good run, a lot of people took the opportunity to liquidate, but the general trend would be for rising prices in the medium- to long-term," he said.

Gold futures for June delivery on the Comex division of the New York Mercantile Exchange rose $3.30 an ounce to $893.00 an ounce.

In other metals, platinum rose to $1,958/$1,968 an ounce from $1,944/$1,964 late on Friday and silver gained to $16.91/$16.97 an ounce from $16.83/16.89. But spot palladium fell $3 to $432.50/$438.50 an ounce.

Oil hits $120 on supply concerns

2008-04-29T14:00:00.000-06:00

London: Oil hit another record near $120 a barrel on Monday, boosted by a string of bullish factors that included big disruptions to Nigeria's output and a UK refinery strike, highlighting anxieties over threats to supply.

Prices retreated from early peaks as the dollar gained versus the euro, reflecting some expectations that the US Federal Reserve may not cut interest rates this week. US light crude for June delivery was up 37 cents at $118.89 a barrel by 1534 GMT, after a record high of $119.93. Prices are up almost 25 per cent since the start of the year.

London Brent crude was up 43 cents at $116.77.

"Continued attacks in Nigeria and refinery closures in Scotland ... may see the US target $121-$122 this week, with longer-term charts all pointing to $130 or higher," said Ben Coleman, senior commodities trader at TradIndex.

Crude prices have surged more than five-fold since 2002 as global supplies struggle to keep pace with rising demand in emerging economies, such as China.

Years of underinvestment in new oil production means the market could struggle to keep pace with booming China demand. The finely-balanced supply-demand outlook has made prices sensitive to any supply disruptions.

ExxonMobil has had to shut nearly all of its Nigerian oil production, totalling around 770,000 barrels per day, due to a strike.

Spot gold rises; futures, global markets dull

2008-04-29T13:58:00.000-06:00

MUMBAI: Gold prices rose by Rs 15 to Rs 11,780 per 10 grams on the bullion market due to demand created during marriage season. But global markets remained weak. Gold fell by $6.11 to $887.14 an ounce in London.

Futures for June delivery dropped $6.40 to $889.10 an ounce on the Comex division of the New York Mercantile Exchange and silver fell 15.5 cents to 16.875.

In local market, standard gold and ornaments remained in demand and gained Rs 15 each at Rs 11,780 and Rs 11,630 per 10 grams respectively. Sovereign, however, hovered around previous level at Rs 9,850 per piece of eight gram in limited deals.

Gold futures in India also showed a weak trend. Gold for June 5 delivery at Multi-Commodity Exchange of India opened at 11650, went to a high of 11655 before closing at 11588, a drop of 0.64 percent over previous close.

Gold declines as dollar rebounds against Euro

2008-04-29T13:57:00.002-06:00

SINGAPORE: Gold declined in Asia on speculation that the Federal Reserve may signal at a policy meeting this week that it might put an end to interest rate cuts, and crude oil's rally to a record stalled.

Analysts said that interest in gold as an alternative asset waned as the dollar rebounded in the past week from its record low against the euro, and oil's climb to as high as $119.93 a barrel yesterday failed to trigger interest in bullion as a hedge against inflation.

Bullion for immediate delivery fell as much as $3.64, or 0.4 percent, to $889.61 an ounce and traded at $890.70 at 1:41 p.m. in Singapore. Silver was 0.5 percent down at $16.945 an ounce, while platinum was little changed at $1,969.

The U.S. currency headed for its first monthly advance versus the yen and euro since December as traders pared bets the Fed will keep reducing interest rates at a time of record oil prices and accelerating inflation.

The dollar was little changed at $1.5634 against the euro in Singapore. It was at 104.28 yen at the same time, compared with an intraday high of 104.82 yen yesterday, the highest level since February 29.

Gold, platinum rise on oil, firm dollar

2008-04-29T13:57:00.001-06:00

Gold rose to $890.40/891.40 an ounce from $886.90/888.30 an ounce early in Asian trade as surging oil prices boosted the metal's appeal as a hedge against inflation and helped it defy a firming dollar.

Gold has lost more than 13% in value since spiking to a lifetime high of $1030.80 an ounce on March 17. It was been struggling to regain $900 and hit a three-week low of $877.60 on Friday before rebounding after oil hit an all-time peak high.

Gold has gained on speculative buying spurred by record high oil prices and expectations of more rate cuts in the United States, which reduces the dollar's appeal and makes gold more appealing for investors seeking an alternative investment.

Oil struck a record high at $119.93 a barrel on Monday, extending the previous session's rally, as a strike closed a major British oil pipeline and as new violence in Nigeria reignited supply fears.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange added $5.3 an ounce to $895.0 an ounce.

Spot platinum rose to $1,961.50/1,961.50 an ounce from $1,944/1,964 late in New York. It had fallen to $1,907 an ounce on Friday, its lowest since early April.

The new benchmark contract in Tokyo platinum futures April 2009, rose 165 yen per gram to 6450 yen, driven by a weaker Japanese currency.

Silver edged up to $16.93/16.99 an ounce from $16.83/16.89 an ounce. Spot palladium fell to $440/445 an ounce from $435.50/443.50 an ounce.

Gold Meltdown: Mining industry got too greedy

2008-04-29T13:55:00.000-06:00

Why is it that amongst companies active in minerals, it is primarily and almost only precious metals shares that are under severe selling pressure?

Why is it that companies active in other mined products or co-products as below have their shares in major demand?

Did gold not rise from $248 to a high of $1033, yet even then the hammer was being applied to gold shares, especially those that hold the potential and promise of new production, as production declines?

Is there not a glaring example of a mined product in the form of potash this week? Did not an IPO in a mining company specializing in potash used as a fertilizer open up above its issue price by 58%?

Chemically, potash consists of potassium carbonate, but also might contain potassium oxide or potassium chloride, depending on how pure you consider the mixture. Usually, potash takes the form of powdery salts. Modern methods of extraction almost all rely upon deposits mined from ores, like sylvanite.

Nowadays our potash comes from mining and goes toward inorganic fertilizer rich in potassium.

Why are other mining entities acting so well, especially those with the following significant products:

Antimony
Beryllium
Cadmium
Chromium
Cobalt
Manganese
PGMs
Rhodium
Tungsten
Vanadium

How about simple iron ore and all those involved in all the criteria of exploration and development of crude oil? That is an extractive industry as is precious metals mining.

Your answer may be that gold is different but it is not. You might say others think that gold has topped, but it hasn’t.

The stimulants economically are the same for potash, iron ore and the other items listed above as it is for gold. It is the growth in Asia, the consequences of the effort to maintain the social order as the financial order implodes, and the condition of the US dollar.

Nothing happens by chance but for argument sake lets call it an opportunity to be seized. Many junior gold companies are so depressed that they are worth more dead than alive.

Gold and other metals shares are depressed so that they are selling well below their “Asset Vale.”

Asset Value is something that 3.7 generations have not taken into consideration where price is concerned. You may recall that I suggested to you that one major company would consolidate the industry. Keep that concept in mind. Major gold producers are in need of new production. This is FACT.

South African companies are in need of major projects OUTSIDE of the RSA. For the RSA gold producer there is no expansion of reserves in RSA because, even if they have it, they cannot produce it as the energy situation is already stressed beyond demand. This is a long-term problem unfortunately.

The major consolidator of the Gold mining industry may have gotten too greedy in waiting for future reserve properties to become ever cheaper and cheaper for acquisition or joint venture.

The game being played by design or serendipity is to depress the juniors or to take advantage of the decline in the juniors as a result of the poor share price action through starving the junior or explorer of financing.

Depressing the price of the shares of most junior situations results in starving precious metals juniors of financing and their shareholders would be ripe for a bid for the company at a price much lower then their highs when gold was at $600. It may also make the smaller company eager to make deals at less than advantageous conditions for their investors.

The key here is that the gold producing industry is in need of new resources as present resources are depleting. That is fact about which there is no question whatsoever.

It is much cheaper to pick up a property or entire company in a financially stressed condition because it cannot publicly finance for continued operation.

Let’s call the situation the taking advantage of a serendipitous development. To others it looks like the consolidators are holding a smoking gun. The weakness in this strategy is the advent of new competition for minerals internationally, primarily from Asia and the Middle East.

The Saudis and the Chinese are actively looking for mineral prospects from industrial to precious metals, from strategic metals and material to rare earths and beach sands, having publicly said so at top executive levels.

The major industry consolidators now have competition from companies with more liquidity and NO need for debt to take any property to production.

The advent of this new competition may well trump the western companies some feel are holding the smoking guns.

This competition from Asia and the Middle East may accelerate the consolidator, whose timing is a greed driven desire to get properties so cheap they might be considered free, to move sooner than later.

To call attention to the factual nature of this analysis please read the following article posted here April 11th this year regarding the stated interest of a major Chinese company given publicly at a recent professional mining conference and quoted therein.

Please note the all-important statement given by a top executive of the Chinese company:

"Small and medium-sized miners and juniors who are still in the exploration stage, are the easiest targets for bigger companies, but the acquisitions wave won't likely stop there."

Gold has been blogged and bandied to death

2008-04-29T13:54:00.000-06:00

(Futures Magazine) -- Boris Schmitz-Thiersen’s family has been selling jewellery in the same location in Cologne, Germany, for more than 100 years, with a brief sabbatical during World War II. Only in the past year, however, has he begun offering bracelets made of a peculiar white metal mined in South Africa. “It’s pure palladium,” he explained. “Pretty, isn’t it?”

Yes – and relatively cheap, trading around $450 per troy ounce at press time, compared to just under $2,000 for the same amount of platinum, and about $1,000 for gold. Silver, by contrast, is trading at between $17 and $18 per ounce.

Schmitz-Thiersen’s decision to peddle palladium instead of platinum is one of those quirky little flips of the mind that, if multiplied by all the jewellery stores in the planet, could have major ramifications for the price of these two most precious of metals, and a quick perusal of Cologne’s jewellery shops indicates the minds are, in fact, turning over.

Samantha Trickey, precious metals consultant at the Commodities Research Unit (CRU) in London, points out that jewellery currently accounts for about 20% of total platinum demand, but that, unlike gold, platinum and palladium are primarily industrial metals and not stores of value.

“If prices of platinum get too high, you could see a substitution on the industrial side to palladium,” she said (see “Precious industrials”). “This is why I’m more bullish on palladium than I am on platinum.” Yet it is platinum’s secondary function as a precious metal that is driving prices to the stratosphere, along with a rickety South African electricity grid.

Most coverage of gold’s rise focuses on two factors: the plunge in the U.S. dollar and a general fear of exposure to paper assets. Less attention has focused on the supply side of gold and silver, but more of platinum, palladium and plain old copper.

“In South Africa, the main power supplier, Eskom, has run out of reserve capacity, and this has caused rolling power cuts,” Trickey said. “Many platinum and palladium mines had to close temporarily at the end of January, since power could not be guaranteed, and this posed a safety risk, especially for the underground mines.”

As a result, mines are operating at just 95% capacity, at a time when industrial demand, primarily in China, remains at full throttle. “They’re able to operate on that, but companies are looking at ways to find individual power sources of their own,” she said.

Palladium, thanks to these and other factors, rose from less than $200 per ounce in March 2003, to nearly $580 in February this year (after a one-month surge of about 40%), before settling down to its current mid-$400 range.

Supply concerns also are dominating the copper market. “The supply side seems to perennially shoot itself in the foot, and so far in 2008 it seems to have shot itself in both feet,” said Trickey’s colleague, Allan Trench, who is CRU’s research manager for copper. He said many of the bullets hitting those feet left their chambers in the 1990s.

“You had a lack of investment then due to low prices. But when that changed, you had all the usual quick fixes being implemented, like expanding leach tanks and debottlenecking the crushing circuit, or putting an extra shovel in the pit in cases where an operation was pit-constrained,” Trench said. What didn’t happen was significant re-tooling.

“As a result, everyone is doing the same thing at the same time, meaning maj or expansions and new projects and suppliers are swamped.” He cites a litany of statistics: tires that could have been delivered in four months three years ago now sometimes need almost two years to arrive. Trucks that would show up in three months now need two years. “You know how they’re dealing with this?” he asked. “They’re driving slower to maintain tire life.”

Analysts seem at odds over the short-term prognosis for platinum, which recently traded up to $2,276 per ounce before settling down to its current range just below $2,000.

The consensus on its poor cousin, palladium, however, is strong — largely because of the paradox that, as with platinum, most of the factors that can make demand for the metal go down actually make it go up. In other words, the factors that hurt demand for palladium as an industrial metal actually help it as a precious metal, and vice versa — at least, that’s the perception. A global deflationary trend would, in reality, drag down the price of both precious and industrial metals.

But in reality, South Africa’s electricity problems and strong industrial demand are only half of the palladium story. The other half is gold and platinum. “Economic news from the U.S.A. seems to be pushing gold around, and that’s also having an effect on platinum on a day-to-day basis,” Trickey said. “Given platinum’s stellar performance so far this year and the risk to the supply side, this should continue to be supportive for palladium.”

This quarter, she sees platinum averaging between $2,000 and $1,900, with palladium remaining in the mid-$400s. In the second half of the year, she sees prices dipping for both.

“I’m expecting platinum to be around $1,800 in the second half of the year, and for palladium to be below $450,” she said. “This is actually higher than we previously projected, because our earlier figures included a number of uncommitted South African mining projects that were scheduled to come online towards the end of this year and in 2009. Now many of these projects are rethinking their strategy based on the energy situation.”

Gold has, of course, been the headline-grabber over these past few months, and what can you say about the yellow metal that hasn’t already been blogged and bandied to death? It’s risen 55% over the past year, topping out above $1,000 per troy ounce before settling back to $900 at press time.

Gold bugs — those ‘end-of-the-worlders’ who seem to materialize by the thousands whenever the global economy shudders — are justifiably happy. But are their doomsday scenarios justified?

Bob McKee, chief economist at Independent Strategy, doesn’t think so. He started getting long gold between $330 and $350 in 2003 (see “Golden opportunity”), citing three drivers that, in hindsight, are clear to all: the current account deficit’s pressure on the dollar, growing political uncertainty and an impending reversal of the liquidity boom.

All three remain in effect today, and the same counter-arguments are being offered now as then, at least as far as the dollar is concerned. “Some people argued then that money flowing into Asian economies would be recycled into dollars,” McKee said. “There’s some truth to this, but there is also a growing pressure to diversify.”

One counter-argument petered out three years back: namely, that the world’s central banks would dump tonnes of the yellow metal on the market if it ever began to overheat. “Up until three or four years ago, that was a real concern because the central banks still saw gold as a dead thing,” he said. “But they have done their dumping, and have no more left to sell.”

The other drivers have only gotten stronger, and the question now is whether they have become so strong that the market has already discounted them. McKee doesn’t think so.

“We still have some room to go in all three drivers,” he said. “Assuming that the U.S. economy went into recession this last quarter, and knowing that recessions tend to last nine to 12 months, we can expect dollar weakness to continue for at least the next two quarters.”

Then, he said, just when the United States begins to pick up steam, the other OECD countries could be slipping into recession with low interest rates sparking fears of inflation. His recommendation: hold your gold for now, but don’t expect the vertical trend of the last year to continue.

HSBC analyst James Steel is also gingerly bullish but warns the end could be near.

The bullish argument comes from the safe haven argument. “There are no reliable estimates of how much “toxic debt” remains in the (mortgage) market and how that debt is distributed,” he wrote in a mid-March newsletter.

“Regarding precious metals prices, there is also the separate but related question of whether a commodities bubble is in the process of bursting,” he added. “Although the commodity rally is in part related to the credit crisis, in that the crisis has undoubtedly encouraged substantial purchase of hard assets, commodity prices, including precious metals prices, are also subject to a slew of other factors.”

Specifically, he warns of a divergence between commodity prices and economic growth: prices can’t keep going up if the economies of the world are slowing down. “We believe the slump in commodity prices is evidence that investors are reassessing likely commodity demand levels, and therefore also prices, after the recent run-up,” he said.

With copper hovering above $8,000 per tonne ($4 per pound) and metals like gold and nickel breaking long-respected milestones, the question on copper traders’ minds is whether the metal can breach the once unheard-of price of $10,000 per tonne. In the most recent edition of his “Copper Monitor,” titled “High Prices: Market Flavour or Fundamentals?,” CRU’s Trench identified 10 events that would have to happen for that level to be breached.

The five that are necessary (condensed to four for brevity) to stay above $8,000 are: Chinese consumption maintains double-digit growth, U.S. consumption holds steady, Chilean and Central African supply remains clogged and ‘non-fundamentals’ like market sentiment remain strong.

Five events that are necessary to get above $10,000 (also condensed here) are: some sort of nationwide supply catastrophe like the one that has impacted South Africa, a flurry of ‘micro’ supply disruptions, developing world demand growth outpacing developed world contraction and hedge fund lemmings going bonkers over the stuff and buying it like mad.

“The first five are already over the line, which is why we’re at these levels,” Trench said. “It’s like we’ve completed the pentathlon and now want to see if they can do the decathlon.”

Of the questionable five, he said number six, a nationwide catastrophe like the one that has befallen South Africa’s mining industry, is the least likely to take place. “That’s something you get once every few decades,” he said. “The others have a fair chance of coming through.”

And, he might add, “once every few decades” isn’t as much of a long shot as it may seem.

Visit a Gold Mickey Mouse in Japan!

2008-04-29T13:52:00.000-06:00

A gold statute of Disney icon Mickey Mouse has been unveiled in Tokyo ahead of an online "treasure hunt" that will give players a chance to win it as a prize.

According to a NDTV.com report, the 120-milimetre high statute - which shows Mickey holding a movie clapperboard - was made by Japanese jewellery house Ginza Tanaka using one kilogram of pure gold.

A total of ten of the company's craftsmen were involved in the design and creation of the statue, which took three months to complete. The piece would be worth around $30,000 (?15,190) at current market values.

It will now be offered a prize through the "treasure hunt" game in partnership with Walt Disney.

A two-foot tall, 24ct gold statue of the character was previously created in 2001 to celebrate Disney's 100th anniversary.

Created for Disney in 1928 by animator Ub Iwerks, Mickey Mouse has become one of the most recognisable symbols on earth - although Walt Disney himself originally preferred the name Mortimer Mouse.

Gold Little Changed in Asia as Oil, Euro Decline From Records

2008-04-23T21:16:00.000-06:00

Gold was little changed in Asia after energy prices declined from a record and the euro eased against the dollar, eroding the precious metal's appeal as a hedge against inflation.

Interest in the precious metal as an alternative asset waned as crude-oil futures fell from a record $119.90 a barrel reached on April 22 and the euro traded below $1.60. Gold climbed to a record $1,032.70 on March 17, when crude and the euro set previous records.

``Gold hasn't been able to sustain a rally even in the face of record oil prices and a record-low dollar,'' Wang Xinyou, senior gold analyst at Agricultural Bank of China, said by phone from Beijing today. ``Gold may remain pressured when those two decline, especially as concerns over the credit crisis seem to be gradually diminishing.''

UBS AG said yesterday gold will sell for $850 an ounce in three months, down from a previous forecast of $1,000.

Bullion for immediate delivery was virtually unchanged at $904.20 an ounce at 9:38 a.m. in Singapore. The precious metal fell below $900 yesterday to $897.67 an ounce. Silver was up 0.2 percent to $17.18 an ounce.

Crude oil fell for the second day to trade at $117.90 a barrel at 9:39 a.m. in Singapore. The euro also fell for the second day against the dollar to $1.5859.

The weakness of the dollar in previous days ``provided some support for gold, but failed to stimulate the metal price movement,'' said Peter Fertig, consultant at Dresdner Kleinwort, in a report yesterday. Gains in the stock markets ``might weigh on gold'' as well, he added.

Gold for June delivery was little changed at $906.70 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at 9:18 a.m. Singapore time.

Gold for February 2009 delivery fell 1.5 percent to 3,028 yen a gram ($911 an ounce) at 10:19 a.m. local time on the Tokyo Commodity Exchange.

Courtesy : Bloomberg.com

Iraq warns oil majors on June deadline

2008-04-23T21:13:00.000-06:00

Rome: Iraq may drop oil service deals with oil majors if they fail to sign the contracts by June, Iraqi oil minister Hussain Al Shahristani said.

Iraq is negotiating five short-term oilfield service contracts worth around $500 million each aimed at boosting its output by around a quarter. The Opec member had hoped to sign the contracts in March.

"June is a bit late, if they are not ready by then we might not really require technical service contracts... we may drop them if they are not signed soon," he said.

BP Royal Dutch Shell and ExxonMobil were negotiating a deal each. Shell is negotiating another deal together with BHP Billiton, while Chevron and Total together are working on a fifth deal.

Gold sheds 2% as dollar rises against euro

2008-04-23T21:12:00.000-06:00

London: Gold shed more than two per cent yesterday as the dollar gained ground against the euro, traders said.

Spot gold sank to an intraday low of $897.10 an ounce before steadying around 900.20/$901.20 by 1428 GMT, well below levels of $920.65/$922.05 seen late in New York trade on Tuesday.

People were unwinding their long positions on gold, after the metal's recent rally, said analyst Daniel Hynes of Merrill Lynch. "We've seen net long positions on the Comex decrease recently and I think we're seeing a continuation of that movement out of gold just at the moment," he said.

Gold held in New York-listed StreetTRACKS Gold Shares, the world's largest gold-backed exchange-traded fund, fell to 623.41 tonnes on Tuesday from 641.82 tonnes the previous day.

Profit-taking

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The metal hit a three-week high of $952.60 last week but attempts to stay above $950 were met by profit-taking. Dealers noted some physical demand but it was not enough to trigger another rally towards last month's record high of $1,030.80. "In the near-term, gold is likely to continue to take its lead from dollar movements," said Suki Cooper, precious metals analyst at Barclays Capital.

The euro pulled back from a record peak versus the dollar after a fall in manufacturing activity suggested that economic growth in the euro zone is starting to slow.

A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation.

Oil eased to under $118 a barrel, but stayed on the boil due to supply disruptions in Nigeria and fears that a refinery strike in Scotland could hit production in the North Sea.

Inflation

"Higher oil prices should increase near-term inflation expectations, which might leave some room for near-term upside potential for commodities," analysts at Standard Bank said.

"However, continued fund liquidation signals that most investors remain on the sidelines because of uncertainty in financial markets. Precious metals should remain range-bound ahead of the Fed interest rate decision due next week."

The US Federal Reserve is expected to lower interest rates from the current 2.25 per cent.

A rate cut tends to lower the dollar's appeal, which in turn often lifts bullion demand.

Platinum fell two per cent to $1,975.50 on the back of the declines in gold, and was later $2,002.50/$2012.50 against $2,017.50/$2,027.50 previously.

Dubai diesel prices up 40% in six months

2008-04-23T21:10:00.002-06:00

Dubai: The price of diesel at Dubai's filling stations has increased by 40 per cent in six months, making it almost 80 per cent more expensive than that sold by Adnoc-operated pumps in Abu Dhabi.

The price of diesel per gallon went up from Dh14.30 to Dh15.30 in Dubai last night, the single biggest increase since October. Diesel sold at Dh11.00 per gallon in the city on October 23, according to transport industry sources.

Dubai fuel retailers Emirates National Oil Company (Enoc), which operates Enoc and Eppco brand service stations, and Emarat have been raising diesel pricing for several months, citing high international crude prices.

The rate of diesel was unchanged at Dh8.60 per gallon in Abu Dhabi yesterday.

Peak Oil: Why Oil reserves are depleting

2008-04-23T21:10:00.001-06:00

MUMBAI: Do you know what is Peak Oil and how the decline in oil production is affecting companies and countries across the globe?

The term Peak Oil refers to the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion.

Here are some common jargons used in describing Peak Oil:

Cumulative production
The cumulative production is the sum of all oil that has ever been produced until a specific date. Cumulative production can be given for a field, oil basin, country or the world.

Decline rate
The decline rate refers to production only. It is defined as the negative relative change of production over a time period. Often a period of a year is used. The decline rate can be expressed as a fraction or as percent. Assume a production of 1 Gb in year 2007 and 0.95 Gb in year 2008. The decline rate for year 2008 would then be (1 - 0.95)/1 = 0.05 = 5%. If the production is rising, the decline rate becomes negative.

Depletion rate
The depletion differs from the decline rate in that it takes into account the amount of oil that is left. The depletion rate is defined as this year’s production divided by the amount of oil that is left

Depletion rate = This year's production / Oil left at start of this year

The amount of oil left is calculated by taking the URR minus last year’s cumulative production. The depletion rate depends on the estimated amount of oil left. As more oil is produced, less oil is left. At a constant production the depletion rate grows while the decline rate is zero. The depletion rate can never become negative.

Geological basin
A large geological area in which sedimentation is occurring or has occurred. Certain parts of the basin might therefore have the required geological conditions to trap oil. Consists of many oil fields.

Oil
In context of oil production, the definition from BP Statistical Review (B.4) is used: crude oil, shale oil, oil sands and NGLs (natural gas liquids - the liquid content of natural gas where this is recovered separately).

In context of oil consumption, the definition from World Energy Outlook (A.6) is used: crude oil, condensates, natural gas liquids, refinery feedstocks and additives, other hydrocarbons and petroleum products (refinery gas, ethane, LPG, aviation gasoline, motor gasoline, jet fuels, kerosene, gas/diesel oil, heavy fuel oil, naphtha, white spirit, lubricants, bitumen, paraffin waxes, petroleum coke and other petroleum products).

Oil-in-place / Recovery factor
Oil-in-place is the estimated total amount of oil that is in the ground before production has started. For various reasons far from all of this oil can be recovered. Oil-in-place is usually calculated on a field basis and in an early stage. The oil-in-place value is multiplied by a valuecalled recovery factor and results in an estimated URR for a single field (see below). Later in a field’s production phase the URR is usually calculated with other techniques>

Oil reservoir
A subsurface porous and permeable rock body that contains oil, gas or both.

Oil field
An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition.

Production
Production refers to the amount of oil that is produced during a certain time period (most often a day or a year). The following units are common in litterature:
kb/d (1 000 barrels per day)
Mb/d (1 000 000 barrels per day)
Gb/y (1 000 000 000 barrels per year)
1 Mb/d = 365/1000 = 0.365 Gb/y
1 Gb/y = 1000/365 = 2.74 Mb/d

Recoverable Reserves (Estimated future production from known fields)
The recoverable reserves are an estimate of how much recoverable oil is still left in the already found oil fields. It can only be an estimate since it’s impossible to know exactly how much oil is still in the ground.

Because of this uncertainty, reserves are calculated with a certain probability. A reserve estimate followed with, for instance, ‘P90’ means that there is a 90% chance that there is at least as much recoverable oil as the reserve estimate claims.

Dow Jones/Gold Ratio says gold could go $5000

2008-04-23T21:09:00.000-06:00

How far will gold prices go? By any stretch of imagination can it go to $5000 per ounce? Let’s face it: Anyone can pick a number for where they think the price of gold will be so many years down the road.

But here’s a time-tested way to figure out how far the bull market in gold has yet to go: It’s called the Dow Jones / Gold ratio: It’s simple to calculate. Take the price or value level of the Dow Jones and divide it by the price of gold.

That is what Richard Russel's chart shows us. Whenever the ratio has slipped below $5 (meaning stocks are priced low compared to gold), a major bull market in stocks typically followed.

This was true at the beginning of the 20th century, during the thirties and during the late Seventies. But when the ratio turned down sharply after a protracted rise (meaning stocks became expensive compared to gold), it was time to buy gold.

If you bought gold in 1965 at $35 an ounce and held on to your investment, you would have seen gold rise to $800 an ounce—an return of 2,185%! Right now, the ratio is at $13. As you can see it has a long way to go before it falls below $5 again. That means gold has plenty of room to roam to the upside. Plenty…

In fact, Richard Russell reckons that the Dow Jones / Gold ratio might trade as low as 1:1 before the bull market in gold and the bear market in stocks is over.

If that is true and the Dow declines to less than half of what is now, from 12,800 to— let’s say—5,000, then gold could conceivably trade at $5,000 an ounce before the bull market in gold is over. (Dow Jones 5,000 divided by $5,000 per ounce of gold equals a1:1 ratio)

Crude Oil supplies up in US

2008-04-23T21:08:00.001-06:00

NEW YORK: The U.S. Department of Energy (DOE) said that crude oil supplies were up 2.4 million barrels to 316.1 million barrels.

Supplies of gasoline were down 3.2 million barrels and heating oil supplies were up 700,000 barrels. June crude oil was up .23 at $118.30.

The DOE also said that refinery use jumped up from 81.4% to 85.6% of capacity last week. Over the past four weeks, gasoline demand was up .9% from a year ago while distillate demand was up .5% from a year ago. June reformulated gasoline closed up 3.23 cents at another new contract high of $3.0424.

Grains
July wheat fell 34.5 cents to $8.315, the lowest close in over three months, helped by reports of good growing weather in the world's wheat regions.

Livestock
Japan suspended imports from National Beef after a shipment of beef was found to contain a spinal column, against Japan's trade rules. June cattle closed up .77 anyway, at 92.87, the highest close in over a month.

June hogs jumped up 1.75 cents to 75.42, the highest close in seven weeks. Pork production has been running high this year, but exports have been stronger than anticipated, helped by the weak dollar.

Lumber
July lumber was down $2.60 at another new contract low of $233.90, plagued by ongoing weakness in the U.S. housing market.

Orange juice
July orange juice closed up 4.55 cents at $1.1955, blamed on bargain-hunting.

Currencies
Statistics Canada reported that retail sales totaled C$35.5 billion in February, down .7% on the month and weaker than expected. The June Canadian dollar fell .88 to 98.25 after the Bank of Canada reduced the interest rate yesterday from 3.50% to 3.00%.

An index of industrial new orders for the Euro area 15 was up .6% in February. Also, an index of services increased from 51.6 to 51.8 in March, better than expected. The June euro was down 1.05 cents at $1.5859.

Australia's Bureau of Statistics said that the consumer price index was up 4.2% in the first quarter from a year ago, increasing expectations for another rise in the interest rate. The June Australian dollar closed up .48 at a new contract high of 94.32.

Investment: Silver is a hot commodity

2008-04-23T21:07:00.000-06:00

Mankind’s timeless fascination with silver stretches back 6,000 years. As early as 700 B.C., the Mesopotamian merchants used silver as a form of exchange. Later, many other civilizations also came to recognize the inherent value of silver as a trading metal.

The ancient Greeks minted the drachma, which contained 1/8th ounce of silver; and in Rome, the basic coin was the denarius, weighing 1/7th ounce. And let’s not forget the English shilling "sterling," originally denoting a specific weight of silver, which has come to mean excellence.

Today, millions of people throughout the world recognize silver’s intrinsic value and have made it popular as an affordable investment. In the United States, Individual Retirement Account (IRA) participants can invest a portion of their investment portfolio in silver bullion coins and silver bullion bars provided that they are of a fineness equal to or exceeding 99.9 percent silver. Contact your IRA plan administrator for further information.

This page explains how to use silver to diversify your investments and hedge against inflation. It will also introduce you to some of the most widely accepted silver investment products.

Although silver is relatively scarce, it is the most plentiful and least expensive of the precious metals.

Precious metals are valued for their beauty and relative scarcity in the Earth’s crust, and their superior properties. They are very malleable, highly resistant to corrosion, superior reflectors of light and are unsurpassed as conductors of heat and electricity.

Besides signifying status and wealth, silver has been one of the most romantic and sought after of all the precious metals. Mystified by its beauty from the beginning of time, people have been drawn to remote areas of the world in search of this white, reflective metal.

Silver has often been surrounded by mystery. The Incas of Peru called it "the tears of the moon" because they were awed by silver’s strange gleam, and the Chinese believed that a silver locket hung around a child’s neck would ward off evil spirits.

For the average investor, silver can be an effective means of diversifying investment assets and preserving wealth against the ravages of inflation.

Although the value of silver may vary, it has an intrinsic value that is immutable and permanent. Accordingly, many experts suggest that investors should include it among their investment assets.

Why?

Because silver can be an important store of value. For example, between 1971 and 1981, the U.S. dollar lost more than half of its value, while silver prices rose nearly five times.

But what about the future? Nobody knows; but many financial planners still suggest including silver among the investments of their clients.

Courtesy: silverinstitute.org

'Gold is a currency that will go up to touch $ 1650'

2008-04-23T21:06:00.000-06:00

By Jim Sinclair
All this has happened before. Have patience as the price of gold is going to $1650 and probably beyond. Please read Dan's letter to an inquiring CIGA concerning the present action of the gold price.

Please read Monty's fundamental update on Global and unstoppable inflation.

Please know that monetary inflation causes price inflation regardless of the state of business activity.

Gold is a currency and that cannot be erased no matter how hard any person, central bank, or group of central banks may try.

There is a feeling that the euro cannot surpass $1.60, so gold hesitates. Today $1.60 was hit and the euro fell back slightly.

Yesterday I showed why the interest rate talk will not prevent the dollar from falling against the euro beyond $1.60.

The 35 year synthetic euro chart screams that the euro will go above USD$2.00

Seasonality only applies to gold when the price of gold is wholly dependent on commodity demand to make price.

Whatever gold has in it on the downside will exhaust itself in terms of potential by early May.

I have recently made an offer to prove to you my firmness in belief that gold will go to $1650. I expect an agreement to be announced soon.

Relax. This has happened before and will again. Look at how far we have come since $248 - now above $900. In the not too distant future we will be at $1650.

Courtesy: www.jsmineset.com

Ban futures trading in Gold & Silver: Indian traders

2008-04-23T21:05:00.000-06:00

A traders' body in India on Wednesday asked the government to ban futures trading in gold and silver in the view of the fluctuations in the precious metals market.

All India Sarafa Association, an apex body of the bullion and jewellery traders, said that the government should ban futures trading in gold and silver on the Multi Commodity Exchange.

The association, at its annual general meeting, unanimously passed a resolution asking the government that in the interest of the traders and consumers gold and silver trading should be banned on the MCX.

The association's President Sheel Chand Jain submitted a memorandum to the Prime Minister Manmohan Singh and Finance Minister P Chidambaram to take initiatives to stop futures trading in precious metals. In the last one year from April 2007-2008 prices of gold surged by about 45 per cent from around Rs 9,000 to the over 13,000 recently, while silver rose by around 35 per cent from about Rs 19,500 to over 26,500 per cent.

In view of a vast fluctuation in the gold and silver prices, which created both confusion and panic in the minds of consumers, the government should take an immediate step, Jain said. He said the futures trading ruined bullion trade as prices rose mostly on speculative base with hardly any physical buyer in the market.

"There is no reason for such volatile fluctuations in the gold and silver prices where a large number of small traders indulging in the future trading throughout the country," Jain added.

Old is Gold: 'Titanic' gold ring sold for record price

2008-04-23T21:04:00.000-06:00

LONDON: Old is gold; and when the 'old' is a precious gold ring belonging to a survivor of the ill-fated Titanic ship that sank in 1912, its value becomes big.

A report published in the World Gold Council web site says a gold ring kept in a shoe box by a Titanic survivor has been sold at auction for 3000 Euro.

The item was among an array of memorabilia from the fated ship auctioned at the weekend for a collective value of Euro 100,000, the web site quoted BBC as saying.

Lillian Asplund's treasures included a pocket watch that stopped at the exact moment the ship sank and sold for Euro 31,000.

Meanwhile, the gold ring was the wedding band that belonged to Miss Asplund's father, Carl, who was in a photo with his wife that sold for Euro 5,000.

Andrew Aldridge, who runs Henry Aldridge and Son in Devizes, Wiltshire with his father Alan, told the publication: "There were bidders from China, America, Sweden, Ireland and the UK calling in and the room itself was so packed we had to fetch more chairs."

On April 10, 1912, the RMS Titanic set sail from Southampton on her maiden voyage to New York. At that time, she was the largest and most luxurious ship ever built. At 11:40 PM on April 14, 1912, she struck an iceberg about 400 miles off Newfoundland, Canada. Although her crew had been warned about icebergs several times that evening by other ships navigating through that region, she was traveling at near top speed of about 20.5 knots when one grazed her side.

Less than three hours later, the Titanic plunged to the bottom of the sea, taking more than 1500 people with her. Only a fraction of her passengers were saved. The world was stunned to learn of the fate of the unsinkable Titanic. It carried some of the richest, most powerful industrialists of her day.

Together, their personal fortunes were worth $600 million in 1912! In addition to wealthy and the middle class passengers, she carried poor emigrants from Europe and the Middle East seeking economic and social freedom in the New World.

Holding Gold is the best investment these days

2008-04-23T21:02:00.000-06:00

Gold is playing a decisive role in the present economic scenario as inflation and recession have eaten the vital parts of every country’s economy.

Most investors prefer to invest their money in gold these days. Most traders think that this is the good time to squeeze maximum benefit from the collapsing economy. So they prefer to hold on to their dear gold possessions.

Recently, Indian Finance Minister P Chidambaram said that the inflationary expectation is worse than inflation. Inflationary expectation occures when people think the prices will rise in which case they will have to pay more and buy more.

Meanwhile globally inflation and high price have been affecting every sector. Thanks to all these reasons, gold has become a safe investment bet these days. Gold's role as a hedge against inflation is unparalleled, although for much of the late 1980s and during the 1990s, following the Plaza Agreement that ushered in monetary policy, this philosophy was challenged in the west on the basis that it wasn't working.

What was being overlooked, of course, was that in Europe and North America at that point inflation had been brought under control and gold was not, at that time, needed as an inflation hedge. In other countries where inflation was running much higher (or out of control - Turkey was a particular case in point), it was doing its job perfectly well.

With the markets now increasingly concerned about inflationary trends, gold has posted its credentials once more, quite separately from its role as a mitigator of financial and political risk.

While inflation is nowhere near the levels of the early 1980s (in the first quarter of 1980, inflation in the United States was 14 percent), inflationary expectations combined with an unprepossessing growth outlook have reinforced gold's defensive qualities. In the United States, in China in particular and also in Japan real interest rates are negative and, therefore, holding gold does not incur an opportunity cost.

Given the fears swirling around the financial sector at the moment, the fact that physical gold, held either in person or in an "allocated account", carries no counterparty risk - and counterparty risk is as we all know, is at the forefront right now.

Gold lose early gains to close at $ 917.60

2008-04-23T21:00:00.000-06:00

NEW YORK: Following crude oil in its journey upward north, gold futures finished $ 2.40 higher at $ 917.60 a troy ounce on the Comex division of NYMEX on Monday

The yellow metal fumbled on its way to the top and even reached $US931.40 an ounce at one stage.

May silver fell US46 cents to $US17.36 an ounce, July platinum finished $US44 weaker at $US2027.30 an ounce.

June palladium tumbled $US10.90 to $US462.50 an ounce, and the most-active July copper contract fell US2.6c to settle at $US3.8665 a pound.

Misplaced pessimism over euro zone's growth rate

2008-04-15T20:08:00.000-06:00

I am puzzled by the International Monetary Fund's (IMF) latest growth projections for the euro zone. The forecasts in the World Economic Outlook show a mild recession for the US, with a positive annual growth rate of 0.5 per cent this year and a huge contraction in growth for the euro zone from 2.6 per cent in 2007 to 1.4 per cent.

This is puzzling to me for two reasons. First, what drives the US downturn is an immense property recession in combination with a credit crunch. That is, by and large, not the case in the euro zone despite a number of regional downturns, for example in Spain. Second, the economic news from the euro zone has been persistently better than expected so far and there may be a dynamism at work that is not yet fully understood.

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One possibility is that some of the economic shock transmitters, especially the exchange rate, may work a little slower than they used to. Companies can hedge against short-term exchange rate fluctuation. The euro has also improved its status as an invoicing currency, which may offer euro zone companies some protection. Eventually, of course, the euro zone may run out of luck, but it would have to run out of luck fairly soon for the IMF's forecast of a sharp growth slowdown to prove correct for this year. Now that might still happen, especially if the US were to fall into a black hole. But I just cannot see how the IMF's pessimism on the euro zone can be consistent with its relative optimism about the US.

Resilience

Another possibility is that the euro zone economy may have become a touch more resilient. To be clear: I am no advocate of "decoupling". It is a meaningless metaphor since no region in a globalised economy can be truly decoupled. But even if there can be no decoupling, there remains the perfectly legitimate question whether the relationship between the US economy and the rest of the world in general, and the euro zone in particular, may have changed over the years.

I suspect it has. One of the main economic arguments in favour of the euro was a lower cyclical dependence on the US. While that goal has clearly not been reached in full, it may have been reached in part. For example, Germany, which accounts for more than a quarter of the euro zone's economic output, has coped better with a rising currency than it did in similar episodes of the past. And in one limited respect, we can even talk about "decoupling": European monetary policy is far more independent of the US today than it used to be. The European Central Bank's dogged pursuit of price stability continues to surprise even seasoned central bank watchers, who could not have imagined that the ECB would be able to leave interest rates unchanged during a period in which the Federal Reserve has cut by 300 basis points.

To see how much has changed over the past 10 years, just imagine what would have happened if there had been no euro. The European financial markets would have remained fragmented. Italy would have devalued its lira a long time ago. Spain would probably have announced a devaluation of the peseta right after the recent elections as the depth of its housing crisis became more and more apparent. Portugal and Greece would have devalued three or four times by now. President Nicolas Sarkozy of France might have been tempted to devalue the franc against the Deutsche Mark shortly after his election. Today, the German, Benelux and Austrian economies would have been crippled by a super-hard Deutsche Mark, guilder and shilling, which would have risen not only against the dollar, but also against the franc, the peseta and the lira. The US downturn would have brought havoc to the European economy - as it used to in the past. You remember that other tired old metaphor about the US sneezing and the Europeans catching a cold. Maybe we are now living in a world where the US is catching a cold and the Europeans are sneezing.

Challenges

This does not mean that all is well with the euro zone. On the contrary, I am almost obsessively pessimistic about Germany's economy and the country's inability to create a dynamic services and financial sector. But there can be no doubt that Germany is more robust relative to past performance.

This is in my view not an economic reform story, but the result of macroeconomic regime change. The euro created a large and stabilising internal market, almost as large as the US itself. Of course, the euro zone remains relatively more open than the US. It continues to depend on outside influences more than the US. But my point is that the euro zone is much less sensitive today than its constituent economies were 10 or 15 years ago. Economic forecasters should beware that not all past relationships can be safely extrapolated into the future.

Obviously, there may come a point when a US recession and a persistently weak dollar will affect the euro zone as well. There are several channels through which US economic weakness is transmitted to the rest of the world - bank profits, the stock market, falling exports among others. But these channels take time to work through the system. I would broadly concur with the IMF's 2009 forecast for the euro zone - a growth rate of 1.2 per cent. But for growth to slow down to 1.4 per cent already this year, something dramatic would have to happen that I am not seeing elsewhere in the IMF's forecasts.

Bahrain days from extinguishing oil well blaze

2008-04-15T20:07:00.000-06:00

Dubai: An oil well fire that started in Bahrain on Saturday could take days to extinguish as the country waits for specialist fire-fighting equipment to arrive, a spokesman at Bahrain's state oil company Bapco said on Tuesday.

Output from Bahrain's onshore 35,000 barrel per day Awali field was unaffected by the fire, which broke out during routine maintenance, said Bapco's acting manager of public relations Mohammed Shehab.

Bahrain has called in a US specialist fire fighting service to extinguish the fire, Shehab said.

A truck hit a wellhead at the oilfield on Friday, causing a gas leak. The gas ignited around midday on Saturday, Shehab said. The high pressure of the gas leak made the fire difficult to extinguish,. The gas was being used for reinjection at the field to boost oil output.

There were no injuries and other wells at Awali continued pumping, he added.

Oil and rice scale new highs

2008-04-15T20:04:00.000-06:00

Sydney: Oil and rice hit record highs on Tuesday, leading gains for commodities as supply concerns intensified while concerns about the US economy and fresh doubts about credit markets eroded confidence in the dollar.

The move back into commodities also lifted gold and other agricultural products.

US crude rose $1.80 to $113.56 a barrel at 1405 GMT, after touching a record high of $113.93.

Oil is up about 18 per cent from the start of the year and is averaging near $100.

London Brent crude was up $1.91 at $111.75, after a record high of $111.85. The May Brent futures contract expired yesterday.

"One thing that is clearly driving the oil price is that the US dollar has gotten substantially weaker in the past several months and quarter," said Richard Batty of Standard Life.

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Opec, which pumps more than a third of the world's oil, says it is producing enough and that a US economic slowdown may weaken consumption in the second quarter.

"Current Opec production at more than 32 million barrels per day will be sufficient to both meet demand growth and contribute to further stockbuilds," the Opec said in its latest Monthly Oil Market report.

Tetsu Emori, fund manager at Astmax Co Ltd, said prices had risen due to automatically placed buying orders once the previous record had been breached.

He sees the next resistance target at $115.

Chicago Board of Trade July rice futures rose to $22.025 a hundredweight in Asian electronic trading after jumping by the 50-cent limit on worries about global supply the previous day.

The tight supply picture was reinforced after Indonesia announced it will curb medium-grade rice exports in an effort to combat inflation, joining other countries seeking to protect domestic supplies.

At the same time the Philippines has said it will enter the market for another 500,000 tonnes in May, the second such tender in as many months as it looks to lock in 2008 requirements ahead of the typically lean third quarter.

Meanwhile, British Prime Minister Gordon Brown urged oil producing countries to act to counter high prices.

Brown, who is due to travel to Washington today for talks with US President George W. Bush, said he planned to discuss collective action to bring down oil prices.

Sterling recovers on Inflation data

2008-04-15T20:02:00.000-06:00

Sterling gained against the dollar on Monday as British producer price inflation surged, taking some heat out of Bank of England interest rate cut expectations.

But worry about the rate view limited the gain on cable, in light of ECB’s decision to keep rate steady. Sterling had been under pressure against the dollar after the Bank of England cut rates by 25 basis points. The bank’s decision affected the concerns on credit conditions in UK.

BOE decided to limit cut in 25 basis points because of optimism about the economy after the latest batch of bank write-downs.

A Bank of England official on last week had downplayed the possibilities of a steep rate cut as the central bank tries to control rising inflation.

The UK purchasing managers’ index of the services sector for March came in at a level of 52.1, below February's level of 54.0, according to the release by the Chartered Institute of Purchasing Supply.

Concerns about European exposure to the US sub-prime mortgage crisis remained, as Swiss banking giant UBS and the Deutsche Bank disclosed a combined $23 billion of write-downs for the first quarter, ahead of their scheduled first-quarter earnings announcements.

Bank of England Governor Mervyn King said that the central bank was facing the challenge of balancing the possibility of weaker growth due to the credit crunch, with higher inflation pressures.

Britain risks the prospect of a US-style crash in its house prices as the credit crunch in the financial markets takes its toll of a heavily over-valued property market, the International Monetary Fund warned on Sunday.

Last day in spot trading, sterling closed at 1.9787 (1.9704) against the dollar, after trading in the range 1.9652– 1.9787.

Medium term outlook

Trading below 2.0000 is the sign of weakness. Supports are 1.9800, 1.9600, 1.9385; resistances are 2.0275, 2.0400.

Last day DGBP traded in the range 197.90 – 196.05 and closed at 196.61.

Dollar weakens against euro

2008-04-15T20:01:00.000-06:00

The dollar weakened against the Euro on Friday on renewed concerns about the economy after the release of weaker than expected consumer confidence. According to the report, U.S. consumer confidence dropped to its lowest in 26 years.

The Reuters/University of Michigan Surveys of Consumers said its preliminary index of confidence fell to 63.2 in April from 69.5 in March. This was well below economists' median expectation of a reading of 69.0, according to a Reuters poll.

But dollar had shown some recovery against the euro after the comments form ECB chief on Thursday. Dollar recovered from record lows against the euro as European Central Bank President Jean-Claude Trichet expressed concerns over high inflation, sluggish growth and foreign-exchange volatility.

Most of the data’s are supporting the view of weak economy in US. The US Commerce Department revealed the nation's trade deficit expanded unexpectedly by 5.7% to $62.3 billion in February.

In job sector, Initial jobless claims in the US fell 53,000 to 357,000 in the week ended April 5, as reported by the Labor Department. But the four-week average of initial claims rose by 2,500 to 378,250.

Also, continuing jobless claims rose 3,000 to 2.94 million, the highest since July 2004, for the week ending March 29. The four-week moving average of continuing jobless claims increased 36,500 to 2.9 million.

According to a Commerce Department report released on Wednesday, US wholesale inventories increased a more-than-expected 1.1 percent February, while sales fell 0.8 percent.

The National Association of Realtors’ (NAR) pending home sales index for February fell 1.9 percent to 84.6 from 86.2 in the previous month.

Minutes from the Federal Open Market Committee meeting held in March gave a downbeat assessment of the US economy, leaving the possibility of further cuts in US interest rates intact. The minutes also showed that many board members believed a recession in the first half of 2008 was likely amid declining economic growth and financial market stress.

According to the release from US Labor Department last week, non-farm payrolls fell by an estimated 80,000 in March.

Also, the unemployment rate in the US rose to 5.1% in March, the highest since September 2005.

Federal Reserve Chairman Ben Bernanke, in testimony to Congress, had said that the outlook for US economic growth had worsened since January and the possibility of a recession could not be ruled out.

Medium Term Outlook
Expecting a short-term recovery in dollar if it sustains below 1.5725; Supports are 1.5909, 1.6148, 1.6420. Resistances are 1.555, 1.5380, 1.5220 and 1.5110. But if it trades above 1.5910, more weakness can be expected.
In spot, dollar closed at 1.5802 (1.5742) against the euro, after trading in the range 1.5855– 1.5735.
Last day, DEUR June traded in the range 157.11– 158.00 and closed at 157.85.

Dollar weak as Economic concerns remain

2008-04-15T19:58:00.000-06:00

The dollar weakened against the Euro on Monday on renewed concerns about the economy.

The Dollar failed to take advantage of better-than-expected Retail Sales data from the US. Data from the US Commerce Department showed retail sales managed to rise 0.2% in March, compared with economists' consensus expectation for a 0.1% decline.

Sentiments in the dollar remained dampened on sustained fears regarding the US Economy, after data showed US consumer confidence sunk to its lowest level in 26 years in early April, according to a report from University of Michigan/Reuters. The US consumer sentiment index fell to 63.2 in early April from 69.5 in March.

Most of the data are supporting the view of weak economy in US. The US Commerce Department revealed the nation's trade deficit expanded unexpectedly by 5.7% to $62.3 billion in February.

In job sector, Initial jobless claims in the US fell 53,000 to 357,000 in the week ended April 5, as reported by the Labor Department. But the four-week average of initial claims rose by 2,500 to 378,250.

Also, continuing jobless claims rose 3,000 to 2.94 million, the highest since July 2004, for the week ending March 29. The four-week moving average of continuing jobless claims increased 36,500 to 2.9 million.

According to a Commerce Department report released on Wednesday, US wholesale inventories increased a more-than-expected 1.1 percent February, while sales fell 0.8 percent.

The National Association of Realtors’ (NAR) pending home sales index for February fell 1.9 percent to 84.6 from 86.2 in the previous month.

Minutes from the Federal Open Market Committee meeting held in March gave a downbeat assessment of the US economy, leaving the possibility of further cuts in US interest rates intact. The minutes also showed that many board members believed a recession in the first half of 2008 was likely amid declining economic growth and financial market stress.

Federal Reserve Chairman Ben Bernanke, in testimony to Congress, had said that the outlook for US economic growth had worsened since January and the possibility of a recession could not be ruled out.

Medium Term Outlook

Expecting a short-term recovery in dollar if it sustains below 1.5725; Supports are 1.5909, 1.6148, 1.6420. Resistances are 1.555, 1.5380, 1.5220 and 1.5110. But if it trades above 1.5910, more weakness can be expected.

In spot, dollar closed at 1.5843 (1.5805) against the euro, after trading in the range 1.5669– 1.5843.

Last day, DEUR June traded in the range 158.28– 156.57 and closed at 157.55.

Gold, Silver will face short term decline

2008-04-15T19:57:00.000-06:00

MUMBAI: In current market scenario, everybody can trust in gold thanks to inflation and recession that have led to the collapse of currency domination in many countries. So gold will continue to glitter.

Forecasters are bullish on gold in long term but for the short term, this market may have some more work to the downside.

Normally, gold and silver are the destination of a "flight to quality" during nervous markets, but that was not the case last month. The gold and silver markets fell in the final week of the commodity decline.

Gold surpassed the $1000 mark briefly, but fell to the deflationary forces by declining $100 before recovering in the last full week of March.

Fundamentally, nothing has changed; we still have inflation, we still have abandonment of the Dollar and we still have aggressive buying of gold bullion. The psychology has changed, as the weak "longs" have lost their courage. Importantly, the exchanges have increased the margins on gold so aggressively that the small players have been forced to liquidate.

Technically, gold has broken the "up" trend line that has been intact since the August lows. The intermediate and short-term trends are down, but the major trend remains up. Gold would have to drop below $700 before turning the major trend down.

This market may have peaked for the first half of the year and will remain range-bound during the next quarter.

Silver...will more than likely follow the pattern of gold and the CRB index. The fundamentals have not changed, but the margin requirements have been grossly increased.

Once again, we have politics driving investors from precious metals futures, reminiscent of 1980, when Bunker Hunt was forced from the silver pits. Only five years ago, silver margins were $1500 per contract. That has been increased to $10,000 in the past couple of weeks.

Gold gains amid firm global trend

2008-04-15T19:56:00.002-06:00

MUMBAI: Gold climbed up by Rs 155 to Rs 12,225 per 10 grams in the bullion market on Tuesday after two days of holidays in the Indian market.

There was on intense buying by jewellery fabricators and retailers on the back of global reports.

According to traders, fresh buying by jewellery fabricators and retailers for the marriage season and report of firming trend in global markets mainly pushed up the prices.

Standard gold and ornaments met with heavy demand and shot up by Rs 155 each to Rs 12,225 and Rs 12,075 per 10 grams respectively. Sovereign, however, remained flat at Rs 9,900 per piece of eight gram in limited deals.

Trading activity picked up following reports of the precious metal rising to $933 an ounce following weakening dollar against leading currencies and crude oil rising to record high levels.

On the other hand, silver ready lacked necessary buying support and lost Rs 50 to Rs 23,550 per kg, but silver weekly delivery found scattered buying support from peculators and rose by Rs 110 to Rs 23,310 per kg.

Silver coins were traded around previous levels of Rs 26,600 for buying and Rs 26,700 for selling of 100 coins.

But in the global market the gains could be limited as gold has yet to retest the key resistance mark of $950 an ounce after falling from a record high of $1,030.80 an ounce hit on March 17. Platinum bounced, while silver and palladium extended losses.

Gold rose to $926.60/927.40 an ounce from $925.30/926.10 late in New York. It hit an intraday low of $914.10 on Monday before rebounding to hit a high of $931.10 as U.S. oil futures settled around $111 a barrel.

Gold futures were higher on Tuesday in opening trade on the Multi Commodity Exchange of India Ltd (MCX) tracking crude oil on a record high and analysts saw more upsides ahead.

The June gold contract on the MCX was seen trading within a range of Rs 11,920 and Rs 12,140, the IL&FS analyst added. Open interest for June gold on MCX was at 7,130 lots, up from 7,119 on Monday.

Volume on Monday was at 15.67 kg. MCX traded only in the second half of Monday owing to a holiday.

Gold will be bullish thanks to higher crude oil price

2008-04-15T19:56:00.001-06:00

Gold and silver fell on the last trading day of the week in New York, and on the Indian trading platforms of MCX and NCDEX on speculation that the precious-metals' rally will falter after prices failed to keep pace with crude oil and the euro.

Still, the bullion market is looking strongly positive on account of heavy buying from investment funds, betting on strong returns in the long term. The Euro touched record high against Dollar last week.

The IMF plans to sell 403 Metric Tones of Gold in international market to meet fund requirement that may not support price down side and the G-7 pledged to implement further monetary and fiscal policies to beat global inflation and likelyhood of a recession.

Expect gold to be likely bullish due to higher crude oil price. Expect infusiong of huge number of hedging funds in bullion market againt weaker dollar.

Technical Outlook
The short run technical indicators in bullion are like RSI is natural zone with 60 point which indicate not over bought and over sold position. The average in MACD are above the zero line, suggesting bullishness. The stochastic fast %K (29 ) is higher then %D (20) indicating positive sign for current price, the current price is higher than the 14 days moving average.

Supports are at $924,$912 and $896 and resistance are at $938,$952 and $970.

Rama Chandra Sahu is Senior Commodity Analyst, Voguestock Ltd, New Delhi

UP, up and up, no slide for gold

2008-04-15T19:55:00.002-06:00

NEW DELHI: Where is the yellow metal heading for? If the present trend is any indication gold may hit $1,100 mark this year itself.

According to Gold Fields Mineral Services (GFMS), the increasing gap between mine production and demand has been pushing gold price up.

GFMS, the London-based consultancy and research company, said the $1,200-mark may not be possible this year.

Last year, the metal breached the GFMS target of $1,000 an ounce and set an all-time record of $1,011.25 on March 17 this year.

According to a press note, the hefty correction in gold prices in the last few weeks did not come as a surprise as the momentum of the earlier gains looked unsustainable.

The current hesitancy does not mean that the bull-run has ended.

The research firm has also warned against irrational exuberance in the gap between mine production and jewellery demand, which is likely to jump from 100 tonnes to around 500 tonnes this year.

The report suggests that the long-term equilibrium price (the price at which the supply of goods matches demand) could be closer to the $600 an ounce-mark.

Last year, western investment fell to just under 160 tonnes as disinvestment in the over-the-counter (OTC) market, chiefly in the first half, countered much of the substantial inflow into other areas such as the physical market, exchange traded funds (ETF) and Futures.

Jewellery demand, however, recorded a year-on-year growth of 22 per cent in the first half, while the second half recorded a drop of 9 per cent with demand falling considerably in the fourth quarter.

This meant the full year’s demand was up 5 per cent at just over 2,400 tonnes. Producer de-hedging proved surprisingly strong in 2007, rising 9 per cent to reach a record of almost 450 tonnes due to a wave of book eliminations and partial buy-backs.

The bulk of the activity took place in the first half of the year. By year-end, the global producer hedge book stood at a about 800 tonnes.

Gold falls again on weak US economic prospects

2008-04-15T19:55:00.001-06:00

NEW YORK: Gold prices fell for the second day in succession to close at $US927 an ounce, down by $US4.80 at the COMEX metals division of NYMEX on Friday.

Analysts attributed the reason for the fall back to investor’s decision to lighten their load on new signs of problems in the US economy.

COMEX copper inched up with support coming from firm supply/demand fundamentals keeping the red metal within sight of its all-time highs above $US4.00 a lb.

Active May copper settled 2.05 cents at $3.9445 a lb.

Gold mining coming down in South Africa

2008-04-15T19:54:00.002-06:00

Gold production in South Africa, the region with world's largest mining operations, is coming down.

Statistics South Africa said on Friday that reported that gold production in February was down 28% from a year ago with mining operations hurt by a lack of available electricity. June gold fell $4.80 to $927.00.

Gold, silver fall on more liquidation

2008-04-15T19:54:00.001-06:00

NEW YORK: Gold prices fell sharply Thursday mainly on liquidation, profit taking and from a higher US dollar and stronger equities.

June gold fell $US5.70 to settle at $US931.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

In other metals trading, May silver fell US15.7 cents to $US18.043 an ounce, July platinum gained US40c to $US2045 an ounce and June palladium rose $US5.55 to $US468.75 an ounce.

May copper declined US7.6c to settle at $US3.9240 a pound on profit taking.

Rush for silver if you want to make moolah!

2008-04-15T19:48:00.000-06:00

You know this time around white metal may prove to be a better option for you to invest than in yellow metal. There are several reasons for that. Mainly, according to Jason Homel’s Silverstockreport.com, silver has all the monetary properties of gold, and more.

It is interesting to know this. If you want know the enviable properties of silver, read on. The historic price ratio of silver to gold shows that about 10 ounces of silver would buy one ounce of gold, a 10:1 ratio. Recently, the ratio is about a 50:1 ratio (with silver at $20/oz., and gold at $1000/oz.) As the silver to gold ratio returns to historic values, from 50:1 to 10:1, you may make over 5 times more money investing in silver, than gold!

Silver prices may rise to exceed the 10:1 ratio, for the following reasons: More than all of the silver produced by the mines each year is consumed by industry, which leaves little to no room for substantial investment demand. A marginal increase in investment demand will drive prices sky high.

Most silver is produced as a by-product of mining gold, copper, zinc, or lead. Higher silver prices might not substantially increase the amount of silver mined each year. Consider, in 1980, when silver prices went up to $50/oz., less silver was mined than in 1979!

Higher silver prices may not cause much reduced demand. Why? Because most silver consumed by industry is used in tiny quantities in each application, such as in film or electrical contacts, therefore, rising silver prices will not easily slow down growing industrial demand.

Additionally, as paper money continues to falter, people will buy silver and gold without regard to price, or they will buy simply because prices are going up. Because many investors today are momentum investors, and won’t be able to ignore the gains.

Each year, silver mines produce about 650 million ounces of silver. Around 200 million ounces come from recycling and about 100 million ounces come from investor or government sales. That’s a total of about 1000 million ounces. Of that, about 42% is consumed by industrial use, about 28% consumed by jewellery, about 20% consumed by photography and around 5% consumed in coins and medallions. That’s 95% of total available silver each year.

This implies either a “surplus”, or “investment demand”, of about 5% total. At $20/oz., that’s only $1 billion per year of net investment demand.

Since the 1950s, silver use and consumption, has made silver more rare than gold, in above ground, refined and deliverable forms. Estimates suggest there are 200-300 million ounces of refined, above ground silver available to the market at the present time. There are about 125 million ounces of silver at the NYMEX, the big commodity exchange in New York. The ETF SLV has about 180 million ounces.

Each silver contract at the NYMEX is a promise. There are too many contracts, too many promises to deliver silver that may not exist. Each contract is for 5000 ounces. There are often over 200,000 contracts for 5000 ounces, that’s a total of 1000 million ounces of silver promised to be delivered.

With recent market trends of defaults and bankruptcies, these contracts are at risk of default. Yet, the exchange has only about a third of that in real silver. How can they promise to deliver more silver than exists?

If they fail to deliver silver, then confidence in the world’s entire financial system may collapse. Industrial users of silver may have to shut down their factories. To prevent this, users will bid silver prices much higher.

Due to the risk of default in silver Futures contracts, Jason Homel suggests that you avoid buying Futures contracts, avoid options, and avoid storing your silver with anyone else. Take delivery of your silver, and put your silver in your own safe.

Despite silver's intrinsic properties as money, silver began to lose its status as money starting in the late 1800s, as nations stopped using silver, and started using only gold as money. Over 100 years of this “demonetization” has caused a serious drop in silver’s value, and this trend is about to be reversed as investors re-learn that silver is a great store of value because of its intrinsic properties.

As paper money continues to waver, the neglect of silver’s use as money will end. Once again, silver will be valued based on other measures of value, such as a day’s wage, or a ratio to gold. If silver exceeds its historic value, then perhaps a silver dime, a silver quarter, or a silver dollar will be worth far more than a day’s wage, as it once was.

Will you be hurt if silver and gold prices rise? Not if you own some. Remember, honest weights and measures in commerce produce prosperity. But you must act to benefit from this information.

Don’t wait for silver to rise before buying it. Silver prices could rise by over $20/day to exceed $100/ounce at any time if large funds or billionaires buy with desperation.
(Courtesy: Jason Homel’s Silverstockreport.com)

Gulf currencies plunge 37% since 2002

2008-04-07T18:25:00.000-06:00

Dubai: Gulf currencies except the Kuwaiti dinar depreciated more than 37 per cent since 2002 against a group of 11 currencies that dominate the region's trade basket, according a statistical estimate by Saudi Arabia-based NCB Capital, the investment banking arm of National Commercial Bank.

The currency depreciation effectively means higher imported inflation in the region adding to the overall inflation caused by structural factors such as supply shortages and surging demand due to the economic boom.

Currency flexibility enabled Kuwait to limit effective depreciation in the dinar to 23 per cent. According to NCB Capital's estimates the Saudi riyal, UAE dirham and the Qatari riyal have effectively depreciated 40 per cent, 37 per cent and 47 per cent respectively in nominal terms while the dollar declined 78 per cent against the euro and 40 per cent against sterling.

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In the context of currencies being forced to decline in nominal terms because of the dollar peg, the Gulf governments' retention of the currency peg has come under increasing calls for a review as falling interest rates, a steady decline in the US dollar, and record high oil prices translate to a flood of liquidity and rising inflation.

"The most appropriate solution is a change of peg to a basket of currencies accompanied by a small one-time revaluation (say 4-5 per cent) to offset part of the sharp loss in value of local currencies)," said Bryan D'Aguiar, head of equity Research of NCB Capital.

However, he argues that a larger revaluation would be counter-productive, as it would impair budgetary balances and current account surpluses. In addition, the regional governments and central banks will incur translation losses on the large pool of dollar denominated assets they already hold.

Additionally a move to a free float would not be advisable at this time as the region lacks a well-developed debt market that helps transmit interest rate signals - an important pre-requisite for monetary policy to function in a floating-exchange rate regime.

According to NCB Capital, the currency basket against a potential future peg should be decided on a trade weighted basis.

Oil surges $3 to above $109 level

2008-04-07T18:24:00.000-06:00

London: Oil surged more than $3 a barrel yesterday, above the $109 level, lifted by a strong rally in gas oil and as optimism that banks will manage to shore up the financial system fuelled buying across commodities and equities.

A surge in gas oil, the benchmark for heating oil and diesel in Europe, on concern of tight supply boosted US heating oil and pushed crude higher, analysts said. Gas oil hit a record high of $1,005 a tonne.

"It's the gas oil situation in Europe that's pushing up Nymex heating oil," said Tom Knight, a trader at Truman Arnold in Texas.

US crude rose $2.77 to $109.00 a barrel by 1608GMT, easing off highs of $109.48 hit earlier. London Brent crude traded up $2.24 to $107.14 a barrel.

Gold futures recover

2008-04-07T18:23:00.002-06:00

Gold futures recovered from midmorning weakness to close higher Thursday, as oil bounced from its early low and the dollar gave back its initial strength.

Gold continued a recovery from an "oversold" condition earlier in the week.

June gold rose $9.40 to settle at $909.60 a troy ounce on the Comex division of the New York Mercantile Exchange. May silver rose 30 cents to $17.48 an ounce.

In other metals trading, July platinum rose $48.30 to $2,012.90 an ounce. The metal was helped by influences such as worries that electrical shortages could persist some time in the key platinum-producing nation of South Africa, thus affecting mining operations there, a trader said.

June palladium rose $3.65 to settle at $447.40 an ounce, and the most-active May copper contract climbed 2.4 cents to finish at $3.9015 a pound.

Gold rebound on soft dollar, weak payroll data support

2008-04-07T18:23:00.001-06:00

In precious metals trading, the market found support after a weaker-than-expected March U.S. payrolls report hurt the dollar.

June gold rose $3.60 to settle at $913.20 an troy ounce on the Comex division of the New York Mercantile Exchange.

In the week's most widely anticipated U.S. economic release, the Labor Department said nonfarm payrolls fell 80,000 in March, the biggest decline in five years, after falling 76,000 in both January and February. The decline was worse than analysts expected and represented the third straight drop in U.S. payrolls. The unemployment rate moved sharply higher to 5.1%.

In other metals trading, May silver rose 27.5 cents to $17.755 an ounce, July platinum climbed $17.60 to $2,030.50 an ounce, but June palladium declined $3 to $444.40 an ounce. The most-active May copper contract rose 5.3 cents to settle at $3.9545 a pound.

Oil prices surge

2008-04-07T18:22:00.000-06:00

Oil prices rose on Monday, extending last week's late rebound after the dollar fell and a fire hit a U.S. refinery.

Light, sweet crude for May delivery on the New York Mercantile Exchange rose 32 cents to $106.55 a barrel by 8:50 IST.

The dollar came under pressure after a U.S. government report showed employers slashed payrolls a third straight month in March, cutting 80,000 jobs, the biggest monthly decline in five years.

Investors have been shifting funds toward the commodities sector for years, a trend that many analysts see continuing as they seeking protection from inflation.

Gains were also fuelled by news of a fire at Exxon Mobil's 150,000 barrel per day Los Angeles-area refinery in Torrance, California, which forced the closure of a hydrotreater, raising concerns about summer gasoline supplies.

Gold gains on global cues, silver falls

2008-04-07T18:21:00.002-06:00

Global cues coupled with heavy buying by stockists helped gold to climb more steps on its journey towards north here at the bullion market on Monday.

Standard gold and ornaments gained Rs 15 each to Rs 12,025 and Rs 11,875 per 10 gram respectively. Sovereign was unchanged at Rs 9,925 per piece of eight gram.

Yellow metal gained in the global markets as surging crude oil prices raised concerns of high inflation, which boosted demand for the precious metal as a safe haven during such crisis, analysts said.

Jewellery fabricators buying to meet the fresh demand for the coming marriage season also led to the increase in gold prices, they said.

On the other hand, silver prices eased on reduced off take amid fresh stocks released in the market by stockists.

Silver ready fell by Rs 20 to Rs 23,700 per kg. However, silver weekly-based delivery rose by Rs 42 to Rs 23,210 per kg as speculators still expecting the prices of the precious metal might pick up.

Silver coins continued to be asked at previous level of Rs 26,600 for buying and Rs 26,700 for selling of 100 pieces

Gold's surge continues as dollar falls

2008-04-07T18:21:00.001-06:00

TOKYO: Gold prices continued to gain on oil’s surge along with a weak US dollar as banks; investors and speculators began to purchase the yellow metal heavily.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange added $4.9 an ounce to $918.1 an ounce.

Silver tracked gold, while platinum extended gains on persistent worries about output in main producer South Africa, which accounts for 80 percent of the world's supply.

Gold jumped to $915.25/916.25 an ounce from $908.40/909.20 an ounce on Friday but was still 11 percent below a record of $1,030.80 ounce hit on March 17.

In addition to speculators, jewelers have been buying gold at the lows, helping the metal rebound from a two-month low of $872.90 an ounce last week.

However, the dollar rallied against the yen on Monday, hitting a high of 102.68 yen on electronic trading platform EBS, due to buying from Japanese investors at the start of the new business year. The euro dipped to $1.5670.

The U.S. Labor Department on Friday said non-farm employment fell by 80,000 jobs in March, the biggest drop in five years, while the jobless rate jumped to a 2-½ year high of 5.1 percent, raising expectations of more rate cuts in April.

Spot platinum rose to $2,012/2,022 an ounce from $2,005/2,015 late in New York on Friday on supply problems in South Africa, where a power shortage had disrupted mining and sent prices to a record high at $2,290 on March 4.

Implats, the world's second-biggest platinum producer, said South Africa did not boost its power allotment to 95 percent from 90 percent.The most active Tokyo platinum futures rose 131 yen per gram or 2 percent to 6,546 yen, reflecting a firm cash market.

Silver edged up to $17.86/17.91 an ounce from $17.77/17.82 an ounce. Spot palladium rose to $443/448 an ounce from $436/440 an ounce.

April will be the best month for Gold

2008-04-07T18:19:00.002-06:00

While the mainstream media and the Fed dance around the Recession word, newsletter editor (Trader Tracks) Roger Wiegand sees a harsher reality looming—as some pretty ugly numbers come to light. Dismissing recent corrections in precious metals, Wiegand predicts the onset of the biggest gold and silver rally in history.

TGR: What did you think of the recent market moves?

RW: I expected them so I am not surprised. I think the reason this happened was to raise cash and cover other troubles in the markets—in the credit crunchies part of it—and in the shares.

TGR: It does seem like every time the market has any kind of up-take, it’s followed almost immediately by a down-take, so how much impact does this have?

RW: The impact is starting to be less and less. With the fundamentals being what they are, and over the longer pull—meaning the next year to three years—the pros are selling shares into strength. They’re trying to get out of the way, because the April-May selling cycle is going to be a doozy.

TGR: What will cause the April-May sell to be worse than what we’ve just seen in March?

RW: There are several reasons,. Traditionally, April and May are the sell-and-may-go-away event. But that phenomenon will have a relatively small impact compared to the major events that will cause a market sell in April. For one thing, the brokers and the banks will be reporting on the first quarter of 2008. Those financial reports are not going to be pretty.

Builders will also report on their spring housing starts. Since it takes about four to six months to build a home, that April report is very important. It generally forecasts a trend in housing for the entire year. Again, those housing starts will look pretty sick. There’s no question in my mind that they’re going to be way under expectations.

Next you’ve got the Auto Sales Spring Market that will report on the first quarter of 2008. To call auto sales dismal is an understatement. Chrysler is forecasting a bad year through 2008. General Motors and some of the others will not do that, but they recently had a big brouhaha at the auto show with the leadership at Chrysler, and they’re basically saying it’s going to get worse.

Consumers will have a big role in this too. Their problems started with the sub-prime crisis and the derivative loans on the mortgages. That migrated into automobiles, but the next thing to hit them will be credit card defaults. I found it very interesting to learn that VISA had a big stock offering and raised something like $17-$19 billion. I was thinking to myself, “How neat to raise all that cash on shares, when, in fact, I expect a major increase in credit card defaults.” I think that was deliberate, and I think they were raising cash to get money into the business so they can manage what they see coming.

TGR: That's interesting.

RW: The next thing is—and this is a new one—Sprint and Porsche are now drawing down on major lines of credit, which they normally never do. These are mandatory drawdown lines that the banks have to honor. They’re solid contracts, and if these companies need the cash, the banks have got to pony up. The banks are in very bad shape at the moment with the liquidity crunch. Now, on top of that, you’ve got these big companies saying, “Okay, we need more money in our business; here’s our line we agreed on. Now, hand me $20 or $25 billion or, or $50 million or whatever it is that our contract allows.” For these reasons, I don't think April is going to be any fun.

TGR: Hasn't some of this already been factored into the market? Most people are expecting housing starts to be low, and everyone is already talking about recession—they expect auto sales to be low and I’m even hearing about credit card problems.

RW: The recession question is really based upon fallacious data. The CPI, a lot of the Labor Department stuff, the jobs data—a lot of those numbers that come out of the government are really phony. It’s no different in the state governments. The recession, in my view, began in April of last year. I think it’s been long underway.

David Rosenberg, the chief North American economist for Merrill Lynch, said one year ago that in about three weeks we’d be in a recession. Later on, he didn't repeat it because the numbers didn’t line up with the government numbers. But as you know, these government numbers don’t really make a lot of sense. Most people just laugh at the CPI when it comes out. They also laugh at the jobs data, but the jobs data is a market mover. There’s no question about it.

Consequently, we think the recession is well underway. Unemployment in Michigan, which is among the worst and most hard hit of all the states, is slightly under 8% officially. My rule of thumb is to take those kinds of numbers and double them. That makes unemployment in Michigan 16%. Now, unemployment in the United States—all states in the 1930s depression—was 25%. I think actually they kept better records in those days than they do now because I don’t think they were fudged.
If Michigan has 16% unemployment, that's not all that far from where they were in 1933.

TGR: Is there anything the Fed can do now or are they making the problem worse by printing more money?

RW: The Fed is making it worse. They have basically thrown up their hands with all the tricks and giveaways they've devised to provide credit to the banks. The latest one is that now they're saying they'll accept almost any kind of collateral. So they’re going to pick up all this mortgage derivative paper that is full of risk or has no value at all. It’s basically dead money, and they’re going to back it. Because if they don’t, these banks are going to go down.

And I mean all of them—all the big ones. Now, it was interesting that Richard Bovey, an investment analyst at Punk, Siegel & Co., recently said that the bank credit crunch is over. And Richard is quite smart and writes good reports. He says this is a once-in-a-generation opportunity to buy bank stocks. He starts out with the comment that it sounds ridiculous, and I think it is ridiculous. It’s way too early, and I will tell you why. I was in the real estate development business for 25 years, and I worked with some big companies and had to arrange credit lines for subdivisions. I understand that business.

What people are not recognizing is that the prices in the housing markets actually doubled from 2003 through 2006. They went up 100%. In other words, if you had a house in 2003 that was worth $100,000 and you replaced it with something equivalent three years later, it would cost $200,000, in certain markets.

Now these prices are falling drastically. They’re having auctions. One way to check the condition of the marketplace is in the Wall Street Journal. Look at the number of pages for lawsuits and watch for the pages of property auctions. And they’ve grown like topsy. It’s just unbelievable.

TGR: So you're saying housing hasn't come close to hitting bottom yet?

RW: You will see the prices of the hottest of the hot markets go back to where they were in 2003. And remember, the used housing market represents 85% of nation's housing. Fifteen percent is new building; 85% is used. People with used housing are going to have to drastically drop their prices to make a sale. Either that, or they have to sit there and make the payment, or default and foreclose.

This year Merrill Lynch’s David Rosenberg started out saying 1-2 million homes would go back to the banks or into foreclosure. Then he upped the numbers to two to four million; now he’s saying there’s a possibility of five to six million. I'm saying 10 million.
So, it’s definitely one big mess. But the next question is what about the regional banks. Smaller banks are traditionally high writers of mortgages and they hold the paper. A lot of the bigger banks sell the paper to Fannie or Freddie, and they get rid of it. They make servicing income or they make fees on the front end when they put a deal together and close it, but the liability is sold off and it’s gone.

That is not the case with the regional banks. Back in the mid-1980s, the Resolution Trust was put together to save the savings and loans and banks. At that time 5,000 banks went under or were recapitalized. The Resolution Trust made some very quick decisions; they had no time for a thorough auditing. They just looked at the books and the numbers and told some of these banks, “You’re out of business; you’re dead." They put more money into others and saved them. The process was very arbitrary, but they restored the health of the housing lending market by doing that.

TGR: Are you saying that something like Resolution Trust is in store for the regional banks?

RW: Yes. That’s exactly what my next point is. I wrote about that in Trader Tracks several months ago. I said, “Look for a Resolution Trust Number Two because I think that’s going to be a very important savior for these regional banks.” Let’s say you have one regional bank serving a town of 10, 20-25,000 people and maybe some very small ones in addition. But that one regional bank may be carrying the largest proportion of the mortgages. If that bank crashes, it would severely affect businesses and basically wipe out a whole town.

So, they can’t let that happen. I think they’re going to be backed up by a Resolution Trust Number two. It’s turning out that the government is becoming a lender of last resort, saving not only everybody in New York that made all the reckless lending mistakes, but also the regional banks. Beyond that they’re going to have to try and save quite a few other associated industries.

TGR: Is printing more cash the only way the government can save the banks?

RW: Well, they’ve been printing cash at the rate of 11 to 13%; Japan’s been printing at the rate of 20%; and Russia’s been printing at the rate of 50%. So, the dollar has to go down; inflation must go up; and gold has to go up. There is just no other way for it to go.

TGR: How do you explain the recent correction in gold?

RW: That’s nothing but a normal technical correction. I mean gold futures this morning [March 20] are trading between $915 and $938. And we have spread positions out right now—I own some myself, both in gold and silver—that went down to the tune of 23%. But my account is in excellent shape; as of the end of last week, my account was up 200% from January 1st. I’ve got traders that have been doing this kind of trading now—some have made a half-million dollars in 30 days.

It just depends on how you structure your trades, where you go, how you buy them, and how you protect yourself. Right now gold is $918; I talked to our brokers this morning. I said, “I see a floor at $915 to $920, if, at the very worst it got real nasty, it could be down to $855.” But if you look at that--$855 versus $1032 high, which is what we had earlier this week in the futures, that is not even one move in a Fibonacci (Fibonacci Retracement Levels) ratio. I use those and Elliott Wave and other analytical tools.

TGR: How do those tools work?

RW: It’s real simple. They show support and resistance numbers, and it’s almost uncanny how those numbers go back. They go right back to the same price every time, and good traders and analysts who use the technical side, not the fundamental side so much, rely on those. Our trading is based upon that. Even more importantly, we trade what I call Elliott Trade Light. Robert Prechter, who’s written a lot of books on Elliott Wave, has a very intense and technical analysis of Elliott Wave. I have been unable to trade it based upon the way they do it, but I use Elliott Wave Simple or Elliott Wave Light, and it seems to work very well.

TGR: For those of our readers who may not want to do the futures trading, do you have any recommendations on the equity side?

RW: Yes, we do. Goldcorp Inc. (TSX:G) (NYSE:GG) is one of them. We traded in options in a lot of this senior stock three or four years ago, and it seemed at the time that it was very easy, almost like shooting ducks.

At this point, we don’t have much in the way of shares options, although I do have some warrants on 2011 in our letter for Goldcorp. Goldcorp's trading range is $21 to $46. They’re in all the right places; they’ve got a beautiful mine in Red Lake. They are also positioned for some fantastic growth in northern Mexico.

We have another stock near Goldcorp's big active mine. The name of that company is Canplats Resources Corp. (V.CPQ, PK.CPQRF, F.CPQ, DE.CPQ, BE.CPQ). Canplats' trading range runs from $.23 to $4.05 but we see it going higher, somewhere between $3.21 and $3.46. I’ve been in and out of Canplats three or four times. The first time we made nearly 200%; the second time about 40%; and the last time maybe 15 or 20%. Canplats is drilling in northern Mexico, and they went to the edge of a big mining community where Goldcorp, Newmont, and others were digging and had some success. Basically, they went to the end of the stakes on the ground, and then picked them up from there. They have about 300 square miles staked out. And the drilling results have been fantastic; a lot of people are very excited about it. So we like that stock.

When we started in this business, we were really looking all over the place. Since 2004, 2005, we’ve seen a lot of things that worry us regarding politics and taxes, what I call “takings” by the government. As a result, we've focused on four spots. We like Northern Mexico; Northeast Nevada; British Columbia; Alaska; and individual parts of Canada. Those are our favorite locations. I'm sure there are many other lucrative mining areas, but we try to eliminate as much risk as possible. The places we've chosen already have proven reserves and good results—we feel there’s no reason to go elsewhere.

We’ve made money two to three times trading Bravo Venture Group Inc. (TSX.V:BVG). The trading range on 52 weeks is $.44 to $1.67. Our goal in the fall of 2008 is a $1.05.

We also like some seniors and we particularly like silver. Silver is behaving better than gold. By that I’m saying its percentage of gain has been better over the last year or two, and we think it will continue. In the seniors, we like Hecla Mining Company (HL) and Pan American Silver (NasdaqGS: PAAS). We also like to trade the SLV and the GLD, the silver and the gold ETFs.

Helca had some problems and was dormant for a long time. They got rid of their debt and have new financing. Now, they’re on the prowl for new acquisitions. They just closed on a big mine they bought in a partnership with Rio Tinto in Greens Creek, Alaska. They’re paying $750 million for it. That’s a proven mine. The stock has been running between $9 and $12. We'd like it to go to $15. Next year, it’s probably even going to be better.

Pan American Silver is pure silver. They continue to make money. Silver Standard (SSRI) is a royalty silver company. They’re going to be a real miner in Mexico, probably within a year.

Another one that we know well is Miranda Gold Corp. (MAD:TSX-V) . Miranda Gold Corp. ((MAD:TSX-V). Miranda is in the right spot in northeast Nevada. Their only disadvantage is that they’re not an active miner, but they have partners, reserves and locations in the right mining areas. We think they’re going to be picked up by a senior company.

That will probably happen to Piedmont Mining Company, Inc. (OTC BB: PIED) as well. Their trading range is $.08 to $.38. We think that will go to the $.34 to $.37 range in late spring or early fall. By the last quarter of this year or the first quarter of 2009, we think Piedmont will be $.52 to $.55, if not higher. Again, Piedmont Mining has reserves in the ground, good management, proper funding, and good potential partners. All of these mines are located in the spots that we prefer regarding risk and opportunity.

TGR: What impact will the recession/depression/devalued dollar have on those companies that are based in the U.S.?

RW: Well, first of all, the dollar devaluation will make it more expensive for the seniors based on their field operating costs. The juniors are not debt laden with operating costs, energy, and materials because, in fact, they’re not really operating.

These disturbing recessionary, depressionary, inflation trends can pull down the junior miners in particular and can make the bigger ones static as to value. But if you have the patience to go for another year or two, I think you’re going to be well rewarded.

We’re embarking right now in Phase II upon what I think is the biggest gold and silver rally in history, and it’s not going to be that quick. But I think the main thrust of it is going to start this fall when things really get rough in the economies, not only in the U.S., but throughout the world. 2009 and 2010 are probably going to be the best parts of it.

We’re looking for a minimum on gold of $2,950 and silver at a 15 to 1 ratio at about $256. And my friend, Jim Turk—you probably saw it in Barrons—he said the thinks gold will probably be $8000. He could be right.

TGR: Do you think the rally in gold and silver will go beyond 2010?

RW: It could. It’s really hard to forecast out that far, but if you look at economic history and the way things worked in the past, you get pretty good clues as to where we’re going. If gold were inflation-adjusted, it would be somewhere around $2000, $2200 tops.

TGR: Right.

RW: Basically, we're halfway there, so the numbers are still way off. This $40, $50, or $60 sell-off in gold is peanuts. It's nothing more than a triple-witching option expiration. We’re going into the holiday weekend. People have made a lot of money. Funds need money to get out of their profitable trades in commodities and pay off other problems, but the funds are going to come right back in again next week and the week after. I think you can bet on it.

TGR: Very good. Roger, thank you so much for your time. We really appreciate it.

About Roger Wiegand: In addition to editing and publishing Trader Tracks (http://www.tradertracks.com/), a stocks, futures and commodities electronic newsletter publication for active traders, Roger writes a weekly column, “Rog’s Corner,” for J Taylor’s Gold and Technology Stocks Newsletter. (See http://wwwwebeatthestreet.com for information on Jay Taylor's and Roger Wiegand's newsletters. Tel: 718-457-1426 Claudio Bassi, Manager cbassi@miningstocks.com.) A native of Michigan, Roger has had an interest in precious metals and futures since the commodity rallies of the late 1970s and early 1980s. His background in a 25-year real estate development and construction career specialized in forward planning, consulting, and using creative skills for conceptual project thinking.

His present work is focused on the precious metals, currency, energy and interest rate markets for trading on the primary American exchanges. Roger has studied these markets intensively for 12 years, to hone personal trading skills. Experience in land, development and base material projects has evolved into consulting for mining companies and analyzing those markets. He has developed longer term ideas for finance and mining marketing doing work on behalf of private and public mining companies. Roger’s consulting work is to focus on concepts and “big picture” forward planning for mining companies. His newsletters utilize the global news, and his personal research and knowledge for expressing personal trading ideas.

Vietnam gold imports touch 30 tonnes

2008-04-07T18:19:00.001-06:00

HANOI: Vietnam’s total gold imports during the first quarter of this year stands at 30 tonnes according to a statement by Vietnam’s commerce ministry.

Vietnam’s gold consumption is forecast to exceed 80 tonnes in 2008, doubling that of in 2005, said the statement.

Experts predicted that gold prices in the Vietnamese market would remain high in the coming time due to increasing world prices of the precious metal.

Vietnam now houses some 8,000 gold businesses.

Gold going steady, may recover

2008-04-07T18:18:00.000-06:00

There was no sign of fears of gold prices falling further in the short-term yesterday (April 2nd), with many analysts maintaining that the next three months also look positive for the precious metal, according to Reuters.

Although prices are still not as high as last month, when they hit a record high of $1,000 per ounce, investors have been put off selling their bullion by hints that the US Federal Reserve may cut interest rates again in April, leading to an uncertain outlook for currency.

Commonwealth Bank of Australia analyst David Moore expressed his optimism about gold futures.

"There's still a possibility for gold prices to recover further at some point in the coming quarter. I think the prices could sort of hold roughly around the current levels in the near term," he said, according to Reuters.

June gold prices rose $12.40 to $900.20 an ounce on the Comex division of the New York Mercantile Exchange yesterday.

Hong Kong prepares for Swiss gold 'paradise'

2008-04-07T18:17:00.002-06:00

HONG KONG: Hong Kong will once again have the largest country pavilion at the BaselWorld jewellery and watch show, with 317 exhibitors set to display their wares, it has been announced.

The Hong Kong Trade Development Council (HKTDC), which is organising the 6,500 sq m exhibition space at the event in Basel, Switzerland, said a total of 370 companies will be represented, with gold jewellery and high-end watches among the pieces set to be featured.

Hong Kong, which is officially a Special Administrative Region of China, is one of the world's leading exporters of watches and jewellery.

In 2007, its jewellery exports were up by 16.7 per cent on the previous year at a total of $4.3 billion (?2.16 billion). Meanwhile, overseas demand for watches and components rose by 6.3 per cent to be worth $6.4 billion.

HKTDC says current jewellery trends show white gold remains popular, while yellow gold with coloured gems is becoming increasingly fashionable.

In terms of watches, multi-function models that offer features such as voice recognition or GPS are most in demand.

In total, over 2,100 exhibitors from across the globe will take part in BaselWorld, which will run from April 3rd to April 10th.

Gold off to a good start, resumes higher by Rs 125

2008-04-07T18:17:00.001-06:00

Gold recovered early from Wednesday’s Rs 10 dip at the bullion market here on Thursday and resumed at Rs 11685, up by Rs 125, mainly on global cues.

Gold prices went up globally Wednesday along with silver and that prompted investors back to the gold. Silver prices firmed up further on sustained industrial demand.

Standard gold opened higher at Rs 11,685 as against Wednesday’s closing level of Rs 11,560. Pure gold also started higher at Rs 11,745 as against Rs 11,615 previously. Silver ready rose to Rs 23,050 from Rs 22,790.

June gold rose by $12.40 to $900.20 an ounce on the Comex division of the N ew York Mercantile Exchange. May silver rose by 29 cents to $17.18.

Gold, platinum surge ahead of US report

2008-04-07T18:15:00.000-06:00

NEW YORK: Gold prices also went up ahead of a US employment report and recorded well above $ 900 an ounce in New York on Wednesday.

The precious yellow metal rose to $US902.50/903.30 an ounce from $US898.00/898.80 an ounce when the metal jumped more than 1% after oil surged almost $US4, boosting its appeal as a hedge against inflation.

Friday's US employment report is expected to show the economy shed jobs in March for a third straight month.

Other precious metals also firmed, with platinum rising more than 1 percent as worries about supplies lingered in main producer South Africa.

The Fed has cut its benchmark interest rate six times since September, bringing it to 2.25% from 5.25%. Lower rates boost gold's appeal as an alternative investment.

Gold futures for June delivery on the COMEX division of the New York Mercantile Exchange added $US6.6 an ounce to $US906.8 an ounce.

Spot platinum rose to $US1,968/1,978 an ounce from $US1,942/1,952 an ounce. Platinum extended gains on worries that South Africa's power crisis, which had disrupted mining, may last many years unless electricity demand reduced.

Despite the gains, platinum remained below a record of $US2290 hit on March 4. The most active Tokyo platinum futures firmed 125 yen per gram to 6,389 yen.

Silver edged up to $US17.38/17.43 an ounce from $US17.17/17.22 an ounce. Spot palladium rose to $US443/448 an ounce from $US436/441 an ounce.

Gold has rebounded more than 3% since falling to a two-month low of $US872.90 on Tuesday, but it was still well below a record high of $US1030.80 hit on March 17.

Gold tumbles below $900 level as dollar's rise dampens appeal

2008-04-01T17:44:00.000-06:00

London: Gold tumbled to a two-month low below the key $900-an-ounce level on Tuesday as the dollar's rise against the euro dampened the metal's appeal as an alternative investment and triggered bullion selling.

Falling oil prices also put pressure on gold, which is traditionally seen as a hedge against inflation. Other metals suffered losses, with silver slipping five per cent to a two-month low and platinum falling more about six per cent.

Gold hit a low of $884.70 and was at $887.40/$888.20 an ounce at 1411 GMT, against $916.20/$917.00 late in New York on Monday, when it fell two per cent. The metal has fallen about 14 per cent since hitting a record high of $1,030.80 two weeks ago.

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"Given the elevated level of speculative interest, we would not rule out a deepening of the current correction in prices," said Suki Cooper, precious metals analyst at Barclays Capital.

Environment

"However, the overall environment for gold remains positive over the forthcoming months," she said, adding the dollar was not expected to rise markedly against the euro in the short term, given the likelihood of poor US data this week.

The dollar rose after Swiss bank UBS announced an additional $19 billion of writedowns and Deutsche Bank said it expected to write down a more than the forecasted $4 billion in the first quarter, showing that credit problems were not limited to the United States alone.

Weaker oil prices also dragged down precious metals. Oil fell to near $100 a barrel, extending losses from the previous session.

In other markets, US gold futures for June delivery on the Comex division of the New York Mercantile Exchange fell $29.9 an ounce to $891.60.

"Given gold's recent movements, the yellow metal will remain vulnerable to selling pressure in the coming sessions, particularly as the second quarter is traditionally weaker than the first due to general market cycles," James Moore, analyst at TheBullionDesk.com, said in a market report.

Gold, platinum follow oil on southward journey

2008-04-01T17:43:00.002-06:00

Gold and platinum followed oil and other commodities on a journey towards south on the last day of the previous fiscal year.

Gold and other precious metals futures finished weaker on Monday in reaction to slipping prices for crude oil and other commodities. Long liquidations at the end of the quarter, as traders hunted down profits with which to close their books, also dampened prices.

June gold fell $US15 to finish at $US921.50 a troy ounce on the Comex division of the New York Mercantile Exchange. May silver slid US63 cents to $US17.31.

The euro was not able to extend early gains, and weakness in crude oil during the latter stages of the session helped pull down gold and silver, analysts said.

In other metals trading, July platinum fell $US5.40 to $US2043.40 an ounce, June palladium declined $US4.70 to $US450.20 an ounce, and the most active May copper contract fell 0.05 cent to settle at $US3.8310 a pound.

Dubai to host Gold Conference

2008-04-01T17:43:00.001-06:00

DUBAI: Dubai, the Asian hub for major trading in gold, is gearing up to host sixth annual Dubai City of Gold Conference. The conference will take place between April 12th and 13th at the Park Hyatt, Dubai.

Over 500 delegates will be in attendance as they plan to discuss the current state of the industry and ways to face the challenge of price rises in the sector.

Transguard Security Services, ABN Amro Bank and Standard Bank are some of the sponsors of the event.

Tawfique Abdullah, chairman of the Dubai Gold and Jewellery Group, said: "The conference is an important event as it discusses ways to boost the growth of the global jewellery industry which is valued at around $146 billion (£73.18 billion)."

According to the official website of the Dubai Gold and Jewellery Group, the organisation was founded in 1996 and now has over 700 members. Its aim is to promote the gold and jewellery industry both nationally and internationally through its various activities.

Gold, silver, platinum decline on profit booking

2008-04-01T17:42:00.001-06:00

NEW YORK: Gold futures along with silver and platinum declined on profit booking in early trade Monday as US inflation showed signs of relaxing and the dollar remained steady.

June gold slid $US17.50 to settle at $US936.50 a troy ounce on the Comex division of the New York Mercantile Exchange.

May silver shed US61 cents to settle at $US17.94 an ounce.

July platinum fell $US9.80 to finish at $US2048.80 an ounce, the most-active May copper contract fell US4.15c to settle at $US3.8315 a pound, but June palladium ended $US1.10 higher at $US454.90 an ounce.

Will dollar go down even more?

2008-04-01T17:41:00.002-06:00

A prudent investor might very well decide to keep his powder dry until the next big investment trend reveals itself.

But thus the big question – what kind of powder to keep?

An investor needs a baseline. He needs to be able to figure out whether he is making progress or backsliding. An American typically keeps score in US Dollars. But there's the rub...

The Dollar is a baseline that keeps moving.

When the Euro came out in 1998, it quickly fell against the Dollar – down from $1.12 to just 88 cents. Of course, that was the era when the Nasdaq was flying and Americans were still the world's most admired people.

Since then, the tech stocks have crashed...the information age has proved a disappointment...the War against Iraq didn't go as planned...housing has gone up – and now down...and Wall Street has shown itself to be as incompetent as the rest of us.

(We all knew Washington was incompetent already.)

And now, as if to underline the point: Europe's esperanto money has risen to $1.55. In terms of what a Dollar will buy in the United States, a Dollar is down around 25% so far this century. In terms of what it will buy in Europe, it is down by about 50%. In terms of Gold, it has shrunk 75%.

So where should an American keep his money? This was a much easier question when the Gold Price was under $500 and the Dollar was worth more than the Euro. Of the three, the Dollar was the last place you wanted to be.

But now the buck is already down. Will it go down even more? Or is it time for A Dollar Rally? Now we're not only uncertain...we're unsure too.

It is still early in the credit crunch. If it crunches hard enough, the Dollar will pop up...squeezed out like a pea from a peapod. On the other hand, there will probably come a time when the Feds bring out the helicopters and begin throwing dollars out of the cargo hatch.

Then, like Germany in the 1920s... Argentina in the '80s...or Zimbabwe today...we'll see some real inflation!

In the meantime, it's probably best to play it safe. Here's what we're doing with our own money: we're splitting our cash into three parts – and putting each third, equally, into Gold (which we expect to double again from here)...Swiss francs, (because we fear the Dollar could fall apart at any moment)...and the dollar itself (because you just never know).

Gold gains on weak dollar

2008-04-01T17:41:00.001-06:00

NEW YORK: Gold futures ended strong Wednesday at the New York Mercantile Exchange as US dollar continued its southward journey against euro.

Gold also benefited from renewed jitters about the financial crisis, after The Wall Street Journal reported that a $19 billion deal to take Clear Channel Communications Inc.

The April contract gained $14.20, or 1.5%, to settle at $949.20 an ounce on the Nymex. The dollar index, which tracks the value of the greenback against a basket of major currencies, fell 0.5% to 71.726 from late trading.

The dollar came under renewed pressure, especially against the euro, after reports showing resilient business sentiment in the euro zone's two biggest economies.

News of a 1.7% drop in U.S. orders for durable goods in February, marking a second decline in a row, further pressured the U.S. currency. In addition, new homes also fell to a 13-year low in February.

Also on Nymex Wednesday, silver for May delivery ended up 3% at $18.38 an ounce. May copper futures climb 1.4% to $3.73 a pound.

Platinum for April rallied 1.3% to $2,012.60 an ounce. June palladium sat out the rally, closing 0.7% lower at $459.70 an ounce.

Gold follows global trends, rises in India

2008-04-01T17:39:00.000-06:00

Gold prices rose to Rs 12,370 per 10 gram in the bullion market here on Wednesday, mostly on global trends and aggressive buying by stockists.

Silver too was boosted by Rs 500 to Rs 23,100 per kg as jewelers and industrial units remained aggressive buyers.

The yellow metal traded notably higher by 0.3 per cent to $941.95 an ounce, the highest since March 20.Gold rose the most in three weeks as a disappointing US consumer confidence report eroded the dollar's value and boosted the appeal of the gold.

Analysts said a steep rise in global markets mainly pushed up the prices even as the physical demand was negligible.

Standard gold and ornaments shot up by Rs 190 each to Rs 12,370 and Rs 12,220 per 10 gram respectively. Sovereign held unchanged at Rs 9,925 per piece of eight gram.

Silver ready spurted by Rs 500 to Rs 23,100 per kg and weekly-based delivery by Rs 690 t o Rs 23,250 per kg. Silver coins, on the other hand, remained unaltered at Rs 26,600 for buying and Rs 26,700 for selling of 100 pieces.

'Bull run in commodities market will continue'

2008-04-01T17:38:00.002-06:00

Commodity prices have been on a spectacular upward journey across global markets, impacting precious metals, base metals, energy complex and agri-commodities alike.

Gold has been trading at record highs, touching a recent high of almost $1033 level, whereas crude touched a high of $110. Agri-commodities such as soybeans and soy oil have also been trading at record highs.

Generally, it has been seen that commodity prices are driven higher by surging demand throughout the world. But the irony is that the latest surge comes amid concerns about a weaker global economy. At present, commodities prices are rising because the U.S. interest rates are falling below the rate of inflation.

When real rates are negative, they provide an incentive for speculation in storable commodities. One of the biggest surprises of this year was how quickly the Federal Reserve lowered interest rates. These revisions in expectations of Fed policy coincided quite precisely with the boom in commodity prices over that period. Last week’s sell-off of commodities also coincided with the Fed’s decision to cut rates by 75 basis points—a big cut, no doubt, but not as much as the market had been expecting. Now, commodities are rebounding as expectations build for more cuts.

The value of US Dollar has been depreciating against major currencies such as Euro, Japanese Yen, the Chinese Yuan, Indian Rupee and British Pounds. This impacts the Balance of Payment (BOP), pushing it to negative zones, especially in developing and under developing countries. They are unable to export more goods and services due to appreciation of domestic currency. The continuous appreciation of Indian Rupees around 15% since beginning of the year 2006 due to strong domestic growth and rising income has helped drive an expansion of more import and less export of agricultural commodity.

Chinese demand is also seen as a factor in boosting commodity prices. Another major factor attributable to rising commodity prices is the sharp increase in crude prices which have increased by almost 100% over last couple of years and touched a high of almost $110 recently. As higher crude prices have an inflationary impact on global economy, it exerts an upward pressure on prices of other commodities. And finally, the other big reason for rising commodity prices is buying by funds that have started adding commodities to their portfolio.

High-income growth is one of the main factors that drive the higher consumption especially in developing and under-developing countries. Rising investment, surging demand and expanding trade prospects are the other key drivers of global economic growth. Due to these factors, economic growth is expected to remain strong in countries like China, India, Brazil and India.

The relative significance and growth potential of agricultural and industrial sector resources play decisive roles in the world of agri and industrial commodities trade. It enhances the demand of higher food and articles like luxury goods, house, and durable goods with the help of income growth. The consumption gradually increases accordingly.
As far as the Indian story is concerned, farm growth is expected around 2.6 per cent in FY08 compared with GDP growth of an estimated 8.8 per cent. After a lower growth in industrial production and below expectation performance of the infrastructure sectors, inflation data released on Friday showed that it had surged to a 59-week high, to come within touching distance of the 7 per cent mark, effectively dousing expectations of an interest rate cut by the Reserve Bank of India.

The spiralling inflationary tend, which was up nearly a full percentage point at 6.68 per cent during the latest reported week ended March 15, has given rise to speculation of a possible interest rate hike in the near future, despite signs of a slowdown in the economy.

The Indian Government’s measures to tame the rising commodity prices seem to have little impact, as prices of some of them such as chana, yellow peas, masoor, turmeric, refined soya oil and mustard oil have jumped more than 20 per cent in the last three months.

Other commodities such as sugar, wheat, maize and guarseed also followed the rising trend. Apart from the rising demand for the cooking medium, reduction in customs duties and freezing of the base prices for imports of all types of edible oils since July 2007 have tempted refiners and stockists to book for higher imports. After lying low during last year, sugar prices seem to have gathered pace. There is a good demand for sugar in the international markets, where prices are appreciating after a hiatus. India has emerged as a big exporter after it toppled Brazil to become the largest producer of sugar.

World commodity prices have been rising substantially over the past few years and are expected to continue in coming years as long as the demand supply mismatch continues.

The US economic scenario, global economic outlook, coupled with the economic growth of China and India, will continue to determine the future direction of commodity prices. The bull run currently being witnessed in commodities markets worldwide is expected to continue as the Asian economies occupy their rightful place in world economy.

Which is China's largest gold mine?

2008-04-01T17:38:00.001-06:00

BEIJING: An organisation has named what is reported to be China's largest gold mine, People's Daily Online reported.

The Zijinshan gold mine has been labelled as such by the China Gold Association, which bases its decision on results taken from appraisals and site investigations, the news provider claimed, citing reports.

Experts tasked with deciding the largest mine in the country concluded that the Zijinshan site held the largest amount of available reserved of resources containing the precious metal, while also being the largest in terms of mining scale and production.

The mine also has future potential for sustainable development and benefits from support by the government. It was reported to have "strong capabilities" in relation to independent innovation, while harbouring the greatest economical benefit.

According to InfoMine, Zijinshan is located in Fujian and is classified as an active open-pit site.

Poor man's Gold is on its way...

2008-04-01T17:37:00.000-06:00

Is it possible to acquire silver before it touches at $30?. Like gold, silver is also climbing up to its pinnacle level. It is important to catch the commodity before it finds it highest momentum.

While gold stole all the headlines when it broke the $1,000 mark, few took notice seven days earlier when silver hit its highest price in 28 years. Silver's current spot price is $17.21 an ounce, but one analyst [a gold bug, nonetheless], believes "the poor man's gold" will break the $30 barrier this year.

James Turk, founder of GoldMoney, said in his annual forecast that the U.S. economy "will get much worse in 2008, making gold the premier asset of choice, but not the best performing precious metal. That honor will go to silver, which I expect will clear $30 in 2008."

...we believe silver will outpace gold in 2008. After all, even with gold's precipitous rise in 2007, silver has still achieved better returns over the life of the prevailing bull market in precious metals.

Further, we believe that gold's ascent is emotionally driven. And fear and loathing in the marketplace for U.S. dollars and equities are still driving prices higher. The subprime crisis was the spark, and the golden fire will rage on in the year ahead.

Over time, however, this emotion will once again give way to the fundamentals of supply and demand amidst a continuing backdrop of the ever-weakening dollar. And in this longer-term scenario, we again give the nod to silver...

Dollar bounce back against euro

2008-04-01T17:36:00.001-06:00

The dollar bounced back from earlier losses against Euro on Monday, after a short-lived sell-off early in the session. A stronger-than-expected surge in inflation in the euro zone muted the effects of a small bounce after the slightly better-than-expected Chicago Purchasing Managers Index.

The EU statistical agency Eurostat said the annual inflation rate in the euro zone hit a new record high of 3.5 percent in March against 3.3 percent in February. The higher-than-expected preliminary figure was far above the European Central Bank's comfort zone of just under 2 percent.

In economic data Monday, business activity in the Chicago region continued to contract in March, but the contraction was less severe than in February, according to a survey of corporate purchasing managers released Monday.

The Chicago Purchasing Managers' index was at 48.2% in March compared with 44.5% in February. Readings under 50% indicate overall business contraction.

Greenback was also helped by U.S. Treasury Secretary Henry Paulson releasing a 218-page proposal to overhaul US financial regulations.

The blueprint for regulatory reform was commissioned in June last year and calls for the U.S. Federal Reserve to expand its powers of oversight beyond the banking system.

Paulson suggested that the current regulatory regime is almost solely focused above ground at 'the tree level' when 'the real threat to market stability is below ground, at the root level where the health of financial firms is intertwined'.

Dollar extend gains

2008-04-01T17:35:00.000-06:00

Dollar extended gains against the euro and closed at 1.5794 (1.5780) on Friday.

As per the US Commerce Department release on Friday, inflation moderated in February, with consumer prices rising just 0.1% for the month.

The greenback found some support in the report from US Labor Department released on Thursday, which revealed that initial claims for state unemployment benefits fell 9,000 to 366,000 in the week ended March 22. However the four-week average of initial claims rose 1,750 to 358,000.

Also continuing claims for benefits fell 5,000, to 2.85 million for the week ended March 15. The four-week average of continuing claims rose 25,250 to 2.82 million.

The US economy grew at 0.6 % annual rate in the fourth quarter according to the Commerce Department estimate made public on Thursday. This was as per expectations and consistent with the two previous estimates, but the slowest pace since 2002.

The US Commerce Department reported Wednesday that sales of new homes in the US fell to a 13-year low in February, dropping 1.3% to a seasonally adjusted annual rate of 590,000.

US consumer confidence index had fallen in March to 64.5 from a revised reading of 76.4 in February, according to a US Conference Board release on Tuesday.

But the report from National Association of Realtors released on Monday had shown that resale of homes rose 2.9% to a seasonally adjusted annualized rate of 5.03 million. The rise was above expectations, and the first in seven months.

The Federal Reserve had cut its benchmark interest rate by 75 basis points in its last meeting.

The Commerce Department had reported a drop in US housing starts in February by 0.6 percent to a 1.065 million unit annual rate, down from 1.071 million units in January.

Another release showed the total industrial output in US fell 0.5 percent in February, much steeper than the expected rate of 0.1 percent.

US homebuilders' confidence held steady in March. The National Association of Home Builders (NAHB) Housing Market Index for March remained unchanged at 20.

The US Commerce department reported a worse-than-expected 0.6 percent fall in the Retail Sales in February.

The Beige Book survey of the Fed reported softening or weakening in the pace of business activity in 8 of the 12 Fed regional districts; and subdued, slow or modest growth in others, confirming the slowdown in US economy since the start of the year.

Federal Reserve Chairman Ben Bernanke had given a grim assessment of the U.S. housing sector, adding to mounting fears of recession.
The Fed had lowered its 2008 growth forecast to 1.3 % - 2 %, from a forecast of 1.8 % - 2.5 % in November.
In a grave effort to prevent a global market meltdown in financial markets and a possible recession in the US economy, the Fed had lowered its lending rate by 75 basis points to 3.50% - a rare move between formal meetings of the central bank's policymakers in January; and again lowered the rate to 3 percent January 30th.
Medium Term Outlook
Expecting a short-term recovery in dollar if it sustains below 1.5725. Supports are 1.5909, 1.6148, 1.6420. Resistances are 1.555, 1.5380, 1.5220 and 1.5110. But if it trades above 1.5910, more weakness can be expected.
In spot, dollar closed at 1.5794 (1.5780) against the euro, after trading in the range 1.5839 – 1.5737.
Last day, DEUR June traded in the range 157.73 – 156.90 and closed at 157.47.

Gold nosedives to Rs 11,830 in India

2008-04-01T17:34:00.000-06:00

MUMBAI: Gold prices nosedived to a six-week low level on Tuesday at the bullion market and ended at Rs 11,830 per 10 grams.

The precious yellow metal dropped by Rs 460 to 11,830 per 10 grams, a level last seen on February 19, as the precious metal traded below 900 dollar an ounce after the greenback strengthened against euro.

Heavy selling by stockists influenced by a weakening trend in global markets.

Fall in oil prices and a broad decline in commodities prices reduced the metal's appeal as hedge against inflation.

Marketmen said on emergence of panic selling in line with record plunged in the precious metals prices at overseas front mainly led to the fall in both gold and silver prices.

Gold fell by 20.18 dollar, or 2.2 per cent, to 896.70 dollar an ounce in London, the first drop since February 15. Silver also lost 44 cents to 16.795 dollar an ounce.

Standard gold and ornaments tumbled by Rs 460 each at Rs 11,830 and Rs 11,680 per 10 grams respectively. Sovereign too lost Rs 125 to Rs 9800 per piece of eight gram.

In a similar fashion, silver ready attracted heavy selling and nosedived by Rs 1,270 to Rs 22,230 per kg and weekly-based delivery by Rs 1,410 to Rs 21,700 per kg. Its coins traded lower by Rs 100 to Rs 26,500 for buying and Rs 26,600 for selling of 100 coins.

Oil Turmoil: Rise and fall of Crude Oil

2008-03-24T19:23:00.001-06:00

Oil rose to a record just below $112 a barrel last Monday and then fell precipitously in the wake of the turmoil surrounding the Bear Stearns buyout. Initially, the dollar fell to a record low against the Euro on fears that other firms might be in financial trouble, but later on Monday oil and most other commodities fell rapidly as traders tried to comprehend a shifting financial landscape.

From a high near $112 oil fell to $102 a barrel on Monday. Tuesday, Wednesday, and Thursday, in a short trading week, were equally as volatile with oil oscillating up to $109 and at one point getting as low as $99.59 a barrel before closing out at just below $102. Overall commodity prices last week saw their biggest drop since 1956.

As with nearly everything else about the financial markets, opinions are mixed as to just what is taking place. Some observers note that much of the drop in commodity prices came because speculators were forced to sell out profitable positions in commodities to meet new margin requirements associated with bailing out Bear Stearns. Others see the weeks events as a signal of tougher economic times ahead that will lead to reduced demand for all commodities.

Goldman Sachs sees oil prices slipping to circa $90 a barrel in the next two months due to seasonal factors and reduced demand. Others are impressed that a massive unwinding of futures positions has still left oil above $100 a barrel. The weekly US stockpiles report showed a less-than-expected growth in crude and gasoline stocks, while distillates continue to slide. Many are now observing that unless the report is wildly at variance with expectations, the US stockpiles report, which until recently drove oil prices, is getting lost in the financial news.

Decoupling

Most acknowledge that the US is entering a period of economic recession which, depending on ones point of view, may last anywhere from months to years. The key question for the oil markets is what will happen to the demand for oil as the US, and those that depend on the US as a market, decline. Last week the EIA reported that US consumption of petroleum products over the last four weeks is down 3.2 percent from the same period in 2007. Despite record prices, however, US demand for gasoline was down by only 0.1 percent in the same period.

Since speculation about the US entering a credit-induced recession became rampant several months ago, conventional wisdom has been that a US recession would soon spread across the world and that demand for oil would slacken as it has in the past. For several months now oil prices have been falling on bad economic news and recovering on good.

During this time there has been much discussion as to whether the economies of Asia and the oil exporting states have become so large and powerful that a recession in the US and parts of Europe will no longer have the same economic impact that it once would. This "decoupling" is at the heart of the debate as to where oil demand will go in the next year or two.

While some US demand for oil products is already declining with a slowing economy plus record high prices for heating oil, diesel and jet fuel and gasoline, so far the reduction in demand is relatively small. Patterns of US oil consumption have changed from what they were 35 years ago, so opportunities and incentives for reduced consumption without major disruptions are few. Thermostats on oil burners can be dialed back, airlines can cut flights and ground inefficient planes, and discretionary automobile travel can be curbed.

However, short of the price-induced conservation measures that have already started, we are probably still several dollars a gallon, or the beginning of actual shortages, away from serious cutbacks in US oil consumption. As the falling dollar has to a certain extent insulated Europe from the recent run-up in oil prices, the situation there is basically similar to that of the US.

Over the weekend, a meeting of Asian central bankers issued a statement saying that while US imports may slow in coming months, growth in Asian intra-regional trade will soften the blow considerably. All this suggests that it will take some very serious economic setbacks before the demand for oil will decline anywhere near as much as it did during the 1970s oil shocks.

Diesel

For the fourth straight week, diesel prices climbed to a new high last week. At a US average of $3.97/gal, prices are now up by $1.29 over the same week last year. The demand for diesel and heating oil in the US is now down five percent from last year. Although crude prices slipped by $10/barrel last week and some are saying we will see lower prices over the next few months, the situation is volatile and there is no assurance that retail prices have peaked.

Distillate fuel inventories dropped by another 2.9 million barrels last week to 113 million barrels, and unlike crude and gasoline inventories, are near the bottom of the seasonal average range. Stocks usually fall at this time of the year as refineries undergo maintenance and there is still a demand for heating oil. Stocks bottom out in May somewhere above 100 million barrels and then start to build for the next heating season.

Underlying the rapid climb in prices is a slowly developing world-wide diesel shortage. Chinese diesel imports hit a record of 6.1 million barrels in January. In February China imported 2.4 million barrels as compared to 219,000 in February 2007. It now appears Beijing will import at least 3.5 million barrels in March. Last week diesel shortages were reported across southeastern China for the second time in six months. Reports of electricity shortages suggest that once again factories will switch on backup diesel generators in order to remain in operation.

As the winter heating season in the northern hemisphere is nearly over, outright diesel shortages are unlikely to develop before next winter. Should spot shortages develop in the US, as they did last fall, environmental regulations on burning higher sulfur motor fuels are likely to be lifted. In the meantime the high prices are causing considerable hardships in the trucking industry and will continue to add inflationary pressure on the US economy.

As worldwide demand for diesel continues to increase, while supplies remain steady at best, it seems likely that debilitating diesel prices and shortages will soon begin to do serious economic damage to the industrialized countries.

Federal energy regulators approved a $700 million LNG terminal for Long Island Sound, a facility which is opposed by the state of Connecticut and other critics. The 1,200-foot-long, 82-foot-high terminal would be built by a consortium of Shell Oil and TransCanada Pipelines Ltd. (3/21, #14)

The U.S. Air Force wants to build a coal-to-liquids (CTL) plant at its Malmstrom base in central Montana as the first project in a nationwide network of facilities to convert coal into aircraft fuel. The high cost of CTL plants plus concerns that the process generates double the greenhouse gases of oil have raised doubts on Capital Hill. Electric utilities recently have scrapped at least four dozen proposed coal-fired power plants over rising costs and the uncertainties about climate change. (3/22, #10)

Australian producer BHP-Billiton has removed all personnel from its Neptune tension leg platform in the deep-water US Gulf after inspections discovered "anomalies in the facilitys hull. (3/22, #11)

In India, strong demand growth and high profit margins have given the country the leeway to absorb a part of input cost hikes in the past. But, as corporate earnings have slowed and economic growth is likely to soften, companies are running out of headroom to absorb further increases in crude oil prices. (3/21, #11)

Wood Mackenzie Consultants said OPEC will only need to increase its production by 2 to 3 million barrels/day by 2012. The rest of the projected increase (10 million barrels/day, barring a major recession) can be met by non-OPEC producers and by gas liquids and non-conventional supplies such as oil sands. They added that OPECs production is set to peak after 2012.

Pemex announced that Mexico's proven hydrocarbon reserves fell 5.1% last year to 14.7 billion barrels of crude oil equivalent. Pemex replaced proven reserves at a rate of 50% last year, compared with 41% in 2006.

In a year when domestic crude oil output continued to decrease and fuel demand in the domestic market climbed, Venezuelan oil exports were seriously hit, dropping 192,000 bpd (6.4 percent) to 2.78 million bpd in 2007.

ASPO-USA and friends are inviting the Massachusetts state legislature and the general public to a special meeting on March 31 in the Massachusetts State House where issues of Peak Oil and its impact on Massachusetts will be presented and discussed.

In February world production of total liquids increased by 175,000 barrels per day from January, according to the International Energy Agencys latest figures. Total world liquids production hit 87.5 million b/d, which is the all-time maximum liquids production. Average global production in 2007 was 85.41 million b/d. In the first two months of 2008 an average of 87.41 million was produced.

courtesy : ibtimes.com

Commodities market cools down, as Dollar gains

2008-03-24T19:22:00.000-06:00

The market for gold and other commodities is cooling and it is the dollar that has gained the most. The Reuters-CRB Commodity Index is down 8.4 per cent over last one week.

Fed Chairman Ben Bernanke’s moves to pump in liquidity and save banks from collapse have brought relief at least in currency markets as dollar is up against major currencies after Bernanke's move and buyers are coming back into US government securities.

“We expect dollar to go up and commodity prices to ease off,” said Michael Preiss, Associate Director- Investment Advisory Group, HSBC.

Thanks to stronger dollar investors are now discarding gold as safe haven.

Major global funds including hedge funds have sold commodities across the board fearing a global slowdown.

Crude oil and gold prices have crashed over 9 per cent since March 17 and latest data suggest US crude demand has dropped by 5.10 lakh barrels/day.

There is also speculation in the market that G - 7 nations may have intervene in forex market to stem the dollar's fall.

Global investors are buying dollars and dumping commodities and so the dollar has gained over 3 per cent against Euro and Yen since March 17.

However, investors are still very worried about US recession and analysts say this will help commodities to find a fair value.

Meanwhile traders on Wall Street have started building up expectations that Federal Reserve might cut interest rates by another 50 bps on next April 30th meet.

Fed obliges all, goes all out to save big banks

2008-03-24T19:18:00.000-06:00

Gold is back in buying territory after its dramatic correction back to key intermediate trendline support. In the last update we were looking for gold to break out above the $1,000 level. It did and briefly got to about $1030 before it turned tail and dropped precipitously.

Interestingly, the short-lived run at $1030 occurred last Sunday at the time of the Bear Stearns emergency, and the time when the crisis was at its most acute was the point at which gold topped out, which is what one would expect.

The action in both gold and silver early last week was short-term bearish, with gold backing off rapidly after its run at about $1030, leaving behind a bearish "gravestone doji" candlestick on its chart, and silver backed off from a run at its highs early this month, thus marking out a small Double Top. These bearish omens were noted and a warning that a possibly heavy reaction was imminent was posted on the site.

The size of the drop last week appears to have been due to the market suddenly becoming aware of the Fed taking action over a period of time to curtail money supply growth behind the highly publicized faade of big interest rate cuts. If they were and are in fact doing this, it would of course have deflationary implications and deflation is the kiss of death for commodity bull markets.

This issue several very important questions. If they have been and are continuing to do this, then a tug-of-war situation must surely exist between deflationary and inflationary forces, for into the foreseeable future boatloads of new electronically created money are going to have to be created for the line of dominoes of collapsing major banks and other financial institutions, in addition to which other countries and trading blocs are likely to continue their policies of competitive devaluation, and even if the Fed succeeds in curtailing the rate of growth of liquidity it would be a Pyrrhic victory, for the current mess and mayhem in the global financial system DEMANDS rapid liquidity growth, and if it doesnt get it the result would be an almost instant credit gridlock leading to a deflationary implosion. This brings us to the next important point, which is just how much control the Fed actually has in the present situation. One thing is clear and that is that if the Fed does have control of the situation, it has done a decidedly poor job of showing it these past 6 months or so.

The Fed is thought to have about as much control of the current situation as a trucker does whose brakes have failed halfway down a steep canyon - he doesnt have control, he has influence. The truck is going to go over the cliff, we know that, but by skillful handling, he can significantly delay the point at which it hurtles over the cliff. So lets stand back and review the 2 main scenarios; the Fed succeeds in curtailing liquidity, which inevitably leads to a credit freeze and deflationary implosion.

The Fed obliges all comers and goes all out to save the big banks, brokerage houses and mortgage institutions from going under by manufacturing as much electronically created money as they need to avoid insolvency. This, given the gravity of the crisis, would lead to hyperinflation. However, there is a third route, which is a highly unsavory and prolonged period of stagflation, that would involve recession coupled with high inflation. This is essentially a muddle through situation in which deflation and inflation exist side by side - we have already seen this with house prices collapsing even as gasoline prices rise. This would be a situation in which most everyone loses. At this point it is of course not at all clear which of these scenarios will play out, and everyone involved in this giant mess appears to be taking it one day at a time, but what is clear is that gold is certainly set to continue to advance in both the hyperinflation and stagflation scenarios, and even in the deflationary implosion scenario, after a possible initial shock drop when most everything goes into the tank, it should then ascend as it would be "the only game in town".

While the correction in gold and silver was an accident waiting to happen, on account of their being extremely overbought with record levels of bullish sentiment, it appears to have been exacerbated, as we have already noted, due to the deflationary implications of the recent liquidity drain that has caught the markets attention and led to the vicious sell-off this past week. It is the Catch 22 situation with regard to the money supply and the eventual chaos that will result, which should ensure an ongoing bull market in gold and silver as safe haven investments, even if commodities as a whole tank due to a global recession/depression. Lets not forget that gold and silver are REAL MONEY, despite the comprehensive and largely successful campaign over many years by the mainstream financial press to relegate them to the status of mere commodities in the minds of investors.

Space Shuttle Columbia built with 40 kilos of gold...

2008-03-24T19:17:00.001-06:00

MUMBAI: Gold, as you know, is generally just worn by people to make themselves 'beautiful and ornate.' And many people buy gold as the best investment option.

But the demand for gold is not for beauty and investment alone. Do you know that space shuttle Columbia was constructed using 40 kilograms of gold?

Do you know that without gold, man wouldn’t have visited the moon?

Gold, in the form of sheets 0.15mm thick, is used in space programmes as a radiation shield. Because gold is such an effective reflector, it deflects the burning heat of the sun, according to the World Gold Council.

Gold is central to safe space travel, so it’s demand has obviously grown as the space industry has.

For example, more than 40.8 kilograms of gold was used in the construction of the famous US Columbia space shuttle, mainly in brazing alloys, fuel cell fabrication, coated plastic films and electrical contacts.

Volatility continues in commodities

2008-03-24T19:15:00.000-06:00

By Jon Nadler
The commodities cave-in that started in New York yesterday continued to unfold overnight and throughout the last trading day of this week as fund after fund took the money and ran. What we now have in the making here is the worst week for gold prices in twenty-nine years.

Of course, gold was not an isolated case of landing gear failure this week. Just look at silver, platinum, crude oil, soybeans, copper, coffee, sugar, etc. A sea of red on the price tickers, with losses of from 2 to 5%. Behold the effect of speculative funds having worked their way into relatively tiny markets that were volatile to begin with. "Sector rotation" and then some...

New York spot prices traded under continuing liquidation pressure all day, losing another $29 of value per ounce to $914.00 at last check, and the best thing that can be said about the situation is that prices are near the starting point of their last rally - at $915- and that they are not at the low of $903.60 we saw earlier on. The damage however, is extensive. Silver lost another $1.48 or 8.5%, falling to $16.94 per ounce. Platinum dropped $39 to $1865.00 per ounce and palladium lost $18 to $438.00 as the entire complex was battered by the freefall in gold.

In the interim, the dollar was making additional gains, falling under $1.55 vs. the Euro, and rising to 72.72 on the index. Not spectacular gains for the greenback, but certainly enough to turn its very vocal morticians into the ones with pallid faces for a change. News that Credit Suisse will not likely report a profit after having to write off at least a couple of billion on you-know-what exposure hardly made a dent in today's market. Sentiment has clearly soured for the moment.

The same cannot be said about essential fabrication demand on the other hand. My good friend Albert Cheng over at the World Gold Council in Singapore, noted robust gold demand emerging in Asia on the $130 price froth blow-off and was encouraged about its return. We are willing to bet that those who flat-out rejected the idea that gold jewelry demand had become irrelevant as investment funds stampeded into bullion, are now looking very kindly upon the bazaars of India and the souks of Dubai as the possible safety nets that could prevent a real meltdown in values. What we have had thus far, is a realignment in price and in perceptions, but not one that would yet qualify as a mortal wound to the bull.

Up here in Canada, these woes are just a bit more amplified. The Globe and Mail's Report on Business describes the situation as follows:

"Commodities have been through more than a few bumps over the past several years, but they have always bounced back to new highs. Is this latest bump anything different?
Skeptics have been noting for some time that the fundamentals supporting commodity prices - the strong demand from China, the weak U.S. dollar, the threat of rising inflation and the uncertain geopolitical situation in many parts of the world - no longer explain the rise this year that sent the charts of many commodity prices into an unsustainable parabolic surge.

Speculators, it seems, have been providing the main thrust as they seek refuge from volatility. However, with the U.S. equity market suddenly looking healthier following aggressive rate cuts by the U.S. Federal Reserve, there is likely a rush for the exits now that is also driving the loonie down.

What's for sure is that the consequences of a protracted downturn are nasty. Commodity producers represent about half of the market capitalization of the S&P/TSX composite index, versus just 18 per cent for the S&P 500."

It is wait-and-see at this juncture. While a rebound is still possible, we need to get a better sense of where the unwinding by the longs could take values. The markets are feeding on their own momentum right now and not much in the way of news seems to matter. Fast turns could become routine. Sleepless nights may yet follow.

www.ibtimes.com

Will Gold prices become volatile?

2008-03-24T19:14:00.002-06:00

MUMBAI: After weeks of bull run, is the most glittering global commodity--gold--entering into a volatile phase?

Gold prices in India, the most active market for the yellow metal, have been witnessing sharp ups and downs in the last one week. India, the largest consumer of gold, often decides the buying and selling patterns in gold.

On Good Friday, in restricted trading, gold staged a strong recovery by gaining Rs 300 at Rs 12,300 per ten grams on the bullion market on revival of buying by stockists at existing lower levels.

Gold, which recorded a steepest fall of Rs 1,110 in previous day's trading, bounced back as stockists and jewellery fabricators bought the metal. However, silver market remained closed for 'Holi' festival.

Global trend, which normally set a price band here in domestic market, failed to impact on the prices as markets closed on account of "Good Friday".

Standard old and ornaments met with fresh demand and recovered by Rs 300 each at Rs 12,300 and Rs 12,150 per ten grams respectively.

However, sovereign declined by Rs 200 at Rs 10,000 per piece of eight gram. The bullion market will remain closed tomorrow on account of "Holi".

Will gold prices decline further?

2008-03-24T19:14:00.001-06:00

MUMBAI: After a rally in gold that led to the international prices zooming to $1030 an ounce, will gold price reverse direction based on Wednesday's price level of $940 ?

Major Ajay, a financial astrologer who predicted a week ago that a “vertical fall in bullions and metals are expected from March 19” has been proved true. “My prediction has indeed come true,” he told Commodity Online. He said silver will follow gold whose support levels are at US $980-965 upto March 25.

Last week Tobias Merath, head of commodity research at Credit Suisse in Zurich, said that the combination of dollar weakness, negative real interest rates and surging inflation was the ideal environment for rising gold prices.

However, he had warned that the gold price rally was entering a more mature phase and further sharp price rice is unlikely as has happened the earlier months.

The latest surge in gold prices, however, is less impressive when adjusted for inflation. In real terms, bullion would need to be about $2,200 to match the price achieved in 1980 of $850 a troy ounce, according World Gold Council.

Gold tumbled nearly 6 percent to a three-week low on Wednesday, as investors rushed to take profits after a lower-than-expected U.S. interest rate cut and as the dollar trimmed losses.

International analysts are of the view that the dips in gold prices are temporary and it could come back to above $1000 levels soon and sustain at that level. The increasing threat of inflation, lower interest rates which makes dollar less attractive and several key drivers of gold prices are still there.