A perfect storm for gold as mines left empty The era of 'peak gold' has arrived. Try as they might, miners cannot find enough ore at viable costs to replace their fast-depleting reserves, even if they dig miles into the centre of the earth. "There's not much gold out there," said Gregory Wilkins, chief executive of top producer Barrick Gold. "Global mine supply is going to decrease at a much faster rate than people generally believe. Many of the new mines that people are anticipating will never come into production," he told the RBC Capital Markets gold conference in London."There is a great disparity between the money spent on exploration and success. It's hard to say where the price of gold is going because we're in uncharted waters. I would say it could easily move to $900, $1,000, or beyond. It could happen very quickly," he said.
Gold Gains in London on Speculation Jewelry Demand to Increase Gold gained in London on speculation that jewelers, the biggest users, will use the metal's decline from a 27-year high to replenish inventories. Silver also rose. Gold traded on Nov. 7 at its highest since 1980 as the dollar slid to a record low against the euro, making bullion more attractive as an alternative investment. The metal has slumped 7 percent since then as some investors deemed the rally overdone and the dollar recovered some its earlier losses. Bullion demand typically gains in the fourth quarter as the wedding and festival seasons get under way in India, the world's biggest gold buyer. ``Strong fabrication demand'' may push precious metals to new highs in 2008, Deutsche Bank AG analysts including Michael Lewis said in a report today.
China's scorching factory investment a 'worry' China's investment in factories, land and other assets in urban areas surged 27% in the first 10 months of the year, adding to concerns of a looming bubble in industrial spending and raising pressure on the government to rein in investment. Investment in fixed urban assets totaled 8.9 trillion yuan ($1.2 trillion) in the January to October period, the statistics bureau reported on Friday. The data cap a busy week of October statistics that showed surging retail spending, robust industrial production and inflation nudging 11-year highs. Economists said Friday's scorching factory-investment figures raised concerns the economy could be heading for a deflationary bust if external demand fails to soak up the capacity due to come online over the next few years.
A profile of buyers and sellers The second half of 2006 and the first half of this year weren't so bad for first-time buyers, but tighter lending standards are currently reducing the number of those able to finance their first home, the National Association of Realtors' chief economist said this week. Between July 2006 and June 2007, 39% of all home purchases were made by first-time buyers, according to the group's annual Profile of Home Buyers and Sellers. That's up from 36% in last year's report. But consider this: 45% of first-time buyers bought with no money down, and the median down payment of a first-time buyer was 2%. Lending standards tightened considerably with the mortgage crisis in the summer, making no-down-payment financing much more difficult to come by.
Greenspan `Mess' Risks U.S. Recession, Stiglitz Says Joseph Stiglitz, a Nobel-prize winning economist, said the U.S. economy risks tumbling into recession because of the subprime crisis and a ``mess'' left by former Federal Reserve Chairman Alan Greenspan. ``I'm very pessimistic,'' Stiglitz said in an interview in London today. ``Alan Greenspan really made a mess of all this. He pushed out too much liquidity at the wrong time. He supported the tax cut in 2001, which is the beginning of these problems. He encouraged people to take out variable-rate mortgages.'' Stiglitz said there is a 50 percent chance of a recession in the U.S. and that growth will certainly slow to less than half its 3 percent potential. A worldwide jump in credit costs following the collapse of the subprime mortgage market is choking off finance to American consumers.
Asian markets drop after Wells Fargo warning Asian markets followed Wall Street down today, after Wells Fargo, America's fifth largest mortgage lender, said that the US housing market was in its worst shape since the Great Depression. John Stumpf, Wells Fargo's chief executive, said: "We have not seen a nationwide decline in housing like this since the Great Depression." The news drove Asian banking stocks further down, while Japanese exporters were hit by the strength of the yen and fears for the US economy. The decline was accelerated when Toshiro Muto, deputy governor of the Bank of Japan, the country's central bank, warned that growth could be threatened if problems in the US housing market spread further.
Goldman Sees Subprime Cutting $2 Trillion in Lending The slump in global credit markets is likely to force banks, brokerages and hedge funds to cut lending by $2 trillion, triggering the risk of a ``substantial recession'' in the U.S., according to Goldman Sachs Group Inc. Losses related to record U.S. home foreclosures using a ``back-of-the-envelope'' calculation may be as high as $400 billion for financial companies, Jan Hatzius, chief economist at Goldman in New York wrote in a report dated yesterday. The effects may be amplified tenfold as companies that borrowed to finance their investments scale back lending, the report said. ``The likely mortgage credit losses pose a significantly bigger macroeconomic risk than generally recognized,'' Hatzius wrote. ``It is easy to see how such a shock could produce a substantial recession'' or ``a long period of very sluggish growth,'' he wrote.
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