‘Gold may easily rise to $1,000’ Gold may ‘’easily’’ rise to a record $1,000 an ounce next year as the dollar weakens and Asian central banks diversify their reserves, said Marc Faber, who advised investors to acquire the metal at the start of a six-year rally. A ‘’continued’’ weakening of the US currency may help gold to climb above its all-time high of $850 traded in January 1980, said Faber, managing director of Marc Faber Ltd. and publisher of the Gloom, Boom & Doom Report. ‘’That’s baked in the cake in my opinion,’’ he said in an interview. ‘’Gold is still relatively cheap. It hasn’t risen as much as nickel, or oil.’’ The metal has climbed 18% in more than two months as the dollar slid to a record low against the euro amid concerns of the economic impact of US subprime-mortgage defaults.
Arabs' Dollar Losses Increase Pressure to Sever Pegs When central bankers in the Middle East say they have no plans to end their fixed exchange rates to the dollar, the currency market hears the opposite. Merrill Lynch & Co. predicts either the United Arab Emirates or Qatar will cut their dollar peg within half a year. Standard Chartered Plc says the six Gulf Cooperation Council nations need to raise the value of their currencies 20 percent. The difference between the price of the Saudi Arabian riyal and the cost of buying it in a year using forward contracts has widened 10-fold since October as traders bet the kingdom will sever its 21-year-old link to the dollar, according to data compiled by Bloomberg.
Opec unites behind higher prices Opec leaders meeting at the weekend summit in Saudi Arabia have differed sharply over the group strategy and purpose, but have united in defence of high oil prices.Hugo Chávez, the left-wing president of Venezuela, opened the summit welcoming oil prices at close to $100 a barrel, describing them as "fair". He called for the group to be "an Opec for geo-politics, an Opec for revolution", adding "Opec was born as a geo-political actor, not as an economic or technocratic bloc." He also reiterated his warning that oil could hit $200 a barrel if the US attacked Iran. King Abdullah of Saudi Arabia, the summit’s host, gave a very different view of Opec’s objectives, saying it was intended to protect both its members’ interests and the world economy, and praising the group for acting in a "moderate and wise manner".
Bond Market to Fed: Recession Threat Means More Cuts The headline in the financial futures market these days says Federal Reserve Chairman Ben S. Bernanke is withholding some vital information: The economy is so bad the central bank will have to lower interest rates at least three-quarters of a percentage point to avoid a recession. Bernanke's two rate cuts since September failed to reassure the bond market, where volatility has risen four of the past five weeks, according to Merrill Lynch & Co.'s MOVE Index. Yields on Treasury bills, the haven for bond investors in times of turmoil, are near their lows of August, when losses on securities backed by subprime mortgages froze credit markets. While the record low dollar and the fastest inflation in 14 months give policy makers reasons to keep the target rate for overnight loans between banks at 4.5 percent, traders expect 3.75 percent early in 2008.
Fed Transparency and Other Illusions On November 14, Ben Bernanke delivered a speech to the Cato Institute’s 25th annual monetary conference. Cato is a well-known Washington Beltway free market think tank. I find it fascinating that Cato invited the Chairman of the Board of Governors of the organization that is by far the most powerful government-created monopoly on earth – the antithesis of the free market – to deliver the keynote address. I suppose it is good to hear what your mortal enemy has to say, but to provide a forum for him to say it is, in my view, bizarre. It is as if a 1962 anti-Communist rally invited Nikita Khrushchev to deliver the keynote address. It gets headlines, but at a high cost. It sends a message: "We have at long last entered the mainstream. We are now part of the loyal opposition."
Wall Street Plans $38 Billion of Bonuses as Shareholders Lose Shareholders in the securities industry are having their worst year since 2002, losing $74 billion of their equity. That won't prevent Wall Street from paying record bonuses, totaling almost $38 billion. That money, split among about 186,000 workers at Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos., equates to an average of $201,500 per person, according to data compiled by Bloomberg. The five biggest U.S. securities firms paid $36 billion to employees last year. The bigger bonus pool derives from a record $9 billion of fees for arranging acquisitions and $5 billion for underwriting initial public offerings and sales of junk bonds, the most lucrative securities, Bloomberg data show.
$100 fill-up coming to a pump near you Motorists in many parts of the country are paying the highest post-Labor Day prices ever this November. With speculators running up the price of a barrel of oil to the $100 range, there can be little doubt that the average price of a gallon of regular gasoline is headed for $3.50, and maybe even $4, before there's any sort of fallback.While such price increases will pressure new-vehicle buyers to look for more-fuel-efficient vehicles, there's a real sticker shock awaiting those who need or want a big sport-utility vehicle or pickup. Those vehicles are among the thirstiest gas guzzlers, delivering an average of 14 to 16 miles per gallon in combined city-highway driving if a driver is judicious with the gas pedal.
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