Gold futures rise on dollar weakness Gold futures traded higher early Monday, as weakness in the U.S. dollar underpinned demand for the precious metal. Gold for December delivery rose $5.80 at $830.50 an ounce on the New York Mercantile Exchange. On Friday, gold futures finished with strong gains, rallying $26 to $824.70 an ounce. Gold is trading higher Monday "as dollar weakness and high oil prices again prove supporting for the precious metals," said James Moore, an analyst at TheBullionDesk.com, in a research note. "Given the oil/dollar scenario and the likelihood for further credit related fall-out, the outlook for gold still remains bullish, with $850 still the clear target before year-end
Why Gold market is getting lots of global attention The US Dollar crossed the $1.48 line to the Euro this week, heading for $1.50 after the US markets closed for Thanksgiving. The greenback then bounced after the London market opened on Friday, but should we do expect a bounce to last long? Not as the secondary phase of the global monetary crisis comes into play. What crisis, you may well ask? It is the sub-prime crisis...credit crunch...and Dollar crisis all rolled into one. And it is spreading into the global economy, as well as inside the United States. The onset of this crisis brought smoothing words to calm global markets, but to no avail. The second phase is when there is public recognition that there is indeed a crisis, followed by everyone involved coming together to give the impression that the crisis is being resolved.
Recession Fears Weigh Heavily On the Markets Battered stock and bond markets are sending an increasingly ominous signal that a U.S. recession could be near. The markets, however, haven't swayed Federal Reserve officials and most private economists from their view that the nation's economy can escape a downturn and get back on a steadier course. The disparity between those two views of the economy -- one growing bleaker, the other remaining sanguine -- stood out starkly last week. Though it rose during Friday's shortened trading day, the Dow Jones Industrial Average -- at 12980.88 -- is 8.4% below its all-time high, set in October. Safe-haven Treasurys, meanwhile, have rallied as investors have lost confidence in a quick resolution of the U.S. housing slump and mortgage crisis, which are behind many of today's economic worries in both the U.S. and Europe.
HSBC to provide $35 billion in funding to SIVs HSBC Holdings on Monday said it would move two of its structured investment vehicles onto its balance sheet and provide up to $35 billion in funding, saying it doesn't expect a near-term resolution of the funding problems faced by the vehicles that it and other banks hold. In a structured investment vehicle, short-term commercial paper is issued, with the bank then re-investing the proceeds in higher-yielding, and longer-maturity debt. Because of the spillover from the U.S. subprime mortgage lending crisis, investors have been reluctant to buy the commercial paper that these vehicles depend on. But the banking giant insists earnings won't be materially impacted, because existing investors will continue to bear all economic risk from actual losses.
Bank of America Takes Lead in Backing `SuperSIV' Fund Bank of America Corp., the nation's second-largest bank, will lead efforts by Citigroup Inc. and JPMorgan Chase & Co. to convince smaller competitors to help finance an $80 billion bailout of short-term debt markets. The campaign starts this week with New York-based Citigroup and JPMorgan in supporting roles to Charlotte, North Carolina- based Bank of America, said two people with knowledge of the matter, who didn't want to comment publicly before the plan is formally announced. The ``SuperSIV'' fund, backed by U.S. Treasury Secretary Henry Paulson, would buy assets from so-called structured investment vehicles, whose $300 billion of holdings include corporate and mortgage debt in danger of default.
Banks as vulture investors Vulture restructuring is a purging cure for a malignant debt cancer. The reckoning of systemic debt presents regulators with a choice of facing the cancer frontally and honestly by excising the invasive malignancy immediately or let it metastasize through the entire financial system over the painful course of several quarters or even years and decades by feeding it with more dilapidating debt. But the strategy of being your own vulture started with Goldman Sachs, the star Wall Street firm known for its prowess in alternative asset management, producing spectacular profits by manipulating debt coming and going amid unfathomable market anomalies and contradictions during years of liquidity boom.
Housing woes have domino effect If you haven't yet felt the impact of the nation's credit crisis, just wait. Chances are, you won't have to wait long. So far, the turmoil may feel a bit remote for average people: Failed mortgage lenders. Gargantuan write-downs by banks. Foreclosures for people who couldn't really afford the mortgages they got. What about the rest of us? Are we in danger? No one knows for sure, but quite likely, yes.As the credit crisis seeps into farther-flung corners of the economy, more of us will find it harder — and costlier — to borrow money. The value of the funds in our retirement accounts could shrink. People with subpar credit will likely find it more difficult to qualify for auto and home-equity loans. Even consumers who make the cut may need higher credit scores and more documentation.
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