Buy Signals are Popping Up in Gold and Silver Buy signals are popping up in many places as a result of Tuesday's positive action in the metal pits. Since I posted my last article, gold has made several ‘higher lows,’ a sign that the bull market is alive and well. Admittedly the Amex Gold BUGS Index, XAU and Amex Gold Miners, went lower than I expected. In retrospect I blame the various ETF’s for drawing money away from the gold and silver stocks. The streetTRACKS Gold Shares now has over 19,800.000 ounces of gold in back of it. Even during pull-backs in gold, while investors are dumping their gold stocks, fresh money keeps moving into the GLD. When people see gold and silver shining brightly amidst the battered economic ruins, they will finally realize that the gold bugs were right all along.
Fatwa against the dollar? To all intents and purposes, the Wahabi religious establishment of Saudi Arabia has just issued a fatwa against the US dollar. This bears watching. A message issued by 26 leading clerics warns that inflation has reached intolerable levels in the Gulf kingdom. While it does not vilify the dollar explicitly, the apparent political aim is to undermine the country’s dollar peg. "The rulers should seek to try to remedy this crisis in a way that would ease people’s suffering." "We direct this message to the rulers and officials: we remind you of Prophet Mohammad’s words that you are shepherds who are responsible for your flock," it said. The statement was posted across the Islamic world. The background to this has been a raging debate in Gulf religious and economic circles about the destructive effects of the sliding dollar.
Treasury won't brand China as manipulator China intervenes heavily in foreign exchange markets to maintain an artificially low value for its renminbi yuan, but does not meet the legal definition of a currency manipulator, the U.S. Treasury Department reported on Wednesday. As expected, China once again escaped official censure in the Treasury's semiannual report on international economic and exchange-rate values, although the administration continued to condemn China's foreign exchange policy in strong terms. "China should significantly accelerate the appreciation of the renminbi's effective exchange rate in order to minimize the risks that are being created for China itself as well as the world economy, of which China is an increasingly critical part," the report said.
Bear Stearns swings to loss Bear Stearns Cos. On Thursday posted its first-ever quarterly loss as the company's mortgage-related write-down grew to $1.9 billion after credit markets worsened last month. Confirming press reports earlier this week, Bear Stearns said members of the executive committee will not receive any bonuses for 2007. "We are obviously upset with our 2007 results, particularly in light of the fact that weakness in fixed income more than offset strong and, in some areas, record-setting performance in other businesses," Chairman James Cayne said in a statement. The company said it wrote down about $1.9 billion in mortgage inventory net of hedges, which reduced fourth-quarter earnings by $8.21 a share. Its previous write-down estimate was $1.2 billion.
Bond Insurer Cut to Junk; Negative Outlook for 4 More Citing deepening problems in the mortgage market, Standard & Poor’s cut the rating of one troubled bond insurer on Wednesday and assigned a negative outlook to four other companies that guarantee debts linked to home loans.The announcement shook an already unsettled credit market, signaling that investment banks and others that had thought they were protected from rising foreclosures might not be immune from all losses. Investors bid up Treasury debt, a refuge in troubled markets, and sold shares in bond guarantors and some investment banks. In another indication that credit markets remained unhinged, the Federal Reserve said that its auction of $20 billion in short-term loans to the banking system drew 93 bids, seeking more than three times the amount available. Banks have become increasingly reluctant to lend to each other in the last few weeks, prompting the Fed to use new methods to lend directly to the banks.
Bank's fears for economy point to gloomy 2008 Gloomy signals for the economy continued to mount yesterday as the Bank of England revealed that its Monetary Policy Committee voted unanimously for an interest-rate cut while fresh data pointed to a downturn on the high street and in the housing market. In a sign of the Bank's concern about the economy, the MPC voted 9-0 for the quarter-point cut two weeks ago. The reduction was the first for more than two years, and the committee's first unanimous vote for a cut since the aftermath of the 9/11 attacks in 2001. The MPC's minutes, published yesterday, said: "The worsening financial market turmoil, and the consequent tightening of credit conditions, had increased the downside risks to activity and inflation in the medium term."
Illegal immigrants smuggled into new homes Unable to sell his house in suburban Phoenix's anemic real estate market, Jason Winterholler rented to a couple who paid the deposit in cash and didn't haggle over price. It was a deal he came to regret. The renters were fronts for immigrant smugglers who used the house as a hiding place for illegal immigrants and trashed the home. In October, a police SWAT team drove an armored personnel carrier onto the lawn and raided the house, rounding up nearly two dozen people. "That was the biggest disappointment. I definitely felt violated," said Winterholler, a high school athletic director now living in Pasadena, California. He said that whenever he spoke to the renters, "everything seemed OK."
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