Gold Bulls Eye $1,000 Bullion If the experts are right, gold could be poised for another banner year in 2008. Experts say they expect continued weakness in the dollar and robust investment demand, and that prices for gold could surge to above $1,000 an ounce in the next 12 months, according to a broad cross-section of professionals interviewed by TheStreet.com. Bullion prices surged in the second half of 2007 as the crisis in the credit markets shook investor confidence and increased the allure of hard assets in general and gold specifically. In early November, the price of gold flirted with the record high of $875 an ounce that was reached in 1980 at the height of the Iran hostage crisis.
What lies in store 'What we are witnessing is essentially the breakdown of our modern day banking system, a complex of levered lending so hard to understand that Fed Chairman Ben Bernanke required a face-to-face refresher course from hedge fund managers in mid-August." The quote is from Bill Gross's Investment Outlook, available on the PIMCO site. For those who don't know, Bill Gross is CEO of PIMCO, the largest manager of bond funds in the world. More importantly, he is highly respected, not least for his ability to write investment letters that explain complex topics and ideas to non-professionals in language they can understand. Naturally, an outlook written in December contains a forecast for the coming year, and Gross has never been afraid to stick his neck out and give his views.
Home prices drop 6.1% Home prices in 20 major U.S. cities were down 6.1% on average in the past year as of October, according to the Case-Shiller price index released Wednesday by Standard & Poor's. Since October 2006, prices in 10 cities fell 6.7% -- a record drop. The prior largest decline was 6.3% in April 1991. "No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, chief economist at MacroMarkets LLC and co-developer of the index. Eleven of the 20 metro areas posted a record low annual growth rate. Also, all 20 metro areas declined from the prior month as San Diego posted the largest decline -- 2.6%.
Target warns of weak December With shopping in the spotlight, the jumbo retailer says the month was rough. But Costco sees 'pretty good' sales. Buffett goes shopping -- for another company. As GM struggles, Toyota aims to boost sales. The holidays felt like a lump of coal at Target. The jumbo retailer warned on Monday afternoon that its December sales appeared to be close to flat; earlier, the chain had forecast a 3% to 5% increase at stores open at least one year. Target now expects same-store-sales this month to fall in a range of a 1% decline to a gain of only 1%. An increase in visits to Target stores in the week ending Dec. 22 "was not sufficient to compensate for the unfavorable traffic trends that carried over into December from the week following Thanksgiving,'' the company said on a recorded call.
Dollar May Fall to 95 Yen on Housing Slump, MUFG's Mizuno Says The dollar may fall 20 percent to 95 yen in 2008 as a housing slump erodes U.S. corporate earnings and consumer spending, forcing the Federal Reserve to cut interest rates, according to Mitsubishi UFJ Securities Co. ``The adjustment in the U.S. housing market has just begun,''' Kazuo Mizuno, chief economist in Tokyo at the unit of Japan's largest publicly traded lender, said in an interview today. ``It will probably bottom out in three or four years. Meantime, this will keep buffeting consumption, employment and the dollar.'' Mizuno's forecast is among the most bearish, with the median estimate of 42 economists for the dollar to fall 3 percent to 110 yen next year. The U.S. currency this year dropped 4 percent as the Federal Reserve cut its benchmark interest rate by 1 percentage point to support the economy.
Analysts still fear $100 oil in 2008 Oil prices of near $100 per barrel caused alarm in consuming countries in 2007, and analysts forecast another tense crude market next year with triple-figure records a real prospect.Despite a murky outlook for the world economy, crude prices are seen settling at elevated levels, spelling more pain for consumers and a steady flow of petrodollars for the world's oil exporters. From a low point of just below $50 per barrel in January, prices doubled in 2007, hitting $99,29 a barrel on November 21, an all-time record. Oil forecasting is a notoriously difficult business, but few had expected such a run-up -- apart from an analyst at investment bank Goldman Sachs who has achieved some fame for foreseeing early in 2005 a "super spike" in prices to $105.
Beleaguered Merrill Lynch raises $7.5bn with shares and assets sell-off John Thain, the new chief executive of Merrill Lynch, has raised $7.5 billion (£3.7 billion) in cash to shore up the investment bank’s damaged finances by selling part of its lending business and a stake in the bank at a substantial discount. Merrill said on Christmas Eve that it would sell a stake worth just under 10 per cent for $6.2 billion to two investors – Temasek Holdings, the Singaporean state-run fund, and Davis Selected Advisors, an American fund manager. The bank said that it had also sold part of its lending business to GE Capital, the two deals freeing up $1.3 billion of capital. Temasek and Davis bought Merrill stock at $48 per share, representing a 13.6 per cent discount to the closing price on Friday.
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