2008 Investment Outlook for Precious Metals Today, price forecasts for gold in 2008 range from $725 to $1,100 per ounce, but it still does not really matter. Over the long term, prices of precious metals - gold, silver and platinum - will rise to much higher levels, in all currencies. This is because the underlying factors causing the increases will not only continue, but will likely accelerate. Although precious metals and all other commodities are currently priced in US dollars, it is important to note that since the summer of 2005 gold has increased in every major currency. It has climbed by 101% in US dollars, 93% in British pounds, 82% in euros, 93% in Swiss francs, 111% in Japanese yen and 78% in Russian rubles.
Merrill writes off $11.5 bln Wall Street titan Merrill Lynch & Co Inc was the latest financial-services firm humbled by the credit crisis on Thursday, writing off $11.5 billion of bad debt and derivatives, and reporting a loss of almost $10 billion. Merrill also made $2.6 billion in credit-valuation adjustments related to hedges on CDOs. The loss from continuing operations was $12.57 a share. "While the firm's earnings performance for the year is clearly unacceptable, over the last few weeks we have substantially strengthened the firm's liquidity and balance sheet," John Thain, chairman and chief executive officer, said in a press release. Earlier this week, Merrill, whose capital position has been weakened by heavy subprime-related write-downs in recent months, said it would issue preferred stock to long-term investors, with the bulk being taken up by Kuwait Investment Authority, Japan's Mizuho Corporate Bank and Korean Investment Corp.
Housing starts plunge 14% to 16-year low Construction on new homes fell 14% in December to a seasonally adjusted annual rate of 1.01 million, the slowest building pace in more than 16 years, the Commerce Department reported Thursday. The gruesome figures show builders are cutting back on production at a furious pace to try to work off a large backload of unsold homes. The bad news is that housing is still contracting; the good news is that the sooner builders stop adding supply to overbuilt markets, the sooner the housing market can recover. Housing starts for single-family homes in the West fell 16% to the lowest level since the data were first collected in 1959.
$3 billion Cosmopolitan casino project faces foreclosure in Vegas The developer of the $3 billion Cosmopolitan Resort & Casino says its lender, Deutsche Bank, filed a notice of foreclosure on the property for a construction loan of $760 million that just matured. Developer and owner Ian Bruce Eichner says in a statement that his company is working with Deutsche Bank and Merrill Lynch to find new investors. Eichner tells The Associated Press in the statement that, "This action by our lender comes as no surprise." He blames challenges in the real estate and capital markets for difficulty in raising capital for the project, which is now under construction. The 3,000-room high-rise casino and hotel is due to open in late 2009 between the Bellagio casino resort and the CityCenter casino complex on the Las Vegas Strip.
Wealthy may be next in line in U.S. home crisis A house in this wealthy Chicago suburb is far beyond the reach of most Americans. Unfortunately, Hinsdale may also now be too expensive for some of the people who already live here. "There is a section of the population here that over-extended themselves to buy here and then keep up the facade of wealth," said Sharon Sodikoff, a broker associate at local real estate agency Prudential Homelife Realty. "In the next year or so they'll be forced out in dribs and drabs." With a picturesque little downtown area and large, expensive houses -- according to the Headrick-Wagner Consulting Group, the average home sale price here in the 12 months to September 30, 2007, was around $1.15 million -- Hinsdale seems a world away from the housing slowdown that may have brought the U.S. economy to the brink of a recession.
Bernanke is said to support stimulus measures Ben Bernanke, chairman of the Federal Reserve, has told lawmakers that he can support short-term tax cuts or spending measures to stimulate the economy, even if they increase the budget deficit, as long as the measures are quick and temporary. Bernanke, who is scheduled to testify before the House Budget Committee on Thursday, has also told Democratic lawmakers that he will not comment on proposals linking a stimulus package with a permanent extension of President George W. Bush's tax cuts — a disappointment to Republicans who favor that. Faced with growing evidence that the economy is slipping into a recession, congressional Democrats and President George W. Bush are both trying to come up with a package that would put more money in people's hands within the next few months.
Americans pay for housing boom's excess The bill for America's excessive borrowing during the housing boom has arrived, and more people are having trouble paying it. JPMorgan Chase & Co. and Wells Fargo & Co., two of the nation's biggest banks, on Wednesday joined a growing chorus warning that the subprime mortgage mess is just the start of a sweeping lending crisis. And some fear that consumers falling behind on all kinds of loan payments could tip the economy's scale toward recession. Strapped consumers are having a tough time making payments on credit cards, home-equity loans, and even for their cars. This has caused three of the top five U.S. commercial banks that have already reported damaging fourth-quarter results to set aside some $12.5 billion to cover future loan losses — and that number will likely grow as the year wears on.
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