Gold producer hedge book is at its lowest since 1992 Société Générale's latest analysis of the global gold mine producer hedge book, compiled by GFMS Ltd, concludes that the hedge book stands at just 835 tonnes, which is the lowest level since 1992, and is equivalent to 34% of 2007 production levels. De-hedging in the fourth quarter was 72 tonnes. For the year as a whole, dehedging in 2007 was a record at 446 tonnes, which meant that mine supply last year was 2,030 tonnes, compared with 2,076 tonnes in 2006. Despite the reduction in the volume of the book, price movements mean that the marked-to market value of the combined book deteriorated to negative $9.4 billion, while producers' average realised prices increased by 15% in US dollar term to $767/ounce, compared with an average spot gold price of $786.25/ounce.
Bank of America profit hit; CEO frets for consumer Bank of America Corp.'s first-quarter profit fell 77% as credit-loss provisions jumped $4.78 billion, driven by weakness in home-equity loans as well as credit extended to small businesses and home builders, the company said Monday. "We remain concerned about the health of the consumer given the prolonged housing slump, subprime issues, employment levels and higher fuel and food prices," CEO Ken Lewis said in a press release Monday morning. Bank of America's revenue dipped 6% to $17.3 billion, while profit in its small business and consumer division fell $1.09 billion. The quarter also saw net charge-offs of $2.72 billion, as consumers became further stressed by rising unemployment and tougher borrowing conditions.
As OPEC Holds Production, Oil Moves Toward $150 Whenever the ministers to OPEC are asked if there is any chance they will raise oil production, the answer is "no." Yesterday, the president of the cartel, Chakib Khelil, said ``Any increase in production now will not have an impact on prices because there is a balance between supply and demand,' according to Bloomberg. Oddly enough, word came from International Energy Agency that emerging market use of oil had passed use in the US for the first time. No matter how great the farce, the power of reason cannot change the cartel's attitude. Even a relatively small incident like the attack of a Japanese oil tanker sent oil up by $1. It has occurred to OPEC members that their best play is to do nothing. With crude now above $116 the tens of billion of dollars in extra profits coming to them can be explained away as being caused by speculation and a weak dollar. The fact that demand is still moving up in China, India, and much of the developing world has nothing to do with it.
Saudis put oil capacity rise on hold Saudi Arabia, the world’s biggest oil producer, has put on hold any plans to further increase long-term production capacity from its vast oil fields, its most powerful policymakers have said. In a series of statements, including one by the king himself, the kingdom has warned consumers it does not reckon there is a need for further expansion, an assumption disputed by the world’s biggest developed countries. The realisation Saudi Arabia will not increase production to 15m barrels a day as quickly as important consumers and the markets had assumed could put further pressure on oil prices, which touched fresh records last week. New York benchmark futures reached a record of slightly less than $117 a barrel last week in response to fear that Russia, the world’s second largest producer, was unable to increase production in the next years.
Bank of England's mortgage bailout The Bank of England on Monday said it will swap as much as 50 billion pounds of U.K. government bonds for high-rated mortgage-backed securities with commercial banks in an effort to thaw frozen credit markets and ensure that lower interest rates are passed on to consumers. The program "is designed to improve the liquidity position of the banking system and raise confidence in financial markets while ensuring that the risk of losses on the loans they have made remains with the banks," said Bank of England Gov. Mervyn King in a statement. Details of the plan, which will allow banks to swap nearly $100 billion of mortgage-backed securities for nine-month U.K. treasury bills, were largely in line with expectations.
Food Rationing Confronts Breadbasket of the World Many parts of America, long considered the breadbasket of the world, are now confronting a once unthinkable phenomenon: food rationing. Major retailers in New York, in areas of New England, and on the West Coast are limiting purchases of flour, rice, and cooking oil as demand outstrips supply. There are also anecdotal reports that some consumers are hoarding grain stocks. At a Costco Warehouse in Mountain View, Calif., yesterday, shoppers grew frustrated and occasionally uttered expletives as they searched in vain for the large sacks of rice they usually buy. "Where's the rice?" an engineer from Palo Alto, Calif., Yajun Liu, said. "You should be able to buy something like rice. This is ridiculous."The bustling store in the heart of Silicon Valley usually sells four or five varieties of rice to a clientele largely of Asian immigrants, but only about half a pallet of Indian-grown Basmati rice was left in stock. A 20-pound bag was selling for $15.99.
Bush seeks to cement legacy of ties with Canada, Mexico U.S. President George W. Bush is tending to his country's relationship with Canada and Mexico one last time, trumpeting trade over the "scare tactics" of economic isolation. Mr. Bush joins Canadian Prime Minister Stephen Harper and Mexican President Felipe Calderon on Monday in New Orleans for his fourth and final North American Leaders' Summit. This year's event has the intended twist of giving an economic and symbolic boost to the host city. Almost 32 months after Hurricane Katrina struck, New Orleans is still recovering — with uneven success — from the most brutal natural disaster in U.S. history. Most of Mr. Bush's time will be spent in a hotel and a historic former city hall in the Central Business District, far from the residential areas hit hardest by Katrina. His agenda includes a few events of local flavour, but they are secondary to diplomatic talks.
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