Gold price cycle has only just begun Investec’s Global Gold fund manager Gail Daniel is expecting the gold price to continue to rise over the longer term and is even more bullish on platinum. Although Daniel is expecting some consolidation around the current price, she is expecting the price to pick up later this year and believes ‘it could easily go rising on for three to five years. ‘At the moment the oil price is at a high, but not the gold price. It could be due a catch up,’ Daniel says. The newly AAA-rated manager says that as long as inflation increases globally, we could see an upside of 25% on the gold price. In particular, she highlights the weakness of the US dollar and points out that while it is unlikely the Federal Reserve will increase rates
40 Years of Inflation, 80 Years of Dow/Gold If Wall Street stocks can surge 160 points on falling earnings, an 11% drop in housing starts, and a 16-year record for consumer-price inflation, then so can everything else that doesn't carry a picture of George Washington. Crude oil, rice, Gold, the Euro, wheat, emerging market bonds, copper...anything that's not stamped with the all-seeing eye of the Dollar looks a great bet once again. The Federal Reserve has seen to that, driving the real returns paid to cash down towards a three-decade low. Sinking to minus 2.05% in March, the real rate of interest nearly equals the very worst returns-to-cash paid during the Great Greenspan Reflation of 2002-2005. This latest slump in real interest rates also comes thanks to "emergency" rate cuts, too.
Rice Rises to Record in Chicago, Leading Wheat, Soybean Gains Rice futures in Chicago soared for a fourth day, reaching a record as Turkey and the Philippines seek to buy the grain amid dwindling global supplies. Wheat, corn and soybeans gained. Rice doubled in the past year after countries including Vietnam, China, Egypt and India curbed exports to meet domestic demand. The Philippines received offers for 325,750 metric tons in a tender today, less than its 500,000-ton target. The country, which plans another tender in May, may raise the amount sought next month by 100,000 tons to 600,000 tons. ``Some importers, especially in Southeast Asia, are feeling pinched as supplies are very tight,'' Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo, said by phone today. ``Anything related to buying tenders can easily lift the rice price as the market is very thin.''
Merrill Lynch posts loss of nearly $2 billion Ongoing write-downs for soured mortgage investments and other bad credit bets continued to plague Wall Street icon Merrill Lynch, leading to an almost $2 billion first-quarter loss and a planned 4,000 job cuts, the company reported Thursday. But new Chief Executive John Thain said core businesses continued to operate well. "Despite this quarter's loss, Merrill Lynch's underlying businesses produced solid results in a difficult market environment," he said. "The firm's $82 billion excess liquidity pool has increased from year-end levels, and we remain well-capitalized." But, the results are still, "a stark reminder that we are not out of the woods yet in terms of the credit crisis. There is more pain to come and pressures on earnings are going to continue," according to Octavio Marenzi, head of financial consultancy Celent.
Oil hits another record high as dollar tumbles to record low Oil prices hit all-time highs above $115 a barrel Thursday with reports that oil and gasoline stocks in the United States were lower than expected and as the dollar hit record lows. Light, sweet crude for May delivery rose as high as $115.54 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $114.89 a barrel by the afternoon in Europe, down 4 cents, as the dollar strengthened slightly and traders booked profits. Oil and other commodities continued to attract investors as the values of the dollar continued falling and as a hedge against inflation. A weaker dollar also makes oil cheaper to investors overseas. The euro hit an all-time high of $1.5982 on Thursday, its second record in as many days against the sagging dollar, but then lost a little ground, falling to $1.5927 late in European trading.
FBI home mortgage probe now targets 19 firms The FBI's probe of potential fraud in the U.S. home mortgage industry now encompasses 19 companies, up from 17 a month ago, agency director Robert Mueller told Congress on Wednesday. He said there was no end in sight to the growth of individual and corporate fraud cases, and the Federal Bureau of Investigation was reassigning agents from other areas such as financial fraud and health care to cope."We've had a tremendous surge in cases related to the subprime mortgage debacle. We currently have almost 1,300 cases that have grown exponentially over the last several years and we expect them to grow even further," he said. "We have also 19 cases involving institutions themselves where mortgage fraud may have contributed to misstatements and the like," Mueller said in testimony before a Senate appropriations subcommittee.
Double Take: JPMorgan Quietly Raising $6 Billion Just hours after suggesting the credit crisis was nearing an end, and reporting a 50 percent drop in net income tied largely to mortgage and credit woes, JPMorgan Chase & Co. filed a curious-looking preliminary prospectus with the Securities and Exchange Commission Wednesday night.Bloomberg News noticed the filing too, and reported that data it had compiled showed that JPMorgan is quietly planning a $6 billion offer of perpetual preferred stock — the biggest such offering in the company’s history. Which means, of course, that it may be time to do a double-take on the company’s earlier suggestion that sunny days are on the horizon; after all, this isn’t exactly the best credit market in which to go hunting for capital, unless there is a real need to do so.
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