Gold will top $1,000 on US economy and fundamentals THE gold price can top $1,000/oz because of the US economy and supply/demand fundamentals, said Nick Holland, CEO of Gold Fields. "I’m bullish on the gold price - I think it can certainly go over $1,000 an ounce. I’m really bullish," Holland said on Summit Business, a daily television broadcast. "The US economy still needs to be corrected, and certainly there are going to be some changes there - I think the dollar probably is the only that that economy can respond because clearly monetary policy is going the other way," he said. "The natural consequence is that there should be positive outcomes for gold," he said. "The supply demand fundamentals in the sector are good for gold," he said.
Beijing and Riyadh will call the shots on ailing dollar's future Only a month ago the dollar slumped to an all-time low against the euro. And it's just five weeks since the greenback hit a 12-year low against the yen. But now, the US currency has started to strengthen - with the markets talking about a "turning point". On Wednesday, the dollar reached a six-week high against the European single currency, closing in on $1.53 - an improvement of more than 5 cents. And on the same day, the greenback climbed to a 10-week peak against the pound. But does the dollar remain in danger? Could "the rope slip" and the world's pivotal currency still go into freefall? That would plunge America beyond recession and into depression - as inflation ballooned amid soaring import costs, forcing the Federal Reserve to raise rates in the teeth of shuddering slowdown.
Get ready for more bank failures A small bank in Arkansas was recently shut down for "unsafe and unsound practices." More banks are probably going to meet the same fate. Bear Stearns may have been deemed to big to fail. But ANB Financial, a small bank in Arkansas, wasn't. And we might need to brace for even more bank shutdowns. ANB, a privately held bank based in Wal-Mart's home town of Bentonville with $2.1 billion in assets, was closed on Friday by the Office of the Comptroller of the Currency. The OCC is a division of the Treasury Department that regulates banks. Apparently, ANB got into trouble by making bad loans for construction projects in Idaho, Wyoming and Utah in addition to Arkansas.
Why HSBC didn't say 'the worst is behind us' HSBC Holdings did not say "the worst is behind us." But after $3.2 billion in loan impairments from the U.S consumer finance business, and a $2.6 billion write-off from its admittedly second-tier investment banking operation, that's how the market is treating the banking giant's statement. That market cap disparity is no accident -- HSBC has the biggest exposure of the banking giants to emerging markets, where growth continues to be stellar, U.S. recession or not. Still, it's worth noting the lender itself was more cautious. "The outlook for the rest of the year remains unusually difficult to foresee in the current environment," the bank said. Unusually for a bank, it's sounded worries about inflation. HSBC's concerns are worth flagging, because it was one of the first to reveal problems from the subprime crisis.
MBIA Swings to Huge Loss of $2.4 Billion Troubled bond insurer MBIA said on Monday unrealized losses on insured derivatives skyrocketed in the first quarter, pushing the world's largest bond insurer into a sharp quarterly loss. The 2008 figure included unrealized losses on insured derivatives, such as credit default swaps, of $3.58 billion. Factoring in the unrealized losses, MBIA reported negative revenue of $2.95 billion, versus revenue of $729.9 million a year before. In February, MBIA warned investors it could face write-downs on its credit derivative positions. It recorded $3.7 billion of losses from the change in credit derivatives' value in all of 2007, which resulted in net losses for the year of $1.9 billion.
The global slump of 2008-09 has begun as poison spreads The avalanche of bankruptcies has begun. Six US companies of substance have defaulted on bonds over the past fortnight, against 17 for the whole of last year. As a "non-believer" in the instant rebound story, I am not easily shocked by gloomy reports. But the latest note by Standard & Poor's - The Bust After The Boom - gave me a fright. As the Fed's latest loan survey makes clear, lenders have dropped the guillotine. With the usual delay, the poison is spreading from banks to the real world. Diane Vazza, S&P's credit chief, says defaults are rising at almost twice the rate of past downturns. "Companies are heading into this recession with a much more toxic mix. Their margin for error is razor-thin," she said.
New mortgage crisis looms Steep price declines and interest-rate resets will have even prime borrowers simply walking away from their mortgage obligations. California is to mortgage lending what Chicago is to pork bellies. For years, that meant it was a place with soaring house values; today, the foreclosure rate across the state is twice the national average and going up fast. Riverside County, outside Los Angeles, may be the foreclosure capital of the country, with a rate close to six times the national average. And housing prices are in free fall. California should be the poster child for a mortgage-loan bailout. In few other places have so many taken on such onerous debts with so little equity.
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