InvestMacro Forex News

By MoneyMorning.com.au

Did you hear the news?

In case you missed it, the beginning of this week was awash with stories of America’s energy comeback.

‘U.S. Redraws World Oil Map’ – Wall Street Journal
‘U.S. Oil Output to Overtake Saudi Arabia’s by 2020′ – Bloomberg
‘U.S. to become biggest Oil Producer – IEA’ – CNNMoney

What’s with the newfound energy discussion and the IEA’s new report? And are there any new ways to profit? Let’s take a look…

Here are a few snippets from this week’s release of the IEA’s World Energy Outlook 2012:

• The global energy map ‘is being redrawn by the resurgence in oil and gas production in the United States’
• ‘The recent rebound in US oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity – with less expensive gas and electricity prices giving industry a competitive edge – and steadily changing the role of North America in global energy trade.’
• ‘By around 2020, the United States is projected to become the largest global oil producer’ [Overtaking Saudi Arabia]
• ‘North America becomes a net oil exporter around 2030.’ [Note: it says ‘North America’, not the United States]
• ‘United States, which currently imports around 20% of its total energy needs, becomes all but self-sufficient in net terms.’
• ‘Unconventional gas accounts for nearly half of the increase in global gas production to 2035, with most of the increase coming from China, the United States and Australia.’

The Key Things to Know About America’s Energy Comeback

There’re plenty of interesting tidbits that came from this week’s report. Let’s break it down…

For starters, it’s clear that America’s energy comeback is for real. Goldman Sachs came out with the first groundbreaking report on this idea back in September…of 2011.

Back then, they said that the U.S. would surpass Russia and Saudi as the No. #1 oil producer in the world. Also back then, the news was a great shock.

On that front, the IEA report didn’t bring much to the table, more than just reaffirming that this resource boom is for real. As the kids would say, the IEA was ‘tardy to the party’ – heck, even OPEC made recent note of America’s great shale story.

Today, I figure it’s only right if we say: Welcome to the conversation IEA!

But the IEA report did make a few points that I’d like to clear up now, too.

As you may have seen this week, there’s been a lot of ‘energy independence’ talk flying around. One of the key points the report made was that the U.S. is set to become energy independent. Great news, right?

To be clear, the IEA isn’t saying [America is] going to be ‘oil independent’. Instead, the report uses an amalgam of energy: nat gas, oil, coal, nuclear.

And sure, when you look at it that way the U.S. is darn close to being energy independent as it stands – a bountiful stock of coal, uranium, nat gas and even oil! Indeed, there’s no new news there.

Also, the report boldly stated that North America will become a next oil exporter. Remember, this is North America, not the United States. Again we’ve known for some time that the U.S. and Canada are the two up-and-comers in the unconventional oil game.

So, that’s what you need to know. The IEA report reaffirms our stance on America’s energy renaissance. More oil and gas are going to be flowing through the pipes in the coming years – all at the same time the rest of the world will be demanding even more oil and gas.

To say the least, it’s good to be an investor in America’s energy future – especially in the next 3-5 years.

Matt Insley
Contributing Editor, Money Morning

Publisher’s Note: This is an edited article that originally appeared in Daily Resource Hunter

From the Archives…

APRA Spins Another Yarn On Australian Banks
9-11-2012 – Kris Sayce

The Secret Return to the Gold Standard
8-11-2012 – William Patalon

Forget the US Election, This Stock Market Event is the One to Watch For
7-10-2012 – Murray Dawes

The Greeks Giving Economists Nightmares
6-10-2012 – Bill Bonner

Super Fund Results: Whoopdeedoo
5-10-2012 – Nick Hubble

The Real Story on America’s Energy Comeback

By MoneyMorning.com.au

In a world where central banks regularly enter the market to weaken their currency, it’s easy to forget that a currency can fall for old fashioned reasons like trade deficits, foreign liabilities and bad sentiment.

That goes some way to explaining why the South African rand is falling at the moment. But that’s only part of a wider story that resource investors should be watching. It’s the task of today’s Money Weekend to find out if all this might lead to a profit opportunity…

Aussie Mining Not the Only One Under Stress

South Africa is in the news for all the wrong reasons. You might be aware of the huge and tragically violent strikes that have hit the mining industry since August of this year. They began in the platinum industry.

One of the big miners in South Africa, Anglo American Platinum Limited (LON: AAL) fired 12,000 workers, then reinstated them! But none of them have returned to work yet.

The unrest has spread to the gold miners and, according to the Washington Post this week, now also to agriculture.

Natural resources like gold, diamonds and platinum are the main exports of the country. But the strikes have cut the output of the mines. Naturally, South Africa’s exports have dropped.

Bloomberg reported on Thursday, ‘South Africa’s mining production slumped the most in five months in September amid the worst labor unrest since apartheid.’

All this is bad news on the trade front, and it’s showing up in the currency. See for yourself…

The South African Rand Falling Against the US Dollar

A falling currency and rising bond yields will put pressure on the South African government if foreign investors are spooked out in a big way.

Unfortunately, none of the problems in the country look like going away anytime soon, as political activism picks up to nationalise the mines. All this has added a hefty layer of political risk to a country that already had plenty of it.

The Forgotten Precious Metals

South Africa’s troubles have put two precious metals right in the spotlight for supply problems.

You might be thinking we mean gold and silver. After all, South Africa is the fifth largest gold producer on the planet.

But we’re actually talking about two other precious metals – platinum and palladium. The market can source its gold elsewhere if need be. The US and Australia are two options. But there’s not so much flexibility when it comes to platinum and palladium.

Take this report from BusinessWeek on Tuesday. ‘Platinum and palladium will return to the biggest shortages in at least a decade this year as strikes and safety stoppages in South Africa and falling sales from Russia cut supplies.’

South Africa accounts for about 80% of platinum supply and about 40% of palladium. That’s a big share of the market. As a pair, both commodities are heavily dominated by just two countries. The other is Russia.

And you could hardly call Russia one of the most stable countries on earth either.

You don’t hear as much about platinum and palladium as you do about gold and silver. They’re traditionally grouped with the four other metals ruthenium, rhodium, osmium and iridium to form the Platinum Group Metals.

Few people realise it, but platinum is actually more valuable than gold. According to the CRB Commodity Yearbook, ‘Platinum is one of the world’s rarest metals with new mine production totaling only about 5 million troy ounces a year. All the platinum mined to date would fit in the average sized living room.’

Platinum and palladium are hard to find in large volumes and difficult to mine.

Both of them have jewellery demand, industry demand and investment demand. But the stats are different for both. For example, 51% of platinum demand is from the jewellery industry, compared to only 4% for palladium. But the auto industry plays a big role for both, with 21% of demand for platinum and 63% of palladium. Both are used in catalytic converters.

And if our mate Dan Denning, editor of The Denning Report, is correct, the vehicle industry is one of the key factors for higher prices as emerging markets drive demand for cars and trucks.

If South African production doesn’t get back to normal, then odds are both platinum and palladium prices are going higher in 2013. Don’t forget the Fed’s money printing will no doubt continue to spark investment demand, too.

Contrarian Bets in a Risky Market

But the price action in the metals won’t benefit platinum and palladium stocks based in South Africa immediately.

The higher metals prices are probably bearish for the producers in the short-term because the price is being driven by the supply bottleneck. You can’t sell what you can’t mine.

On the other hand, the rising prices of the metals may attract investment flows to the PGM ETFs. And for investors, the bearish sentiment in the producers is exactly the invitation you need, with lower share prices, to consider taking a position.

But the supply deficit in the Platinum Group Metals is just one side of the equation. The other is demand. When you balance them, 2013 looks like a good bet for higher prices in the PGM group.

It’s a contrarian play because South Africa is probably scaring the bejesus out of most investors. But Dan Denning was on the ground in South Africa last month and his view is that sentiment in South Africa is ripe for a turnaround.

And therein lies the opportunity. As he wrote in his report for subscribers, ‘This point of maximum pessimism is also when you find investments at their cheapest.’

Dan tipped a stock to capitalise on this idea in last month’s The Denning Report.

If you don’t mind a speculative punt, with all the bad news happening in South Africa right now priced in, it’s a great time to bet on these overlooked precious metals.

Callum Newman
Co-Editor, Scoops Lane

The Most Important Story This Week

The Aussie stock market took a hit this week. On Wednesday it followed the US market down. The ASX tends to move in step with the US. That means one of the key indexes in America, the S&P 500, is a key signal to watch. Murray Dawes, Port Phillip Publishing’s in-house trader, analysed it this week. Forget about the fiscal cliff, you need to watch the ’200 day abyss’ to see where Aussie stock are heading. Murray says why in Avoid the Slaughter: Watch This Key Stock Market Pointer

Highlights in Money Morning This Week…

Kris Sayce on Retirees and the Fed Face Off: ‘After 40 years of expanding credit like nobody’s business, and four years of printing money and bailing out zombie banks like it was going out of fashion, the US Federal Reserve has worked out why it’s plan to boost the economy isn’t working.’

Murray Dawes on Avoid the Slaughter: Watch This Key Stock Market Pointer: ‘Markets did continue to fall from there, and now they are quite literally resting on the precipice of the 200 day moving average. Everyone is banging on about the ‘fiscal cliff’, but are they aware they are now staring at the ’200 day abyss’? I doubt it.’

Dr. Alex Cowie on Why Lithium is Another ‘Rare’ Element on China’s Radar: ‘What have iPhones, laptop computers, electric toothbrushes, and power-tools all got in common? They’re all powered by a ‘magical’ element that’s on the British Geological Survey’s Risk List of strategic minerals.’

William Patalon on Obama Wins: Why the Case For Higher Gold Prices Got Even Stronger: ‘The case for higher gold prices got even stronger. Let me give you seven reasons that gold prices are destined to head much higher in the next several years. Let’s call it the Obama ‘baker’s half-dozen’ case for gold.’

Platinum and Palladium: Two Contrarian Bets in a Risky Market

Do you need a kidney? A new watch? Or a house? So print it! It sounds like science fiction, but the technology is closer than you think.

Right now, the sale of personal 3D printers is exploding. It is now possible to get your very own machine for less than 1,300 dollars. But desktop 3D printers are only the beginning. 3D printing holds potential for an entire revolution of the way we manufacture our products.

Get your own 3D printer:
MakerBot – MakerBot Replicator 2 ($ 2,199)
3D Systems – Cube 3D Printer ($ 1,299)

Journalist: Rasmus Soele Nielsen
Editing: Jesper Jacobsen
Photo: Jesper Ravn

New York:
Journalist: Carina Moeller Jensen
Photo: Thomas Hass

Video by en.jyskebank.tv

Our old friend Marc Faber was on CNBC earlier this week. He said we should “prepare for a massive market meltdown.”

I don’t think markets are going down because of Greece, I don’t think markets are going down because of the “fiscal cliff” – because there won’t be a “fiscal cliff.” The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20%, in my view.

Of course, Marc has been preparing for a major market meltdown for years. And so have we. So, when we repeat our predictions, we begin to sound foolish.

And the longer the market goes without melting down the more foolish we look… until the market actually does melt down. We gloom-and-doomers are always wrong — and then, we’re right.

The Dow gave up another 185 points yesterday…

Blowing Bubbles

In the 1990s, investors pooh-poohed our warnings about falling stock prices. Then the Nasdaq and the dot-coms led the stock market. Some of these stocks had gone up to crazy levels.

This can’t go on,” we said, stating the obvious. Still, many investors didn’t want to hear it. They were counting on the stock market to make them rich. All they needed was “another Microsoft.” Or “another Amazon.”

The dot-com boom turned into a bubble. Then it blew up. Investors were downcast. Their hopes for easy money were dashed.

But the feds came to the rescue. After a slump in 2001, an aggressive combination of fiscal and monetary stimulus soon had the party going again.

This time, hopes for easy money were focused on housing. If you had a pulse, you could get a low-doc mortgage for more than 100% of the buying price.

Heck, you didn’t even need a pulse! The robo-mortgage processors didn’t care if you were living or dead. They wrote up the mortgage papers, gave you money and gave themselves a big bonus.

Then some slicer-and-dicer packaged your mortgage into a mortgage-backed security (MBS) and sold it to speculators. Those MBSs are what the Fed is buying now… to try to revive the housing market.

Housing had gone to dizzying levels by 2007. Again, we doom-and-gloomers worried that it was a bubble. And again, the dreamers and schemers sloughed off our warnings. But the housing market blew up in 2007… and has been losing air ever since. Bummer!

Once again the get-rich-quick crowd is deeply disappointed. Where will it turn for easy profits? Back to stocks!

The Next Big Thing

Following the crash of 2008, stocks went up 100%… retracing the entire move down. This caused investors to think the easy money was back on the table. Many thought they could just buy “stocks for the long run” (which they figured was about five years) and get rich.

If they were lucky, they caught the big run-up after March 2009. And now they’re waiting for the next burst. Where’s the “next Apple?” The “next Google?” The next big thing?

Darned if we know. But we know what happens to corporate earnings after they hit a major new high. They go down. And we know what happens to stock markets. They go down too. This is not a problem the feds can fix. It is just a fact of life. You don’t fix it; you prepare for it.

Poor Prospects?

Faber is looking at major companies – Apple, Google, Intel, McDonald’s. They seem to be headed down.

Why? Because earnings aren’t as good as they once were. And prospects don’t look so good either.

For the first time ever, for example, McDonald’s reports lower same-store sales. And Apple? How much better could it get?

Smart investors are asking themselves questions…

Why pay 15 times earnings for stocks in an economy that is growing at only 2% per year?

How can the Fed continue to print money without eventually causing inflation rates to increase? How long can the federal government continue to borrow and spend without going broke?

For companies to make money they need people who can buy their products. But household incomes and household wealth have gone down in the U.S.

They’re lower now than they were 20 years ago. Now the average starting salary is only $23,711. And nearly 40% of Americans make only half of their peak earnings. How are these people going to buy more products and services?

To make matters worse, the native-born U.S. population is now in decline. And a large part of it is getting old. More than 12,000 people turn 55 every day. At that age, their spending patterns change. They spend less.

As for the meltdown, Faber figures:

There will be pain and there will be very substantial pain. The question is do we take less pain now through austerity or risk a complete collapse of society in five to 10 years’ time? I think the whole global financial system will have to be reset and it won’t be reset by central bankers but by imploding markets – either the currency [markets, debt market or stock markets. It will happen – it will happen one day and then we’ll be lucky if we still have 50% of the asset values that we have today.

Disclaimer

By The Sizemore Letter

Listen to Charles discuss the fiscal cliff, the “triple dip” recession in Europe, infrastructure investment and more with Mike Robertson on Straight Talk Money.

If you cannot view the embedded audio player, please follow this link: Charles Sizemore on Straight Talk Radio

The post Charles Sizemore on Straight Talk Money Radio: All About the Fiscal Cliff appeared first on Sizemore Insights.

Related posts:

• Listen to Charles Sizemore on Straight Talk Radio
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• Charles Sizemore Discusses Bernanke’s “Big Bazooka” on Straight Talk Radio

Trading with Elliott wave analysis
November 16, 2012

By Elliott Wave International

(Part 1 of this article is posted here.)

A Quick Road Map of Wave Analysis

For this overview of wave analysis, I have borrowed from the “Cliffs Notes” version that we provide for free to anyone interested in learning about wave analysis. It’s called Discovering How To Use the Elliott Wave Principle.

Elliott’s road map, or basic wave pattern, consists of “impulsive waves” and “corrective waves.” An impulsive wave is composed of five subwaves and moves in the same direction as the larger trend — or the wave’s next larger size. A corrective wave is divided into three subwaves, and it moves against the trend of the next larger degree. As you can see in Figure 1, there are plenty of right and left turns — or up and down moves on a price chart.

Figure 1 reveals the general roadmap that markets follow during bull markets. Notice the building-block process. The completion of an initial impulsive wave (waves 1-5, up-down-up-down-up) sets the stage for a corrective phase (waves A-B-C, down-up-down). Combined, those waves represent the first two legs of a larger “degree” advance. In this illustration, waves 1, 2, 3, 4 and 5 together complete a larger impulsive wave, labeled as wave (1).

A five-wave rally from a significant low tells us that the movement at the next larger degree of trend is also upward. It also warns us to expect a three-wave correction — in this case, a downtrend. That correction, wave (2), is followed by waves (3), (4) and (5) to complete an impulsive sequence of the next larger degree. At that point, again, a three-wave correction of the same degree occurs.

Note that, regardless of the size of the wave, each impulsive wave peak leads to the same result — a correction.

If we isolate the corrective waves, the subwaves A and C move in the direction of the larger trend and usually unfold in an impulsive manner. Referring to Figure 1, the (A)-(B)-(C) decline that follows the (1)-to-(5) sequence illustrates this structure. Waves labeled with a B, however, are corrective waves; they move opposite to the trend of the next larger degree. In this case, they move upward against the downtrend. Notice that these corrective waves are themselves made up of three subwaves.

Reading the Wave Analysis Map

So now that you have a wave road map in hand, let’s talk about how to apply it to the actual terrain of financial markets. When I look at a price chart for the first time, my first task is to identify any completed five-wave and three-wave structures. Once I do that, then I can interpret where the market is along the pre-defined path and, from there, where it’s likely to go.

Say we’re studying a market that has reached the point shown in Figure 2. So far we’ve seen a five-wave move up, followed by a three-wave move down.

But this is not the only possible interpretation. It’s sort of like having a GPS that tells you that you’ve arrived, when you’ve actually got miles to go. In this example, it is also possible that wave (2) hasn’t ended yet; it could develop into a more complex three-wave structure before wave (3) gets under way. Another possibility is that the waves labeled (1) and (2) are actually waves (A) and (B) of a developing three-wave upward correction within a larger impulsive downtrend, as shown in the “Alternate” interpretation at the bottom of the chart. According to each of these interpretations, though, the next imminent movement is likely to be upward. That tells you more than most technical analysis systems do.

Alternate counts are an essential part of using the Wave Principle. They are neither “bad” nor “rejected” wave interpretations. Rather, they are valid interpretations that are given a lower probability while the count works itself out. If the market doesn’t follow the original preferred scenario, the top alternate usually becomes the preferred count.

I consider alternate counts to be similar to detours — just a different way for the market to get to where it’s going. How many times do you actually go from point A to point B non-stop in your travels? Admit it, you have to stop to grab a bite to eat or ask for directions once you realize you’re lost. After consulting the map, you get back on track toward your intended destination. The new path represents an alternate count.

This seeming ambiguity about a wave structure illustrates an important point about the Wave Principle that, in my opinion, is often misunderstood. The Wave Principle does not provide certainty about any one market outcome. Instead, it gives you an objective means of determining the probability of a future direction for the market. At any time, two or more valid wave interpretations usually exist. Unlike actual physical roads that exist, price movements in financial markets are always changing, and the best you can do is be somewhat confident of whether they are moving up or down. That’s the kind of confidence that the Wave Principle provides.

(Come back soon for part 3 of this series.)

Who is Jim Martens?
Jim is one of the very few forex Elliott wave instructors in the world, and a long-time editor of EWI’s Currency Specialty Service. A sought-after speaker, Jim has been successfully applying Elliott since the mid-1980s, including 2 years at the George Soros-affiliated hedge fund, Nexus Capital, Ltd.

Catch up on Jim’s latest thoughts about FX markets and the business of trading them at his Twitter feed.

Download Your Free 14-page eBook: “Trading Forex: How the Elliott Wave Principle Can Boost Your Forex Success” Here’s some of what you’ll learn: Which Elliott waves to trade Which Elliott waves set up your forex trade When your analysis is wrong Guidelines for projecting price targets How to evaluate an Elliott wave structure How to use the bigger picture to give you perspective on the market’s next major move Jim also takes you through two real-world trading examples to reinforce what you’ve learned and apply it to your own trading. All you need is a free Club EWI profile to download this FREE 14-page eBook now >>

By The Sizemore Letter

It’s filing season again, that time of year when we get to peek at what big, high-profile investors are buying.  And perhaps no portfolio is waited for in more anticipation that Warren Buffett’s Berkshire Hathaway (NYSE:$BRK-A).

Buffett is still bullish these days, even with all the talk of the fiscal cliff.  If we fell over the cliff and the economy got whacked with higher taxes and massive spending cuts, Congress and the White House would hash out a deal before the economy slipped into recession.  “We’re not going to permanently cripple ourselves,” he said recently in a CNN interview.

That may be true, but I’m a little more worried than Mr. Buffett.  I agree that a deal will get made eventually, but the psychological damage can still be huge.  And we could easily get a deep stock correction or a recession in the meantime.  Policy paralysis has consequences.

With that said, what is Buffett and his team buying and selling these days?

To start, he’s buying broadcast TV.  Berkshire Hathaway bought nearly 20% of Media General  (NYSE: $MEG).  This is a small holding for a portfolio of Berkshire’s size, but it does show bullishness on the part of Buffett for traditional media.

I like to think I am a contrarian investor.  But then I look at Warren Buffett and I realize that I’m not nearly as big of a contrarian as I thought.  I wouldn’t touch traditional media right now because I can’t see where the profits will come from.  Advertising is an industry in flux, and TV competes with the internet for eyeballs.

But then, there is a proper price for everything, and Buffett seems to believe that, at .16 times sales, Media general is simply too cheap to ignore.

Buffett additionally made three additions in the gritty industrial sphere, buying nearly 4 million shares of Deere & Co (NYSE:$DE), the producer of tractors and others heavy-duty equipment,  1.2 million shares of Precision Castparts Corp (NYSE:$PCP), which is essentially a metal shop with a worldwide presence,  and 1.5 million shares of Wabco Holdings Inc (NYSE: $WBC), a world leader brake and control systems for large commercial vehicles.

Truck parts and tractors.  Buffett clearly believes that industrial activity will be picking up in the years ahead, both in the United States and overseas.

Now, what’s Buffett and his team selling?

He sold out of Dollar General (NYSE:$DG), Moldelez International (Nasdaq:$MDLZ), Ingersoll-Rand PLC (NYSE:$IR) and CVS Corp (NYSE: $CVS).

The sales have little obvious in common, other than all but Ingersoll-Rand have a strong consumer focus.  Dollar General is a discount retailer of assorted sundries, CVS Corp is national chain of pharmacies, and Mondelez is a producer of packaged foods.   Yet Berkshire still maintains enormous positions in Coca-Cola (NYSE:$KO), Procter & Gamble (NYSE:$PG) and Wal-Mart (NYSE:$WMT), so  you can’t reach the conclusion that Buffett is bearish on the consumer.

Still, Berkshire’s portfolio has been consistently drifting away from consumer-oriented stocks for months and towards grittier industrial stocks and business services stocks such as IBM (NYSE:$IBM).

Disclosures: Sizemore Capital is long PG and WMT.  SUBSCRIBE to Sizemore Insights via e-mail today.

The post What is Warren Buffett Buying? appeared first on Sizemore Insights.

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London Gold Market Report
from Ben Traynor
BullionVault
Friday 16 November 2012, 07:45 EST

WHOLESALE gold bullion prices fell below $1710 an ounce Friday morning in London, dropping below that level for the second day in a row, as stocks, commodities and the Euro all fell and US Treasuries gained ahead of negotiations among US lawmakers about the so-called fiscal cliff.

“Gold is being seen increasingly as a source of cash,” says Simon Weeks, head of precious metals at bullion bank Scotia Mocatta.

“Liquidation of gold can cover losses elsewhere.”

Silver bullion meantime fell to $32.19 an ounce.

On the currency markets, the US Dollar Index, which measures the Dollar’s strength against other major currencies, touched a 10-week high as the Euro’s recent rally stalled.

Heading into the weekend, gold bullion looked set for a 1.2% weekly loss by Friday lunchtime in London, while silver was down 1.3%.

President Obama is due to meet congressional leaders later today for negotiations on the so-called fiscal cliff due at the start of next year. Tax cuts made by former president George W Bush are due to expire on December 31, while spending cuts for the military and social programs are currently scheduled for January as a result of a deficit deal agreed last year.

Lawmakers are negotiating on how to reduce the federal deficit over the next deficit; failure to agree a deal would see the tax cut expiries and spending cuts occur as scheduled.

“[Obama] will not sign, under any circumstances, an extension of tax cuts for the top 2% of American earners,” White House spokesman Jay Carney said Thursday, a day after President Obama suggested taxes should be raised for the wealthy to reduce the deficit.

“What we won’t do is raise tax rates,” countered Republican Senate leader Mitch McConnell, who will be at today’s talks.

Ratings agency Standard & Poor’s stripped the US of its AAA credit rating in August 2011, after weeks of negotiations on raising the so-called ‘debt ceiling’ for federal debt.

“The [US credit] rating is in the hands of policymakers,” says John Chambers, chairman of S&P’s sovereign rating committee.

“If no budget deal is reached in the early part of next year and the debt trajectory just continues to rise,” adds Bart Oosterveld at fellow ratings agency Moody’s, “then we’d be looking at a downgrade of a notch to Aa1.”

Aa1 is the second-highest Moody’s rating after Aaa.

“If we don’t see an agreement and there is a gridlock, it will burden the Dollar and benefit gold,” reckons Dominic Schnider at UBS Wealth Management.

The UK government is unlikely to end its ownership of Royal Bank of Scotland and Lloyds “any time soon”, according to a report published by parliament’s Public Accounts Committee.

“The £66 billion cash spent purchasing shares in RBS and Lloyds may never be recovered,” the report on the sale of Northern Rock says.

“The low level of competition [to buy Northern Rock assets] does not give us confidence that the taxpayer will make a profit on the sale of RBS or Lloyds… it seems inevitable that their ‘temporary public ownership’ will last for some time, if getting value for our investment remains the most important objective for government. ”

By contrast, the US Treasury Department said earlier this year that it expects to make a $2 billion profit on the stakes it bought in US banks during the 2008 crisis.

The volume of gold bullion held to back shares in the SPDR Gold Trust (GLD), the world’s largest gold ETF, rose to within 0.07% of its all-time high yesterday, rising to 1339.6 tonnes during Thursday’s US trading.

Soros Fund Management increased its investment in the GLD by 49% to 1.32 million shares during the third quarter, according to the fund’s 13F filing with Securities and Exchange Commission. Hedge fund Paulson & Co., the GLD’s biggest investor, maintained its stake at 21.8 million shares.

In its quarterly Gold Demand Trends published yesterday, the World Gold Council notes that notes that gold investment through exchange traded funds was strong in Q3, in contrast with demand in many markets for gold coins and bars.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and can be found on Google+

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By TraderVox.com

Tradervox.com (Dublin) – The greenback strengthened against the euro as investors sought haven assets as concerns rose prior to President Barack Obama’s talk with lawmakers on fiscal cliff issues. The dollar Index is headed for a weekly advance for the fourth time in row. The advance has come prior to a report expected to show that US industrial production expanded at a slower pace in October. The Japanese currency has strengthened from six months low against the greenback as speculation that the drop was too rapid increased. The Swiss franc trimmed a weekly advance against the dollar after Thomas Jordan, the Swiss National Bank President, indicated that the currency remains strong and is putting strain on the economy.

According to Michael Derks, the Chief Strategist in London at FXPro Group Ltd, the meeting between Obama and the congressional leaders scheduled for today is unlikely to yield any fruits. He predicted that bids for the dollar will rise as investors avoid risk related currencies. In a situation where the US congress fails to reach an agreement by the end of the year, the $607billion spending cuts and tax adjustment will take effect. This will force the congress to increase the country’s debt ceiling above $16.4 trillion which will be reached early next year.

Obama will be meeting with Democratic and Republican congressional leaders today where they will be discussion fiscal cliff issues. The dollar has advanced by 1.6 percent in October while the yen has dropped by 1.4 percent in the same period.

The greenback rose by 0.3 percent against the euro to trade at $1.2740 per euro at the start of trading in London and increased by 0.2 percent against the yen to exchange at 81 yen. The dollar has pared a 1.9 advance against the yen. It had reached its strongest level against the yen yesterday of 81.46, last seen on April 25.

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By Central Bank News
    The Central Bank of Sri Lanka held its benchmark repurchase rate steady at 7.75 percent, as expected, saying inflation eased in October and should decline further while the growth of broad money and credit to the public sector decelerated sharply in the third quarter.
    The central bank, which has raised rates by 75 basis points so far this year to control inflation, said the global economy should slow further due to the “absence of proactive leadership amidst economic contraction” in the euro area, but recovery may be supported by a joint effort between the U.S. and euro area following the conclusion of US presidential elections.
    Sri Lanka’s inflation rate eased to 8.9 percent in October from 9.1 percent in September due to lower food prices.
    “The onset of the intermonsoonal rains is likely to increase the supply of agricultural produce alleviating price pressures further,” the bank said.
    Sri Lanka’s inflation rose this year, peaking at 9.8 percent in July, due to changes in administered prices in March and the central bank expects this base effect to first disappear by March next year at which point the inflation rate expected to drop.

    The growth of credit to the private sector by commercial banks eased to an annual 25.5 percent in September from over 35 peak percent prior to April, the bank said, adding the government’s commitment to fiscal consolidation “is likely to provide comfort to the conduct of monetary policy in the years ahead.”
    Sri Lanka’s Gross Domestic Product slowed to an annual rate of 6.4 percent in the second quarter from 7.9 percent in the first quarter, with growth this year forecast to ease to 6.8 percent from 2011’s record 8.3 percent.

    www.CentralBankNews.info