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by Tyler Durden
The latest development in the gold bubble saga, and one which will likely cause the precious metal's price to spike even higher, comes from thetiny island of Mauritius which according to Dow Jones has purchased 2 metric tons of Gold from the IMF for $71.7 million. The price works out to approximately $1,115 per ounce.
Tiny Mauritius Tells US To Shove Its Dollar, Buys 2 Metric Tons Of Gold From IMF At $1,115 An Ounce
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By Martin Hutchinson
Gold is different from other commodities in many ways. Still, the price of the yellow metal depends on the same three factors as oil or wheat: supply, demand and financial conditions. Put them together, and the 20pc increase since August might only be the beginning.
Start with supply. Production from mines totalled 2,414 tonnes in 2008, worth $88bn at the November 16 price. There will be more this year, but less from 2010 onwards. It will take years for new mines to come on stream. Recycling from scrap jewellery and official gold sales were worth $40bn in 2008, but those sources aren’t likely to cough up much more.
One central bank has even become a buyer. India recently purchased 200 tonnes of gold from the International Monetary Fund. If China decided to put 10% of its $2.3 trillion of official reserves into gold, it would need to buy up almost three years’ worth of production, at the current price.
Such a big move isn’t likely, but smaller shifts from central banks – selling less – could be enough to move the price, as long as other demand keeps up. That’s likely. The long period of ultra-easy money may not be undermining the monetary system, but many people fear it might. Some of them will buy some more gold, just in case. With yields on government bonds so low, gold looks like cheap insurance.
Gold at $5,000 an ounce? Don't disgard it
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By JAKE TAPPER and MATTHEW JAFFE
At a meeting with President Obama Monday morning, Communist Party Secretary Yu Xheng Sheng told the U.S. president how well General Motors' Chinese division was doing.
U.S. taxpayer dollars could go toward global restructuring efforts.
"The business of GM in Shanghai is pretty good," Secretary Yu told the president. "By the end of October this year their sales has increased by 40 percent over the same period of last year. I think that the fantasticperformance here in Shanghai is definitely a boost to their business in the United States."
"Absolutely," said President Obama. "I think they can learn from their operations here in terms of increasing sales back in the United States."
But some critics wonder if GM is a little too focused on its international operations.
Specifically, at a time when the nation's unemployment rate has soared to levels not seen in decades and GM is cutting thousands of U.S. jobs, the company's CEO is considering spending millions from its U.S. coffers -- fattened by $50 billion in taxpayer aid -- on its overseas operations, a possibility that has outraged critics and lawmakers.
"I don't think most Americans believe that when the taxpayer bailouts were happening it was intended for that purpose," said Rep. Anthony Weiner, D-N.Y. "It was intended to protect theAmerican economy -- not take the money overseas."
By James Kwak
Gretchen Morgenson of The New York Times (hat tip Calculated Risk) reports that the recent Worker, Homeownership and Business Assistance Act of 2009 (which included the expansion of the homebuyer tax credit) included a curious tax break for money-losing companies:
“a tax break that lets big companies offset losses incurred in 2008 and 2009 against profits booked as far back as 2004. The tax cuts will generate corporate refunds or relief worth about $33 billion, according to an administration estimate.
“Before the bill became law, the so-called look-back on losses was limited to small businesses and could be used to counterbalance just two years of profits. Now the profit offset goes back five years, and the law allows big companies to take advantage of it, too.”
Morgenson focuses on the fact that some of the biggest beneficiaries will be the massive home-building companies that raked in huge profits during the height of the boom, and that they have no apparent plans to hire new workers. “After spending its $210,000, Pulte will receive $450 million in refunds. And Hovnanian, after spending its $222,000, will get as much as $275 million.” (If you’re not enraged by the behavior of some of these companies, you should read Chapter Five of Our Lot by Alyssa Katz.)
But leaving aside the link to home builders, here’s the puzzler: what’s the plausible economic justification for this tax break?
By Garry White
In its third-quarter monetary policy report on Thursday, the People's Bank of China left out a standard phrase pledging to maintain the stability of the yuan and said that it would consider major currencies, not just the dollar, in guiding exchange rates. This prompted speculation that the government was about to allow its currency to strengthen against the dollar, after having pegged it to the US currency for more than a year.
However, a report on Saturday by Xinhua, the state-controlled Chinese news agency said that the government would not allow the currency to gain against the dollar in the short term.
Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong, said in a report to clients: "I consider this article an official effort by Chinese authorities to dismiss the renewed speculation of yuan appreciation in the near term."
The confusion occurred as US President Barack Obama begins a three-day visit to China. Last week, Mr Obama said in an interview with Reuters that he would bring up currency issues during the visit. He is expected to meet Chinese premier Wen Jiabao and President Hu Jintao, as well as meet Chinese children in Shanghai, as he attempts to increase bi-lateral ties.
China quashes talk of letting yuan strengthen
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By Byron King
Let’s review the big picture for gold. What’s going on? And what are people saying?
For much of 2009, gold traded in the range of low-mid $900 per ounce. There was a dip over the summer, with a strong upswing starting in September. Gold is now trading well over $1,000 per ounce, in fact just under $1,100.
Turns out that the government of India was buying gold in mid-October. Over a two-week span, the central bank of India bought 200 tonnes (metric tons) of gold from the International Monetary Fund (IMF) at an average price of $1,045. The IMF — over which the U.S. holds veto power for most actions — got approval to sell the gold from — where else? — the U.S. Congress, last spring.
Previously, the government of India held 350 tonnes of gold reserves. This 200-tonne purchase is a 57% increase in India’s reserves. There’s joy in India, I’ll bet. (It makes me wonder what the Pakistanis think, now that their large neighbor has both nuclear weapons AND a growing gold hoard.)
India, China Central Banks Rather Have Gold Than Dollars
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by Tyler Durden
There is nothing the administration hates more than the anti-propaganda truth, especially the kind that discloses the pathetic situation of the economy. Which is why Larry Summers must be positively loathing the most recent report from the Pew Center On The States, entitled "Beyond California: States in Fiscal Peril", which, as the observant among you may surmise, discusses states in fiscal peril. In short, that would be all of them. A snippet: "California’s problems are in a league of their own. But the same pressures that drove it toward fiscal disaster are wreaking havoc in a number of states, with potentially damaging consequences for the entire country."
And while the Fed may hope to bail out the ongoing contraction at the Federal level indefinitely (or until it runs out of toner cartridge), the options facing the various states are much less sanguine
Mihai Andrici
Ok, now that you’ve taken a good look at the HTC Eris, you might have noticed that it does not have a physical keyboard. It’s all touch. The capacitive display with haptic feedback is not bad, not by a long shot, but it is not as good as an iPhone (nothing is). If you are very picky about your typing solutions, you might need to look further, but if a decent onscreen keyboard doesn’t seem that repulsive, read on to find what the HTC Eris can do.
Because we mentioned the screen, you have to know that the 3.2” incher (capable of a “standard” 320×480 resolution) is very bright and sharp and if you leave the Droid’s high resolution out, the HTC Eris has the best screen you can get from an Android smartphone.
The physical buttons on the HTC Eris are only three in number: you have the send and end call buttons and the traditional HTC trackball that really does its job great. The electrostatic buttons just above the physical ones are not the easiest buttons to trigger, but you’ll get the hang of it once you get used to the phone.
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Reuters
The U.S. dollar may come under renewed pressure from emerging market currencies and the euro after a meeting of the world's top finance officials failed to take concrete action on rebalancing global money flows.
Finance ministers and central bank governors of the Group of 20 major countries, meeting in Scotland at the weekend, launched a "framework" in which they will discuss how to reduce trade and savings imbalances between nations.
But their communique talked only in general terms about rebalancing economies, and implied they might not agree on specific policies for individual countries to adopt before the end of next year at the earliest.
The result may be a continuation of heavy fund flows into emerging markets, boosting currencies there. And central banks intervening to slow currency appreciation may keep investing much of the money they obtain in the euro, pushing up that currency too.
G20 leaves door open for fresh pressure on dollar
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Carolyn Said
Shopping centers, office buildings, industrial spaces, hotels and apartments can expect a period of "enveloping gloom" from the recession and credit crunch, according to a report released on Thursday.
Values will plunge, vacancies will rise and rents will decrease across all types of commercial property before the market hits bottom in 2010, according to the "Emerging Trends in Real Estate" forecast from the Urban Land Institute and PricewaterhouseCoopers LLP.
Based on interviews with 900 industry leaders, including investors, developers and financiers, the report was released at an Urban Land Institute conference for developers, planners and other real estate professionals taking place this week at San Francisco's Moscone Center.
No quick recovery is in store, the report said. "2010 looks like an unavoidable bloodbath for a multitude of 'zombie' borrowers, investors and lenders," it said. "The shake-out period may extend several years as even some conservative owners with well-underwritten loans from the early 2000s see their equity destroyed."
Gloomy times for commercial real estate
