The most accurate dollar forecasters predict the world’s reserve currency will continue sliding even when the Federal Reserve begins to raise interest rates, which policy makers say is an “extended period” away.
Once the Fed raises its target, the dollar’s performance likely will mimic the pattern that followed the central bank’s past three rounds of increases, Sutton and Henderson said.
After policy makers started boosting borrowing costs in July 2004, the Dollar Index tumbled 10 percent and didn’t get back to where it had been before the first increase and stay there for more than a month until November 2005.
Antarctica is losing ice from its larger eastern side as well as the western part, an indication the southernmost continent may add “significantly more” to rising seas, researchers in Texas said.
XX Sean’s note - ZeroHedge.com wrote that at 9:52 Sunday night. I think picking such a short time frame just damages your credibility, but we’ll see if he pulls it off.
Who’s in charge of this market?The dollar?Gold? Oil?Or maybe Ol’ Doctor Copper …
Copper is called “Doctor Copper” because it tells the health of the economy. Doctor Copper’s Rx is looking pretty good so far. We already have the iPath Copper ETF (JJC: 43.75 +0.57 +1.32%) in Red-Hot Commodity ETFs, with nice open gains.
And for contrarians (and you know who you are), Bloomberg just reported yesterday that Chinese copper EXPORTS are soaring. So what’s driving copper prices higher then? Just speculation, or something else? Will Chinese copper exports keep a lid on prices?
I’ve received some questions about which gold ETFs are most tax efficient. So here is an article from Barron’s with the scoop …
If the ETF sells some of its gold or silver, as funds typically do to pay expenses, including management fees, then gains or losses on such sales flow through to the fund’s investors, though they receive no cash distribution. In the case of gains, the investors must include their share of the profit in gross income, which likewise would be taxable at the maximum 28% rate.
These tax rules also apply to other precious-metals ETFs, such as the iShares Comex Gold Trust (IAU) and iShares Silver Trust (SLV). But they don’t apply to ETFs that use futures or derivative contracts to track the performance of metals, such as PowerShares DB Gold (DGL), PowerShares DB Silver (DBS) and PowerShares DB Precious Metals (DBP). Exchange-Traded Note funds, or ETNs, also have different tax rules, as do ETFs that buy stock in companies in precious-metals-related businesses.
Go read the whole thing HERE (subscription required.
And as I’ve said previously, my preference for long-term buy-and-hold gold is to own it physically.
The World Gold Council released its Gold Demand Trends statistics this morning. From the release …
Total identifiable gold demand for the third quarter 2009 reached 800.3 tonnes, or US$24.7 billion in dollar terms, up 15% from the second quarter, as gold’s long-term store of value and wealth preservation qualities continued to attract investors and consumers. Jewellery and investment demand in non-western markets rebound from the very low levels seen in the first quarter, while industrial demand started to recover in response to an improvement in economic conditions.
To be sure, gold demand fell 34% compared to a year earlier. But speculative buying, a surge of demand for gold in China and expectations for more official sector bullion buying are keeping prices elevated. And the rise from the dismal 2Q demand — boosted by consumer buying — is pretty bullish.
My takeway: Consumer demand is rebounding even in the face of higher prices. That means consumer are adjusting to higher prices (the average price of gold in the 3rd quarter was over $950 an ounce), which makes it that less likely that gold prices will go below $1,000 an ounce.
Federal Reserve Bank of St. Louis President James Bullard said policy makers may not start to raise rates until early 2012 while facing a “too low for two long” argument that may “weigh heavily” on the central bank.
The Fed’s “main issue” will be how to avoid spurring inflation while adjusting its $1.725 trillion in asset purchases, a main tool in its effort to sustain economic growth, Bullard said today in the text of slides for a St. Louis speech.
Bullard’s statement sent the dollar swooning and gold and silver soaring.
I’m about to tell you something anecdotal, but it tells me that the mortgage system is truly broken, and mortgage lenders are doomed.
We had some wonderful neighbors who moved to a new neighborhood at the height of the housing bubble. They paid about $420,000 for their new home.
Now, the bubble has imploded. A home on the same street that they live on - the same model as their house - is LISTING for $185,000.
In other words, they are never getting their money back.
After discussing things over with a lawyer, they decided to stop paying their mortgage. The bank said pay up or we’ll foreclose. My friends told the bank: “Show us the official mortgage paper.”
The bank can’t do that, because it sold, sliced and diced that mortgage from here to Kingdom Come. The foreclosure went to court … and the judge threw the case out. So, our friends are living in their house rent-free - which they’ve been doing for months — while they see what happens next.
Now, a bunch of their other friends are talking about doing the same thing.
You’ll notice a couple of things …
The stigma of foreclosure has evaporated. Friends and neighbors aren’t talking behind their backs - they’re talking to them to learn how to do the same thing.
The solid middle class is in revolt. This is a very hard-working couple, immigrants from Israel. They’re still paying their association dues because, as our friend explained to my wife, “we use the facilities, so we should pay for them.” They aren’t creeps, they aren’t crooks, and they feel the banks have already profited handsomely from middle class misery, and they aren’t going to throw more money down a hole.
What comes next? I don’t dare to guess. But if you think the banks are in trouble with foreclosures now, just you wait.
UPDATE: In response to a couple of comments, I’d like to point out that all ethics are relative, and that goes double when it comes to banks.
I have another friend, a hard-working dude, maybe not a rocket scientist but a sweet guy. About 10, maybe 12 years ago, he was getting close to paying off the mortgage on his little house. It wasn’t a great house, but it was his house. But for one reason or another, he missed a couple of payments. You might think the bank might work with him. But instead, they started foreclosure proceedings and had him kicked out of his house when he had very little left on the mortgage.
Unethical? I think so. And absolutely legal. I don’t know what the bank did financially that year, but let’s say it did well. Did the financial analysts on TV say, “yeah, they had a good year, but they’re real jerks for kicking that guy out of his house in West Palm Beach.” Of course not. Because what the bank did was legal. No one worries about a bank’s ethics. THAT would be crazy!!
Now some other people are doing what I wouldn’t do. A bunch of other people are watching them and thinking that maybe they’ll do the same thing. There is a tidal wave building, and you would be foolish to wait until your feet are getting wet.
In Foreign Policy magazine (hat-tip Barry Rithholz), Edward Luttwak draws comparisons between America, Rome and Byzantium, and says that Byzantium should really be the new model for the U.S. After all, Byzantium outlasted Rome by eight centuries.
Here is one example of his advice …
VI. Subversion is the cheapest path to victory. So cheap, in fact, as compared with the costs and risks of battle, that it must always be attempted, even with the most seemingly irreconcilable enemies. Remember: Even religious fanatics can be bribed, as the Byzantines were some of the first to discover, because zealots can be quite creative in inventing religious justifications for betraying their own cause (”since the ultimate victory of Islam is inevitable anyway …”).
Boy, this puts me in the mood for They Might Be Giants and their song “Istanbul”
OTHER NEWS YOU CAN USE
Why The Financial Crisis Isn’t Going AwayPositive growth is an illusion created by government spending. In fact, the economy is still flat on its back. Consumer spending and credit are in sharp decline. Unemployment is steadily rising (although at a slower pace) and wages are flatlining with a chance of falling for the first time in 30 years. Deflationary pressures are building. The talk of a “jobless recovery” is intentionally misleading. Jobs ARE recovery; therefore a jobless recovery merely points to asset-inflation brought on by erratic monetary policy. Surging stocks shouldn’t be confused with a real recovery.
Another Central Bank Bites the (Gold) Dust Mauritius, a small nation comprising a collection of islands in the Indian Ocean, is the latest of sovereign central banks to purchase gold bullion from the IMF bank, which is scheduled to sell 403.3 tons. By doing so, Mauritius has doubled its gold holdings to 3.9 tons.
Calls Rise for New Global Currency International Monetary Fund director Dominique Strauss-Kahn says the days of one country’s currency as the global benchmark are numbered. The U.S. dollar remains the currency standard, but globalization demands a new global currency that provides representation for the growing importance of a variety of major economies, Mr. Strauss-Kahn said during a trip to China.
