Friday, January 13, 2012
Gold hits 1 month high, breaks ranks with euro
NEW YORK/LONDON, Jan 11 (Reuters) - Gold rose to a one-month high on Wednesday, breaking ranks with the euro and equities, as evidence of strong physical demand from China fueled fund buying after bullion's recent sell-off. The metal rose for a second day as the single currency hit a 16-month low against the dollar after ratings agency Fitch warned of dire consequences if the European Central Bank refrains from taking more action on Europe's debt crisis.
Bullion has gained around 5 percent in 2012, appearing to
halt a strong, positive link with riskier assets. In the
previous two months, gold had tended to fall when the dollar
strengthened, trading in virtual lockstep with the euro.
However, some analysts said gold's gains could be
short-lived because the metal has failed to garner safe-haven
buying even as markets fretted over the viability of the euro.
"The strength of the dollar has not been friendly to
commodities markets in the past couple of years. As long as the
dollar is in an uptrend, I wouldn't be too positive on gold at
this point," said Mark Arbeter, chief technical strategist at
S&P Capital IQ.
Spot gold was up 0.3 percent at $1,637.51 an ounce by
2:36 p.m. EST (1936 GMT). U.S. February gold futures
settled up $8.10 at $1,639.60 an ounce, with volume in line with
its 30-day average.
Gold's gain brought prices above their 200-day moving
average around $1,635 an ounce. The metal had held the 200 DMA
for around three years until late December.
The metal drew support from macro hedge fund buying, said
James Steel, chief commodities analyst at HSBC.
Gold's rally to a one-month high of $1,646.90 on
Wednesday has given investors more confidence to buy the metal,
especially in light of improved demand in India given the
rupee's rise against the dollar, and a sharp increase in Chinese
imports.
Data showing record gold imports to China late last year has
reassured investors that physical offtake is underpinning the
market. China, the number-two buyer of the metal, is preparing
for the Lunar New Year this month, a key gold-buying period.
Israel raises security after Iran scientist killed
The defense establishment is tightening security over Israeli delegations overseas out of concern that Iran will avenge the assassination on Wednesday of a senior nuclear scientist and ahead of the anniversary of the killing of Hezbollah’s military chief.
Security officials said that meetings were being held regularly by the Shin Bet (Israel Security Agency) and the Counterterrorism Bureau to assess the threat and make adjustments to the security of delegations and senior officials overseas.
On Thursday, a hardline Iranian newspaper with links to the country’s top authority called on the clerical establishment to take retaliatory measures against Israel for the killing of scientist Mostafa Ahmadi-Roshan in Tehran.
Israel has neither confirmed nor denied its role in the assassination.
“We should retaliate against Israel for the martyring of our young scientist,” wrote Hossein Shariatmadari, the editorin- chief of the Kayhannewspaper, who was appointed by the country’s Supreme Leader AyatollahAli Khamenei. “These corrupted people are easily identifiable and readily within our reach... assassinations of the Zionist regime’s militarymen and officials are very easy.”
Even without the calls for retaliation by the Iranians, the Israeli defense establishment traditionally goes on high alert this time of year ahead of the anniversary of the assassination of Imad Mughniyeh, the commander of Hezbollah who was killed in a car bombing in Damascus in February 2008. Hezbollah has accused Israel of perpetrating the assassination
Hezbollah is believed to be actively seeking revenge for Mughniyeh’s death, and over the years there have been reports of a number of plots that were thwarted including an attempt to bomb the Israeli Embassy in Azerbaijan.
Earlier in the week, the Israeli Transportation Ministry asked Bulgarian authorities to tighten security measures around Israeli tourists in Sofia after a suspicious package was discovered on a bus that was supposed to transport the tourists from Turkey to Bulgaria.
Jerusalem Post
Russia: Nato 'planning direct military intervention on Syria'
The head of Russia's security council said he had seen intelligence indicating plans for a military incursion were well advanced.
"We are getting information that Nato members and some Persian Gulf States, operating according to the Libya scenario, intend to move from indirect intervention in Syrian affairs to direct military intervention," Nikolai Patrushev, the head of the Kremlin security body said in an interview published in Russia's Kommersant newspaper on Thursday.
"This time it is true that the main strikes forces will not be provided by France, the UK or Italy, but possibly by neighbouring Turkey which was until recently on good terms with Syria and is a rival of Iran with immense ambitions." America and Turkey were even now possibly already refining options for a no-fly zone that would allow armed Syrian opposition fighters to mass in the designated areas, he added.
Mr Patrushev, a Kremlin hawk who used to run the FSB security service, the Russian successor agency to the KGB, went on to claim that the real reason Syria was coming under so much international pressure to end a brutal crackdown on the opposition was largely geopolitical.
"Syria has not become an object of interest for a new coalition of the willing in itself," he said. "The plan is to punish Damascus not so much for repressing the opposition as for its unwillingness to sever its friendly relations with Tehran."
A spokesman for Nato said Mr Patrushev's comments were wide of the mark however.
"There is no discussion of a Nato role with respect to Syria," said Carmen Romero, the spokesman, pointing out that Anders Fogh Rasmussen, Nato's secretary general, had previously stated that the alliance had "no intention whatsoever" of intervening.
The Kremlin, a close ally of Damascus since the Soviet-era, has doggedly resisted Western attempts to impose meaningful sanctions on Syria in the United Nations and has offered the regime moral support by adopting parts of its one-sided rhetoric.
It has made it clear it still feels cheated by the West's manoeuvring on Libya last year. Moscow chose to abstain in a crucial United Nations vote, effectively allowing a no-fly zone to be introduced. It later angrily accused the West of exploiting the vote to bring about regime change however and has said it will not be duped in the United Nations a second time.
Moscow has a naval supply and maintenance base at the Syrian port of Tartus, its only military footprint in the Mediterranean and one which has been gradually upgraded. Earlier this month, a Russian naval force led by the Admiral Kuznetsov aircraft carrier made a three-day port trip to Tartus in an apparent signal of support for Bashar Assad.
On Thursday, Turkey claimed that a Russian ship carrying weapons and ammunition had flouted an EU embargo on arms shipments to Syria after making an unscheduled stop in Cyprus and had now docked in Tartus. Russia is one of the Assad regime's main arms suppliers, and stands to lose lucrative arms deals if it falls.
Russia's warning on Syria came as Anwar Malek, a former Arab League monitor, said three other monitors had followed his lead and resigned because they believed their mission had done nothing to stop President Assad's bloody crackdown. The mission, which was designed to monitor Syria's compliance with an Arab League peace plan, appears to be in disarray with plans to expand the monitoring team on hold after some observers were injured by pro-Assad protesters earlier this week.
The Telegraph
David Wolman: A universal currency could end the financial crisis
This article was taken from the February 2012 issue of Wired magazine. Be the first to read Wired's articles in print before they're posted online, and get your hands on loads of additional content by subscribing online.
Despite all the evidence that it could never work (we're looking at you, euro zone), the idea of a universal currency just won't die. Thanks to the debt crisis, some Greek officials are contemplating dumping the common currency for the drachma. Meanwhile, Italy and Spain teeter. A decade after the shared currency was heralded as a 21st-century tool for peace and prosperity, it turns out that currency unions aren't such a hot idea.
Not so fast, though. This is undeniably a period of epic turmoil, and many economists will tell you that sovereign states need sovereign currencies -- full stop. But this notion ignores a fundamental truth: countries with their own currency may have monetary independence, but in reality -- as gun battles in Libya, collateralised debt obligations in the US, and tsunamis in Japan have taught us -- we are only becoming more economically intertwined, regardless of what our coins look like.
Step back from the current crisis to consider the long view, and currency unions -- or even a single global currency -- have a fair share of appeal. A universal medium of exchange could eliminate currency risk and jack up trade. It would mean speculators couldn't short an individual country's currency. Exporters wouldn't have to fret over the gap between a price on a contract and the value of the payment. A single currency could halt spastic swings in prices and end conversion fees, leaving more of the pie for little stuff such as R&D and employee health insurance. Oh -- and it could put an end to international disputes over currency manipulation. Hello? China?
True, sovereign currencies afford the ability to manipulate the money supply, jiggle the handle of interest rates, and buy up piles of toxic assets. When a boom goes bust, devaluing currency is the least bad way for governments to rein in wages and prices that are suddenly too high. But if you use the same currency as another country that isn't in dire straits, good luck convincing them to accept devaluation.
But does this mean we'll never see a global currency? A recent Pew Researchpoll reveals that 41 per cent of Americans expect it by 2050. Maybe the idea has been planted in our heads by leftist utopians and science fiction authors: "credits" are used in everything from Star Wars to Star Trek. Yet economics titans such as John Maynard Keynes have also touted the idea.
The fact is, the modern economy and monetary system are too precarious for us not to examine every possible way to protect against future shocks. It's a bit like geoengineering: radical and outrageous at first blush but, given humanity's current predicament, not as outrageous as dismissing it.
Some pundits insist that gold could do the trick or that we could achieve many of the benefits of a global currency by tying the value of national ones to a set amount of the shiny stuff. But most economists view a return to gold as anachronistic, absurd and even hazardous. Maybe, but it's possible they're saying so because reviving the gold standard is so incongruous with the present and not necessarily because it would result in a system inferior to today's.
Of course, the universal currency could be the US dollar, and in some ways that's already the case. The greenback is what central banks hold the most of on reserve, and it's the currency used for the vast majority of international transactions. But the dollar's special status seems less stable than ever -- and will worsen if Washington can't deal with the debt. Perhaps the seed for that universal currency has already been planted. The International Monetary Fund uses something called Special Drawing Rights, a crossbreed of four of the world's key currencies, to make certain kinds of settlements between IMF members. Could SDR someday morph into the One Coin to Rule Them All?
A global currency may indeed prove to be a vision best left in the realm of fantasy. But it would behoove us to seriously analyse the pros and cons before ditching the idea in favour of today's smorgasbord of euros, pesos, yuan and Malawi kwacha.
Wired
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