Saturday, April 16, 2011
Friday, April 15, 2011
Silver soars to 31-year high
Gold rose over 1 per cent to a near-record and silver surged Thursday as dollar weakness, inflation
worries and a European debt crisis powered bullion to its biggest one-day gain in about seven weeks.
Silver futures soared to their highest since 1980, rising more than 4 per cent for their biggest one-day gain since November, as strong investment and speculative buying sent the gold/silver ratio to a low.
Gold received a boost from inflation worries triggered by a crude oil rally and data showing rising U.S. core producer prices in March, and as higher-than-expected jobless claims knocked the dollar.
“The combination of higher oil prices, weaker dollar and the resurrection of discussions of Greek sovereign risk problems has galvanized the gold market. It’s particularly impressive because we ran into selling above the market yesterday,” said James Steel, chief commodity analyst at HSBC.
Spot gold rose 1.4 per cent to $1,474.30 an ounce by 4:02 p.m. ET, within striking distance of its record $1,476.21 set on Monday.U.S. gold futures(GC-FT1,482.9010.500.71%) for June delivery settled up $16.80 at $1,472.40 an ounce.
Investors grew jittery on talk of debt restructuring by Greece, the first euro zone member to receive a bailout a year ago in the crisis that has driven Ireland and Portugal to seek aid and forced draconian budget cuts in Spain.
The European debt crisis has boosted gold this year and also helped power the metal’s 30 per cent gain last year.
Bullion investors took heart as the dollar fell broadly, reaching a record low against the Swiss franc, with more weakness likely so long as U.S. Federal Reserve and European Central Bank policies continue to diverge.
The recent surge in oil prices is no prelude to broader price increases that would force the Fed to raise interest rates, top Fed officials said Thursday in what appeared to be the predominant view at the central bank.
Comments by the Fed officials strengthened expectations the central bank will stay on course with its $600-billion debt-buying program and not look to reverse its super-easy monetary policy any time soon.
Gold prices have almost doubled since the Fed cut interest rates to the bone in 2008 in an attempt to shock the economy back to life after the worst financial crisis since the Great Depression.
SILVER RATIO LOWEST IN NEARLY 3 DECADES
Silver (SI-FT42.640.982.34%) climbed 3.5 per cent to $42.03, having hit a 31-year high at $42.07 an ounce.
The spread between gold and silver – showing the relative strength between the two metals – has nearly halved since last August. The gold-to-silver ratio fell to just above 35, the lowest since the early 1980s.
“Silver continues to attract a very large speculative bid. Even though silver is far out-gaining gold, the reasons why precious metals rally are related to the financial factors that surround the gold market,” said Bill O’Neill, partner at commodities firm LOGIC Advisors.
Silver has rallied about 35 per cent year-to-date on talk of near-term supply tightness as a recovering global economy boosts demand for the industrial metal.
“There is still a lot of speculative, investment money coming into the gold market. Until there is a clear technical signal that the situation is reversed, the momentum of silver remains intact,” HSBC’s Steel said.
worries and a European debt crisis powered bullion to its biggest one-day gain in about seven weeks.
Silver futures soared to their highest since 1980, rising more than 4 per cent for their biggest one-day gain since November, as strong investment and speculative buying sent the gold/silver ratio to a low.
Gold received a boost from inflation worries triggered by a crude oil rally and data showing rising U.S. core producer prices in March, and as higher-than-expected jobless claims knocked the dollar.
“The combination of higher oil prices, weaker dollar and the resurrection of discussions of Greek sovereign risk problems has galvanized the gold market. It’s particularly impressive because we ran into selling above the market yesterday,” said James Steel, chief commodity analyst at HSBC.
Spot gold rose 1.4 per cent to $1,474.30 an ounce by 4:02 p.m. ET, within striking distance of its record $1,476.21 set on Monday.U.S. gold futures(GC-FT1,482.9010.500.71%) for June delivery settled up $16.80 at $1,472.40 an ounce.
Investors grew jittery on talk of debt restructuring by Greece, the first euro zone member to receive a bailout a year ago in the crisis that has driven Ireland and Portugal to seek aid and forced draconian budget cuts in Spain.
The European debt crisis has boosted gold this year and also helped power the metal’s 30 per cent gain last year.
Bullion investors took heart as the dollar fell broadly, reaching a record low against the Swiss franc, with more weakness likely so long as U.S. Federal Reserve and European Central Bank policies continue to diverge.
The recent surge in oil prices is no prelude to broader price increases that would force the Fed to raise interest rates, top Fed officials said Thursday in what appeared to be the predominant view at the central bank.
Comments by the Fed officials strengthened expectations the central bank will stay on course with its $600-billion debt-buying program and not look to reverse its super-easy monetary policy any time soon.
Gold prices have almost doubled since the Fed cut interest rates to the bone in 2008 in an attempt to shock the economy back to life after the worst financial crisis since the Great Depression.
SILVER RATIO LOWEST IN NEARLY 3 DECADES
Silver (SI-FT42.640.982.34%) climbed 3.5 per cent to $42.03, having hit a 31-year high at $42.07 an ounce.
The spread between gold and silver – showing the relative strength between the two metals – has nearly halved since last August. The gold-to-silver ratio fell to just above 35, the lowest since the early 1980s.
“Silver continues to attract a very large speculative bid. Even though silver is far out-gaining gold, the reasons why precious metals rally are related to the financial factors that surround the gold market,” said Bill O’Neill, partner at commodities firm LOGIC Advisors.
Silver has rallied about 35 per cent year-to-date on talk of near-term supply tightness as a recovering global economy boosts demand for the industrial metal.
“There is still a lot of speculative, investment money coming into the gold market. Until there is a clear technical signal that the situation is reversed, the momentum of silver remains intact,” HSBC’s Steel said.
The Globe
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China's $3 Trillion Reserves Show G-20 Task as Wen Resists Yuan Pressure
China’s foreign-exchange reserves exceeded $3 trillion for the first time, highlighting global imbalances that Group of 20 finance chiefs aim to tackle at meetings in Washington.
China’s currency holdings, the world’s biggest, swelled by $197 billion in the first quarter to $3.04 trillion, the central bank said yesterday. New loans were a more-than-estimated 679.4 billion yuan ($104 billion) in March, it said.
Premier Wen Jiabao’s policy of controlling the currency, along with trade surpluses and flows of capital into the fastest-growing major economy, have boosted the reserves by $1 trillion in two years. G-20 finance chiefs are seeking to agree on an early-warning system that can prevent the type of imbalances in trade and financial patterns that contributed to the 2007-09 crisis and recession.
“The continued substantial foreign-exchange reserve accumulation by China is a reflection of global imbalances,” said David Cohen, a Singapore-based economist at Action Economics who formerly worked for the U.S. Federal Reserve. China continues to “resist the pressure for faster appreciation of the yuan,” he said.
China will report first-quarter economic growth of 9.7 percent and March inflation of 5.4 percent, Jiang Guangce, a partner and fund manager at Congrong Investment Management Co., said yesterday, citing market speculation. Consumer prices rose 5.3 percent or 5.4 percent last month, according to a Phoenix Television report yesterday.
Those numbers, to be released today, would exceed economists’ median forecasts for 9.4 percent growth and 5.2 percent inflation.
‘Striking’ Increase
The currency holdings at the end of March compared with the $2.98 trillion estimate in a Bloomberg News survey of five economists and $2.85 trillion at the end of last year. M2 money supply rose 16.6 percent in March from a year earlier, exceeding analysts’ median estimate.
“Most striking at first sight is how fast the foreign- exchange reserves are rising,” said Mark Williams, a London- based economist for Capital Economics Ltd. “Chinese officials point to the first quarter’s trade deficit as evidence that there is less need for the renminbi rise, but the scale of reserve growth shows that the People’s Bank is still intervening very actively to keep the renminbi down.”
Yesterday’s reports underscore the challenges for China’s policy makers as they seek to stem inflation while at the same time preventing the yuan from soaring.
Stronger Yuan
The yuan closed at 6.5315 per dollar in Shanghai yesterday, about 4.5 percent higher than a year ago. By contrast, Singapore’s currency has climbed 10 percent in that time, according to Bloomberg data. That nation, which uses its exchange rate as the main monetary policy tool, yesterday said it will allow further appreciation after a greater-than-forecast acceleration in growth last quarter.
Any slowing in the pace of gross domestic product growth may help defuse risks of overheating and aid Wen’s campaign to contain consumer prices. The peak year-on-year gain in GDP growth during 2010 was 11.9 percent.
U.S. Federal Reserve Chairman Ben S. Bernanke is among those who have said that excess savings in Asia contributed to inflows of capital into the U.S. The investments helped hold down American borrowing costs, fueling a record mortgage boom that ended with a bust that sparked the global credit crisis.
Global Imbalances
At a February meeting in Paris, G-20 policy makers produced a list of criteria to use as yardsticks for when dangerous global imbalances are developing. The list included public debt and fiscal deficits, private debt and savings rates, trade balances and net investment-income flows and transfers.
Omitted at China’s behest were foreign-exchange reserves, a sign of the international disparities in spending and saving. In a signal that China may continue to resist the initiative, Li Yong, a vice finance minister, said guidelines could be used as a “political tool” against his nation by the G-20.
Reserves are also affected by exchange-rate swings. Strength in the euro against the dollar may have bolstered China’s holdings in the first quarter, by boosting the dollar- denominated value of assets held in the European currency.
Chinese officials are reining in lending to counter inflation after a record expansion of credit in 2009 and 2010, with the central bank boosting interest rates four times since mid-October and raising banks’ reserve requirements.
“We will further improve the yuan formation mechanism and increase yuan exchange-rate flexibility to eliminate monetary conditions that fuel inflation,” Wen told China’s cabinet this week.
'Red' sky worries Iran as sandstorms wreak havoc
The blinding sandstorms hit western, central and southern provinces on Wednesday due to winds blowing at high speed, considerably reducing visibility to as low as 50 metres (yards) in some cities.
"Unprecedented sandstorms which entered from west are the most violent storms that have ever reached Iran," said Touraj Hemmati, a top environmental official in the southwestern Khuzestan province which borders Iraq.
Arman newspaper said "small Arabian sands... marked a red situation across the country's sky."
The Kayhan daily said "yellow sand rained in Khuzestan," where the rate of air pollution reached 70 times the permitted amount. It said 123 people were hospitalised in the nearby province of Ilam, also bordering Iraq.
Authorities in six western provinces, including Khuzestan and Ilam, were forced to suspend school and university activities and shut down government offices,Tehran Emrouz daily reported.
Air traffic was partially affected in the country, with incoming flights and departures cancelled in some western cities, according to Hamshahri newspaper.
State air pollution chief Amir Jamali announced on Wednesday that Iran was hit by sandstorms three times more frequently in the first Iranian month of Farvardin, from March 21 to April 20, compared to the same period last year.
"We have witnessed dust storms thrice... Drought that we experienced (last year) has intensified this phenomenon," Fars news agency quoted him as saying.
Iranian media blamed most of the sandstorms on countries west of the Islamic republic, particularly Iraq which is hit by desertification and deforestation due to a decline in the flow of water disrupted by construction of dams as well as a disappearing agriculture industry.
Arman reported that 23 lawmakers, in a letter to President Mahmoud Ahmadinejad on Wednesday, demanded the government "resolve the problems caused by the sandstorms in western and southern provinces."
The weather phenomenon continued Thursday with less intensity in the western provinces, as adverse winds blew further into the central parts of the country. Authorities expect the sandstorms to continue until later in the evening.
Breitbart
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Japan nuclear crisis: workers urged to store blood cells
Workers at Japan's troubled nuclear plant should store blood cells now in case they need them later as treatment for radiation overdose, some Japanese experts suggest.
Plant workers are struggling to control radiation leakage from the Fukushima Daiichi complex, which was severely damaged by the March 11 earthquake and tsunami. Radiation levels are dangerously high in some areas of the plant, and the experts note that the work there will take years, posing a risk of accidental exposure.
High doses of radiation can destroy the blood-making cells of the bone marrow, a potentially fatal outcome that can be treated with transplants of blood stem cells. Such transplants are standard therapy now for blood diseases like leukaemia. Getting those cells from a donor takes time, and potential incompatibility between the donated cells and the recipient can lead to severe complications, the experts noted.
So they suggest that the plant's workers have their own blood stem cells banked now. That involves getting injections for several days to get stem cells from the marrow to enter the bloodstream. Then blood would be drawn from one arm, processed to extract the stem cells, and returned into the other arm. That takes several hours.
Once the stem cells were stored, any workers who later got accidentally exposed to a large radiation dose could get infusions of their own cells.
The experts, from institutions including Toranomon Hospital and the Japanese Foundation for Cancer Research in Tokyo, discuss the idea in a letter published online Thursday by the journal Lancet.
The telegraph
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Thursday, April 14, 2011
JPMorgan loan drop raises concerns
NEW YORK — JPMorgan Chase & Co. reported a 4% drop in its loan book in the first quarter, raising questions about the U.S. banking industry’s ability to boost profit as the U.S. housing sector continues to flail and businesses remain reluctant to borrow.
First-quarter earnings rose by two-thirds, but that increase came mainly from a drastic cut in the amount of money set aside for bad loans, a move that could be difficult to repeat over the long term.
The bank’s book of consumer loans shrank 10% in the quarter, and loans to corporate customers did not increase enough to make up for that. The No. 2 U.S. bank also took US$1.75-billion in charges linked to collecting payments on bad mortgages and foreclosures, and said an upcoming settlement with regulators over mortgage servicing abuses could force it to hire as many 3,000 people.
The quarterly results were the first from a major Wall Street bank. They beat expectations but raised concerns about lending profits, and bank shares broadly edged lower.
“The only way banks can grow earnings over the long term is to grow assets, which isn’t happening,” said Malcolm Polley, chief investment officer of Stewart Capital Advisors, with $1-billion under management.
“Assets in the industry are stagnant at best, and they will not grow in the foreseeable future,” Mr. Polley said.
Analysts and investors said a good deal of banks’ ability to grow in the future will depend on an expanding global economy, which will spur demand for loans, stock and bond underwriting, and other services. An acquisition outside the United States could help generate higher profit, too, analysts said.
U.S. retail sales rose only modestly in March as auto sales fell from the month before and consumers faced higher gasoline prices.
JPMorgan earned US$5.56-billion, or US$1.28 a share, in the first quarter, up from US$3.33-billion, or 74 cents a share, a year earlier. Wall Street analysts, on average, expected US$1.16 per share, according to Thomson Reuters I/B/E/S.
The bank set aside US$1.17-billion to cover bad loans, down from US$7.01-billion a year earlier. The smaller loan-loss provision resulted from lower credit losses for many types of loans, including credit cards.
Credit improvement was a key factor in regulators allowing JPMorgan in March to boost its dividend after stress tests.
In recent quarters, the bank has boosted profit mainly by setting aside less money to cover credit losses, rather than by generating more money from new loans. Pre-provision profit, a measure of how much the bank earns before setting aside money for credit losses, fell 20% to US$9.23-billion in the first quarter. Loans on the bank’s books fell 4% to US$686-billion, indicating demand for loans is tepid compared with how quickly existing loans are being repaid.
“JPMorgan can’t count on gains from (setting aside less money) in the future. If the bank can’t get their loan book growing in a significant way, they face a number of headwinds,” said Sean Egan, managing director at Egan-Jones Ratings.
The bank is making more loans to corporate customers, but the terms of those loans are easier than they have been in prior quarters, CEO Dimon said.
JPMorgan’s investment banking profit fell 4% to US$2.37-billion. Merger advisory and debt underwriting revenue rose, while stock underwriting fell, as did trading revenue.
Bond trading profits, though, were higher than some analysts had expected, which helped lift Goldman Sachs Group Inc GS.N shares 1.1%. Goldman is due to report earnings next Tuesday.
Fixed income trading fared better than estimated. Profit fell 4% to US$5.24-billion from the year-ago period, which was an exceptionally strong quarter but rose more than 80% from the fourth quarter.
One millstone for JPMorgan is its residential mortgage book, where it took a US$1.1-billion charge before taxes to account for the higher costs of collecting payments on mortgages, and a US$650-million charge before taxes for foreclosure-related matters. Chief Financial Officer Doug Braunstein said the bank would have to spend US$1.1-billion to hire the 2,000 to 3,000 people to comply with the mortgage servicing settlement, and the regulators may impose additional fees and penalties.
Chief Executive Jamie Dimon added, “I think a good global settlement would be good for everybody … Keeping this mess going on is not a good thing for anybody.”
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