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Gold Drops 4% to Hit Two-Week Low as Dollar Bounces, Oil Sinks, Bear-Market Rally in Stocks Continues -- Posted Wednesday, 23 July 2008 | Digg This Article | Source: GoldSeek.com London Gold Market Report from Adrian Ash THE PRICE OF PHYSICAL Gold dumped another $12 per ounce Wednesday morning in London, falling more than 4% from yesterday's four-session high. World stock markets continued their sharp rally, meantime, with Europe's 300 largest shares just climbing out of the 20% bear-market loss that hit between Nov. and June. Crude oil fell towards $126 per barrel. The US Dollar pushed the Euro down...

The Fed's "beige book," a roundup of reports from the 12 regional Fed banks released every six weeks, shows economic activity is weak across most of the U.S. and companies are increasingly worried about growth in the coming months. Despite the $107 billion in economic-stimulus checks that have been doled out to millions of Americans since late April, the report said consumer spending was reported as mixed, weak or slowing in nearly all districts. In the Philadelphia region, for example, "despite what one store executive termed 'very large markdowns' on many types of merchandise, total sales have fallen below the...

Some of the world’s largest sovereign wealth funds are seeking to scale back their exposure to the US dollar in a sign of global concern about the currency. One big sovereign fund in the Gulf has cut its dollar-denominated holdings from more than 80 per cent a year ago to less than 60 per cent, while China’s State Administration of Foreign Exchange (SAFE) has been looking to strike deals with private equity firms in Europe as a part of a strategy to reduce its dollar holdings. Sovereign wealth funds have played a leading role in helping to recapitalise faltering US...

Thanks to oil prices that have reached record levels, proponents of increased exploration in the U.S. have gained an upper hand in the debate over whether to drill in previously untapped areas.While it would be hard to argue against more robust domestic exploration, it should be said that some of its adherents ignore the dollar's outsized impact on the price of oil, along with basic economic laws regarding comparative advantage and trade. Much has been made of expensive oil in recent years, while much less has been said about oil being expensive due to the dollar being weak. The oil...

Fears surrounding the global financial sector and a U.S.-led economic downturn continued to set the tone in foreign-exchange markets Wednesday, leaving the dollar under pressure but above recent lows against major counterparts. The euro is slightly higher against the dollar, changing hands at $1.5928 a gain of 0.1%. The euro notched another all-time high against the greenback Tuesday near $1.6036 then trimmed gains. The dollar is down 0.8% against a broadly stronger Japanese yen at 103.84 yen and is off 0.4% against the Swiss currency to 1.0044 francs. The dollar's decline was slowed by a sharp fall in crude oil...

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world. The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors. "Japan was able to cut its interest rates to zero," said Alex...

Insofar as a currency derives its strength from the balance sheet of the issuing central bank, the euro is unsound and becoming more so, as Mr. Mersch did not quite say. We, however, will say it for him. In fact, we will say the same for most of the leading monetary brands, that of the United States not excluded. The mortgage mess is the immediate cause of the new debasement. A long-held article of central banking dogma is the remote cause.

The dollar declined sharply against other major currencies, hitting fresh weekly, monthly and in some cases multiyear lows as investors continued to fret over the health of the U.S. financial sector. The British pound was buying more than $2.00, the euro briefly traded above $1.60, and the Australian dollar was at its highest level against the U.S. currency since 1983, buying more than 98 cents. The currency moves came as Asian stocks saw a late selloff, with Hong Kong's benchmark index down 4% after Tokyo closed 2% lower. European shares traded at three-year lows early in the day, with the...

Analysis: Blame the dollar By Massoud Hedeshi, international development expert, in Vienna The US economic power horse is running out of ideas and cash as it jostles with a massive national debt, housing and financial crises, rising inflation, and a depreciating currency. This has all contributed to a growing tendency to live off credit amassed through petrodollars and foreign loans, leaving repayment for future generations. Today, in much of America, communities and suburbs are dealing with a drastic increase in foreclosures and short sales. This has not been helped by the fact that gas is selling at over $1 a...

VATICAN CITY, JULY 9, 2008 (Zenit.org).- For the first time since 2003, the Holy See finished in the red in 2007, marking a deficit of more that $14 million (€9 million).The Council of Cardinals for the Study of Organizational and Economic Questions of the Apostolic See reported the result today after meeting last Thursday and Friday in the Vatican. However, Vatican City State, separate from the Holy See, closed 2007 with a net gain of about $10.5 million (€6.7 million). The net from 2004-2006 for the Holy See was a combined $15 million in the black. The balance was presented...

A financial bubble. I will use the familiar term “bubble” as a shorthand, but note that it confuses cause with effect. A better, if ungainly, descriptor would be “asset-price hyperinflation”—the huge spike in asset prices that results from a perverse self-reinforcing belief system, a fog that clouds the judgment of all but the most aware participants in the market. Asset hyperinflation starts at a certain stage of market development under just the right conditions. The bubble is the result of that financial madness, seen only when the fog rolls away. is a market aberration manufactured by government, finance, and industry,...

Iran has really gone and done it now. No, they haven't sent their first nuclear sub in to the Persian Gulf . They are about to launch something much more deadly -- next week the Iran Bourse will open to trade oil, not n dollars but in Euros' This apparently insignificant event has consequences far greater for the US people, indeed all for us all, than is imaginable. Currently almost all oil buying and selling is in US-dollars through exchanges in London and New York . It is not accidental they are both US-owned. The Wall Street crash in 1929...

Federal Reserve Chairman Ben Bernanke said on Tuesday the U.S. central bank may keep an emergency lending facility for big Wall Street firms open past year-end while it seeks to restore financial market stability. In remarks to a mortgage lending forum sponsored by the Federal Deposit Insurance Corp., Bernanke said credit costs have been driven higher and the pace of U.S. economic growth also has been hurt by market turmoil. "We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end, should the current unusual and...

Early this year, the price of crude oil surpassed its previous inflation-adjusted peak of $103.76 a barrel (a record established in 1980). Since then, the price of crude has been making new record highs on a regular basis... Just what is pushing prices skyward? Surprisingly, the G-8 finance ministers failed to mention the US dollar’s role. Every commodity trader knows that all commodities trade off changes in the value of the greenback... For example, if the greenback had held its January 2001 value against the euro, oil would have traded at about $76 a barrel in May 2008. This is...

Not long after he took over at the Federal Reserve in 1987, Alan Greenspan was faced with questions about what to do with the Fed funds rate. After polling the various Fed presidents, in September of that year Greenspan found that there was "good growth, high optimism and full employment--all reasons to be leery of inflation." According to his biography the various FOMC members were persuaded "that the Fed would have to raise rates soon." In describing the thought processes at work, Greenspan plainly wrote that in order to "subdue inflationary pressures, we were trying to slow the economy by...

Europe is on the brink of an economic slowdown. Its citizens are being choked by record inflation. Plans to reform its political institutions have hit their second major stumbling block in three years. Now is not exactly a great time for France to take up the rotating six-month presidency of the European Union, but it does give a good excuse for Nicolas Sarkozy to take a pop at the European Central Bank. The French president has made no secret of his contempt for the euro zone's central bank in the past, which he has publicly slammed for refusing to bring...

NEW YORK (AFP) - Oil prices fell sharply Monday in a move some traders attributed to an ease in geopolitical tensions related to Iran's nuclear program and a strengthening US dollar. New York's main oil futures contract, light sweet crude for August delivery, slumped a hefty 3.92 dollars to close at 141.37 dollars. The contract had earlier fallen over five dollars before trimming some of its losses. In London, Brent North Sea crude for August settled down 2.55 dollars at 141.87 dollars a barrel.

Call this the Age of Commodities. Also think of this as the age in which commodities, long relegated to the cellar by economists and markets, have fought back. They have fought back with such vigor and catastrophic effect on global business that they may be the determining force in the November election. But Sens. John McCain and Barack Obama have been tiptoeing around the global crisis triggered by a run on commodities. Wikipedia defines the category well: “A commodity is anything for which there is demand, but is supplied without qualitative differentiation across a market. In other words, copper is...

ALGIERS (AFP) - OPEC president Chakib Khelil warned Sunday that oil prices will continue to rise because of the falling dollar, in an interview in the Algeria-News. "The price of oil will rise again in the coming weeks. We have to follow the evolution of the dollar, because a one percent fall in the dollar means four dollars more on the price of oil," Khelil, who is Algeria's minister of energy and mines, told the independent daily. < > "I believe that 60 percent of the rise is due to the fall in the exchange rate of the dollar and...

LONDON (Reuters) - A weaker dollar cannot be blamed for soaring oil prices as policymakers around the world tussle with the twin specters of rising inflation and slowing growth, U.S. Treasury Secretary Henry Paulson said on Thursday. Some of the world's leading oil producers and market analysts say the weak dollar is a key factor spurring many dollar-denominated commodities -- including oil -- to record highs, pushing the cost of living higher across the world. It is rare for the United States government to say anything about the greenback beyond its mantra that it believes in a strong dollar, but...

WASHINGTON, July 2 (UPI) -- U.S. Treasury Secretary Henry "Hank" Paulson is in the news a lot these days, but not for the reasons he would like: Seven and half years of reckless and blindly optimistic fiscal and energy policies are coming home to bite him and his master, President George W. Bush. Paulson acknowledged in Berlin Tuesday that soaring oil prices are dragging down economic prospects in the United States and around the world. "There is no doubt that both our countries, as well as the world, are feeling the burden of high oil prices," Paulson said following a...

WASHINGTON (Reuters) - U.S. President George W. Bush reiterated on Wednesday that his administration believed in a strong dollar, and said the currency would reflect the relative strength of the economy. "We're strong dollar people in this administration, and have always been for a strong dollar, and believe that the relative strengths of our economy will reflect that," Bush told reporters at a news conference ahead of his trip to Japan for a meeting of the Group of Eight rich nations. Inflation is expected to be high on the G8 agenda next week. Some countries have blamed the weak dollar...

China's premier urges US to stabilise dollar AFP - Tuesday, July 1 BEIJING (AFP) - - Chinese Premier Wen Jiabao has again called on the United States to stabilise the dollar, warning the greenback's decline was posing threats to the global economy. "China is taking measures to safeguard its stable economic development," Wen said during a meeting with visiting US Secretary of State Condoleezza Rice on Monday, according to a statement posted on the foreign ministry's website. "(We) hope the US will overcome its subprime crisis soon and stabilise the exchange rate of the US dollar, which is significant to...

The oil price has doubled in the past year because the US Federal Reserve panicked over risks to the over-leveraged financial system and flooded markets with excess liquidity. The world is willing to pay arbitrarily high prices to hedge against inflation, but the cost of inflation hedges drags down the world economy. Last week's spike in commodity prices and swoon in global stock markets points the way to a deep and prolonged fall in economic activity. Breaking out of the death spiral still is possible. With mixed emotions, I propose a simple solution. In fact, a crash would not be...

Gold futures close at two-and-a-half-month high Dollar weakness, strength in oil feed gold's risk aversion traits By Polya Lesova & Myra P. Saefong, MarketWatch Last update: 4:23 p.m. EDT July 1, 2008 SAN FRANCISCO (MarketWatch) -- Gold futures climbed Tuesday to close at their highest level since mid-April, as weakness in the dollar and rising crude-oil prices burnished the precious metal's investment appeal. Carrying forward with its recent rally, gold for August delivery rose $16.20 to finish the session at $944.50 an ounce on the New York Mercantile Exchange. It climbed as high as $948.50 earlier in the session. Gold's...

The gross totals of debt in the United States are, well, gross. Private debt owed by Americans is nearly $14 trillion—approximately the size of our Gross Domestic Product. Corporate debt exceeds $6 trillion. Uncle Sam’s official debt is $9.4 trillion. If one includes unfunded liabilities for Social Security, Medicare, and who-knows-what, then you can add several more multiples of GDP to our total national indebtedness.

Energy: The Federal Reserve and its leader, Ben Bernanke, have taken a lot of hits in recent weeks. Some even suggest that the energy crisis is due more to Fed fumbling than anything else. This is preposterous.It's one thing to suggest the Fed has erred in setting interest rates. Heck, IBD's been a thorn in its side so long we sometimes feel we do nothing but correct errant central bankers. That said, the Fed's conduct of monetary policy isn't what's causing our current energy crisis. The energy crunch is a result of two things being out of whack: supply and...

“Over the past five years the greenback has lost 40 percent of its value. Oil is close to $140 a barrel. And gold, now trading above $900 an ounce, is warning that if the Fed fails to stop creating excess dollars, inflation could rise to 6 or 7 percent.”—Larry Kudlow, “Where’s Bernanke’s Inner Volcker?”, June 27th, 2008. The Creature is at it again. No, the Fed didn’t cut interest rates again or bail out another investment bank—this time their crime was a bit more subtle, yet just as harmful. They lied. A few weeks ago, ALG News was very pleased...

BASEL, Switzerland (Reuters) - Central bankers issued a stern warning on Sunday against the dangers of surging inflation, saying rising energy costs risk damaging growth in rich and poor countries alike. Policymakers attending talks at the annual meeting of the Bank for International Settlements said they were on high alert to the dangers posed by rising inflation and slowing growth, but there was no one-size-fits-all solution. "We see very difficult times for the world economy moving ahead," said Martin Redrado, Argentina's central bank governor. "In particular in the financial sector we are going to be witnessing the second wave of...

Saudis press United States to put an end to rate cuts American Account Irwin Stelzer SO the Federal Reserve Board’s monetary policy committee (technically, the Federal Open Market Committee, or FOMC) has decided to leave interest rates as they are - which is far less important than how it arrived at that decision. What follows is a combination of hard fact and my own surmise, mixed together so as to shield the usual highly placed, reliable source. There is something called “the Fed family”. It’s not as shady as a mafia family, but far more powerful. Members include chairman Ben...

On the day after an unusually important Fed policy meeting both gold and stocks severely rebuked the central bank's decision to take no action in support of the weak dollar or to curb rapidly growing inflation. Gold spiked $30, a clear message that Bernanke & Co. won't stop inflation. Stocks plunged over 200 points, an equally clear message that the Fed's cheap-dollar inflation is damaging economic growth. These market warnings are two sides of the same coin. Inflation, which is caused by excess dollar creation, is the cruelest tax of all. It is a tax on consumer and family purchasing...

(IsraelNN.com) Mujahideen Muslim terrorists may be behind the sinking American dollar as part of a campaign to cripple the American economy, the Middle East Media Research Institute (MEMRI) reported. The media watch group, which specializes in tracking Arabic language websites, said that postings on websites the past two years reflect a move toward waging an economic war against the United States. Financial, rather than military, losses that will prompt the U.S. to change its policies in the Middle East and elsewhere. Mujahideen terrorist groups that operate in Afghanistan, Pakistan and other countries "have come to the conclusion that it is...

The Shrinking Influence of the US Federal Reserve By Gabor Steingart in Washington Humiliation for Mr. Dollar: Ben Bernanke, the chairman of the United States Federal Reserve Bank, faces a general investigation by the International Monetary Fund. Just one more example of the Fed losing its power. The United States Federal Reserve Bank, or Fed, seems as much a part of America as Coca-Cola or Pizza Hut. But at least one difference has become apparent in recent days. While the pizza chain and soft-drink maker are likely to expand their scope of influence in the age of globalization, the US...

A satire about the decline of the US dollar, written in a mock biblical style reminiscent of *Private Eye's Old Testament-based spoofs. In the last days of the ancient world, the people of Egypt loved their chariots above all. Each chariot was pulled by many horses, and each horse was an oats-guzzler, consuming many barrels of oats per mile traveled. And the land of Egypt was bountiful in all but oats to feed the horses to pull their chariots. So the Egyptians traded with the lands of the Arabites, which had plentiful oats. But the Arabites wanted gold and silver...

US central bank accused of unleashing an inflation shock that will rock financial markets Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero". "We're in a nasty environment," said the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well to preserve their wealth." Barclays said...

NEW YORK: The Italian defense contractor Finmeccanica's recent $4 billion acquisition of DRS Technologies, a U.S. defense company, was a big one for the industry, and it is not likely to be the last. More European defense contractors looking to gain a presence in the United States, the largest defense market in the world, will very likely be setting their sights on U.S. suppliers. Increasing acquisition activity is also expected within the U.S. defense sector as suppliers consolidate to become one-stop shops for contractors like Boeing, Lockheed Martin and Northrop Grumman. U.S. defense spending - estimated to exceed $500 billion...

NEW YORK (CNNMoney.com) -- Oil prices were volatile Monday morning as the dollar strengthened and investors weighed a production increase by Saudi Arabia against potential supply disruptions in Nigeria. U.S. crude for August delivery rose 97 cents to $136.33 a barrel in electronic trading. Crude prices had been more than $1 higher in Asian trading. The dollar rose against the euro early Monday following dour economic reports in Germany and France. "The dollar got the market off its earlier highs," said Phil Flynn, senior market analyst at Alaron Trading in Chicago. A stronger dollar is seen as a sign that...

The current high price of oil is artificial and the market is well supplied with crude, Iranian President Mahmoud Ahmadinejad said on Tuesday, pinning the blame on the sliding dollar. "The rise in consumption is lower than the rise in production," Ahmadinejad told a meeting in the city of Isfahan of the Organisation of Petroleum Exporting Countries' (OPEC's) fund for international development. "The market is well supplied but prices are rising and this situation is artificial and imposed" by world powers. Ahmadinejad, who is president of OPEC's number two producer, has repeatedly said that the current high price of oil...

"We accept euros," say signs in the windows of several Manhattan retailers. The Continental currency is up 14% against the dollar the past 12 months. Measured against a basket of currencies of big economies, the dollar is at a 25-year low. The pendulum may be about to swing the other way, however. Europe's growth rate is expected to sputter to 1.7% this year from 2.6% in 2007. If the European central bank cuts interest rates to kick-start the economy, the dollar will benefit. Foreign direct investment into the U.S. is also increasing the demand for dollars; it rose 62% in...

The clash between the European Central Bank and the US Federal Reserve over monetary strategy is causing serious strains in the global financial system and could lead to a replay of Europe's exchange rate crisis in the 1990s, a team of bankers has warned. "We see striking similarities between the transatlantic tensions that built up in the early 1990s and those that are accumulating again today. The outcome of the 1992 deadlock was a major currency crisis and a recession in Europe," said a report by Morgan Stanley's European experts. Just as then, Washington has slashed rates to bail out...

NEW YORK (AP) -- Crude oil futures hit a record close to $140 a barrel Monday as the dollar weakened against the euro. Retail gas prices rose to a record $4.08 a gallon. Light, sweet crude for July delivery rose to $139.89 before retreating to trade up $3.62 at $138.48 a barrel on the New York Mercantile Exchange. Many investors buy commodities such as oil as a hedge against inflation when the dollar falls. Also, a weaker dollar makes oil less expensive to investors dealing in other currencies. Many analysts believe the dollar's protracted decline is a major factor behind...

OSAKA, Japan (Reuters) - The weak U.S. dollar and oil speculators took centre stage as Group of Eight finance ministers gathered in Japan on Friday to grapple with surging inflation and a slowing global economy. ADVERTISEMENT As soaring energy costs stirred protests from Malaysia to Spain, the world's most powerful governments talked up a link between a dollar slide and a doubling of oil prices in 12 months. Their communique at the end of their meeting on Saturday will describe commodity prices as a "serious challenge" to economic growth, a G8 source told Reuters. The G8 countries, mostly importers of...

Notes printed in Berlin have more currency for bank customers who fear a 'value crisis' Ordinary Germans have begun to reject euro bank notes with serial numbers from Italy, Spain, Greece and Portugal, raising concerns that public support for monetary union may be waning in the eurozone's anchor country. Germany's Handelsblatt newspaper says bankers have detected a curious pattern where customers are withdrawing cash directly from branches, screening the notes to determine the origin of issue. They ask for paper from the southern states to be exchanged for German notes. Each country prints its own notes according to its economic...

Dmitry Medvedev delivered the most anti-American speech of his one-month presidency this weekend when he claimed that US selfishness had led the world into its worst financial crisis since the Great Depression. Addressing a grandiose conference designed to show off Russia's financial resurgence, the new president said that America's "economic egoism" and Western protectionism had triggered a global economic slowdown. "The aggressive financial policies of the biggest economy in the world have led not only to corporate losses; most people on the planet have become poorer," he told delegates at the St Petersburg Economic Forum. Western chief executives who came...

NEW YORK (CNNMoney.com) -- Oil prices shot up Wednesday as the dollar slipped and the U.S. government reported that crude supplies shrank more-than-expected last week. In its weekly inventory report, the Energy Information Administration said crude supplies fell by 4.6 million barrels last week. Analysts were looking for a drop of 1.4 million barrels, according to a poll by energy research firm Platts. Light, sweet crude for July delivery rose $5.07 to settle at $136.38 a barrel on the New York Mercantile Exchange. The contract surged nearly $11 on Friday to set an all-time high of $139.12 before giving up...

Recent Federal Reserve activities suggest that Chairman Ben Bernanke went from being in charge to losing control of the Federal Reserve in the span of a few days.As for the longer-term direction of monetary policy and the Federal Reserve? It could be up for grabs after the elections this fall. Credit markets have been sending a signal that economic conditions might improve later this year, and the dollar value appeared to be in the process of finding a bottom against the overvalued euro. At least it appears that is what Bernanke thought. Central bank officials typically don't say much about...

NEW YORK (AP) -- Oil prices fell Tuesday, giving up an earlier advance as the dollar held its gains against the euro and the Energy Department slashed its oil consumption projections. Retail gasoline prices rose to a new record over $4.04 a gallon.

Friday's market rout in employment, oil, the dollar and stocks was not the end of the world, but it is a warning. The message is that the current Washington policy mix of easy money and Keynesian fiscal "stimulus" is taking us down the road to stagflation. Stocks hit the skids following a plunge in the dollar and a nearly $11 leap in the oil price, which in turn followed a jump in the jobless rate to 5.5% in May from 5%. Investors are guessing that the weak jobs report means that the Federal Reserve won't follow through on its recent...

Last week, Jean-Claude Trichet, the President of the European Central Bank, gathered with fellow euro-worthies in Frankfurt to be photographed next to a giant cake. However, having attended the single currency's 10th birthday party, eurozone policy-makers could now be suffering from a permanent hangover. A decade on, the single currency area is still enduring the co-ordination problems that have bedevilled it from the outset. And, such are the difficulties in running a huge currency bloc, now with 15 member states, that Trichet's attempts to temper inflationary expectations last week simply made price pressures much worse. Last week, the International Monetary...

DOHA (AFP) - US Treasury Secretary Henry Paulson said on Sunday that high inflation in the oil-rich Gulf region was not caused by the peg to the stumbling dollar, but any decision on the link was up to individual governments. Speaking to reporters in Qatar on the second leg of a Gulf tour, Paulson also said skyrocketing oil prices were a question of supply and demand. "I haven't heard anyone saying to me that the peg is causing a problem. You can look at Kuwait, they depegged to a basket of currencies (but) they have the same inflation... problem," he...