I'll have to say I wasn't disappointed in the talk given by Federal Reserve Chairwoman Janet Yellen, as my expectations were appropriately low, and I wasn't surprised by the lack of anything new and some of the weasel words used to provide cover in case economic conditions in the second half are such that the Fed doesn't raise interest rates as Yellen has been leaning towards and most others expect.
Here's the wording she used to cover her actions if they end up different than she has signaled to the market:
"But I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step ..." she said, referring to the probability of raising interest rates.
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Showing posts with label Interest Rates. Show all posts
Showing posts with label Interest Rates. Show all posts
Monday, July 13, 2015
Tuesday, November 16, 2010
Gold Prices Today Plummet on South Korea, U.S. Dollar, EU Sovereign Debt
Several market forces are pushing the price of gold down today, as concerns over Ireland's sovereign debt has the euro under pressure, pushing up the value of the U.S. dollar, while pent-up concern over the probably of Asian countries raising their interest rates become a reality, as South Korea was the first to take the action to battle inflation. Most thought China may first take that step.
South Korea raised their interest rates by 25 basis points to 2.50.
The U.S. dollar index rose in response to the weakened euro, gaining $0.79, increasing to $79.14 earlier in the day.
Interest rates became a major concern when China revealed their consumer price index was higher than expected, reaching 4.4 percent, generating speculation they would raise interest rates to combat inflation.
Gold prices will probably remain under pressure until the interest rate scenario plays out, the continual uncertainty surrounding the European Union sovereign debt crisis is handled.
The problem with the European sovereign debt crisis is there appears to be a lot of shady dealings and data still being presented as the condition of some countries, as Greece has again stated their numbers are probably lower than believed concerning their deficits.
Socialism isn't sustainable, and these countries better stop their entitlement programs and mentality before the region becomes an economic graveyard. They're already well on the way.
Once the Ireland situation is taken care of, or at least a bailout is accepted by them, the euro will move stronger against the U.S. dollar, helping gold to rebound again.
But there will still be the interest rate scenario left to play out, which when Asian nations announce they're going to raise them, will cause pressure to again be brought on gold prices in response.
It looks like we're going to end up having opposite economic pressure on gold, which will probably result in a lot of volatility until the narrative is more clear.
Spot gold prices have fallen by over $26 an ounce as of about 2:00 PM EDT.
South Korea raised their interest rates by 25 basis points to 2.50.
The U.S. dollar index rose in response to the weakened euro, gaining $0.79, increasing to $79.14 earlier in the day.
Interest rates became a major concern when China revealed their consumer price index was higher than expected, reaching 4.4 percent, generating speculation they would raise interest rates to combat inflation.
Gold prices will probably remain under pressure until the interest rate scenario plays out, the continual uncertainty surrounding the European Union sovereign debt crisis is handled.
The problem with the European sovereign debt crisis is there appears to be a lot of shady dealings and data still being presented as the condition of some countries, as Greece has again stated their numbers are probably lower than believed concerning their deficits.
Socialism isn't sustainable, and these countries better stop their entitlement programs and mentality before the region becomes an economic graveyard. They're already well on the way.
Once the Ireland situation is taken care of, or at least a bailout is accepted by them, the euro will move stronger against the U.S. dollar, helping gold to rebound again.
But there will still be the interest rate scenario left to play out, which when Asian nations announce they're going to raise them, will cause pressure to again be brought on gold prices in response.
It looks like we're going to end up having opposite economic pressure on gold, which will probably result in a lot of volatility until the narrative is more clear.
Spot gold prices have fallen by over $26 an ounce as of about 2:00 PM EDT.
Wednesday, August 25, 2010
Jim Rogers: “We never got out of the first recession”
In a telephone interview with Bloomberg, investor and author Jim Roger stated concerning the economic conditions, that “We never got out of the first recession," something we agree with heartily.
As we mention frequently, the GDP of the United States includes the stimulus spending in its results, and so makes things look better than they really are, masking the true state of the economy.
That's why most economic commentators continue to say we're in danger of a double-dip recession.
Stimulus money is leaving the economic system, simply revealing to us the state the economy has always been in.
Also in the interview, Rogers stated this concerning interest rates: “Everyone should be raising interest rates, they are too low worldwide. If the world economy gets better, that’s good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money.”
“We never got out of the first recession,” Rogers added. “If the U.S. and Europe continue to slow down, that’s going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can’t bail us out.”
Concerning commodities, Rogers is still very bullish, and said even if they grow at a rate of 5 to 6 percent annually, they'll still surpass their all-time high, sometime in the next decade.
Rogers said he remains long on commodities.
As we mention frequently, the GDP of the United States includes the stimulus spending in its results, and so makes things look better than they really are, masking the true state of the economy.
That's why most economic commentators continue to say we're in danger of a double-dip recession.
Stimulus money is leaving the economic system, simply revealing to us the state the economy has always been in.
Also in the interview, Rogers stated this concerning interest rates: “Everyone should be raising interest rates, they are too low worldwide. If the world economy gets better, that’s good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money.”
“We never got out of the first recession,” Rogers added. “If the U.S. and Europe continue to slow down, that’s going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can’t bail us out.”
Concerning commodities, Rogers is still very bullish, and said even if they grow at a rate of 5 to 6 percent annually, they'll still surpass their all-time high, sometime in the next decade.
Rogers said he remains long on commodities.
Tuesday, May 11, 2010
US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal SA (NYSE:MT) Fall on China Tightening
A number of companies in the commodity and/or raw materials sector have been under pressure lately, and that's true in the steel industry, as US Steel (NYSE:X), AK Steel (NYSE:AKS), ArcelorMittal SA (NYSE:MT) are down so far in today's trading session because of China's battle against a housing market bubble bursting, and so they're tightening things up to better manage the situation, which has generated uncertainty as to how that will affect the demand for building materials.
This shouldn't dramatically impact the steel industry, but it could cause some of their projections to fall short, depending on how much China may cut back on imports of iron ore and steel, among other materials.
All companies and countries relying on China are getting nervous over how deeply China will have to cut back in order to bring things to a better balance.
This shouldn't dramatically impact the steel industry, but it could cause some of their projections to fall short, depending on how much China may cut back on imports of iron ore and steel, among other materials.
All companies and countries relying on China are getting nervous over how deeply China will have to cut back in order to bring things to a better balance.
Tuesday, April 27, 2010
Investors Flee to Gold for Safety
Gold prices moved higher today as investors fled to safety after the S&P downgraded Greece and Portugal, with Greece debt now being classified as junk and Portugal debt being downgraded two levels.
While ongoing opposing possibilities continue to weigh on gold, for now it seems things will continue to support gold prices, and they'll continue their upward move.
The major event waiting on the sidelines is the increase in interest rates by the federal reserve, which they've said isn't going to happen any time soon. But investor will listen closely as usual to any hint concerns over inflation could cause that to change.
While ongoing opposing possibilities continue to weigh on gold, for now it seems things will continue to support gold prices, and they'll continue their upward move.
The major event waiting on the sidelines is the increase in interest rates by the federal reserve, which they've said isn't going to happen any time soon. But investor will listen closely as usual to any hint concerns over inflation could cause that to change.
Wednesday, March 17, 2010
Gold Responding to Interest Rates
One thing this super recession has taught people, and if nothing else, it could be a great silver lining to some of the pain people have gone through, and that is, interest rates exist for a certain purpose, and they aren't always safe, and there are other factors to consider when deciding whether to invest in something with interest rates, or consider another option.
Just look at municipal bonds as an example. Who would have used the term risk and municipal bonds in the same sentence three years ago? Now though, there are a growing number of financial advisers urging their clients to get out of them, as they are highly toxic at this time, and could be for years, depending on a lot of factors; like the financial health of the city issuing them and the project the money is being raised for.
So many people think when the Federal Reserve finally raises interest rates, people will flock out of gold and other commodities and get the higher returns offered through those types of investments. Most believe that won't happen until the latter part of 2010 at the earliest. The Federal Reserve held things right where they're at today concerning interest rates, and gold responded in a nice upward movement.
Anyway, what are the potential consequences of interest rates going up for holders of gold? The real question will be how much more does the average investor on the street understand the fundamentals of gold as it relates to monetary policy and its effects on the economy. If they at least have a general understanding of that, there won't be much of a move out of gold, although the majority of holders continue to be seasoned or institutional investors. If the average person starts investing in gold, that will be a major factor in the overall impact on gold.
Another key element is the same question, but being directed toward institutional investors. Are they any more in the know than the average, individual investor? In many, if not most cases, they aren't. They are Keynesian's, even if they don't understand what that means, and they will operate based on certain assumptions that probably are no longer viable in the post-recession world, once there is a post-recession that is.
Inflation is going to be held off much longer. Money will eventually be released into the markets, and the pent-up demand is extraordinary, and we could see amazing surges in commodity prices as a result. Look at iron ore this year based on demand, and as far as globally, we're far from what could be called a recovery in any meaningful way.
Another big part of the puzzle is the bond market. Once that collapses, which it almost assuredly will, even more investors will pour money into commodities, especially gold. At that time all bets are off as to how high gold prices will go.
Once that happens, we will then finally enter into a possible gold bubble, but that's not here, and won't be until these other events line up.
Gold won't be going away any time soon as a solid investment and place of safety. I think we're really just getting started, and while exact timing and events could take some interesting turns and twists, we will ultimately arrive, and those positioned in gold will benefit greatly while protecting their wealth and spending power.
Just look at municipal bonds as an example. Who would have used the term risk and municipal bonds in the same sentence three years ago? Now though, there are a growing number of financial advisers urging their clients to get out of them, as they are highly toxic at this time, and could be for years, depending on a lot of factors; like the financial health of the city issuing them and the project the money is being raised for.
So many people think when the Federal Reserve finally raises interest rates, people will flock out of gold and other commodities and get the higher returns offered through those types of investments. Most believe that won't happen until the latter part of 2010 at the earliest. The Federal Reserve held things right where they're at today concerning interest rates, and gold responded in a nice upward movement.
Anyway, what are the potential consequences of interest rates going up for holders of gold? The real question will be how much more does the average investor on the street understand the fundamentals of gold as it relates to monetary policy and its effects on the economy. If they at least have a general understanding of that, there won't be much of a move out of gold, although the majority of holders continue to be seasoned or institutional investors. If the average person starts investing in gold, that will be a major factor in the overall impact on gold.
Another key element is the same question, but being directed toward institutional investors. Are they any more in the know than the average, individual investor? In many, if not most cases, they aren't. They are Keynesian's, even if they don't understand what that means, and they will operate based on certain assumptions that probably are no longer viable in the post-recession world, once there is a post-recession that is.
Inflation is going to be held off much longer. Money will eventually be released into the markets, and the pent-up demand is extraordinary, and we could see amazing surges in commodity prices as a result. Look at iron ore this year based on demand, and as far as globally, we're far from what could be called a recovery in any meaningful way.
Another big part of the puzzle is the bond market. Once that collapses, which it almost assuredly will, even more investors will pour money into commodities, especially gold. At that time all bets are off as to how high gold prices will go.
Once that happens, we will then finally enter into a possible gold bubble, but that's not here, and won't be until these other events line up.
Gold won't be going away any time soon as a solid investment and place of safety. I think we're really just getting started, and while exact timing and events could take some interesting turns and twists, we will ultimately arrive, and those positioned in gold will benefit greatly while protecting their wealth and spending power.
Tuesday, March 16, 2010
Barrick Gold (ABX.TO), Potash (POT.TO) Push TSX Up
Toronto Stock Exchange Up on Rising Commodity Prices
Rising commodity prices drove up the Toronto Stock Exchange today to its highest level since September 2008, led by majors like Barrick Gold (ABX.TO) and Potash (POT.TO).
This is the third straight day the index has finished the session above 12,000.
Gold mining giant Barrick Gold (ABX.TO) closed the day at $40.64, while Potash (POT.TO) endd the session at $128.75. Potash was moved by reports their inventory may have dropped.
Barrick Gold and other similar companies were moved partly by the anticipation of interest rates in the U.S. remaining the same, and the Federal Reserve confirmed this after their meeting, possibly signaling another upward move of gold as everything is lining up to favor the inflation hedge and safety currency for investors.
Toronto Stock Exchange Up on Rising Commodity Prices
Rising commodity prices drove up the Toronto Stock Exchange today to its highest level since September 2008, led by majors like Barrick Gold (ABX.TO) and Potash (POT.TO).
This is the third straight day the index has finished the session above 12,000.
Gold mining giant Barrick Gold (ABX.TO) closed the day at $40.64, while Potash (POT.TO) endd the session at $128.75. Potash was moved by reports their inventory may have dropped.
Barrick Gold and other similar companies were moved partly by the anticipation of interest rates in the U.S. remaining the same, and the Federal Reserve confirmed this after their meeting, possibly signaling another upward move of gold as everything is lining up to favor the inflation hedge and safety currency for investors.
Toronto Stock Exchange Up on Rising Commodity Prices
Friday, February 19, 2010
Dollar Surge on Greece Fears
U.S. Dollar Sovereign Default
Although both faulty currencies, the U.S. dollar has been getting the better of the euro lately, especially in light of concerns over sovereign default be Greece continue.
Another factor is it seems the Federal Reserve could tighten up its money policy a little sooner than expected, also giving the U.S. dollar an upward thrust.
Of course Greece is far from the only concern in Europe, as the PIIGS Portugal, Ireland, Italy, Greece and Spain, are considered to be in a similar situation, with any of them exposed to sovereign default.
While long on talk and short on ideas, other than saying they're prepared to help Greece, there is growing concern on how that could be done, especially if the other exposed countries look to be, or need to be, bailed out as well.
If they collapse, there may no longer be a European Union, or a euro for that matter.
An interesting potential anomaly in all of this is gold and the U.S. dollar may increase in price and strength as a result of all this, making the usual movement of gold in opposite direction of the dollar no longer the case.
U.S. Dollar Sovereign Default
Although both faulty currencies, the U.S. dollar has been getting the better of the euro lately, especially in light of concerns over sovereign default be Greece continue.
Another factor is it seems the Federal Reserve could tighten up its money policy a little sooner than expected, also giving the U.S. dollar an upward thrust.
Of course Greece is far from the only concern in Europe, as the PIIGS Portugal, Ireland, Italy, Greece and Spain, are considered to be in a similar situation, with any of them exposed to sovereign default.
While long on talk and short on ideas, other than saying they're prepared to help Greece, there is growing concern on how that could be done, especially if the other exposed countries look to be, or need to be, bailed out as well.
If they collapse, there may no longer be a European Union, or a euro for that matter.
An interesting potential anomaly in all of this is gold and the U.S. dollar may increase in price and strength as a result of all this, making the usual movement of gold in opposite direction of the dollar no longer the case.
U.S. Dollar Sovereign Default
Wednesday, February 17, 2010
Gold Bull Market Over?
Gold Bull Market
I find it hilarious when clueless people attempt to make assertions like those I've been hearing lately that the bull market in gold is over.
The primary ignorance of some of those making these assertions is that the recent increase in gold prices has been because of gold bugs, rather than market forces, or in this case: lack of force in the market.
For some reason, people seem to resent or reject the fact that gold performs strongly when adverse economic and world conditions are uncertain, and we have been in that situation for several years, and will continue to be for many more.
Anyone who asserts gold bugs are behind the run up in gold prices understands nothing about historical responses to tough economic circumstances, the extreme printing of money, and the inevitable inflation that follows.
Add to that the sovereign risk associated with a growing number of countries, along with rising inflation, and you have a perfect economic storm for the rise in gold prices to continue, and they will.
What about the so-called gold bubble some think we're in? There's no evidence of it, on the contrary, for the most part institutional investors are the primary investors in gold, and until the general population enters into the sector, there will not be, neither can there be, a gold bubble.
Gold has a great future over the next several years, and possibly longer, depending on the rate of inflation and how long it'll take to realize we are still in the middle of a recession.
Once that happens, we'll see gold surge even higher, and those positioned to take advantage of that should enjoy strong profits from gold investing for a number of years to come.
Gold Bull Market
I find it hilarious when clueless people attempt to make assertions like those I've been hearing lately that the bull market in gold is over.
The primary ignorance of some of those making these assertions is that the recent increase in gold prices has been because of gold bugs, rather than market forces, or in this case: lack of force in the market.
For some reason, people seem to resent or reject the fact that gold performs strongly when adverse economic and world conditions are uncertain, and we have been in that situation for several years, and will continue to be for many more.
Anyone who asserts gold bugs are behind the run up in gold prices understands nothing about historical responses to tough economic circumstances, the extreme printing of money, and the inevitable inflation that follows.
Add to that the sovereign risk associated with a growing number of countries, along with rising inflation, and you have a perfect economic storm for the rise in gold prices to continue, and they will.
What about the so-called gold bubble some think we're in? There's no evidence of it, on the contrary, for the most part institutional investors are the primary investors in gold, and until the general population enters into the sector, there will not be, neither can there be, a gold bubble.
Gold has a great future over the next several years, and possibly longer, depending on the rate of inflation and how long it'll take to realize we are still in the middle of a recession.
Once that happens, we'll see gold surge even higher, and those positioned to take advantage of that should enjoy strong profits from gold investing for a number of years to come.
Gold Bull Market
Thursday, February 11, 2010
Commodities Fall on Bernanke Statement
Commodities and Interest Rates
Commodities fell today as Ben Bernanke stated in House Financial Services Committee testimony that the interest rates on direct loans to banks may be raised sometime soon.
Bernanke was quick to add that the low interest environment overall isn't going to go away, and there will continue to be an "extended period" where that is the case.
Some commodity companies like Exxon Mobil (NYSE:XOM) and Freeport-McMoRan (NYSE: FCX) fell, along with copper, which dropped for the first time in the trading week.
Gold also fell as the U.S. dollar climbed slightly on the news.
Commodities and Interest Rates
Commodities fell today as Ben Bernanke stated in House Financial Services Committee testimony that the interest rates on direct loans to banks may be raised sometime soon.
Bernanke was quick to add that the low interest environment overall isn't going to go away, and there will continue to be an "extended period" where that is the case.
Some commodity companies like Exxon Mobil (NYSE:XOM) and Freeport-McMoRan (NYSE: FCX) fell, along with copper, which dropped for the first time in the trading week.
Gold also fell as the U.S. dollar climbed slightly on the news.
Commodities and Interest Rates
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