Nucor (NYSE:NUE), AK Steel Holding (NYSE:AKS), Commercial Metals Company (NYSE:CMC) all moved up with the broader commodity sector Thursday, as the announcement that the Federal Reserve was going to inflate again via its quantitative easing strategy pushed up the price of commodities in anticipation of the inevitable inflation to come.
Commodity prices going up included gold, silver, oil prices and aluminum. Gold prices reached record levels again, straining toward the $1,400 an ounce level. Silver surged past the $26 level, and seems poised to continue moving up.
The steel industry could go through a period of fluctuation as currencies respond to the fall in value of the U.S. dollar, which will affect margins because of the wide swings in currency value and the battle by some against the Chinese renminbi, which they'll have to take defensive measures against.
Because of market factors, and the overall health of the steel industry, it probably won't participate in the surge in commodity prices and demand as other raw materials will do.
Nucor closed at $39.40 Thursday, rising $0.86, or 2.23 percent. AK Steel Holding surged to close at $13.55, gaining $0.29, or 2.19 percent. Commercial Metals Company was up to $14.59 at the end of the trading session, gaining $0.54, or 3.84 percent.
Showing posts with label US Dollar Value. Show all posts
Showing posts with label US Dollar Value. Show all posts
Friday, November 5, 2010
Monday, October 11, 2010
Citigroup (NYSE:C): Asian Emerging Markets Buying US Dollar
The weak US dollar is wreaking as Citigroup (NYSE:C) notes, Asian countries like Indonesia, Philippines, Taiwan, Thailand, Malaysia and Singapore have been snapping up US dollars as a move against their major competitor China.
Increasing strength of the currencies of the smaller emerging markets has been squeezing margins and profits of companies in the region, as the pegged Chinese currency moves in step with the greenback.
The acquisition of US dollars is a defensive step by these countries in order to maintain competitive exchange rates to compete with their exports.
Although financial media has focused on this recently, it has in fact been going on for quiet some time.
Increasing strength of the currencies of the smaller emerging markets has been squeezing margins and profits of companies in the region, as the pegged Chinese currency moves in step with the greenback.
The acquisition of US dollars is a defensive step by these countries in order to maintain competitive exchange rates to compete with their exports.
Although financial media has focused on this recently, it has in fact been going on for quiet some time.
Friday, October 8, 2010
Alcoa's (NYSE:AA) Performance Going Forward
While some celebrated the fact that Alcoa (NYSE:AA) analysts' profit estimates in the third quarter, they were still down 21 percent from previous results.
So even though aluminum prices helped their performance some, higher costs still cut into margins, generating lower results than they could have had. And that was with sales rising 15 percent to $5.3 billion.
Where does all this leave the company as it relates to the future?
They've already cut expenses to the bone, and while they may be able to whittle away a little more, there isn't much more it would to do affect the bottom line.
That means management has pretty much positioned themselves the best they can, other than possibly expanding through acquisition.
But that has its weaknesses as well, as the industry via its smelters can easily ramp up production and increase global aluminum inventory quickly, making acquisitions less desirable than other miners, such as in the gold mining industry.
One positive thing Alcoa and other commodity producing companies have going for them is the misguided policies of central banks around the world, who are committed to inflating (call it quantitative easing if it makes you feel better), which will drive down the value of the dollar, making it cheaper for overseas customers to buy aluminum in the case of Alcoa.
Lower prices alone can't be counted on though, as continued weaknesses in the global economy, especially in the West, could quickly skew the supply and demand picture, and little could be done if that ends up going down.
Since aluminum demand is for the most part coming from the emerging markets, that may not be as big of a factor, although it could still slow things down for a time, and stunt the rally they're experiencing now.
In other words, Alcoa is going to remain volatile and unpredictable, as there are too many factors happening at the same time to know which one will predominate and affect their markets.
One that can be counted on is weakening U.S. dollar and possible increased sales from overseas markets. If other things continue on as they are, that could be good news as long as the global economy and emerging markets remain fairly healthy.
That can't be measured by the West, as if they're not still in a recession, they're just on the other side of it, with the likelihood of dropping down into another one.
Alcoa's near and mid-term future is tied into emerging market growth. How they go will be how Alcoa goes, along with the secondary factors mentioned beyond supply and demand.
So even though aluminum prices helped their performance some, higher costs still cut into margins, generating lower results than they could have had. And that was with sales rising 15 percent to $5.3 billion.
Where does all this leave the company as it relates to the future?
They've already cut expenses to the bone, and while they may be able to whittle away a little more, there isn't much more it would to do affect the bottom line.
That means management has pretty much positioned themselves the best they can, other than possibly expanding through acquisition.
But that has its weaknesses as well, as the industry via its smelters can easily ramp up production and increase global aluminum inventory quickly, making acquisitions less desirable than other miners, such as in the gold mining industry.
One positive thing Alcoa and other commodity producing companies have going for them is the misguided policies of central banks around the world, who are committed to inflating (call it quantitative easing if it makes you feel better), which will drive down the value of the dollar, making it cheaper for overseas customers to buy aluminum in the case of Alcoa.
Lower prices alone can't be counted on though, as continued weaknesses in the global economy, especially in the West, could quickly skew the supply and demand picture, and little could be done if that ends up going down.
Since aluminum demand is for the most part coming from the emerging markets, that may not be as big of a factor, although it could still slow things down for a time, and stunt the rally they're experiencing now.
In other words, Alcoa is going to remain volatile and unpredictable, as there are too many factors happening at the same time to know which one will predominate and affect their markets.
One that can be counted on is weakening U.S. dollar and possible increased sales from overseas markets. If other things continue on as they are, that could be good news as long as the global economy and emerging markets remain fairly healthy.
That can't be measured by the West, as if they're not still in a recession, they're just on the other side of it, with the likelihood of dropping down into another one.
Alcoa's near and mid-term future is tied into emerging market growth. How they go will be how Alcoa goes, along with the secondary factors mentioned beyond supply and demand.
Monday, August 23, 2010
Soybean Prices Dropping on US Dollar, Strong Harvest
Soybean prices dropped to a two-week low as crops in the Midwest indicate they will exceed harvest expectations.
The U.S. Department of Agriculture’s projected a harvest of 3.43 billion bushels, while it has now been upwardly revised to 3.5 billion bushels, according to the newsletter run by the Professional Farmers of America.
In a Pro Farmer Tour which includes inspecting the fields, in Iowa alone the crop yields are up by 13 percent over projections in 2009. That's significant because Iowa is the largest producer of soybeans in the U.S.
Since the seven-month high of $10.49 reached on August 5, soybeans have declined 4.3 percent, and could go down as low as $9.60, say some analysts.
The U.S. dollar is another factor, as when it gains in value the price of soybeans in the U.S. fall to compensate for less interest from foreign buyers.
Until the dollar starts to pull back, it'll have a significant effect on the price of soybeans, combined with the larger harvest than expected.
The U.S. Department of Agriculture’s projected a harvest of 3.43 billion bushels, while it has now been upwardly revised to 3.5 billion bushels, according to the newsletter run by the Professional Farmers of America.
In a Pro Farmer Tour which includes inspecting the fields, in Iowa alone the crop yields are up by 13 percent over projections in 2009. That's significant because Iowa is the largest producer of soybeans in the U.S.
Since the seven-month high of $10.49 reached on August 5, soybeans have declined 4.3 percent, and could go down as low as $9.60, say some analysts.
The U.S. dollar is another factor, as when it gains in value the price of soybeans in the U.S. fall to compensate for less interest from foreign buyers.
Until the dollar starts to pull back, it'll have a significant effect on the price of soybeans, combined with the larger harvest than expected.
Friday, August 13, 2010
Gold Gains on Euro, British Pound, and Swiss Franc
Probably one of the most important metrics of gold's strength is its movement against currencies, and the last week it moved up strongly against the Euro, British Pound, and Swiss Franc.
Against euros it gained 2.0 percent; against the British pound, 1.7 percent; and against the Swiss franc, 1.3 percent. Gold did fall against the Japanese yen by 0.3 percent.
The euro fell against the U.S. dollar, dropping from $1.3169 to $1.2982, a loss of 1.1 percent.
Spot settlements for COMEX gold ended at $1,215, while averaging $1,203.
Against euros it gained 2.0 percent; against the British pound, 1.7 percent; and against the Swiss franc, 1.3 percent. Gold did fall against the Japanese yen by 0.3 percent.
The euro fell against the U.S. dollar, dropping from $1.3169 to $1.2982, a loss of 1.1 percent.
Spot settlements for COMEX gold ended at $1,215, while averaging $1,203.
Saturday, May 15, 2010
Caterpillar (NYSE:CAT) Falls on Demand Concerns
Growing concerns over the level of demand for Caterpillar (NYSE:CAT) products in light of the European crisis and China battling inflation and a potential property bubble bursting, has caused some downward pressure on the stock, and it dropped on Friday to $64.66, a loss of 3.4 percent.
The collapse in value of the euro is connected to the euro zone problem, as the U.S. dollar has risen strongly against it, making exports more costly and less competitive.
In the recent past the strength of the euro has been a bonus for exports to the region, as well as other areas of the world, as far as the dollar being weaker.
That has changed as all currencies are becoming suspect, and investors are fleeing to gold and other raw materials to protect their assets and build their wealth.
It'll probably be hard for Caterpillar to continue its gains this year with these two important regions either lowering orders or generating less revenue and profits from the increased strength of the dollar.
The collapse in value of the euro is connected to the euro zone problem, as the U.S. dollar has risen strongly against it, making exports more costly and less competitive.
In the recent past the strength of the euro has been a bonus for exports to the region, as well as other areas of the world, as far as the dollar being weaker.
That has changed as all currencies are becoming suspect, and investors are fleeing to gold and other raw materials to protect their assets and build their wealth.
It'll probably be hard for Caterpillar to continue its gains this year with these two important regions either lowering orders or generating less revenue and profits from the increased strength of the dollar.
Friday, April 9, 2010
Gold Continues to Ignore Dollar
Gold ignoring U.S. dollar
Maybe more than any other time in recent history, gold has decoupled from its usual inverse relationship to the U.S. dollar and is standing on its own as an alternative form of currency.
While most say that will change when interest rates change in the U.S. and the dollar strengthens, I'm not sure that will be completely true.
I'm not saying it won't happen, but something has changed in the mindset of investors in reference to paper currencies, and it remains to be seen whether that change holds or not when circumstances change to favor the dollar. What remains to be seen is if gold has a floor under which will last for years into the future, no matter what happens to the dollar.
Investors and the general public are gradually learning the weakness of continuing to print money out of thin air, and even when interest rates increase there's the likelihood that inflation will too, adding another element to the overall performance of gold, and that doesn't take into account the potential European fiasco that may unfold in the next year or two, of which Greece is only a small part of it.
There are too many variables because of the economic and banking crisis which are unique to our time, and we really don't know where things will end up, and that makes gold even more attractive going into the cloudy future.
Maybe more than any other time in recent history, gold has decoupled from its usual inverse relationship to the U.S. dollar and is standing on its own as an alternative form of currency.
While most say that will change when interest rates change in the U.S. and the dollar strengthens, I'm not sure that will be completely true.
I'm not saying it won't happen, but something has changed in the mindset of investors in reference to paper currencies, and it remains to be seen whether that change holds or not when circumstances change to favor the dollar. What remains to be seen is if gold has a floor under which will last for years into the future, no matter what happens to the dollar.
Investors and the general public are gradually learning the weakness of continuing to print money out of thin air, and even when interest rates increase there's the likelihood that inflation will too, adding another element to the overall performance of gold, and that doesn't take into account the potential European fiasco that may unfold in the next year or two, of which Greece is only a small part of it.
There are too many variables because of the economic and banking crisis which are unique to our time, and we really don't know where things will end up, and that makes gold even more attractive going into the cloudy future.
Tuesday, April 6, 2010
Canadian Dollar Trading at Parity with U.S Dollar
Canadian Dollar
For the first time since July 2008, the Canadian dollar has traded at parity with the U.S. dollar, and even beyond it today.
The increasing price of crude oil and inevitable raising of interest rates in Canada are cited as the key reasons behind the increase in value of the Canadian dollar.
This is familiar territory as it relates to crude oil, as the last time the Canadian dollar was trading at parity to the U.S. dollar, oil had reached a record high of $147.27 a barrel.
With commodity prices expected to continue to skyrocket, the Canadian dollar should remain strong for years to come against the dollar, and its past behavior will no longer be the norm as it passes into an entirely new era.
This will be great for Canadian consumers who should enjoy lower prices, but a challenge to exporter, whose prices will struggle to compete on the basis of the strength of the Canadian dollar.
For the first time since July 2008, the Canadian dollar has traded at parity with the U.S. dollar, and even beyond it today.
The increasing price of crude oil and inevitable raising of interest rates in Canada are cited as the key reasons behind the increase in value of the Canadian dollar.
This is familiar territory as it relates to crude oil, as the last time the Canadian dollar was trading at parity to the U.S. dollar, oil had reached a record high of $147.27 a barrel.
With commodity prices expected to continue to skyrocket, the Canadian dollar should remain strong for years to come against the dollar, and its past behavior will no longer be the norm as it passes into an entirely new era.
This will be great for Canadian consumers who should enjoy lower prices, but a challenge to exporter, whose prices will struggle to compete on the basis of the strength of the Canadian dollar.
Wednesday, March 24, 2010
Dollar Up, Commodities Down
Sovereign Debt Putting Downward Pressure on Commodities
The continuing sovereign debt fiasco in Europe has caused investors to look to the U.S. dollar and gold as their choice of currency for safety. And yes, gold is increasingly being thought of a form of currency again by people, as they begin to learn the inherent weakness in paper currencies.
An interesting part of all of this is as the crisis in Europe continues to unfold, it forces investors to decide whether to invest in gold or the U.S. dollar for a place of safety, and many times that has resulted in both going up in price on the same day, telling us people are thinking of both of the commodities as a place to be.
As far as commodities in general, they won't behave in a similar matter because of being denominated in U.S. dollars. When the dollar goes up, foreign investors tend to flee commodities for that reason.
It's not that the U.S. dollar is on a rebound or considered healthy in any way, it's that when you compare it to the euro especially, it makes it look robust in comparison. That's what's largely driving this reaction to commodities, and it will continue on in what should be some wild swings unrelated to supply and demand.
Portugal today was downgraded for its debt by Fitch Ratings, adding another element to the sovereign debt crisis in Europe, which seems to only be getting started as to the revelation on how deep it really is.
The continuing sovereign debt fiasco in Europe has caused investors to look to the U.S. dollar and gold as their choice of currency for safety. And yes, gold is increasingly being thought of a form of currency again by people, as they begin to learn the inherent weakness in paper currencies.
An interesting part of all of this is as the crisis in Europe continues to unfold, it forces investors to decide whether to invest in gold or the U.S. dollar for a place of safety, and many times that has resulted in both going up in price on the same day, telling us people are thinking of both of the commodities as a place to be.
As far as commodities in general, they won't behave in a similar matter because of being denominated in U.S. dollars. When the dollar goes up, foreign investors tend to flee commodities for that reason.
It's not that the U.S. dollar is on a rebound or considered healthy in any way, it's that when you compare it to the euro especially, it makes it look robust in comparison. That's what's largely driving this reaction to commodities, and it will continue on in what should be some wild swings unrelated to supply and demand.
Portugal today was downgraded for its debt by Fitch Ratings, adding another element to the sovereign debt crisis in Europe, which seems to only be getting started as to the revelation on how deep it really is.
Friday, March 19, 2010
Gold Reserve Currency Says Citigroup (NYSE:C) Analyst
Gold as reserve currency
In an extraordinary statement, Citigroup (NYSE:C) analyst Dennis Gartman said the major reason for the unique behavior of gold in regard to its usual inverse relationship with the U.S. dollar has changed, is people are now considering gold to be a real reserve currency, equal to the U.S. dollar.
Of course for some that follow these things closely, they've believed that for years, but to see this in the mainstream media is a major story, to say the least.
So when the U.S. dollar goes up and gold goes up with it, that's a sign that many investors now consider gold as much of a reserve currency as the dollar is. And Gartman added this isn't just a fad, but a "trend [that] shall continue months, if not years, into the future."
Gold as reserve currency
In an extraordinary statement, Citigroup (NYSE:C) analyst Dennis Gartman said the major reason for the unique behavior of gold in regard to its usual inverse relationship with the U.S. dollar has changed, is people are now considering gold to be a real reserve currency, equal to the U.S. dollar.
Of course for some that follow these things closely, they've believed that for years, but to see this in the mainstream media is a major story, to say the least.
So when the U.S. dollar goes up and gold goes up with it, that's a sign that many investors now consider gold as much of a reserve currency as the dollar is. And Gartman added this isn't just a fad, but a "trend [that] shall continue months, if not years, into the future."
Gold as reserve currency
Monday, March 15, 2010
Goldman Sachs (NYSE:GS): Buy Euro!
Goldman Sachs recommends to buy euro
Talking about whether to buy the euro or the U.S. dollar, Goldman Sachs (NYSE:GS) let be known what currency should be acquired, and that is the euro. They're probably right, as the underlying fundamentals of the U.S. dollar haven't changed, and only concerns over the Greek sovereign debt issue gave some temporary strength, based on the fall of the euro rather than something in herent in the dollar.
Most of this is based on short term emphasis and possible events, rather than long term investment suggestions.
Goldman believes the U.S. dollar will revert to its weakened condition, while in the short term the euro should have some nice upside surprises in store.
One of the more unprecedented turnarounds for the U.S dollar came when almost everyone was bullish on it until the Greek crisis and its effect on the euro, now that it has passed and Europe in general is supporting Greece, the dollar has nothing to make it keep its strength, while for now, the euro does.
Goldman acknowledges things could get stirred up in Europe again, but for now, the crisis have been avoided.
Goldman Sachs recommends to buy euro
Talking about whether to buy the euro or the U.S. dollar, Goldman Sachs (NYSE:GS) let be known what currency should be acquired, and that is the euro. They're probably right, as the underlying fundamentals of the U.S. dollar haven't changed, and only concerns over the Greek sovereign debt issue gave some temporary strength, based on the fall of the euro rather than something in herent in the dollar.
Most of this is based on short term emphasis and possible events, rather than long term investment suggestions.
Goldman believes the U.S. dollar will revert to its weakened condition, while in the short term the euro should have some nice upside surprises in store.
One of the more unprecedented turnarounds for the U.S dollar came when almost everyone was bullish on it until the Greek crisis and its effect on the euro, now that it has passed and Europe in general is supporting Greece, the dollar has nothing to make it keep its strength, while for now, the euro does.
Goldman acknowledges things could get stirred up in Europe again, but for now, the crisis have been avoided.
Goldman Sachs recommends to buy euro
Peter Schiff Warns U.S. Dollar Bulls
Peter Schiff on U.S. Dollar in 2010
Peter Schiff recently stated there is nothing more accurate than dissecting the fundamentals of a government to ascertain the value of its currency, and in the case of the U.S. dollar, that doesn't point to a reason those who are bullish on its strength should continue to be.
Very quickly the seemingly endless bearishness toward the U.S. dollar ended because of the sovereign debt crisis in Greece and the resultant plunge in value of the euro.
Now that it seems to be on relatively solid footing for now, the inherent value of the U.S. dollar should emerge again, and that should continue downward in Schiff's opinion, based on the continuing policies of the U.S. government which undermines its value.
In an extraordinarily short time Schiff notes, the sentiment concerning the fall of the U.S. dollar gravitated toward the euro, something he said, as far as how quickly it happened, he had never seen before in his life.
Schiff believes there will soon be a huge sell-of of the greenback, and once there is more of a surety concerning Europe, there is no reason people would hold onto the U.S. dollar, as it still remains a flawed currency.
Peter Schiff on U.S. Dollar in 2010
Peter Schiff recently stated there is nothing more accurate than dissecting the fundamentals of a government to ascertain the value of its currency, and in the case of the U.S. dollar, that doesn't point to a reason those who are bullish on its strength should continue to be.
Very quickly the seemingly endless bearishness toward the U.S. dollar ended because of the sovereign debt crisis in Greece and the resultant plunge in value of the euro.
Now that it seems to be on relatively solid footing for now, the inherent value of the U.S. dollar should emerge again, and that should continue downward in Schiff's opinion, based on the continuing policies of the U.S. government which undermines its value.
In an extraordinarily short time Schiff notes, the sentiment concerning the fall of the U.S. dollar gravitated toward the euro, something he said, as far as how quickly it happened, he had never seen before in his life.
Schiff believes there will soon be a huge sell-of of the greenback, and once there is more of a surety concerning Europe, there is no reason people would hold onto the U.S. dollar, as it still remains a flawed currency.
Peter Schiff on U.S. Dollar in 2010
Wednesday, March 3, 2010
Commodities Rise on Weaker Dollar
Commodity Prices Rise as Dollar Drops
A number of commodity sector rose as the U.S. dollar weakened against major currencies.
Enjoying the increase were energy, metals and grains, with major crops like corn, soybeans and wheat increasing; something the grain market has been looking and hoping for for awhile.
Also rising in response to the collapsing dollar were gold, silver and copper, while on the energy side price also rose, even though they would normally have fallen on the news oil and gasoline pireced remained higher than expected for the previous week.
Oil gained $1.19 to finish the session at $80.87 on the New York Mercantile Exchange.
Commodity Prices Rise as Dollar Drops
A number of commodity sector rose as the U.S. dollar weakened against major currencies.
Enjoying the increase were energy, metals and grains, with major crops like corn, soybeans and wheat increasing; something the grain market has been looking and hoping for for awhile.
Also rising in response to the collapsing dollar were gold, silver and copper, while on the energy side price also rose, even though they would normally have fallen on the news oil and gasoline pireced remained higher than expected for the previous week.
Oil gained $1.19 to finish the session at $80.87 on the New York Mercantile Exchange.
Commodity Prices Rise as Dollar Drops
Jim Rogers: Dollar Strength Temporary
Jim Rogers U.S. Dollar Strength
While Jim Rogers likes the U.S. dollar on a very temporary basis as far as holding its value, over the long term he is a dollar bear, and those affected by the greenback need to take that into consideration.
Rogers said not too long ago that the fact there were so many U.S. dollar bears made his contrarian tendencies believe the dollar would strengthen some, and it has since he made that statement.
Even so, there is little chance the dollar will hold its strength for long, and once it plunges it'll take those with it who thought it was in a bull rally.
Again, the key is this is only a very short term upwards move by the dollar, and it'll resume its downward spiral again. No one can be sure when, but it would be a mistake to look at the U.S. dollar as strong for any meaningful period of time.
Jim Rogers U.S. Dollar Strength
While Jim Rogers likes the U.S. dollar on a very temporary basis as far as holding its value, over the long term he is a dollar bear, and those affected by the greenback need to take that into consideration.
Rogers said not too long ago that the fact there were so many U.S. dollar bears made his contrarian tendencies believe the dollar would strengthen some, and it has since he made that statement.
Even so, there is little chance the dollar will hold its strength for long, and once it plunges it'll take those with it who thought it was in a bull rally.
Again, the key is this is only a very short term upwards move by the dollar, and it'll resume its downward spiral again. No one can be sure when, but it would be a mistake to look at the U.S. dollar as strong for any meaningful period of time.
Jim Rogers U.S. Dollar Strength
Monday, March 1, 2010
Chile Peso in Earthquake Aftermath
Trading Chile Peso
As relief efforts from agencies outside the country send a windfall of U.S. dollars their way, the Chilean peso is expected to experience a nice upward push in value against the dollar during that time.
In 2009 the Chilean peso grew in value against the U.S. dollar by close to 20 percent. It was dropping against the greenback in the first two months of 2010 based on new currency reserve requirements in the country concerning private pension funds.
This temporary situation could be a good play going forward for currency traders looking for some degree of predictability in their forex trading.
Trading Chile Peso
As relief efforts from agencies outside the country send a windfall of U.S. dollars their way, the Chilean peso is expected to experience a nice upward push in value against the dollar during that time.
In 2009 the Chilean peso grew in value against the U.S. dollar by close to 20 percent. It was dropping against the greenback in the first two months of 2010 based on new currency reserve requirements in the country concerning private pension funds.
This temporary situation could be a good play going forward for currency traders looking for some degree of predictability in their forex trading.
Trading Chile Peso
Friday, February 26, 2010
Commodities Rise on Falling Dollar
Commodity Prices Rising
The falling dollar gave commodities a boost today, as many raw materials rose as a result of the dollar-denominated factor.
Gold, silver, copper, platinum and palladium all enjoyed price increases with little resistance in a relatively light day of trading.
Another commodity sector rising was energy, where oil, natural gas and gasoline all spiked.
Also joining the other commodity sectors in rising in price were the grains, where corn, soybeans and wheat all moved upwards.
What this shows me is how important the U.S. dollar is to the inflationary pressure we continue to face. While that's nothing new, it does show how just a little weakness in the dollar can drive commodity prices upwards.
It also shows me how vulnerable we are to inflation, and how quickly things can change in relationship to that.
Commodity Prices Rising
Financial Advisor
The falling dollar gave commodities a boost today, as many raw materials rose as a result of the dollar-denominated factor.
Gold, silver, copper, platinum and palladium all enjoyed price increases with little resistance in a relatively light day of trading.
Another commodity sector rising was energy, where oil, natural gas and gasoline all spiked.
Also joining the other commodity sectors in rising in price were the grains, where corn, soybeans and wheat all moved upwards.
What this shows me is how important the U.S. dollar is to the inflationary pressure we continue to face. While that's nothing new, it does show how just a little weakness in the dollar can drive commodity prices upwards.
It also shows me how vulnerable we are to inflation, and how quickly things can change in relationship to that.
Commodity Prices Rising
Financial Advisor
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
Monday, February 8, 2010
Marc Faber: US Bankrupt 10 Years
Marc Faber - US going bankrupt
Marc Faber states in about 10 years over 35 percent of tax revenues collected in the United States will have to be used to pay off the U.S. debt.
“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff. I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war,” said Faber
He also believes the credit rating of the U.S. could fall below its top rated 'A' status, especially if the economy grows much slower than estimates, and the more information that comes out, the more a reality that seems to be.
Inflation is coming, it's only a matter of when it becomes noticeable. Some prices are already significantly higher, but they're balanced by the drop in others. Pretty soon that scenario won't be able to survive in the realities ahead of us, and then the unthinkable will happen.
Marc Faber - US going bankrupt
Marc Faber states in about 10 years over 35 percent of tax revenues collected in the United States will have to be used to pay off the U.S. debt.
“Maximum within 10 years time more than 35% of tax revenues will have to be used to pay the interest on the government debt and then you are in trouble – because then there will be not enough money out of the budget to pay for other stuff. I’m convinced the US government will go bankrupt, but not tomorrow. And before they go bankrupt, they’ll print money, and then you get high inflation rates, you have a depression and eventually they’ll go to war,” said Faber
He also believes the credit rating of the U.S. could fall below its top rated 'A' status, especially if the economy grows much slower than estimates, and the more information that comes out, the more a reality that seems to be.
Inflation is coming, it's only a matter of when it becomes noticeable. Some prices are already significantly higher, but they're balanced by the drop in others. Pretty soon that scenario won't be able to survive in the realities ahead of us, and then the unthinkable will happen.
Marc Faber - US going bankrupt
Thursday, January 14, 2010
Marc Faber | U.S. Debt Crisis Coming
Marc Faber: U.S. Debt Crisis Coming
Although in the short term we probably won't be going through a debt crisis in the United States, according to Marc Faber, sometime over the next 10 years it will definitely hit, and when it does hit, it'll hit hard.
According to Faber, the U.S. will be forced to default on its debt, more than likely from ramping up the money printing presses even more, which will essentially destroy what's left of the value of the U.S. currency.
The two major challenges are the surging debt load of the United states government, and the costs of interest which skyrocket in the years ahead.
Anyone who understands the debt that has been taken on by the U.S. government, knows that it is growing at levels which can't be sustained, and will have to go through a time of correcting itself, where explosive economic growth, huge increases in taxes or getting the right person in office to start dismantling the horrid social programs the government refuses to deal with as far as not being able to afford them.
Concerning the costs of interest, once the interest rates start going up again, there's no doubt the cost of interest will increase as well.
Faber believes that in about five years the cost of government programs in relationship to costs of interest will rise to about 35 percent of tax revenue, a huge leap from the 12 percent experienced today. Once that happens, there will only be two things that can be done, a group of bold politicians willing to make the necessary cuts (laughter in the background), or a printing of money at levels unprecedented in history.
Marc Faber: U.S. Debt Crisis Coming
Although in the short term we probably won't be going through a debt crisis in the United States, according to Marc Faber, sometime over the next 10 years it will definitely hit, and when it does hit, it'll hit hard.
According to Faber, the U.S. will be forced to default on its debt, more than likely from ramping up the money printing presses even more, which will essentially destroy what's left of the value of the U.S. currency.
The two major challenges are the surging debt load of the United states government, and the costs of interest which skyrocket in the years ahead.
Anyone who understands the debt that has been taken on by the U.S. government, knows that it is growing at levels which can't be sustained, and will have to go through a time of correcting itself, where explosive economic growth, huge increases in taxes or getting the right person in office to start dismantling the horrid social programs the government refuses to deal with as far as not being able to afford them.
Concerning the costs of interest, once the interest rates start going up again, there's no doubt the cost of interest will increase as well.
Faber believes that in about five years the cost of government programs in relationship to costs of interest will rise to about 35 percent of tax revenue, a huge leap from the 12 percent experienced today. Once that happens, there will only be two things that can be done, a group of bold politicians willing to make the necessary cuts (laughter in the background), or a printing of money at levels unprecedented in history.
Marc Faber: U.S. Debt Crisis Coming
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