Gold's 2009 start ran into a bit of difficulty as a fresh rise in the US dollar created less than auspicious conditions for continued advances towards the $900 level. The greenback rang in the new year with an advance against the euro, which retreated following an 11-year low reading in the area's manufacturing activity. Moreover, the single currency faces the start of its second decade of life beset with challenges.
A multi-decade high in French unemployment and output slumps in Italy and Germany have raised the odds that some Euro politicians will make the currency their prime target for scapegoating. The US released its own December manufacturing activity data today, and the numbers revealed the grim reality: a rate of shrinkage not seen since 1980. Demand for furniture, appliances, and automobiles fell to the lowest post-war level since 1948.
Very little was tendered in the way of explanations as to what motivated the Dow to gain more than 240 point today, on the back of such poor econometrics. Some say that the anticipation of stimulus packages yet to be delivered by the new President buoyed equities, others pointed to GM's cash infusion as the reason for the bounce. Oil reversed its earlier declines as well, and ended with a gain of $1.58 to $46.18 per barrel on the day.
In Asia, Singapore's recession deepened as well, with a negative 2% growth rate being forecast for 2009 ( for a third consecutive year). India lowered interest rates for a fourth time as inflation turned to disinflation. Unsurprisingly, oil prices dove by over $3 and traded at $41.50 on such glum GDP news. In the interim, the 'gas war' between Russia and the Ukraine continued solutionless and helped the energy complex, while the Israeli strikes against Hamas entered their seventh day and a ground invasion appeared nearer.
New York spot gold dealings opened with a loss of $10, at just under $871 per ounce as the US dollar climbed higher on the trade-weighted index (now at 81.88), but later narrowed that decline to as little as $4.00 to trade at $877 at last check. climbing crude prices made matters easier, as did pre-weekend book-squaring. The US has (wisely) indicated that it intends to refill its Strategic Petroleum Reserve by buying about 12 million barrels of black gold. Open interest rose by 6203 contracts. Silver's initial 25-cent fall to $11.07 turned into a 20-cent gain in the afternoon (last quote was $11.52), while platinum turned a $5 loss at the open into a $17 gain late in the day. The metal was quoted at $945 per ounce. Palladium was ahead by $5, starting at $190 per ounce. Thank you, Uncle Sam. Long live the National Automobile Works.
After a year like the one that just ended, nothing should surprise anyone, anymore. Especially not the news that there may be more Madoff-style Ponzi schemes coming to the light of day in the near future. And, if UBS is right, we better not let our guard down. They say a few more bombshells could very well drop – but here's the twist – not all of them are bad! That's right there could be some upside surprises on the horizon.
Here's what UBS told CNBC just before Christmas, could be Some [of the] Surprises for 2009.
1) Oil prices fall below $20 per barrel.
2) The dollar falls to new lifetime lows.
3) Global growth is negative for 2009.
4) Gold goes to $300.
5) Corporate default rates don't rise significantly.
These things may seem unlikely but this year has shown us that unlikely things can happen, says Jeff Palma, head of global equity strategy at UBS Investment Research. Of course these surprises are not forecasts. They're more like plausible what if situations. But, it's worth noting last year UBS put together the same kind of list and nearly half came true. At the other end of the prediction spectrum, lies India's Commodity Online - it feels that lower supply and higher demand will push gold to $2,000 per ounce. Standard Chartered Plc sees the metal as averaging $985 per ounce this year, and trading closer to $1K by mid-year. And the forecasts keep on rolling in...
Well, one of the more significant final gold demand tallies of 2008 is now available, and it confirms that which we have been cautioning for the better part of the year that passed. Gold imports by India, traditionally the single largest global buyer of the metal, fell by 47 percent in 2008. Only 402 tonnes were demanded by the country, as high gold prices and a slowing Indian economy ended up nearly halving demand, according to the Bombay Bullion Association.
The Mumbai-based trade body said that India's gold imports in last month dropped by 81 percent to total only 3 tonnes (just over 96,000 ozs.), as compared to 16 tonnes being imported in the same month of 2007. The deadly bombings in the centre of Mumbai were also seen as having affected demand in December. Unless gold can bank on investment demand to more than offset the slump in Indian purchase tonnages, we must remain on alert and exercise caution. Demand destruction of this type is not health-beneficial for our market.
One ought not take one of the pillars of gold demand and treat it as if it mattered little. The President of the BBA, Mr. Suresh Hundia made it quite clear: Imports were down because prices rose. There were not many marriages or festivals either, In 2007, India imported 759 tonnes of gold (in other words, almost as much as the gold ETF has amassed in four years' time).
You have undoubtedly made your own New Year's resolutions and listened to many other wise words of advice on what to do and how to do it in 2009. We now bring you Todd Harrison's list of tips to remember when it comes to...most everything:
The carnage of 2008 forever changed the socioeconomic landscape and seismically shifted the collective perception of what we do, how we do it and who we do it with. As we look back at the year that was and cast an eye toward what will be, a little perspective will most certainly go a long way. Herewith are some personal lessons learned, some of which relate to the market but most of which apply to life.
• All you have is your name and your word.
• Emotion is the enemy when trading.
• The only difference between genius and madness is acceptance.
• Adapt but don't conform.
• The reaction to news is more important than the news itself.
• Time is the most precious commodity.
• Opportunities are made up easier than losses.
• The purpose of the journey is the journey itself.
• What goes around comes around.
• The greatest wisdom is bred as a function of pain.
• Bad times define good friends just as bad seasons define good fans.
• There is a difference between having fun and being happy.
• Be good to others and better to yourself.
• Work to live. Don't live to work.
• Profitability begins within.
• Gratitude is latitude.
• Seeing old friends is good for the soul.
• When in doubt, sit it out.
• Time is the arbiter of all fate.
• The air of integrity gets thinner with age.
• Free will is God's greatest gift.
• Experience is a close second.
• Negative energy is wasted energy.
• You've got to have faith.
• Hope isn't a viable investment vehicle.
• The only difference between intervention and manipulation is communication.
• One hand washes the other.
• Good traders know how to make money but great traders know how to take a loss.
• Where you stand is a function of where you sit.
• Life is shaped by decisions made.
• Take the high road. It's less crowded and boasts a much better view.
• To appreciate where we are, you must understand how we got here.
• The opposite of love isn't hate; it's apathy.
• Stay out of debt.
• The friction between opinions is where true education resides.
• A dream is only as powerful as those who believe in it.
• Money comes and goes.
• The best way to build a growth company is by surrounding yourself with people who can themselves grow.
• Tenacity and resolve are the hallmarks of success.
• View obstacles as opportunities.
• The only difference between a lesson and a mistake is the ability to learn from it.
• The definition of an investment should never be a trade gone awry.
• By the time you get to where you think you want to be, the journey will be over.
• Think positive.
To which, we would add: Gold is where you find it.
Golden Dreams Make Men Wake Hungry.