Gold prices hit record highs close to US$1,500 this week, while oil and base metals fell on expectations that rising global inflation risks will lead to higher interest rates and slower growth.
PRECIOUS METALS: Gold reached record highs at the start of the week and continued higher from there to finish with an all-time peak of US$1,486.07 an ounce.
Investors piled into the safe-haven precious metal amid spikes to global inflation and fresh eurozone debt worries.
“The ongoing simmering European sovereign debt concerns and inflationary price pressures coming from ... China and the US continue to drive investors to buy the precious metals as an inflation hedge,” said Ian O’Sullivan, analyst at Spread Co trading group.
Record-breaking gold will likely soar past US$1,600 for the first time later this year, driven by fears over high inflation, consultancy GFMS forecast on Wednesday.
By late Friday on the London Bullion Market, gold rose to US$1,476.75 an ounce from US$1,469.50 a week earlier.
Silver climbed to US$42.61 an ounce from US$40.22.
On the London Platinum and Palladium Market, platinum fell to US$1,787 an ounce from US$1,803.
Palladium dropped to US$772 an ounce from US$798.
OIL: Prices slipped of 30-month highs, weighed down by a sharp inflation rise in China and predictions of weaker demand.
Oil prices slumped on Tuesday after the International Energy Agency (IEA) warned that recent high prices had started to hurt global demand for energy.
The Paris-based IEA warned that “there are real risks that a sustained US$100-plus a barrel price environment will prove incompatible with the currently expected pace of economic recovery.”
The IMF meanwhile warned that high oil prices were a key risk to solid global economic recovery.
Crude futures enjoyed a brief mid-week rebound as data showed US stockpiles of motor fuel slumped 10 times more than expected.
The oil market was also looking ahead to weekend elections in Nigeria, a key exporter of crude but which is regularly hit by supply disruptions owing to unrest between rebels and the government.
“Any political unrest created from the polls in Nigeria could further increase the geopolitical risk and may retrace recent losses in the price of oil,” said Nick Campbell, an analyst at energy consultants Inenco.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June stood at US$122.57 a barrel, compared with US$125.33 for the May contract one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for May dropped to US$108.42 from US$111.58.
BASE METALS: Tin prices struck another record high at US$33,600 a tonne thanks to strong demand, but later retreated along with most other base metals on fears that rate tightening by China would cut demand for raw materials.
By late Friday on the London Metal Exchange, copper for delivery in three months dropped to US$9,390 a tonne from US$9,896 a week earlier.
Three-month tin slipped to US$32,950 a tonne from US$33,100.
Three-month aluminum fell to US$2,677 a tonne from US$2,712.
Three-month zinc gained to US$2,640 a tonne from US$2,526.
Japan government announces disaster relief budget
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The Japanese government has announced a 4 trillion yen ($48.9bn; £29.6bn) emergency budget for disaster relief, after March's earthquake and tsunami.
The budget still needs approval from parliament later this month, and could be implemented in May.Authorities say no new bonds were issued to fund the spending, to prevent adding to Japan's huge public debt.
The government estimates it will cost as much as 25tn yen to rebuild the country.
The emergency budget is aimed at disaster relief, including providing temporary housing, restoration of infrastructure and disaster-related loans.
The 11 March earthquake left more than 27,000 people dead or missing.
It also destroyed infrastructure in the north-eastern part of Japan and triggered a nuclear disaster.
Prime Minister Naoto Kan has said this could be the first of several extra budgets needed to fund reconstruction.
On Thursday, his government made it illegal to enter a 20km (12-mile) evacuation zone around the stricken Fukushima nuclear reactor.
Cooling systems were knocked out by the twin disasters and radiation has been leaking from the plant.
It is not clear how many people are still living in the evacuation zone, but reports said police had counted at least 60 families.
Debt worries The budget will be financed by taking 2.5tn yen from pension funds, as well as money set aside to increase payments to families with children.
Money from emergency reserves is also being used.
The Japanese government has announced a 4 trillion yen ($48.9bn; £29.6bn) emergency budget for disaster relief, after March's earthquake and tsunami.
The budget still needs approval from parliament later this month, and could be implemented in May.Authorities say no new bonds were issued to fund the spending, to prevent adding to Japan's huge public debt.
The government estimates it will cost as much as 25tn yen to rebuild the country.
The emergency budget is aimed at disaster relief, including providing temporary housing, restoration of infrastructure and disaster-related loans.
The 11 March earthquake left more than 27,000 people dead or missing.
It also destroyed infrastructure in the north-eastern part of Japan and triggered a nuclear disaster.
Prime Minister Naoto Kan has said this could be the first of several extra budgets needed to fund reconstruction.
On Thursday, his government made it illegal to enter a 20km (12-mile) evacuation zone around the stricken Fukushima nuclear reactor.
Cooling systems were knocked out by the twin disasters and radiation has been leaking from the plant.
It is not clear how many people are still living in the evacuation zone, but reports said police had counted at least 60 families.
Debt worries The budget will be financed by taking 2.5tn yen from pension funds, as well as money set aside to increase payments to families with children.
Money from emergency reserves is also being used.
The Japanese government has announced a 4 trillion yen ($48.9bn; £29.6bn) emergency budget for disaster relief, after March's earthquake and tsunami.
The budget still needs approval from parliament later this month, and could be implemented in May.Authorities say no new bonds were issued to fund the spending, to prevent adding to Japan's huge public debt.
The government estimates it will cost as much as 25tn yen to rebuild the country.
The emergency budget is aimed at disaster relief, including providing temporary housing, restoration of infrastructure and disaster-related loans.
The 11 March earthquake left more than 27,000 people dead or missing.
It also destroyed infrastructure in the north-eastern part of Japan and triggered a nuclear disaster.
Prime Minister Naoto Kan has said this could be the first of several extra budgets needed to fund reconstruction.
On Thursday, his government made it illegal to enter a 20km (12-mile) evacuation zone around the stricken Fukushima nuclear reactor.
Cooling systems were knocked out by the twin disasters and radiation has been leaking from the plant.
It is not clear how many people are still living in the evacuation zone, but reports said police had counted at least 60 families.
Debt worries The budget will be financed by taking 2.5tn yen from pension funds, as well as money set aside to increase payments to families with children.
Money from emergency reserves is also being used.
But the government has promised that it will not sell more bonds, or borrow more money from the markets, to fund this spending.
Japan already has a debt burden double the size of the economy.
However, some analysts warn that the government will have to increase debt issuances in the future to finance reconstruction.
Controversial cuts
The BBC's Roland Buerk in Tokyo said that although future emergency budgets were likely to require more borrowing, this one would be paid for by spending cuts.
"Plans to increase allowances for families with children are being scrapped and highway tolls will be increased," he said.
"Much of the money will come from dipping into pension reserves, [which is] controversial in a country with a rapidly ageing population.
"Tax rises are also being discussed."
He added that the budget was likely to get through parliament, despite concerns about some of the measures, as the opposition does not want to be seen as preventing money from getting to those who need it.
The government is hoping the budget will be enacted soon, despite calls for Prime Minister Naoto Kan to resign.
How Apple blocks its competition
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Japan's earthquake, tsunami and aftershocks halted or slowed production of hundreds of components that are found in consumer electronics devices, including the iPhone and iPad. Memory chips, touch screens, image sensors, batteries and the special resins that are used to hold chipsets together have all been in scarce supply lately.
Yet Apple (AAPL, Fortune 500) sold a remarkable 18.7 million iPhones and 4.7 million iPads last quarter. COO Tim Cook said Wednesday that the company would suffer "no material supply impact" in the current quarter, despite what he called "the mother of all backlogs" thanks to very strong demand for the iPad.
Other consumer electronics makers haven't been so lucky. Sony Ericsson, for instance, said it would delay its eagerly anticipated Xperia Play "PlayStation phone" because of the Japan earthquake's impact on the supply chain. Research In Motion (RIMM) finally launched its PlayBook tablet last week, after delaying its release by a month.
"A number of equipment manufacturers are getting delayed or shut out due to Apple's supply chain dominance," said Brian White, supply chain and Apple analyst at Ticonderoga Securities.
Not only has Apple been able to beat competitors to the market with devices, it also sells them more cheaply. Despite having a year to catch up, no major tablet competitors have been able to match Apple's $499 entry point for the iPad.
How does Apple do it?
"The products are hot, it's got $60 billion in cash, and it's a big company," White said. "Those three factors allow it to get more of its fair share of components, and ultimately market share."
Apple aggressively uses its size and vast array of resources -- including its very deep pockets -- to get the deals it wants with component makers. The company sent executives to its Japanese suppliers literally with cash in hand to make sure supply remained adequate, White said.
But Apple's key to supply-chain success isn't as simple as its ability to bring bigger briefcases of $100 bills to its partners than its rivals. Part of the reason Apple wins in the supply chain is simply because Apple is so successful overall.
"In times of a shortage, suppliers are going to sell to their biggest customers first," said Tom Dinges, senior electronics manufacturing consultant at IHS iSuppli.
Sales of Apple's devices have risen astronomically over the past several years, and the company has grown to become one of the world's biggest component purchasers.
But there are lots of big companies out there. What separates Apple from the rest is its ability to sell a lot of products while selling remarkably few different kinds of products.
Apple predominately sells just five different gadgets -- iPad, iPhone, iPod, Mac and Apple TV -- and a combined total of 15 different variations of those devices, excluding modifications like the amount of available memory.
That small handful of products shares many parts common to all the devices. That makes Apple's supply chain among the most precisely honed in the world.
"For a company of Apple's size, no one out there sells so few different products," Dinges said. "As a result, Apple's sourcing strategy can be much more finely tuned than other companies with very disparate products."
All of that adds up to a very well-oiled machine. Despite ongoing worldwide supply constraints, Apple's Cook said the company is "so confident in its ability to supply" that it's launching the iPad 2 in 13 more countries next week.
The Motorola (MMI) Xoom isn't even available in 13 countries yet.
Gold Prospecting
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It is becoming harder and harder to buy gold with the gold supply shortage and bigger demand for gold bullion. The wait period can be several months now for a person wanting to buy gold bullion.
Well, an alternative to buying gold bullion is gold prospecting. There is still lots of gold in "them thar hills" and it is not really hard to find with the right knowledge and equipment and a bit of determination. Besides which, imagine the excitement you will feel when you find that beautiful golden nugget worth thousands of dollars after panning in a stream in the fresh open air.
Gold prospecting is the action of searching potential gold deposits or looking for new gold deposits. There are various methods of prospecting for gold and these are not just for the commercial companies. Many a good living is being made, and some fine gold nuggets have been found by what is known as recreational gold prospecting.
How to Prospect for Gold
First one needs to understand a little about how to prospect for gold. For many years panning for gold in streams has been the traditional method of gold prospecting. There are many places around the world where this can and is still done with remarkable results. This is the way to find gold nuggets. Gold nuggets are only found on the surface and usually in streams although sometimes can be found in rock or earth. This sort of gold prospecting is uneconomical to do for large mining companies so there is still a lot of gold available for the prospector with his trusty gold pan or even a metal detector designed to scan the ground for gold. Recreational gold prospecting can be a lot of fun too for the whole family.
The basic gold prospecting techniques include panning, metal detectors and mining.
Gold Panning
Using gold prospecting pans is the simplest and cheapest. One finds an area where gold is known to be found and prospects for "placer gold". "Placer gold" is gold found in deposits of sand or gravel in the beds of streams. The gold pan used is a wide shallow dish, usually black or a dark color to show up any gold found, and the technique is to scope an amount of sediment from the river or stream bead and swirl that around gently in the pan with water, gradually filtering out the sand and gravel from any gold found. It works on a the gravity principle as gold will be heavier than the sand or gravel. Some expertise is needed but, with practice, a person can become quite adept at filtering out the gold from the sand.
Gold Metal Detector
Another gold prospecting technique is to use a metal detector. This is a machine that uses an electromagnetic field generated by the metal detector that is swept over and just under the surface of the ground. When the field meets gold (or any other metal it can be set for) the metal alters the electromagnetic field and this alteration is shown to the user so he or she knows that there is gold there. There are some very basic metal detectors that will basically detect metal and one would have to dig up everything found, from old rusty nails to bright coins or other metal, to very sophisticated models that can be adjusted to pick out gold or another precious metal only even if quite deep down under the surface.
Gold Mining
Mining is the other gold prospecting technique. This is for the more serious minded as it involves a lot of expense and equipment. It can also require the acquisition of mining rights and much more. For most people panning for gold and using metal detectors are the way to go. Especially for gold nugget prospecting!
Gold Prospecting Equipment
The gold prospecting tools needed for a day out depend on the type of gold prospecting you want to do.
Basic gold prospecting tools and equipment should include"
For the more sophisticated there are also sluices, filters, and chemicals to check for the purity of gold plus many more additional tools and equipment.
A gold prospecting pan
Digging implements such as a spade, and smaller ones
Good reliable compass so you don’t get lost
A easy to read and understand map of the area
A means of contact with the outside world, such as a cell phone or other communications device
Gold or metal detector
A book about gold prospecting
Good solid clothing and boots
A quick search on google or msn will get you a heap of suppliers willing to supply you with every imaginable gold prospecting tool you could ever need.
If one is going to camp out for a night or two, then camping equipment and food etc, is a must. Also if one is going to go gold prospecting by oneself and out into the bush or country, it is advisable to inform someone of where you are going and how long you expect to be away.
Where to Prospect for Gold
Of course if we knew where all the gold was, it would have all been removed by now. In fact there are still many pockets of gold in most if not all of the major continents and quite possibly not far from you still available and waiting to be found. It has been estimated that only 5 percent of all the gold in the world has been found so there is still plenty more to find!
A good idea is to join a local gold prospecting club and perhaps, initially, join a gold prospecting tour. You can pick up much valuable information as well as go out with others and learn all the tricks of gold prospecting. One can pick up a lot of experiential information from others who enjoy the fun of gold prospecting. Locating your nearest club, joining in the gold prospecting tours, pouring over gold prospecting maps, all have an air of excitement hard to resist.
There are also a heap of gold prospecting books available from many online and local bookstores from the very simple to the extremely complex.
It should be noted that many areas have laws relating to gold prospecting. These are usually state gold prospecting laws and sometimes a licence is required before someone can go gold prospecting. It is advisable to check with the local authorities or gold prospecting clubs, who will have this sort of information, before venturing forth.
Above all, when going out gold prospecting, it is important to have fun and, who knows, you might be the one to find that big golden nugget worth thousands of dollars.
World Bank warns millions face poverty
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The World Bank has warned that rising food prices, driven partly by rising fuel costs, are pushing millions of people into extreme poverty.
World food prices are 36% above levels of a year ago, driven by problems in the Middle East and North Africa, and remain volatile, the bank said.That has pushed 44 million people into poverty since last June.
A further 10% rise would push 10m more below the extreme poverty line of $1.25 (76p) a day, the bank said.
And it warned that a 30% cost hike in the price of staples could lead to 34 million more poor.
'Protect the poor' The World Bank estimates there are about 1.2 billion people living on less than $1.25 a day.
"More poor people are suffering and more people could become poor because of high and volatile food prices," said World Bank president Robert Zoellick.
"We have to put food first and protect the poor and vulnerable, who spend most of their money on food."
Mr Zoellick was speaking before IMF and World Bank spring meetings later this week.The gatherings will be attended by finance ministers and central bankers including Chancellor of the Exchequer George Osborne, and Governor of the Bank of England, Mervyn King.
Nutrition
The World Bank says prices of basic commodities remain close to their 2008 peak, with the prices of wheat, maize and soya all rocketing.
The only exception is rice, which has fallen slightly in price in the past year.
The bank suggests a number of measures to help alleviate the impact of high food prices on the poor.
They include encouraging food-producing countries to ease export controls, and to divert production away from biofuels production when food prices exceed certain limits..
Other recommendations include targeting social assistance and nutritional programmes to the poorest, better weather forecasting, more investments in agriculture, the adoption of new technologies - such as rice fortification to make it more nutritious, and efforts to address climate change.
It also said financial measures were needed to prevent poor countries being subject to food price volatility.
China's economy slows, as inflation remains feverish
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China's economy grew at an annual pace of 9.7% from a year earlier in the first three months of the year, the National Bureau of Statistics said Friday.
While that feverish speed far outpaces growth in advanced nations such as the United States, it marks a slight slowdown from the 9.8% growth rate seen in the prior quarter.
China is the world's second largest economy after the United States, but is considered an emerging economy because of its rapid growth and industrialization. Staggering growth of around 10% has been common in China over the last 30 years.
Lately, China's government has tried to slow down the economy and tame rapidly rising prices that have accompanied growth. But it has done so very gradually, in an effort to avoid a crash landing.
Chinese Premier Wen Jiabao has repeatedly said controlling inflation is a top priority, but prices have continued to surge as commodities rally in global markets.
"Judging from the inflation situation in the first quarter, we are still under great pressure of price hikes," Wen said Wednesday, according to the government's official press agency Xinhua. "We should never lower our guard."
Prices barreled ahead at a 5% rate in the first quarter, according to the latest government data released Friday. Food accounted for most of the increase, rising 11% over the period.
Prices rose 4.9% in cities and 5.5% in rural areas. Housing prices overall were up 6.5%.
ast week, the government hiked interest rates for the fourth time in six months, in a continuing effort to tighten the country's money supply.
The government has also raised minimum down payments for second-home purchases and introduced higher property taxes in two of the country's largest cities, in an attempt to slow staggering growth in China's runaway property market.
Despite those efforts, new loans and the money supply still grew slightly more than analysts had expected in March -- implying that the Chinese government may have to continue its efforts to limit rising prices.
"Inflation, not growth, continues to be China's top macro risk in Chinese policymakers' eyes -- a fact that calls for the continuation of tightening efforts," Qu Hongbin, HSBC co-head of Asian economics research said in a note to investors.
Rapid price increases in China have recently spilled over into the U.S. According to U.S. trade data for February, 20% of America's imported goods came from China, and prices on those goods were up 2.6% from a year ago.
That marked the highest increase in Chinese import prices since December 2008.
CNN
China raises interest rates again
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| "Inflation is like a tiger; once it gets free, it is difficult to put it back in the cage," China Premier Wen Jiabao said last month. |
The People's Bank of China said Tuesday that it will raise its one-year lending rate to 6.31% from 6.06%, effective Wednesday.
China has raised interest rates incrementally over the last six months in an ongoing effort to tame rapidly rising prices there. Consumer prices surged 4.9% over the 12 months ending in February -- a rate far outpacing price increases in the United States and Europe.
As rising prices have barreled ahead, China's Premier Wen Jiabao has even likened inflation to a tiger. "Once it gets free, it is difficult to put it back in the cage," he told reporters last month.
The central bank has used several tools to ease rapid growth in China. Interest rate hikes are one tool -- but they may have topped out now at 6.35%, Mark Williams, senior China economist with Capital Economics, said in a research note.
China has also raised banks' reserve requirements several times as a way to pull money out of the economy, but still shies away from allowing its currency, the yuan to exchange completely freely against other currencies.
Over the last year, China's tightening has sparked fears that the Beijing government could squelch growth too much, causing the economy to crash land.
But inflation and the overall economy have continued to grow at a rapid clip, and now critics say the government's approach may actually be too slow.
"If anything, they're tightening a bit too slow. We have to be a little concerned about overheating, said Paul Ballew, a chief economist at Nationwide.
Either way, China's actions to rein in inflation stand in stark contrast to the Federal Reserve's stance on inflation in the United States. Federal Reserve Chairman Ben Bernanke still shrugs off fears of longterm inflation in the United States, stating that rising food and energy prices are merely a temporary phenomenon.
"In the last six months, we've seen a fairly substantial split between the Fed and other central banks around the world. The Fed takes a far more dovish approach, and we'll see whether or not that's a wise choice down the road," said Paul Ballew, chief economist at Nationwide.
Next, all eyes are on the European Central Bank, which plans to announce its latest monetary policy decision Thursday. Outside economists are expecting the bank to raise interest rates by a quarter of a percentage point, which would be the ECB's first rate hike since mid-2008.
Buy Gold and Silver and manage your own Money
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EUR USD trading: A technical perspective
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RBS have updated foreign exchange traders with their perspective on the EUR USD rate.
The Euro Dollar exchange rate is currently at 1.3947 after hitting resistance at 1.4.
William Moore at RBS says that there are 3 things from a technical perspective at work that market participants need to be aware of:
"1.4050, due to the monthly charts, looks for the moment too high for the EUR. There are 2 support bands to be aware of that are continuing to catch dips they are between 1.3890/60 and 1.3745/70.
"Finally the USD index chart hangs on a knife edge which I think will determine the longer term direction of the USD Strategy: Less conviction than previous but prefer shorts over longs on a tight 70 pip stop up at 1.4050 targeting the 2 bands as highlighted above."
From a fundamental perspective, the Dollar rallied against the majority of the major currencies yesterday, as concerns grew over the radiation leak in Japan and a state of emergency was declared in Bahrain.
The political unrest sweeping through the Middle East and North Africa has taken a backseat following the earthquake last week, but investors are still concerned about the threat of civil war.
The U.S currency made gains against nine out of the 16 most actively traded currencies as global risk aversion stalked the market and stocks slid worldwide. The Euro ended three days of gains against the Dollar, after Moody's Investors Service downgraded Portugal, reviving concern about Europe's ability to resolve the sovereign debt crisis that has engulfed many peripheral economies.
The Euro Dollar exchange rate is currently at 1.3947 after hitting resistance at 1.4.
William Moore at RBS says that there are 3 things from a technical perspective at work that market participants need to be aware of:
"1.4050, due to the monthly charts, looks for the moment too high for the EUR. There are 2 support bands to be aware of that are continuing to catch dips they are between 1.3890/60 and 1.3745/70.
"Finally the USD index chart hangs on a knife edge which I think will determine the longer term direction of the USD Strategy: Less conviction than previous but prefer shorts over longs on a tight 70 pip stop up at 1.4050 targeting the 2 bands as highlighted above."
From a fundamental perspective, the Dollar rallied against the majority of the major currencies yesterday, as concerns grew over the radiation leak in Japan and a state of emergency was declared in Bahrain.
The political unrest sweeping through the Middle East and North Africa has taken a backseat following the earthquake last week, but investors are still concerned about the threat of civil war.
The U.S currency made gains against nine out of the 16 most actively traded currencies as global risk aversion stalked the market and stocks slid worldwide. The Euro ended three days of gains against the Dollar, after Moody's Investors Service downgraded Portugal, reviving concern about Europe's ability to resolve the sovereign debt crisis that has engulfed many peripheral economies.
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