CHINA CONFIDENTIAL
Tuesday, December 09, 2008
The Case for Gold
Katie Benner reports on the case for gold:The case for gold begins with the fundamental weakness in the dollar. While investors have seen the dollar as a haven in the current economic crisis, that trend won't last, says Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors. That's because the vast amount of currency that the United States will have to print to fund TARP, potential auto industry aid and a massive U.S. government spending plan will create tremendous inflationary pressure and erode the value of the dollar.
Moreover, currencies all over the world are declining in value as countries slash interest rates to stave off even deeper economic recessions and the banking system struggles to deal with massive write-downs and illiquid assets. Europe and China are rolling out their own incentive and bailout plans, points out Jim Vail, a senior portfolio manager at ING. "Financial assets are under pressure and the global money supply is growing rapidly," says Vail. With few currencies holding up in value, he believes investors and sovereign nations will soon turn to gold as a preferred reserve currency.
Investors also want a liquid asset going into an uncertain economic environment. Over the past year, gold has been one of the few liquid assets that struggling money managers were able to sell to offset stock and bond losses. It pushed down the value of gold in the near term, but reinforced gold's reputation as safe and always valuable.
Finally, a shortage of gold will likely keep a floor under prices (currently bouncing between $700 and $800) and push them higher in the future. Mark Johnson, who manages the USAA Precious Metals and Minerals Fund, says gold production is flat and could even fall as mines close and no major new mines are opened....
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Pickens 'Anxious' About Wind Farm Financing
Dateline USA....
Texas oil tycoon T. Boone Pickens said on Monday he is "anxious" for his company's multibillion dollar plans to build a giant wind farm in Texas as the economic crisis chokes off project financing.
Mesa Power LLC is planning to build the world's largest wind farm in the Texas Panhandle, but financiers for the project have disappeared in the economic downturn.
"Where's the money is the question. I don't know how we'll do it. I'm anxious to see what Obama comes up with. There is no money to finance a wind project now," Pickens told reporters at a briefing in New York City.
"I'm a little anxious."
Mesa Power began the first phase of the project, which is expected to cost $2 billion, earlier this year when it purchased over 600 wind turbines.
Wind power and natural gas are integral parts of the "Pickens Plan," a 10-year project to wean the United States off of foreign oil imports. The billionaire launched the plan this summer, when crude prices peaked over $147 a barrel and interest in alternative energy surged.
Since then, oil has tumbled to $44 a barrel as demand in the United States and other big consumer nations slowed.
"We had them standing in line a year ago, they were all over the place. A couple of them that we had have gone out of business," Pickens said.
Pickens, whose BP Capital hedge fund lost $2 billion earlier this year as energy prices tumbled and before it shifted into cash, said he does not believe prices will fall below $40 a barrel. He added prices could rebound back to the $100 a barrel level in a year if the economy recovers.
-ReutersViolence Erupts in Athens After Teen's Funeral
Foreign Confidential....
Violence erupted in Athens Tuesday after the funeral of the teenager, Alexandros Grigoropoulos, was held in a southern suburb. Thousands of protesters marched on the capital, facing off against police in riot gear and shouting anti-government slogans.
The BBC's Malcolm Brabant analyzes the violence that began in Athens and then spread to Thessaloniki.The centre for this December rebellion is the Athens Polytechnic, where students have been out on the streets with wheelbarrows and shopping trolleys to collect and recycle rocks and pieces of marble used in the previous night's assaults.
The polytechnic is the symbol of modern rebellion.
On 17 November 1973, tanks of the then six-year-old military dictatorship burst through the iron railings to suppress a student uprising against the colonels.
The exact casualty figure is still unknown to this day but it is believed that around 40 people were killed.
The sacrifice of the polytechnic was so significant that the post-junta architects of Greece's new constitution drafted the right of asylum, which bans the authorities from entering the grounds of schools and universities.
That is why places of learning are the springboards for the current wave of violence and it also explains why many of the riots are in university towns.
Students and pupils have effectively been given carte blanche to carry on protesting, because their professors have declared a three-day strike.
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Tuesday, 9 December 2008
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