Monday, December 01, 2008
Gold Hit Hard By Falling Oil Price and a Firmer Dollar
Foreign Confidential....
In international markets Monday, a lower crude oil price and a firm dollar eroded gold’s appeal as an alternative investment.
In London, spot gold hit a session low of $776.80 and was later traded at $782.30 an ounce, down from $813.00 in the US market on Friday.
Also in London, silver touched an intraday low of $9.15 as investors took profits on dollar’s rally. The metal was at $10.26 in New York on Friday.
On the equities side, the Amex Gold Bugs Index, which tracks the share prices of major gold companies, fell 14.4% to 211.82 points.
Japanese Company Unveils Water-Powered Car
SCANDAL! US Warned India in October of Possible Sea-Borne Terrorist Attack Against Mumbai Hotels
ABC News, quoting a U.S. intelligence source, says U.S. intelligence agencies warned their Indian counterparts in mid-October of a potential attack "from the sea against hotels and business centers in Mumbai."
A second government source says specific locations, including the Taj hotel, were listed in the U.S. warning, according to ABC.
One month later, Nov. 18, Indian intelligence also intercepted a satellite phone call to a number in Pakistan known to be used by a leader of the terror group, Lashkar e Taiba, believed responsible for the weekend attack, Indian intelligence officials say.
The Indian intercept also revealed a possible sea-borne attack, the officials say.
In related news, Ratan Tata, the chairman of the company that owns the hotel, told CNN that security was temporarily increased following a warning.
Tata told CNN Sunday that the enhanced measurers were later eased and, in any case, "could not have stopped what took place."The Case for Investing in Gold Equities
For investors interested in the long view, the case for diversification into gold equities grows stronger by the day as fears of a prolonged global recession (or depression) marked by deflation (ahead of likely inflation starting sometime in 2010) drive down commodities' prices.
Investing in gold stocks may be riskier than physical gold; but many mining companies with proven management teams are sitting on potentially huge, undervalued assets. Some companies are trading at or close to cash value.
In other words, although it is both unfair and illogical, good and bad gold mining companies are being punished equally.
But misery means opportunity. Junior miners with or on the verge of obtaining impressive resource calculations could yield the best returns. A clever stock picker who understands the industry--and can afford the risk--could conceivably make 400% or more on his investment over the next 12-18 months.
This reporter (who presently does not own a single share of any listed gold company) is attracted to companies and regions that lend themselves to consolidation. Reason: proving a resource is one thing; mining it, something else, entirely. Mining is capital intensive; capital is going to be harder to mobilize over the next year; and pre-feasibility and feasibility studies, which are requisites for raising funds to actually mine metals, are themselves costly. Hence, the importance of economies of scale, the strategic value of assembling a critical mass of an economically recoverable resource that could turn a junior into an intermediate--and a target for acquisition by an even larger intermediate or a senior-sized mining company.
Two countries to watch in this regard are Peru and Mexico. The latter is more mining friendly; and western Mexico's Sierra Madre region, as reported here, which has been mined for five centuries, is ripe for consolidation. Agnico-Eagle Mines, Ltd. (NYSE: AEM), Alamos Gold, Inc. (TSE: AGI), Gammon Gold, Inc. (NYSE: GRS), Minefinders Corp. Ltd., (TSE: MFL), and Nayarit Gold Inc. (CVE: NYG), are among the companies that are active in this geological region.Pentagon Plans Domestic Rapid Reaction Force
Dateline USA....
The US Department of Defense plans to deploy 20,000 troops nationwide by 2011 to help state and local officials respond to terror or nuclear attacks and emergencies, The Washington Post said Monday.
Citing Pentagon officials, the newspaper said the plan calls for three rapid-reaction forces.
The first 4,700-strong unit, built around an active-duty combat brigade, is based at Fort Stewart, Georgia, and is already available for deployment, according to General Victor Renuart, commander of the US Northern Command, it said.
Two additional groups will later join nearly 80 smaller National Guard and reserve units made up of about 6,000 troops to support local and state authorities nationwide, The Post said.
They will all would be trained to respond to domestic chemical, biological, radiological, nuclear, or high-yield explosive attacks.
The newpaper said that civil liberties groups and libertarians had expressed concern that the plan could undermine the Posse Comitatus Act, a 130-year-old law restricting the military's role in domestic law enforcement.
- AFPMumbai Massacre Revealed Security Weakness
The attack revealed the weakness of India's security apparatus. India's top law enforcement official resigned Sunday, bowing to growing criticism that the attackers appeared better trained, better coordinated and better armed than police.
Maharashtra's top official, Vilasrao Deshmukh, offered to resign Monday, as did his deputy, R.R. Patil, who had sparked outrage by referring to the attacks as "small incidents."
The announcement blaming militant group Lashkar-e-Taiba threatened to escalate tensions between India and Pakistan. However, Indian officials have been cautious about accusing Pakistan's government of complicity.
Foreign Ministry spokesman Vishnu Prakash denied a news report that India was preparing to end a 2003 cease-fire with Pakistan. An intelligence official, speaking on customary condition of anonymity, said there was no unusual mobilization of troops along the India-Pakistan border.
Pakistan has warned that any buildup of troops on its border with India would require troops to be pulled from its western frontier, where it is fighting militants suspected of launching attacks throughout the country and on American troops in Afghanistan.
The group the Indians have blamed, Lashkar, has long seen as a creation of the Pakistani intelligence service to help fight India in disputed Kashmir. It was banned in Pakistan in 2002 under pressure from the U.S., a year after Washington and Britain listed it a terrorist group. It is since believed to have emerged under another name, Jamaat-ud-Dawa, though that group has denied links to the Mumbai attack.
As more details of the response to the attack emerged, a picture formed of woefully unprepared security forces.
"These guys could do it next week again in Mumbai and our responses would be exactly the same," said Ajai Sahni, head of the New Delhi-based Institute for Conflict Management and who has close ties to India's police and intelligence.
Prime Minister Manmohan Singh promised to strengthen maritime and air security and look into creating a new federal investigative agency.
Singh promised to expand the commando force and set up new bases for it around the country. He called a rare meeting of leaders from the country's main political parties, hours after the resignation of Home Minister Shivraj Patil.Mumbai Survivor Says Terrorist Smiled as He Shot
Chinese Jetliners Aiming (for Now) at Brazil, Canada
Chinese jetliners are poised for takeoff.
Thomas Lifson writes:The first domestic Chinese jet airliner had its first flight last Friday. A potentially serious new competitor is growing its capability in the most sophisticated and complex civilian manufacturing sector. Boeing and Airbus, both reeling from development delays of their next generation products and the threat of massive order cancellations with the world economy heading down, do not exactly need more competition right now. Fortunately for them, the new Chinese product line is aimed more at markets dominated by Embraer of Brazil and Bombardier of Canada -- so-called regional jets, a bit smaller than the smallest Boeing and Airbus models, but both expanding their line-ups to get into the lower end of the A320, B737 range.
Click here to continue.Gold Declines in Asia
Gold declined for the first time in three days in Asia as crude oil fell and equities dropped after U.S. retailers had the smallest gain for “Black Friday” holiday sales in three years.
Bullion also fell as the euro declined against the dollar on expectations the European Central Bank will trim borrowing costs this week. The U.S. Dollar Index, which tracks the greenback against six trading partners, rose for a second day.
“Gold will continue trading in the $750 to $850 range in the near term as flight-to-safety buying offsets reduced demand for an inflation hedge,” Zhu Bin, head of research at Nanhua Futures Co., said from Hangzhou.
- BloombergSunday, November 30, 2008
Complex Oil Outlook for Coming Year
Foreign Confidential....
The oil outlook is complex.
On the one hand, the market is clearly over-supplied.
On the other hand, a combination of a cold snap in the United States and OPEC production cuts could push crude prices higher despite the global economic meltdown.
That said, Saudi officials' stated target of $75 per-barrel oil is probably just public relations. The kingdom does not need $75, unlike Iran and Venezuela.
Monday, 1 December 2008
SPECIALLY TRAINED TROOPS WOULD RESPOND TO NUCLEAR, TERROR ATTACKS
Jenny Barchfield reports from Mumbai:
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