Nov 27, 2004
MARKET NEWS DIGEST
-> Dollar Decline; Foreigners Reduce Holdings -Bl
-> Wall Street flatlines on Black Friday -CBSMW
-> Gold reaches landmark as dollar falls -FT
-> Oil Up as Winter Supplies Stay Tight -Reuters
-> Euro Rises to Record, Russia May Lift Euro Reserves -Bl
-> Letters may go to 41 cents in 2005 -CNNfn
-> Experts fear price pressures could worsen -AP
-> IMF Cuts Forecast for 2005 World Growth -Bloomberg
-> Iran Refuses to Terminate Nuclear Plans -NYT
-> Thanksgiving: A VERY GRATEFUL HEART
-> Good time to add glitter to your portfolio -FT
-> Gold Creeps into Wall St Consciousness -Russell
-> GOLD AND GRAVITY -Dan Denning, Strategic Inv.
-> If Bush keeps U.S. in deficit, gold is a big winner -Ortega
-> Thanksgiving Is an Incentives Success Story
-> IN REMEMBRANCE OF THE PILGRIMS -Joseph Tkach
-> * SPECIAL: GIFTS THAT WILL APPRECIATE OVER TIME!
FOUNDERS' QUOTE OF THE WEEK
"The consciousness of having discharged that duty which we owe to our country is superior to all other considerations."
MARKET NEWS DIGEST
Gold reaches landmark as dollar falls -FT
By Kevin Morrison, Financial Times
Nov. 26, 2004
Gold broke the $450 a troy ounce level yesterday for the first time since June 21 1988, as the dollar fell to a record low against the euro.
Bullion hit a high of $452.75 a troy ounce, up more than $3 from its late quote in New York on Wednesday, before settling at $451.50/$452.25 in late London trade.
Kamal Naqvi, precious metals analyst at Barclays Capital, said that although bullion prices had risen about $40 since the start of the year, global gold equity indices had hardly moved.
Mr Naqvi said the divergence was due to a lack of confidence among investors that the current rally was sustainable, and that the large gold miners in Australia, Canada and South Africa would see higher earnings because of the weaker dollar.
11-26-04 -- Dollar's Fall Pushes Gold Above $450 By ALAN COWELL, NY Times -- LONDON, Nov. 26 - With the dollar hitting a third straight day of record lows against the euro on Thursday, gold rose above $450 an ounce for the first time in more than 16 years, driven by investors looking for an alternative to the American currency. "Gold bulls should be dancing in the street," Barclays Capital said in an investment note. Gold, which is priced in dollars, has risen by about 13 percent in the past two months.
11-26-04 -- Gold is on a tear, but where are investors? USA Today - By John Waggoner, USA TODAY. Gold is having a party, but investors aren't coming. Gold closed at $449 an ounce Wednesday, up 76% from its February 2001 low of $255. The yellow metal has gained 8% this year, vs. 6.3% for the Standard & Poor's 500-stock index. And gold funds, which invest mainly in gold-mining stocks, have been the top-performing mutual fund category the past five years, jumping 154%, vs. 11% for the average stock fund. But investors have yawned. Such muted enthusiasm could mean that the bull market in gold is in its early stages, says James DiGeorgia, editor of Gold & Energy Advisor.
11-26-04 -- Citigroup Bullish On Gold - SYDNEY -(Dow Jones)- The bull market in gold is showing no signs of letting up, according to Citigroup Inc. (C), which may soon have to raise its forecast for 2005 as a result, the bank's Sydney-based global commodity analyst told Dow Jones Newswires this week. "There's no doubt that the recent weakness in the U.S. dollar is what's been fueling the recent rally in the gold price and left our forecast somewhat in limbo, and I guess potentially subject to upgrade," said Alan Heap of Citigroup's Smith Barney brokerage arm.
Wall Street flatlines on Black Friday -CBSMW
By Susan Lerner, CBS.MarketWatch.com
Nov. 26, 2004
NEW YORK (CBS.MW) - U.S. stocks started the day with small opening gains Friday in what was expected to be a quiet, post-holiday shortened session as many on Wall Street take advantage of the weekend and retailers ring up profits on "Black Friday," the biggest shopping day of the year.
The Dow Jones Industrial Average finished the day up 1.92 points at 10,522.23. For the week, the blue chip gauge added 0.6 percent.
The Nasdaq Composite Index slipped 0.57 points to 2,101.97. The Index was up 1.5 percent on the week.
The S&P 500 added 0.89 points, or 0.1 percent, to 1,182.65. For the week, the S&P was up 1.1 percent.
Stock trading ended at 1 p.m. Eastern and the bond market closed at 2 p.m. Eastern.
Walt Disney and General Motors were the biggest blue chip decliners in the early going while Alcoa and Merck weighed in with the biggest gains.
The dollar continued to fall to record levels vs. the euro, reaching $1.3328 in overnight trading. Weighing on the buck were reports that the Chinese central bank had cut its U.S. Treasury holdings due to concerns over the eroding value of the dollar.
Oil Up as U.S. Winter Supplies Stay Tight -Reuters
Crude extends rally as traders anticipate a colder-than-normal winter in the Northeast.
November 24, 2004
NEW YORK (Reuters) - Oil prices rose on Wednesday as a U.S. government report showed heating fuel stocks in the world's largest energy consumer remained tight ahead of the winter, despite a small build in distillate supplies.
U.S. light crude settled up 50 cents to $49.44 a barrel, up 50 percent from the start of the year but more than $6 off their all-time peak one month ago. London Brent was up 37 cents at $44.82 a barrel.
The U.S. government reported on Wednesday that distillate stocks, which include heating oil and diesel fuel, rose 1 million barrels last week to 115.6 million barrels, the first build since mid-September.
But supplies of the key winter fuels remained 14 percent below last year, with heating oil stocks alone keeping a 16 percent year-on-year deficit, the Energy Information Administration (EIA) said.
"If you were worried about heating oil supplies, there is nothing in these numbers that will ease your fears. Heating oil stocks are continuing to be an issue," said Phil Flynn, analyst at Alaron Trading in Chicago.
So far, major consuming nations have experienced mild winter weather, though U.S. government and private forecasters are expecting temperatures in the winter months to average slightly colder than normal.
A cold spell could drive up domestic heating oil usage in the heavy-consuming Northeast, adding to U.S. distillate demand that is already running about 8 percent above last year due to strong trucking and manufacturing activity.
"Without a mild winter to keep demand from increasing significantly, the heating oil market in the United States should remain relatively tight, keeping pressure on prices," the EIA said in its weekly review.
Worries over winter stockpiles have overshadowed a steady increase in crude oil supply in major consumer nations, thanks to the highest OPEC production in 25 years. OPEC has been struggling to keep up with strong demand growth from China and the United States.
A Gulf source said on Wednesday that Saudi Arabia will keep pumping oil at about 9.5 million barrels per day (bpd) through the end of the year and that the kingdom sees no sign of a let-up in strong oil demand.
$5 Gas Coming Soon!?!
Dollar Decline; Foreigners May Reduce Holdings -Bl
"We weren't prepared for the dollar to be at this level" ..."2005 won't be an easy year"
Nov. 26 (Bloomberg) -- The dollar is poised for a seventh straight weekly drop against the euro, its longest losing streak in 10 months, on concern foreign investors and central banks may reduce holdings of U.S. assets.
Bank of England Chief Economist Charles Bean said in a speech late yesterday international investors are unlikely to keep buying U.S. assets indefinitely, resulting in a ``possibly substantial'' drop in the dollar. Russian central bank official Alexei Ulyukayev said three days ago Russia may trim the share of dollars held in its foreign-exchange reserves.
``What we're seeing now is far more than just speculation; these are real fundamental shifts in portfolio allocations from official and private entities, and that could continue and see the dollar selling accelerate,'' said Derek Halpenny, a currency strategist at Bank of Tokyo-Mitsubishi Ltd. in London.
Against the euro, the dollar traded at $1.3249 at 9:54 a.m. in New York, from $1.3269 late yesterday, according to electronic currency-dealing system EBS. It earlier fell to a record $1.3330. The dollar rose to 102.90 yen, from 102.46, after dropping as low as 102.01, the weakest since January 2000. On the week, the dollar has shed 1.7 percent against the euro and 0.2 percent versus the yen, its ninth straight weekly drop.
Bean's comments to business leaders in Colchester, England, echoed those of Federal Reserve Chairman Alan Greenspan, who said at the European Banking Congress in Frankfurt on Nov. 19 that overseas investors may tire of financing the U.S. current-account deficit. ``A diminished appetite for adding to dollar balances must occur at some point,'' Greenspan said.
``There's no reason to be brave right now'' and buy dollars, said Robert Sinche, head of currency strategy at Banc of America Securities LLC in New York. Given the ``tacit approval'' from policy makers that the dollar needs to drop, ``why would you get on the other side of it?''
Sinche projects a dollar drop to $1.35 per euro early next year. A weaker dollar has helped U.S. companies that sell products in Europe such as Gillette Co., which said the U.S. currency's drop boosted sales in the third quarter. The dollar has lost 32 percent against the euro since the start of 2002.
The dollar dropped earlier today after China Business News reported Chinese central bank official Yu Yongding said his country had trimmed its holdings of U.S. Treasury securities.
Yu, a monetary policy committee member, denied making such a statement. Yu said the report was ``distorted,'' in a statement on the Web site of the Institute of World Economics and Policies of the Chinese Academy of Social Sciences, where he is a director.
China, the second-largest foreign holder of U.S. notes, reduced its holdings of U.S. Treasuries to $180 billion, China Business News said. The country's central bank declined to comment on the report that it had reduced its holdings.
``The real risk is that the sharper and the quicker the dollar falls that these investors pull out pretty quickly from U.S. markets,'' said Mitul Kotecha, global head of currency research in London at Calyon, the investment banking unit of Credit Agricole SA.
Chinese international reserve assets were a record $514.5 billion in September, accounting for about 15 percent of the world's total, excluding holdings of gold, according to data compiled by Bloomberg.
Russian foreign currency and gold reserves totaled $113.1 billion in the week ended Nov. 12. The central bank keeps about a third of its reserves in euros and the rest mainly in dollars, central bank Deputy Chairman Konstantin Korishchenko said in an interview on Nov. 3.
``There's no escaping a weaker dollar,'' said Ashley Davies, currency strategist in Singapore at UBS AG.``A lack of faith in the dollar by central banks reaffirms our bearish stance.''
UBS, the world's biggest currency trader in Euromoney magazine's 2004 poll, this week lowered its three-month dollar projections to 103 yen from 107, and to $1.36 per euro from $1.30.
The Dollar Index, which measures the dollar against a basket of six currencies, fell as low as 81.42 today, the lowest since 1995, according to data compiled by Bloomberg. The New York Board of Trade's index averages exchange rates between the dollar and six other currencies, with the euro accounting for 58 percent.
DaimlerChrysler AG, the world's fifth-largest carmaker, said the dollar's decline against the euro will reduce the earnings of the Mercedes-Benz luxury car division.
``We weren't prepared for the dollar to be at this level,'' Thomas Weber, the management board member responsible for research, told journalists at a dinner in Frankfurt yesterday. ``It will influence the results at Mercedes and 2005 won't be an easy year.''
Nov. 23 (Bloomberg) -- The euro rose to its sixth record this month against the dollar after Russia's central bank said it may lift the share of the 12-nation currency in its reserves.
``Most of our reserves are in dollars, and that's a cause for concern,'' First Deputy Chairman Alexei Ulyukayev told reporters in Moscow. ``Looking at the dynamics of the euro-dollar rate, we are discussing the possibility to change the reserve structure.''
Against the dollar, the euro gained to $1.3072 at 9:19 a.m. in New York from $1.3049 late yesterday, according to EBS, an electronic foreign-exchange dealing system. It earlier reached a record high of $1.3094. The dollar has lost 7 percent against the euro in the past three months. Versus the yen, the euro rose to 134.88 from 134.58.
``Central banks are becoming more like professional fund managers -- they want to maximize returns,'' said Steven Saywell, chief currency strategist at Citigroup Inc. in London. ``It makes sense for central banks to reduce any aggressive overweighting in dollars.''
The dollar's share of the world's foreign-currency holdings fell to 63.8 percent at the end of last year from 66.9 percent two years before, according to the International Monetary Fund. The euro's share rose to 19.7 percent from 16.7 percent in that period.
``The message is quite clear -- the euro is going to be more favored in comparison to the dollar, and the impact will be dollar-negative,'' said Carsten Fritsch, a currency strategist in Frankfurt at Commerzbank AG.
Demand for the dollar has waned on concern about a record deficit in the U.S. current account, the broadest measure of trade because it includes some investment flows. The shortfall reached $166.2 billion in the second quarter. A wider deficit means more dollars need to be converted to other currencies to pay for imports.
``Clearly both policy makers and market participants believe that a weaker dollar, so long as it goes in an orderly way, is part of the adjustment process to reduce those imbalances,'' said Richard Berner, chief U.S. economist in New York at Morgan Stanley, the second-biggest U.S. securities firm.
The U.S. currency tumbled on Nov. 19 after Federal Reserve Chairman Alan Greenspan said overseas investors may tire of financing the U.S. current-account gap and diversify into assets denominated in other currencies. ``A diminished appetite for adding to dollar balances must occur at some point,'' he said at the European Banking Congress in Frankfurt.
``It is going to remain difficult for the dollar to perform well when there is an apparent Washington endorsement of a weaker dollar,'' said Todd Elmer, a currency strategist in New York at Barclays Capital Inc. ``Greenspan made it clear that he is comfortable with a falling dollar, and the Treasury department is practicing a policy of benign neglect.''
Barclays predicts a drop to $1.32 per euro and 102 yen in three months.
Pittsburgh-based H.J. Heinz Co., the world's biggest ketchup maker, today said fiscal second-quarter earnings rose 3.9 percent as sales increased overseas, helped by a weaker U.S. dollar.
U.S. President George W. Bush two days ago said he backed a ``strong dollar'' and pledged to cut the U.S. federal budget deficit.
``Having a strong currency is very much in our interest,'' Robert Rubin, chairman of the executive committee at Citigroup Inc. and former U.S. Treasury secretary, said last night.
THE IN-CREDIBLE SHRINKING DOLLAR
11-22-04 - By Craig R. Smith, SATC -- The U.S. dollar has lost over 40% of it's buying power since 2001 -- and that's under Bush's "strong dollar" policy! Can you image what's ahead over the next four years for the heavily indebted dollar? I can: "Trouble!" A surging cost of living! 'We the People' are the ultimate victims of the shrinking dollar.
Experts fear price pressures could worsen -AP
Nov 22, 1004
WASHINGTON (AP) After years of relative calm on the inflation front, Americans are being battered by $2-a-gallon gasoline, rising food prices and higher medical bills. And there are fears that price pressures could worsen in 2005.
The problem came into sharp focus last week when the government reported that wholesale prices increased in October by the largest amount in more than 14 years, and prices at the retail level recorded the biggest gain since May.
At the same time, energy prices experienced another jump, climbing at an annual rate of 22.5% through October. This has contributed to inflation's rising at a 3.9% annual rate this year, compared with 1.9% in 2003.
Inflationary pressures have led some economists to worry about a possible nightmare scenario: The dollar weakens dramatically, which drives up import prices; as terrorists attack overseas oil production facilities, which drives up energy prices; and like that, America's productivity miracle, a main reason for moderate inflation in recent years, disappears.
Economists acknowledge this is a worst-case scenario. Still, they say some shock is likely.
"If my inflation projection for next year goes haywire, it will most likely be because of external factors such as geopolitical tensions or terrorism that we have no control over," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis.
Some economists see inflationary pressures next year that will result directly from Bush administration policies on the dollar.
The administration insists it favors a strong dollar yet has done nothing to check the greenback's slide over the past three years. This decline could help combat the widening U.S. trade deficit by making American products cheaper abroad and imports pricier in this country.
Treasury Secretary John Snow and other U.S. officials have pressed China to sever its currency's direct link to the dollar. U.S. manufacturers contend that practice has undervalued the Chinese currency by as much as 40% and given China a substantial advantage against U.S. competitors.
If China should allow financial markets to set the value of its currency, that could mean steep price increases for the billions of dollars in imported Chinese products from sneakers to high-tech electronics that U.S. consumers have grown to love.
The threat of higher inflation will come not only from China but other Asian countries. They fear a loss of export sales because of China's currency manipulation, so they have managed their currencies to keep them from rising against the dollar.
"Once the Chinese revalue, almost three-fourths of consumer goods imported into the United States will see price increases," said Mark Zandi, chief economist at Economy.com. He said a change in China's currency policies was likely next year and could raise U.S. inflation rates by at least one-half a percentage point.
Letters may go to 41 cents in 2005 -CNNfn
U.S. Postal Service set to raise stamp prices by at least 10% in early 2005, reports the WSJ.
November 24, 2004
NEW YORK (Reuters) - The U.S. Postal Service is set to ask early next year for a rise in postage stamp prices of at least 10 percent, said a newspaper report Wednesday.
The increase -- expected to take effect in early 2006 -- would be the fourth round of price hikes in recent years and lead to a first-class stamp costing at least 41 cents, up from its current 37 cents, the Wall Street Journal said.
The USPS was already planning to file for an increase next year, but the requested rise will probably be in the double digits because Congressional passage of proposed legislation overhauling the postal system is unlikely, the paper said.
The postal bill would enable the post office to benefit from about $3 billion a year in pension-fund savings and streamline the rate-setting process, which can last for nearly a year, the newspaper reported.
A new rate rise could also drive customers to pay bills via the Internet and to use competitors such as United Parcel Service Inc., the world's largest package carrier, to send packages, according to the Journal.
[Ed. Note: Please note that the price of a stamp has grown from $.02 in 1919 to $.41 in 2005 -- a 2050% increase over 86 years! Hmmmmm ... the Official "Swiss America Stamp Price Index" says that inflation has averaged over DOUBLE the official CPI figures over the last 20, 30 and 40 years! So, which should we believe? (I will stick with the real world cost of a stamp vs. the theoretical CPI.) IF the rate of inflation is actually double the official 2-3% that the government claims, then millions more Americans are getting a negative return on investments that do not yield at least 5-6%. Bah Humbug! Call SATC for the best tangible advice about how to stop the slaughter of your dollar and buying power before the price of a stamp hits $1.00 in 2015.]
Nov. 22 (Bloomberg) -- The International Monetary Fund scaled down its expectations for world economic growth next year because of oil prices near records and the U.S. budget deficit, German Deputy Finance Minister Caio Koch-Weser said.
The IMF expects global growth of about 4 percent next year, compared with a Sept. 29 forecast of 4.3 percent, Koch-Weser said in an interview yesterday, citing comments by the fund's managing director, Rodrigo de Rato, to delegates at a Berlin meeting of the Group of 20 industrial and emerging economies.
``Nobody can rule out a renewed rise in oil prices and the U.S. twin deficit, which has overshadowed the world economy for some time, shows no signs of improvement,'' said Manuela Preuschl, an economist at Deutsche Bank AG in Frankfurt, Germany's biggest bank by assets. Preuschl expects the global economy to expand 4.1 percent in 2005 after 4.9 percent this year.
Growth in Europe and Japan weakened in the third quarter and the U.S. economy, the world's largest, grew at a slower-than- expected 3.7 percent annual rate. During the G-20 meeting, German Chancellor Gerhard Schroeder urged the U.S. to trim its deficit, which he blamed for ``worrying'' gains in the euro against the dollar that are hurting European exports.
The 12-nation euro-region economy grew 0.3 percent in the third quarter, prompting the European Commission to cut its forecast for the current quarter. The euro reached a record $1.3074 on Nov. 18 and cost $1.3031 at 12:11 p.m. in Frankfurt.
U.S. Deficit Pledge
U.S. Treasury Secretary John Snow told fellow G-20 ministers that he plans to cut the budget deficit in half by 2009 by adopting growth policies and spending less.
A ``clear message'' from the meeting was the need for the U.S. to cut its budget deficit, Koch-Weser said in the interview.
In the U.S., the Conference Board's barometer of the economy fell for a fifth month in October, the longest decline since 1995, signaling that growth may slow in coming months.
Japanese growth unexpectedly slowed to an annual pace of 0.3 percent in the third quarter as higher fuel costs prompted manufacturers to curb spending on equipment and exports grew at he slowest pace in almost three years.
The price of oil, which reached a record last month, is curbing global economic growth by pushing up the cost of heating oil and gasoline, leaving consumers with less money to spend and hurting companies' profit margins.
New York oil futures are trading 65 percent higher than a year ago and reached a record $55.67 on Oct. 25. Crude oil for January delivery cost $49.29 a barrel in after-hours electronic trading on the New York Mercantile Exchange.
``We have risks somewhat more tilted to the downside now due to oil prices,'' Koch-Weser said. Growth next year will reach ``lower levels than earlier predicted,'' he said.
Iranians Refuse to Terminate Nuclear Plans -NY Times
By ELAINE SCIOLINO, New York Times
November 26, 2004
VIENNA, Nov. 25 - Iran refused Thursday to abandon plans to operate uranium enrichment equipment that could be used either for energy purposes or in a nuclear bomb-making project, European and Iranian officials said.
The refusal threatened to scuttle a nuclear agreement Iran reached 10 days ago with France, Britain and Germany to freeze all of Iran's uranium enrichment activities, the European officials added. It also gave new ammunition to the Bush administration, which asserts that Iran has a secret nuclear weapons program and cannot be trusted.
The impasse coincided with the opening of crucial meetings to review Iran's nuclear program at the International Atomic Energy Agency here, the United Nations nuclear monitoring body that has the authority to refer Iran to the United Nations for possible censure or sanctions.
Mohamed ElBaradei, the agency chief, said in a speech on Thursday that Iran had so far failed to meet its pledge to freeze fully its uranium enrichment because of its insistence on operating 20 centrifuges for research.
Noting Iran's long history of concealment of its nuclear activities, Dr. ElBaradei said: "A confidence deficit has been created, and confidence needs to be restored. Iran's active cooperation and full transparency is therefore indispensable."
He also expressed the hope that the dispute over the centrifuges would "resolve itself" by Friday, and one of his aides said he was pressing the Iranians to back down.
Centrifuges are machines that spin at supersonic speed to purify or enrich uranium for use in nuclear reactors. When uranium is enriched to a very high degree, it can be used in a nuclear weapon.
But the new Iranian demand, contained in two formal letters to the agency, has the Europeans in a bind.
On the one hand, they have stated that their deal must stand as is and have told the Iranians that an exemption for any reason is unacceptable.
On the other hand, they are eager to salvage their hard-won deal and have already softened language in a draft resolution critical of Iran's nuclear activities that is to be passed by the 35 nations that make up the agency's governing board.
"Someone is going to have to back down," said a Western diplomat involved in the negotiations. "Both Iran and the Europeans are in a very tough spot right now."
Nuclear Programs: Rogue States on Notice -CNS
By Patrick Goodenough CNSNews.com International Editor
November 22, 2004
Pacific Rim Bureau (CNSNews.com) - President Bush used his first international summit since re-election to turn up the pressure on the remaining rogue states of the trio he once labeled an "axis of evil," putting Iran and North Korea on notice over their nuclear programs.
In a weekend of busy diplomacy, Bush attended the annual Asia-Pacific Economic Cooperation (APEC) summit, hosted this year by Chile, as well as a handful of bilateral encounters with heads of state.
He made it clear that nuclear proliferation would be a key focus of this second term, warning Iran that its efforts to produce material that can be used to build atomic bombs were being taken seriously. "The world knows it's a serious matter and we're working together to solve this matter," he said.
Iran insists that its program, developed with Russian help, is designed for purely peaceful energy purposes, but Washington is unconvinced.
U.S. officials also are skeptical of an agreement reached between Iran and three European Union countries, due to come into effect on Monday.
Under the deal, Iran has promised to suspend uranium-enrichment in return for assurances that it will not face the prospect of sanctions as long as it continues to negotiate with Britain, France and Germany.
Western diplomats have alleged that Tehran has been producing uranium hexafluoride (UH6), a substance that can be spun in centrifuges and enriched to make nuclear weapons.
Iran denies the charges, but after a meeting with Japanese Prime Minister Junichiro Koizumi in Santiago, Bush said the Iranians were "willing to speed up processing of materials that could lead to a nuclear weapon."
The International Atomic Energy Agency's board of governors holds a meeting in Vienna Thursday to discuss Iran's programs.
On North Korea, Bush's weekend efforts were focused on drawing the recalcitrant Stalinist regime back into a multilateral framework that has held three, so far unsuccessful, rounds of talks to date.
Gratefulness is the cornerstone of the Christian life. Without it, nothing else will satisfy the deepest desires of the heart.
As a Christian family and businessman, I have much to be grateful for this year - despite the tragedies we've all faced during the turbulent 21st century so far.
I'm thankful for my wife and children because they are God's gift to me and a source of joy and challenge. They serve as God's tool to form my life into what He has for me to accomplish. My ultimate purpose.
I'm thankful for my business, Swiss America Trading and every single employee and broker that has is committed to serving our customers, boldly proclaiming that our mission is "Helping America Rediscover Gold in the 21st Century."
I'm thankful that I'm learning that surrender of my own agenda to God's agenda -- which means learning daily that service precedes true leadership -- and that service gives my life meaning.
I'm thankful for my country, which values life, liberty and the pursuit of happiness with more passion than any other nation on earth.
I'm thankful for government leaders who want restoration of substance to the words; "In God We Trust," which is embossed on every U.S. coin and currency note in circulation.
I'm thankful for my local church, which raises up leadership with a great vision -- and a plan to help us reach God's goals for our life, family and society.
But, most of all, as the popular song declares, I'm thankful that God gave His Son to create a bridge between Himself and "whomsoever shall believe," which for over 20 years now, has included me, a sinner saved by grace.
I'm also thankful for you, dear reader, and pray that this Thanksgiving will bring memories of all that you have to be thankful for as well.
Craig R. Smith, CEO, Swiss America
Good time to add glitter to your portfolio
By Stephen Schurr, Financial Times
November 23, 2004
"We are now in the second phase of the gold bull market - the phase when the public gradually becomes interested. I think gold will hit $1,000 before this bull market is over," says Richard Russell, editor of Dow Theory Letters.
Mr Russell has been making bold calls since 1958 and as he says this to me, the price of gold hovers at about $440. The metal is already up about 75 per cent from its dog days of 1999 but is a far cry for the $850 gold fetched back in 1981.
In other words, it is not too late to add a little glitter to your portfolio.
Given the uncertainty regarding the dollar's decline, ballooning US deficits and rising inflation - not to mention the rich valuations in US stocks and bonds - having no exposure to gold poses the greater risk.
The above statement may warm the hearts of gold bugs - those who envisage an imminent economic cataclysm and see the metal as the only bulwark - but you do not have to espouse an end-of-days philosophy to see the sense in owning a 10 per cent stake in gold as a hedge against an extreme outcome from the dollar's decline.
The question is how to best get that exposure. Last week, investors were given access to a great new option - an exchange-traded fund pegged partly to the metal, the first time US investors could buy a stake in a commodity via an instrument traded on the stock exchange. In today's column, we will discuss the pluses and minuses of the new ETFs, as well as investing in gold, gold stocks and gold mutual funds.
First, caveat emptor: gold may shoot the moon but a short-term pull-back in gold-related investments may first be on the cards, especially among stocks trading at a premium to the metal. Indeed, some long-term gold enthusiasts such as Frank Holmes of US Global Investors expect a short-term dollar rally, and a gold retreat before the metal resumes its ascent.
Savvy hands-on investors with an interest in covering their assets on the downside should not wait forever. First, gold is a vital diversifier. According to Ibbotson, going back to 1968 gold has been negatively correlated to the S&P 500 and the US long bond, while having almost no correlation with inflation - making it the purest portfolio hedge for investors.
Second, a short-term pull-back will not undermine the fact that gold looks like one of the best investments of the next several years.
"The best way for investors to think about gold," says Bill Fleckenstein, a Seattle hedge-fund manager who has made a tidy profit on metals investments this decade, "is to see it not as a $440 metal but as a $4.40 stock that might trade for $4 over the short term but could well be an $8 to $10 stock depending on how the world comes to view the dollar".
Mr Russell espouses a "two parts gold, one part gold stocks" strategy for the gold portion of a portfolio.
At my year-end rejig, my 10 per cent gold stake will consist of one part gold ETF and one part gold stocks (or gold stock funds).
* Gold ETFs. As readers of this column know, I am a big proponent of ETFs - passively managed, low-cost baskets of stocks that focus on a country, sector or asset class. ETFs offer the best of both worlds: they trade daily like stocks while offering the diversification of a mutual fund.
The gold ETF, called StreetTracks Gold Trust and offered by the World Gold Council and State Street Securities, is a different kettle of fish in that it is linked to a commodity. The ETF trades on New York Stock Exchange under the symbol GLD. The ETF is pegged to trade at about 1/10th the price of gold, and it is 10 per cent backed by gold bullion.
On the downside, the Gold ETF is less tax efficient than typical ETFs because gold is taxed at a higher 28 per cent rate. For investors looking for 100 per cent exposure to gold, the ETF is not useful because it is only 10 per cent supported by gold bullion. This leaves gold diehards such as James Turk, author of the Freemarket Gold & Money Report newsletter, less than satisfied. "For those looking to own gold I'd say think twice before buying the ETF because it is not fully supported by physical gold."
Gold Creeps into Wall Streets Consciousness -Russell, DTL
Source: Dow Theory Letters, 11/20/2004
As Alan Greenspan moves towards the end of his reign, he evidently feels the urge to get honest. Thus, this headline in today's Los Angeles Times "Fed Chief Deflates Wall Street." And from page 1 of today's New York Times "Greenspan Sees No Rise Soon For the Dollar. Says U.S. Debts Post Threat to Currency."
And suddenly, like the Phoenix rising from the ashes, real money, better known as gold, creeps into the consciousness of Wall Street. First, we have a gold ETF listed on the NYSE and shortly we have another gold ETF to be listed on the Amex. Gold has been rising against dollars since 2001, and here's gold today, up 78% since its 2001 low, and finally gold is getting a bit, just a tiny bit, of publicity.
Subscribers write to ask, "Should I buy gold coins or ETFs? My answer either one will do, but, of course, there's nothing like the real thing in your bank vault. But again either will do. Our government classifies gold not as money but as a "collectible," taxable at 28%. I'm not sure how the new gold ETF will be taxed (accountants, please?). But collectibles cannot be put in your IRA whereas ETFs can. Ah, there's a difference.
Of course if our government was honest, it would admit that gold is money, and therefore exchanging gold for dollars or dollars for gold would be comparable with changing two five dollar bills for a ten. Yeah, that's if our government was honest.
Meanwhile, the stock market got its first splash of reality last week. With valuations higher than 1929, 1966, 1987 or 2000, investors go merrily on with their stubborn bullishness and their dreams of the future. The future may be glorious for the U.S. (with five kids I sure hope it's glorious), but then again, I read about the Chinese becoming a major power in both Asia and South America (in S. America the Chinese are buying up natural resources as fast as they can), and I have to wonder.
Amid dour forecasts of China's downfall, I suspect that China is on the way to becoming a Superpower. China, perhaps teamed with Russia, is also a rising direct threat to the U.S. in the coming battle for world ECONOMIC equality -- and then supremacy. Meanwhile, in China people stand in line at the banks in a rush to trade dollars for renminbi. Wonder what that means?
World strength goes to the savers, the creators and the producers. The U.S. is not a saver, the U.S. is a diminishing producer, but the U.S. is a great creator. Is one out of three good enough? Your call is as good as mine.
If there's one gauge as to whether we're in trouble or not (aside from the stock market), I'd say that it's the bonds. If bonds go down due to foreigners cutting back on their purchases of U.S. Treasuries, then interest rates go up. If interest rates go up -- then we're playing in a different ball game. So let's keep both eyes on the stock market -- but also let's keep a third eye on the bond market and that "head-and-shoulders top" that I've been showing in the bonds. (November 20, 2004)
4-13-04, WHEN IN DOUBT, STAY OUT! -Richard Russell
GOLD AND GRAVITY -Dan Denning, Strategic Investment
Nov 23, 2004
Is the gold price giving us a repeat performance of October's fake-out in the oil market? My suspicion is that gold is acting a lot like crude did last month... running up to fresh highs - and making headlines all the way...
But this isn't the main event. Not yet.
The day of reckoning for America, her deficits and her dollar, is surely on its way. Investors who haven't yet bought gold as protection could be forgiven for thinking they've missed their chance. But we may see gold make the inevitable run up to $450 - as early as next week - and then experience a serious correction and consolidation.
For that, investors still not holding gold should read, "last chance to buy before the bull is untethered... "
First, note that as gold has screamed up since the summer, gold mining stocks have failed to confirm the move. Just as it happened with the Oil Sector in October, the underlying commodity has gotten way ahead of its producers. For instance, gold put on $5 - one full percent - between its Tuesday close in London and its Wednesday close in New York this week. Yet the two biggest gold producers in the world did not follow. AngloGold eked out a 0.56% gain on the day; Newmont mining, the world's largest gold producer, managed a 0.71% gain.
Is this quibbling? Well, no. Newmont climbed as high as $49.96 in intraday trading Wednesday. But when you take a closer look at the chart, you see that it even though it closed up for the day, the second half of the session was all downhill... until it reached $49.55. In short, Newmont made a bid for $50 and couldn't make it. The largest gold stock in the world is failing to confirm gold's bullish move. Why?
The answer is "earnings' gravity". If you want to buy Newmont at p/e of 50, be my guest... and many investors will. But until the bullion price moves much higher - and starts making its way onto the income statements of the gold producers - the dearth of gold shares means you have too many investors chasing too few gold stocks, and paying too much for them. The total market capitalization of the gold and silver mining sector in the US is less than $136 billion. By comparison, Microsoft's market cap is $296 billion. The equity upside of gold is limited until the bullion upside gets much, much higher.
Of course, there is the chance that the next "psychological level" for gold is $500 - that being simply such a glorious number that traders can't resist it. Kevin Kerr, at Outstanding Investments, believes the technicals support gold all the way up to $475 in short order. This move would be aided and abetted by a huge increase in speculative longs in the futures market AND a surge in liquidity inspired by the launch of GLD, the New York listing for the World Gold Council's bullion backed gold fund. It's due next month, if not in the New Year.
Several hundred million dollars could flood into GLD as soon as it's launched. The stock will enable U.S. institutions to take a position in "paper gold." Wall Street's appetite for such financial chimeras is growing at what seems an exponential rate. Last week, cash inflows into Exchange-Traded Funds exceeded U.S. equity mutual fund inflows for the first time that I can recall - and this during a week when over $1.3 billion came in from the cold of the money market to the stock market sauna!
Moreover, such a flood of funds into GLD would be a vindication of the idea of "paper gold," at least in the short term. The idea behind GLD - and its London-list equivalent GBS, which has successfully matched the price of gold since its launch in January 2004 - is that they introduce liquidity to the gold market and create institutional demand for the metal. Up until now, U.S. pension funds and institutions - which is just a fancy way of saying mutual funds, banks, insurance companies, and brokerages - had no easy way to buy gold through the stock market. They had to do it through futures contract, or buy bullion. And legally, U.S. pension funds weren't allowed to own commodities outright.
Few institutions want to buy bullion anyway, because it never pays a dividend. It's essentially a savings account with zero interest, although if the dollar is getting worth less and less... then things priced in dollars go up... and pure inflation becomes one way to explain the rising gold price.
It's like a can of Coke that used to cost 25 cents now costing 75 cents or $1.00. Has the Coke gone up in value? Or has the purchasing power of your money gone down? Owning bullion when the currency inflates is one way to profit - in terms of paper dollars, at least.
The question today is whether there is pent up institutional demand for "paper gold" that is bullish for bullion. A lot of institutions could allocate a small percentage of their cash to gold, perhaps as much as 5%. And with gold rising in dollar terms - and also in terms of British pounds now as well - there would be no "yield penalty" to pay. The gain in bullion prices would match, or exceed, the yield on U.K. gilts or U.S. Treasuries - plus you'd have the safety of owning nature's own currency!
With paper gold, like GBS and GLD, accepted and flourishing, "earnings' gravity" on gold stocks may no longer be a check on making money in the yellow metal. With GBS and GLD, so the theory goes, you get more liquidity in the equity side of the gold market. And whichever way the gold price goes in the near-term, the launch of the new Amex Gold Miner's Index (GDM) should also be great news for options investors if and when those vehicles become "optionable" - especially as it's composed of more volatile junior exploration stocks.
I made the enhanced liquidity argument myself - about a year and a half ago, when gold was much less popular. Today is different. Gold is "hot". But is it "hot" in the way that, say, Britney Spears in a skin-tight red rubber suit is "hot?" Or is gold warming up because it's at the centre of a major shift in investor sentiment about asset allocation and the need for diversification?
With gold making 16-year highs, and the dollar making fresh lows in euro and yen terms, I'm more inclined to take recent developments as a sign of a near-term top in the gold price. In contrarian terms, whenever the crowd is all on the same side of the trade, the trade is nearly over.
In this scenario, GLD launches... goes a-googling its way up briefly... and then plummets to earth at the rate of 32 feet per second per second when the lustre of the first buy tarnishes.
That's when we should buy it. And that's when you should go hunting for gold stocks again - buying them at a much lower price. Or, you can do what I'm telling my options readers: Sit tight with your long gold positions, and buy put options on them for a near-term correction in the gold price.
In the long-term - but before we're all dead - I'm still mega-bullish on gold. Markets rarely move in straight lines, however. Just ask anyone who bought crude oil futures over $55 a barrel in October.
And with so much sentiment so universally bullish on gold, even the staunchest gold bull should keep both feet planted firmly on the ground.
If Bush keeps U.S. in deficit, gold is a big winner -Edgar Ortega
Nov 22, 2004
Euan Leckie and Greg Foulis, managers of the top-performing Scudder Gold & Precious Metals Fund, expect to add to their gains with the help of President Bush.
Bush's tax cuts and military spending helped turn a record budget surplus into a record deficit, causing the U.S. dollar to drop and gold prices to rise, Leckie said from his office at Deutsche Asset Management in Sydney, Australia. Bush's re-election represents a "continuation of the policy of large budget deficits," Leckie said.
"That's an overall positive environment for gold," he said.
His mutual fund had 88 percent of its assets in gold-mining stocks at the end of September.
The $545.5 million Scudder fund rose at an average annual rate of 27.2 percent during the past five years, through Oct. 29, the best performance of 22 gold funds Bloomberg tracks.
Leckie and Foulis search for mining companies that can increase production and reserves at below-average costs. The approach, which Foulis calls "valuation geology," led them to Placer Dome, Canada's second-largest gold miner, and Ivanhoe Mines, a Vancouver, B.C.-based company that's developing a copper and gold mine in Mongolia.
Shares of Placer Dome, the fund's biggest holding, more than doubled since Bush's inauguration Jan. 20, 2001, through Oct. 29. Gold climbed 64 percent to $434.50 an ounce in the same period.
The U.S. budget deficit swelled to $412.3 billion in the 12 months ended Sept. 30, as costs rose to finance the war in Iraq and homeland security. Before Bush took office, the country had a record surplus of $236.4 billion.
A declining dollar makes gold, which is denominated in the U.S. currency, less costly for holders of other currencies and boosts its attraction as a hedge against declines in U.S. assets.
Bush said during his first press conference after winning re-election that he will press ahead with the war on terrorism and with making permanent his $1.85 trillion of tax cuts.
Nov. 24 (Bloomberg) -- It is the tradition of this column every year at this time to relate the story of Thanksgiving. For source material, I relied on the accounts of William Bradford, the first governor of the Plymouth Bay Colony (Bradford's History ``Of Plimoth Plantation'').
For most Americans, Thanksgiving is a holiday from work, a time to gather with friends and family and celebrate with a huge feast. If children know anything about the origins of this national holiday, declared each year by presidential proclamation, it's that the Pilgrims set aside a day to give thanks for a bountiful harvest in their new land, where they came to escape religious persecution.
What children -- and many adults -- don't know is that things weren't always good for the Pilgrims, a group of English Separatists who landed at Plymouth Rock in 1620 and established the Plymouth Bay Colony.
The first winters were difficult: The weather was harsh, and crop yields were poor. Half the Pilgrims died or returned to England in the first year. Those who remained went hungry. Despite their deep religious convictions, the Pilgrims took to stealing from one another.
Finally, in the spring of 1623, Governor Bradford and the others ``begane to thinke how they might raise as much corne as they could, and obtaine a better crop than they had done, that they might not still thus languish in misery,'' according to Bradford's History.
One of the traditions the Pilgrims had brought with them from England was a practice known as ``farming in common.'' Everything they produced was put into a common pool, and the harvest was rationed among them according to need.
They had thought ``that the taking away of property, and bringing in community into a common wealth, would make them happy and flourishing,'' Bradford recounts.
They were wrong. ``For this communitie (so farr as it was) was found to breed much confusion and discontent, and retard much imployment that would have been to their benefite and comforte,'' Bradford writes.
Young, able-bodied men resented working for others without compensation. They thought it an ``injuestice'' to get the same allotment of food and clothing as those who didn't pull their weight.
A New Way
After the Pilgrims had endured near-starvation for three winters, Bradford, with the advice of the leaders of the colony, decided to experiment when it came time to plant in the spring of 1623. He set aside a plot of land for each family, that ``they should set corne every man for his owne particuler, and in that regard trust to themselves.''
The results were nothing short of miraculous.
Bradford writes: ``This had very good success; for it made all hands very industrious, so as much more corne was planted than other ways would have been by any means the Govr or any other could use, and saved him a great deall of trouble, and gave far better content.''
The women now went willingly into the field, carrying their young children on their backs. Those who previously claimed they were too old or ill to work embraced the idea of private property and enjoyed the fruits of their own labor, eventually producing enough to trade their excess corn for furs and other desired commodities.
Given appropriate incentives, the Pilgrims produced and enjoyed a bountiful harvest in the fall of 1623 and set aside ``a day of thanksgiving'' to thank God for their good fortune.
``Any generall wante or famine hath not been amongst them since to this day,'' Bradford writes in an entry from 1647, the last year covered by his History.
With the benefit of hindsight, we know that the Pilgrims' good fortune was not a matter of luck. In 1623, they were responding to the same incentives that men and women still respond to almost four centuries later.
Give thanks with a grateful heart
Give thanks to the Holy One
Give thanks because He's given
Jesus Christ, His Son.
In the United States, late fall and early winter is traditionally a time of thanksgiving and the most important reason to be thankful is that God has given us the greatest gift imaginable, Jesus Christ, as the song lyrics above remind us. In Jesus, our lives have hope and meaning. Without him, all the "things" of this world would be vanity utterly meaningless.
The fourth Thursday of November is Thanksgiving Day, in remembrance of the Pilgrims, who were eager to thank God for the bare necessities of life. By modern standards, they were deep in poverty but they were rich in gratitude.
* The previous winter, more than half the Pilgrims had died from bad weather, hunger and illness. But the Pilgrims were not shaken in faith. Their grief did not paralyze them. They were thankful for the life they had.
* They were thankful for food, even simple rations. Today, many of us live in a land of plenty, where overeating is more common than malnutrition. In the United States, it takes only 3 farmers to feed every 100 people, which means that the other 97 percent can produce other goods and services that raise the standard of living for all. This is good, and we should be thankful.
* The Pilgrims were thankful for peace. They were fleeing religious persecution, and felt blessed to be on good terms with the Native Americans. They knew they were strangers and pilgrims, guests on land that had not been theirs. We are also pilgrims and strangers on earth, seeking a better country, a heavenly inheritance (Hebrews 11:13-16).
* They were so thankful for the small amount they had, that they were willing to share it with their potential enemies, the Indians. This was not a shrewd political maneuver it was an honest expression of being thankful for what God had given. The Pilgrims always kept God in the picture. Whatever happened, he allowed, and whatever the circumstances, they were to be used for his glory. With that conviction, we can indeed be thankful for all things.
The Sunday after Thanksgiving is usually Advent Sunday. This is an annual commemoration celebrating the Second Coming (the Advent) of Jesus Christ. We eagerly await our Savior to bring even greater blessings upon his return. For this, too, we can be supremely thankful, for he who promised can be counted on to bring this blessing to us: the presence of God, with peace and joy greater than we can imagine!
Then comes the Advent season, when churches traditionally begin to go through the Gospels, starting with the story of John the Baptist, who came to prepare the way for the Lord. Again, what a great cause for thanksgiving, for celebration to realize that God did not leave us in our sins, did not punish us according to our transgressions. Instead of giving us what we deserved, he gave us Jesus Christ, his Son.
How should we respond to such a gift? With grateful hearts, with generosity. We should be generous with others, just as God has been generous to us. Throughout the New Testament, we see that our attitudes and behavior are to be a reflection of what God has done for us in Jesus Christ. We are to be like him, to be Christ-like, to be transformed by the renewing of minds, as we let his mind be in us, as we let his humility and compassion be ours.
Jesus was a thankful person, not griping about things he didn't have, but simply using what he had for God's glory. He didn't have much in the way of silver and gold, but what he did have, he gave: He gave healing, cleansing, freedom, forgiveness, compassion and love. He gave himself in life as well as in death. He was a living sacrifice, not just someone who died. He continues to live as our high priest, giving us access to the Father, giving us assurance that God loves us, giving us hope in his return, giving us himself.
How do we respond to what he has given us?
(2004 news/views weekly summary
ABOUT THE EDITOR
David M. Bradshaw is Editor of Real Money Perspectives, publisher of Rediscovering Gold in the 21st Century: The Complete Guide to the Next Gold Rush (7/01) and has been an economic commentator since 1987, when he produced the World Economic Perspectives radio show. In 1997, he produced a one-hour TV documentary, "Preparing Wisely for the Next Millennium," which was distributed free of charge at Blockbuster Video nationally. In 1999, he produced a one-hour radio special, "The Big Picture: The Shape of Things to Come" discussing geopolitical, economic and spiritual trends in the 21st Century. MORE ... NOTE: Youngest daughter Braida Zoe (9 months) is now standing, clapping, waiving ... and even kissing her Dr. after her 9-mo shots!
DISCLAIMER: All of the information in this story is believed to be true, however errors are possible.
Past performance is no guarantee of future performance. All investments have risk.