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