2006RUS

The protesters win the war in Egypt, as the final battle comes to an end and Mubarak steps down. Markets continue to make fresh highs, and so are treasury yields. You can see traders already had this news priced in. The dollar continues to get whacked, and if there was any uncertainty the situation was systemic, this wouldn’t be the case.

Normally when uncertainty hits the market, the dollar gets a flight to safety bid, but the dollar has continued to weaken over the period. If traders were really fearful you would have seen the “risk-off” trade- money flows out of stocks and into bonds, the U.S. Dollar, and Gold. Instead traders were not fearful at all and decided to just sit on their hands. Regardless, the bigger story looms and Inflation is rearing its ugly head!

The Egyptians finally overthrow a dictator they had in place for 30 years, and all because food prices spiked. Will contagion spread to the nations around Egypt? Traders will be watching to see how this will play out. I believe this is a small battle in a much larger war!

In times of uncertainty gold acts as an inflation hedge. Since the Egyptian situation posed no immediate threat, we should have seen gold sell off, but defying all odds gold has continued higher on the news. It looks as if its going to make its way to new heights.

The week ahead. Equities are still due for a five to ten percent pullback, but as the bulls and bears both want the market to pull back the opposite tends to happen. One thing to note as crude got whacked on Monday as Gold stayed very strong. It might be catching a bid into the decision congress will make about raising the debt ceiling as well as European debt roll-over in March.

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Job Growth and importance for the economy and stock market is an issue that affects most countries, but particularly those that that are most heavily industrialized.

Countries like Britain and America are still not yet out of the woods, and the number of jobs being created is barely enough to sustain economic recovery. The recovery will be slow if jobs are not created quickly. Small businesses will have to do it because large corporations cannot.

There is still faith in market driven economic systems. They have proved their worth in the past and government interference has proved disastrous. Nevertheless, as problems persist in some countries the temptation for politicians to meddle grows stronger. They call in business leaders and try to persuade them to created more jobs. Only when that number grows will the economies grow. But neither stocks nor the economy will grow unless companies are profitable. There lies the rub.

In market economies the forces of supply and demand operate. In 1942 gangs of fifty or more men maintained the railways. Singing rhythmically they raised their picks aloft, and then brought them down in unison. By 1990 all those jobs were gone, as indeed had the railway itself. Instead, one man drove a large van to deliver goods, and the road was maintained by another man. Two jobs had replaced fifty.

Some people in European countries have been slow to adapt, and have had the option of falling back on the social welfare systems as mechanization replaced jobs. It has been made possible for them to live without working.

Information technology has produced phalanxes of new jobs but unfortunately a measure of training is necessary if the job is to be done. Indian workers have shown themselves adept at training themselves to be effective IT workers, and this has implications for countries like Britain and America.

However many new opportunities are created two inescapable requirements remain. Workers must be prepared to retrain and work productively so that entrepreneurs can turn a profit. In this regard Indian and Chinese have proved so superior that firms shut up shop in America and Europe, and moved their operations to the East where greater profit was possible. Western workers may have sneered about ’sweat shops’ and ‘human rights’ but the hard facts of profit prevail over sentiment.

However many new opportunities are created two inescapable requirements remain. Workers must be prepared to retrain and work productively so that entrepreneurs can turn a profit. In this regard Indian and Chinese have proved so superior that firms shut up shop in America and Europe, and moved their operations to the East where greater profit was possible. Western workers may have sneered about ’sweat shops’ and ‘human rights’ but the hard facts of profit prevail over sentiment.

Oddly enough, the solution may lie not within the Western countries themselves, but in China and India. The economies of those countries have been built on exports and hard work. Now that exports to the West are becoming more difficult on account of the difficulties of those importing countries, the only solution for a country like China is to pay its workers more and so built up its own internal markets. A higher standard of living where workers have been used to working for a dollar a day will make them buyers of goods from the West and so equilibrium will be established, and all will be better off the world over.

The solution to Job Growth and its importance for the economy and the stock market may nor even lie in the hands of Europeans and Americans, but in more globalization and a better equilibrium world wide of wealth, jobs and quality of life.

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It would appear that the jury is out right now on whether the gradual but intentional weakening of the American dollar will continue or reverse oil prices and the resulting stock value of oil companies. Traditionally, a devalued dollar has driven oil prices and commodities higher with stock appreciation rising in a similar manner. Unfortunately, with so many current variables at play, seeing a clear forecast is tricky, if at all possible.

From 2001 to 2008, when the dollar fell to its lowest, the 73 range, oil-exporting businesses profited by challenging higher prices per barrel to ensure that they could have the funds for their operating expenses in other currencies. Internationally, investors began to take protective measures by shifting some of their portfolio into commodity futures, which developed a temporary jump in value there. During that time, not just oil businesses, but banks and energy organizations also profited from the weakened dollar. ExxonMobil stock soared from $36 – $85, a 138% appreciation and similar to the percentage improve of crude oil per barrel. Are we set for a repeat? Maybe, or maybe not.

Absolutely, the lack of commitment from the G-20 conference recently all but gave agreement for the Federal Reserve to exercise quantitative easing. With no effective measures to require accountability, plans are moving ahead to begin round 2 of asset buying as early as the beginning of November in yet another effort to push interest rates down again and jump begin the sluggish economy. Until that occurs, the surprising, small but encouraging, increase in existing home sales in September could have blunted the effects of the disappointing G-20 conclave.

If, in fact, the dollar is allowed to slide further than the 10% it has against the euro in the last 3 months or to the 15 year low against the Japanese yen, it is expected that not only oil prices and commodities, including gold, will rise but so will stock in participating oil companies. Stock brokers and online traders will be watching these opportunities closely for a chance to gain some possible turn-over advantage or as a portfolio hedge against other investments.

If an all-out currency war can be eliminated, those companies with significant foreign product lines stand to make excellent cash and represent profitable stock market investment prospective. A cheaper American dollar means other currencies can purchase additional and sales will boost. In countries not pegged to dollar currency, oil will remain somewhat cheap. In America, due to the fact we are limited to the American dollar as our only currency, high oil costs may well trigger other responses like less foreign travel, more demand for gasoline at property, and extra healthy competition between foreign imports and domestic products.

For the stock market, dollar devaluation may well be a win-win situation for oil organizations, at least within the short term. Increased sales at higher costs sounds a great deal like the definition of profitability. As a weakened dollar creates far more buying potential, countries for example Germany and France is going to be able to buy much more oil at cheaper rates, energizing the age-old supply and demand model. Conversely, a stronger, more healthy American dollar would help to make crude oil additional high-priced for other weaker currencies, decreasing the demand for oil and forcing lowered prices.

Selecting to invest in foreign commodities and oil companies based solely on the perceived strength or weakness of the dollar alone may well be risky. Having said that, for those willing to place themselves in position just before the Fed moves in November, this might be an exciting and potentially profitable opportunity. Fagio D. Rather

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The U.S. economical view dimmed after the unsatisfactory reading from the November non-farm payrolls report. The U.S. market added 39,000 jobs in the month, a great deal short of the 150,000 consensus estimation. The unemployment rate elevated to 9.8% from 9.6%, the highest since April.

The currency market’s reaction was to sell the U.S. dollar as it dropped one hundred pips versus practically everything. The only exception was the Canadian dollar which regularly suffers on undesirable U.S. employment details because of the nation’s reliance upon the U.S. consumer. Compounding CAD’s losses was a mixed Canadian employment report that saw 11K full-time jobs lost.

The fast fall in the Usd after the jobs report indicates some of the dollar’s current positive move has been because of anticipations that not all of the $600 billion QE2 plan would be utilized as a result of a rebounding economy and jobs market. Friday’s non-farm payrolls dashed a portion of those expectations however we wouldn’t be so speedy to totally eliminate some of that sentiment returning. Other measures of employment are actually bettering lately and non-farm payrolls usually are infamously volatile. ADP employment on Wednesday was better than predicted and the employment part of Friday’s ISM non-manufacturing rose to 52.7 from 50.9 – the highest since October 2007.

The overall status of the U.S. overall economy seems to be getting better incrementally as well. We observe that even many of the most bearish economists have finally ruled out a near-term double-dip.

The primary stage of uncertainty in the U.S. economy pertains to fiscal policy. The U.S. debt commission’s ideas were shelved on Friday after it did not acquire 14 of the 18 votes required for it to go to Congress for argument along with a vote. The plan, which involved elevating social security payments to sixty-nine as well as hiking the gasoline tax by 15-cents can now be changed or pushed aside. The value in the report was in establishing a debate but its fast rejection additionally shows that U.S. political figures are reluctant to make the tough decisions which are necessary to forge a balanced budget.

The jobs statement showed state and local governments laying off 11,000 employees. We appear to be at just the leading fringe of a long-term cut in U.S. govt spending which may cost up to a million jobs over the subsequent several years. Unquestionably concerning the velocity and harshness of those lay offs and job cuts should go a long distance towards the U.S. dollar’s near-term performance.

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A very diversified investment portfolio has a small space for a position in gold. Some people think that investing in gold means holding gold coins, usually South African Kruger Rands, which are one troy ounce in weight. Other speculators purchase gold futures on the commodity exchange.

However, futures contracts are tremendously precarious because you are betting that the price of gold will rise or fall in the future. The contract itself requires a relatively small up front payment, but you will have to put up guarantees called margin to take care of daily changes in price.

The reason investors are interested in gold at the moment is because often in the past, when the stock market is down, the gold market is up. Weakness in the dollar frequently brings a surge in the price of gold too.

Another route to investing in gold is through bonds and precious metal funds, which can be bought through a stock broker. However, you will need to select your stockbroker very cautiously, because this area of investing requires highly specialized knowledge.

The following suggestions are meant as examples only as you will want up-to-the-minute information, if you are thinking about investing in stocks, shares and funds. One of the names that will come up in any investigation is Agnico-Eagle Mines, which trades on the NYSE and the Toronto Stock Exchange under the ticker AEM. They have 30+ year history in the mining of gold and In that time, they have produced 4,000,000+ ounces of gold.

Gold has made huge profits for investors in gold since the late 1970’s. However, the secret to making money from gold is knowledge of the different resistance points in the price and the evaluation of the worldwide market for the use of gold. It is used principally in jewellery and electronics and some other types of manufacturing.

The biggest markets for gold jewellery is India and other Eastern countries. China’s new-found prosperity is also having an effect on the markets, although manufacturing is still of prime importance there.

You will have to have a good stockbroker or consultant, because the gold market is so complex. If you are investing in gold as a hedge against a vulnerable dollar, you are taking huge risks and you will have to to look for any strengthening in the dollar like a hawk. A fairly shrewd tactic is to set yourself reasonable goals. For instance, are you content with a 10% profit or are you going to hang out for a 25% gain?

Gold can be affected by seasonal events. Check out when people in India get married. It is seasonal and around Christmas time. Then St. Valentine’s Day is a realistic influence too, but you or your adviser will have to examine the trends and the graphs.

You can get into gold mining stocks for fairly small money, but it is not the cost of the share certificate that is important, it is the yield on those shares. Be on your guard with small mining companies, because the expenses of exploration are ruinous. Likewise, profits on hitting a big seam would be wonderful for a small company.

Owen Jones, the author of this piece, writes on many subjects, but is currently involved with Clogau Welsh gold. If you have an interest in wedding rings too, please go to our website now at White Gold Claddagh Ring

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What a tumultuous decade it’s been in the financial markets. We’ve seen peaks and valleys like never before, and it makes you wonder what lies ahead.

Let’s take a look back to the beginning of the decade. Times were great in the financial world. In fact, the indexes hit all-time highs and there were aggressive gains in the markets almost every day.

More people were trading stocks than ever before. This was a craze that the world had never witnessed, and everyone wanted a piece of the action. New accounts were springing up left and right.

The NASDAQ’s all-time high of over 5,000 still seems surreal today, and things quickly corrected themselves. Many stocks were fractions of their previous high just months after things peaked.

Things quickly went down and stayed that way for quite some time. Just when it looked as if things were stabilizing in 2001, things got worse after the 9-11 attacks. The world economy was at risk and many investors were pulling their money out of the markets.

A rebuilding mode set in during the next few years, and some steady gains followed through 2006, at which point some of the indexes once again set new records. Investors were optimistic about market conditions and money was beginning to flow back in.

At the same time, oil prices hit all-time highs, and things like forex trading became extremely popular. The mania was back and everyone wanted to be a part of it.

As you well know, the end of the decade ended on a poor note, as we’ve been hit with one of the biggest bear markets in history. On the bright side, things look to be slowly improving and we could very well be on our way back up the roller coaster.

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