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Posts Tagged ‘inflation’

‘Everyone should be raising interest rates, they are too low worldwide,’ Rogers said in a phone interview with Bloomberg News. — PHOTO: BLOOMBERG NEWS

SINGAPORE – CHINA and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.

‘Everyone should be raising interest rates, they are too low worldwide,’ Rogers said in a phone interview with Bloomberg News.

‘If the world economy gets better, that’s good for commodities demand. if the world economy does not get better, stocks are going to lose a lot as governments will print more money.’

China’s central bank hasn’t increased rates since November 2007. In the US, the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 per cent, where it’s been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 per cent.

Policy makers in Malaysia, South Korea, Taiwan and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.

The global economy is at the risk of prolonging a recession after reports over the past two days showed US home sales plunged by a record and Japan’s export growth slowed for a fifth month in July, he said.

The Straits Times

Jim Rogers (former Quantum Fund manager)Predicts Bigger Financial Shocks Loom…do a google search on the name.

The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff

Wholesale inflation surged in July- fastest pace in 27 years http://www.msnbc.msn.com/id/26286459

indeed, the U.S. financial debacle is now so ingrained – and a so-called “Super Crash” so likely – that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away – if it ever is, Rogers said.

The end of this crisis “is a long way away,” Rogers said. “In fact, it may not be in our lifetimes.”

As a person who survived under the Carter Administration let me assure you that our national economy is in no uncertain terms as bad as the late 1970's or early 1980's. Even then, most people survived.

So, you can stop the Al Gore chicken little panic.

Geez, Democrats are shut wimps!

The average American probably feels as if the sky is falling because the average American does not financially prepare for lean times. Maybe, when the current slump is over, people will learn to not live beyond their means and manage money more wisely. Turning to the government ( which doesn't live within its means, either ) to bail out those that lack financial responsibility is not the answer. ask someone who has been wise with their finances over the years if they are suffering right now? The answer is no.

Does the average American know what is happening with the financial crisis we face?

In late 2009 the price of gold zoomed past $1,200 an ounce. This was a new record for the yellow metal as investors across the world sought protection from turmoil in financial markets and solace against worries about the inflation. for some investors, this was an expected outcome. Jim Rogers, a legendary fund manager, has made huge bets on gold in recent years based on his belief that the US dollar is overvalued and that the dollar and gold will show an inverse correlation to one another. In other words, he believe that as the dollar weakens, gold must inevitably rise.

Yet that inverse correlation may not be as predictive as mr Rogers and others investing in gold hope. for gold is often viewed as simply another currency. since gold is traded and priced in dollars, it must inevitably rise if the dollar weakens. Yet the same effect could be obtained by holding another currency such as the euro or Japanese yen.

And the difficulty with holding gold as an investment is that the price of the metal has a strong influence on jewellery demand, which accounts for some two-thirds of gold demand. last year some $61 billion was spent on gold jewellery, according to the World Gold Council. In contrast investment accounted for just $32 billion of demand for gold. for investors who are holding gold as a hedge against inflation, the worry is that a rising price is unsustainable if it halts gold jewellery buying and leads to an oversupply of the metal. for now gold has served investors well, but at current high prices they should think carefully before investing in gold or buying gold ETFs.

Jon Rose is the pen name of a financial journalist who has covered business and financial markets for 15 years and has an interest in personalfinance. You can read other articles he has written about buying gold ETFs and investing.

CoolArticles.org Real Estate Cool Articles

This entry was posted on Tuesday, July 6th, 2010 at 3:36 pm and is filed under investing in gold. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Investing in Gold ETFs May Not Make a Portfolio More Robust

GOLD PRICE NEWS The gold price fell $16.20 to $1,216.26 Thursday as the spot price of gold finished lower for the third consecutive session. The SPDR Gold Trust (GLD), which acts as a proxy for the gold price, closed down by $1.59, or 1.3%, at $118.98 per share. in spite of todays weakness, the gold price remains modestly higher for the month, by $2.12, but turned negative by $2.09 on the week.

Gold stocks did not follow the gold price lower, with shares of most gold miners rising alongside the broader market. Notable advancers in the gold stocks sector included Agnico-Eagle Mines (AEM), Freeport McMoRan Copper & Gold (FCX), and Gammon Gold (GRS). Shares of AEM, FCX, and GRS posted gains of 1.9%, 5.9%, and 3.4%, respectively.

Weakness in the gold price came as the euro rallied against the U.S. dollar for the third straight day, rising 1.0% to 1.2116 as U.S. equity markets closed. The euro climbed after European Central Bank (ECB) President Jean-Claude Trichet said the European Unions central bank will continue its bond purchase program, a component of the $1 trillion rescue plan announced last month at the height of the Greek debt crisis. Trichet made the remarks during his monthly post-ECB meeting news conference, but declined to provide details on the scope or duration of the purchase program.

The rescue announcement in mid-May fueled concerns of inflation among investors and sent the euro to a four-year low against the dollar. ECB officials have subsequently made great efforts to note that the bond purchases are sterilized i.e., they are offset by other asset sales and result in no increase in liquidity. however, investors have remained skeptical of such assurances, and have fled the euro for the safety of assets tied to the price of gold.

Commenting on the European sovereign debt crisis at a conference in Vienna, Austria, legendary investor George Soros sounded quite skeptical of the measures taken by European policymakers. Soros, who is perhaps best known for founding the Quantum Fund with Jim Rogers in the 1970s, stated that The collapse of the financial system as we know it is real, and the crisis is far from over. indeed, we have just entered Act II of the drama.

The billionaire investor went on to say that the present global economic environment is eerily reminiscent of the 1930s, with governments recently coming under pressure to reduce their budget deficits during a period when the economic recovery remains fragile. when the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide, Soros stated.

Given Soros stellar track record, investors will pay close attention to his comments. If the dire scenario he describes unfolds, the euro is likely to come under additional pressure in the months ahead. Despite the recent three-day rebound, the euro remains near a four-year low against the U.S. dollar, with many investors and traders eyeing the 1.15 or 1.10 as the next likely target. Such a development would most likely be a substantial positive catalyst for the gold price, which has benefited from economic uncertainty and the policy responses to the deflationary aspects of the sovereign debt crisis.

Gold Price Dips, but “Crisis far from over”

In Peter Lynch’s book “learn to earn” he talks about a bond paying 8% interest on 10K investment. (8K Intrest). then he says inflation is 4%. He calculates that you lose almost 1,300 of the interest (I think) to inflation. therefore he says that your orginal 10K investment is worth 6,648 after 10 yrs of 4% inflation. How is it that the investment ends up at 6,648 after 10 yrs of inflation?

Need explination of this thing..?