Significant Stats, Chinese Navy
Stocks and bonds are going sideways during this low volume holiday season. The Dollar is also caught in a tight trading range and going nowhere.
Gold is rising, and is now over $870/ounce. That’s a nice run up from the recent low of $700/ounce. Hope you all got your slice of this happiness in these bad economic times.
Oil is moving sideways, but gasoline, while it went up a little today, is on a down trend. Gasoline should now be falling at your local pump, and bring a little New Year cheer.
In the news today…..
The FED granted GMAC the status of being a “bank.” That means that GMAC has been saved from the auto downdraft, and will probably be receiving some of your generous bailout dollars.
One interesting note that seems contradictory in these times, but maybe is just logical, is that some states are starting to save a bundle of money (by saving lots of man-hours) by implementing the Japanese quality efficiency system that is very similar to Six Sigma. I hope this comes to my and your states too. It makes sense because states clearly see their revenue base disappearing, and cost savings are easier to implement than layoffs – but layoff are coming too.
Talking about International Happenings…..
Japanese factory output fell the biggest amount EVER last month – down 8.1%. Just to put that into perspective – a drop of 8% is the same ballpark as what happened in the Great Depression. These statistics are very significant.
The Chinese Navy is going to Somalia to fight the pirates. Hurray… But, what does this really mean?? This is the first time that the Chinese Navy has ever ventured outside of their coastal waters. They are spreading their wings, and doing it in a very safe environment as the US government is welcoming them with open arms.
Here are Today’s numbers:
Dow Jones 30 Industrial – 8515 (up 47 points)
10 Year Treasury Bond – 2.14% (down 0.04%)
Euro – $1.4062
Gold – $871 (up $23)
Oil – $37.71 (up $2.36)
Gasoline – $0.84 (up $0.05)
This won’t be the last time the Chinese Navy operates outside their coastal waters. In fact we should expect this to be a trend. We aren’t the lone superpower any more. This may even stabilize the global oil supply as the gulf region is secured not just be the US but also by China.
I have a question. Why is it that global deflation increases the USD price of gold. On the surface, it seems that there are fewer dollars chasing goods which leads to lower prices. Why is it that gold has increased in price or at least been more resistant to the asset price deflation we have seen elsewhere?
Hi David,
Good question. Your thoughts on the effects of deflation are absolutely correct. The difference with what’s going on right now is that we are throwing money at problem, and that will cause inflation in the future. Gold feeds on inflation – as you so rightly inferred.
Another thing working in the market today is speculation, and it could be pushing gold more than a normal market would play.
Tom