Thursday, July 06, 2006


Gold 'Reaffirmed Role Of Safe Harbor'

Forbes leads off the currency news. "The dollar fell against the euro Thursday after the European Central Bank's president promised 'strong vigilance' on inflation, interpreted as a likely sign that an interest rate increase is coming. Also on Thursday, the Bank of England kept its interest rates at 4.5 percent, leaving the cost of borrowing unchanged for the 11th consecutive month."

"The British pound rose to $1.8380 from $1.8347. The dollar also fell against the Japanese currency, dropping to 115.37 yen from 115.71 yen."

From Bloomberg. "Brazil's currency gained for the first day in four as exporters took advantage of recent declines to exchange dollars on the local market. The real weakened 2 percent in the previous three sessions after the central bank purchased U.S. dollars on the spot currency market in a bid to replenish foreign reserves. The real also fell yesterday after missile tests by North Korea prompted investors to seek safer assets such as the U.S. dollar."

"'The news on missile tests by North Korea spooked the market yesterday, and today exporters are taking the opportunity to sell dollars,' Mario Battistel, foreign-exchange director at Corretora Novacao SA said in Sao Paulo. 'Exporters have been largely responsible for the real's strength right after days of crisis over the past couple of months.'"

"Gold futures closed at their highest level since June 5 as tensions between North Korea and the West continued to escalate after Pyongyang threatened Thursday to test more missiles. After a weak opening, gold for August delivery reversed course midmorning and closed up $6.60 at $636.30 an ounce on the New York Mercantile Exchange."

"Other metals prices also posted gains. Silver added 17.20 cents at $11.507 an ounce, platinum edged up $1 to $1,249.60 an ounce and palladium rose $3.15 at $330.85 an ounce."

"'The resolve and bravado coming from Pyongyang has caught many complacent market (and political) analysts off-guard,' said Jon Nadler, investment-products analyst at 'Gold quickly reaffirmed its role of the safe harbor for one's wealth as soon as the geopolitical skies turned to a menacing shade of grey,' Nadler said. He added that there might be some volatility ahead."

"Gold is holding above $600, looking stronger than most expected, said Julian Phillips, an analyst at 'The gold market is evolving out of itself into part of the global money scene,' Phillips said. 'This means investment funds are coming in on the dips.'"

When Iran was at the front of the news, I posted in this blogs comments that Iranians were right when they said the US needs them more than they need the US. IMO, the US is in danger of looking like a paper-tiger.

If we are seeing a major shift of power/value away from the US$, that would likely occur most rapidly in a situation just like this one. Will foreign-policy humiliation accompany the fall of the greenback?
Forgot this Financial Times article on CDO's:

'The US market for the complex debt products known as collateralised debt obligations is booming with issuance in the first half of this year just 9 per cent below the total for all of 2005, according to analysts at Deutsche Bank in New York.'

'The stunning growth comes in spite of growing concerns about a coming turn in the credit cycle and the effect this and higher interest rates will have of on many of the assets backing these deals.'
the Pentagon said it's limited in dealing with NK because the military is overstretched in Iraq. good job mr. bush.
anyone have an opinion on the krona?

Iceland's Central Bank Raises Benchmark Rate to 13%

is anyone using railroads to invest in the commodity boom?

Industries pass along rising rail costs

IMO there is too much speculation involved in the Krona. I have blogged on that situation since the Fitch report blew the story wide open and I can't see a compelling reason to own any, given the currency risk.
I agree, the yield is attractive through. I think there is a good chance you'll make money vs. the dollar, but the krona will most likely fall against the other major currencies. I think AUZ(or is it NZ) has similar rates but better prospects.
The krona did a good job of wiping out 85% of my other currency gains even with 8.24% APY.
ran across this article.

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