Gold and Loonie SOAR on American dollar weakness- gold tops $1,100 with another record close
Dow Jones hits 2009 high
Canadian home builders scramble to meet demand - sale prices in October up 20% from a year ago
• TSX +236.46 (Reuters) investors continued to be buoyed by the weekend pledge from the Group of 20 rich and developing countries to maintain stimulus measures as long as economies remained weak .
• DOW +203.52 to 10,226.94 closing at its highest level this year.
• Dollar +1.57c to 94.57cUS The big mover in the currency markets was the pound, which slipped 0.5 per cent to $1.66 after the Fitch ratings agency warned that Britain was the major economy most at risk of losing its triple A debt rating.
• Oil +$2.00 to $79.43US per barrel.
• Gold +$5.70 to $1,100.80USD per ounce
Canadian home builders scramble to meet demand
Garry Marr, Financial Post
The Canadian housing market's surprising turnaround is spreading to new home construction as developers scramble to respond to a supply shortage that has sent pricing soaring for existing homes.
But any increase in construction on the new home side will likely not surface fast enough to feed the demand for housing that continues to be spurred on by record low interest rates.
Canada Mortgage and Housing Corp. said Monday there were 157,300 units constructed last month on a seasonally adjusted annualized basis, a 5.4% increase from a month earlier. Annualized starts at dropped as low as 118,500 in April.
"There is not a lot of inventory around," said Gary Friend, president of the Canadian Home Builders' Association, adding his industry has been careful not to speculate. "We have to watch our Ps and Qs, as we try to meet this demand."
Any increase in supply would be welcomed as a shortage of new listings has lead to a spike in prices. The Canadian Real Estate Association said last month existing home prices across the country were up 13.6% in September from a year ago as a supply problem was evident in almost every city.
The shortage has yet to ease despite the suggestion higher prices would coax homeowners to sell. This month the Toronto Real Estate Board reported sale prices in October were up 20% from a year ago.
"The existing homes market is in short supply so we've gone from a buyer's market to seller's market. The way it gets linked is you get some spillover into the new homes market and that's starting to happen," said Bob Dugan, chief economist with CMHC.
The agency has already upped its forecast for new home construction for 2010 from 150,300 to 164,900. Even at that level though, construction is still well off the 211,000 new starts recorded in 2008.
Paul Ferley, assistant chief economist with the Royal Bank of Canada, said "at the margins" new home construction could help ease the housing crunch. "Builders are aware and will contribute where they can to advance construction activity but no they can't turn on a dime."
Tuesday, November 10, 2009
Monday, November 9, 2009
Financial Update for Nov. 9, 2009
TSX +69.72 (Reuters) ending higher for a 4th straight session as gold miners rallied around record high bullion prices, offsetting the index's fall at the outset on weak jobs data that fueled worry about economic recovery.
• DOW +17.46 crossing the 10,000 threshold again to 10,023
• Dollar -.83c to .93.cUS after Statistics Canada said more than 43,000 jobs were lost in Canada last month, a huge miss compared with the consensus by economists, who had forecast the addition of 10,000 jobs
• Oil -$2.19 to $77.43US per barrel.
• Gold +$6.40 to $1,095.10USD per ounce after going as high as US$1,101.90. Gold is reacting to the bad news that the unemployment rate in the U.S. is above expectations. Everyone is focusing on the fragility of the recovery," said Michael Sprung, president at Sprung & Co. Investment Counsel. Gold hit the record high shortly after markets opened
G20 pledges to maintain emergency support until recovery is assured
ST. ANDREWS, Scotland - Finance officials from rich and developing countries pledged Saturday to maintain emergency support for their economies until recovery is assured, but failed to reach a clear agreement to bear the cost of fighting climate change.
There was also a mixed reaction among the Group of 20 leading rich and emerging countries to a British-led push to consider a fund for bank bailouts, possibly financed by a tax on financial transactions, to ensure that taxpayers don't bear the brunt of any future rescues.
The grouping - representing around 90 per cent of the world's wealth, 80 per cent of world trade and two-thirds of the world's population - said in a statement after talks in St. Andrews, Scotland, that economic recovery is "uneven and remains dependent on policy support."
U.S. Treasury Secretary Timothy Geithner said U.S. jobs figures out Friday showing unemployment at a 26-year high of 10.2 per cent "reinforced that this is still a very tough economic environment."
While the "process of growth is now beginning," that fledging growth still needs to be reinforced to create jobs and get businesses investing to underpin the recovery in the housing market and elsewhere, Geithner said.
"If we put the brakes on too quickly, we will weaken the economy and the financial system, unemployment will rise, more businesses will fail, budget deficits will rise, and the ultimate cost of the crisis will be greater," he told reporters in Scotland. "It is too early to start to lean against recovery."
The statement smoothed over divisions among G20 members about whether it was time to start talking about exit strategies to unwind recent massive stimulus measures. Germany, France and Russia have called for a joint plan on when countries should start repaying debt, and the European Central Bank has indicated it will soon start withdrawing some of its emergency lending to banks.
The officials also emphasized the need for quick implementation of banking industry reform, saying that stronger standards should be developed by the end of 2010, that could be put into force by the end of 2012 as financial conditions improve.
The G20 is comprised of Argentina, Australia, Brazil, Britain, Canada, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the rotating EU presidency.
• DOW +17.46 crossing the 10,000 threshold again to 10,023
• Dollar -.83c to .93.cUS after Statistics Canada said more than 43,000 jobs were lost in Canada last month, a huge miss compared with the consensus by economists, who had forecast the addition of 10,000 jobs
• Oil -$2.19 to $77.43US per barrel.
• Gold +$6.40 to $1,095.10USD per ounce after going as high as US$1,101.90. Gold is reacting to the bad news that the unemployment rate in the U.S. is above expectations. Everyone is focusing on the fragility of the recovery," said Michael Sprung, president at Sprung & Co. Investment Counsel. Gold hit the record high shortly after markets opened
G20 pledges to maintain emergency support until recovery is assured
ST. ANDREWS, Scotland - Finance officials from rich and developing countries pledged Saturday to maintain emergency support for their economies until recovery is assured, but failed to reach a clear agreement to bear the cost of fighting climate change.
There was also a mixed reaction among the Group of 20 leading rich and emerging countries to a British-led push to consider a fund for bank bailouts, possibly financed by a tax on financial transactions, to ensure that taxpayers don't bear the brunt of any future rescues.
The grouping - representing around 90 per cent of the world's wealth, 80 per cent of world trade and two-thirds of the world's population - said in a statement after talks in St. Andrews, Scotland, that economic recovery is "uneven and remains dependent on policy support."
U.S. Treasury Secretary Timothy Geithner said U.S. jobs figures out Friday showing unemployment at a 26-year high of 10.2 per cent "reinforced that this is still a very tough economic environment."
While the "process of growth is now beginning," that fledging growth still needs to be reinforced to create jobs and get businesses investing to underpin the recovery in the housing market and elsewhere, Geithner said.
"If we put the brakes on too quickly, we will weaken the economy and the financial system, unemployment will rise, more businesses will fail, budget deficits will rise, and the ultimate cost of the crisis will be greater," he told reporters in Scotland. "It is too early to start to lean against recovery."
The statement smoothed over divisions among G20 members about whether it was time to start talking about exit strategies to unwind recent massive stimulus measures. Germany, France and Russia have called for a joint plan on when countries should start repaying debt, and the European Central Bank has indicated it will soon start withdrawing some of its emergency lending to banks.
The officials also emphasized the need for quick implementation of banking industry reform, saying that stronger standards should be developed by the end of 2010, that could be put into force by the end of 2012 as financial conditions improve.
The G20 is comprised of Argentina, Australia, Brazil, Britain, Canada, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United States and the rotating EU presidency.
Wednesday, November 4, 2009
Financial Update For Nov. 3, 2009
• TSX +147.55 (Reuters) to 11,025.90 as a volatile session was helped my a surge in gold prices. As well, strength in railway stocks helped to lift the index after news that Warren Buffett's Berkshire Hathaway will buy rail company Burlington Northern Santa Fe Corp in a $26 billion deal
• DOW -17.53
• Dollar +.84c to 93.62
• Oil -$1.47 to $79.60US per barrel.
• Gold -$30.90 to $1,084.90USD per ounce after the International Monetary Fund announced it sold 200 tonnes of gold to India's central bank for a total of 6.7 billion dollars to bolster its finances.
Ford Motor Co issued a surprisingly strong quarterly profit of just under US$1 billion Monday
Gold seen as a hedge against greenback
Alia McMullen, Financial Post
Gold soared to a record high Tuesday after India surprised the market with the biggest single purchase of the commodity by a central bank in the past 30 years -- a signal governments around the world are becoming increasingly uncomfortable about the sliding value of the U.S. dollar.
"It's certainly indicative that the monetary authorities in India are not overwhelmingly upbeat about the outlook for the U.S. dollar," said Erik Nilsson, senior international economist at Scotia Capital. "Bear in mind too that we're talking about a jurisdiction that has had a long standing love affair with gold."
Mr. Nilsson said India had increased its gold reserves to hedge against its U.S.-dollar holdings, which total about US$268.4-billion.
He said the increasing demand for gold as a hedge against the greenback was helping to set the stage for an alternative reserve currency or asset to the U.S. dollar, a proposal that has been trumpeted by countries such as China, France, India and Russia. However, any such change would not come quickly, Mr. Nilsson said.
The cost of an ounce of gold rose US$30.90 Tuesday to hit a record US$1,084.90 after it was announced the Reserve Bank of India had purchased 200 tonnes of the precious metal from the International Monetary Fund.
The IMF said the purchases were made in installments between Oct. 19 and Oct. 30 for a total value of US$6.7-billion.
Timothy Green, author of The Ages of Gold, said it was "the biggest single central-bank purchase that we know about for at least 30 years."
Indeed, the purchase amounts to almost half of the 403.3 tonnes that the IMF approved for sale in September to diversify its sources of funding. The IMF owns more than 3,000 tonnes of gold.
Bart Melek, global commodities analyst at BMO Capital Markets, said the Reserve Bank of India's gold purchase pushed the country's gold reserves up to 7.1% of its total reserve assets. He said other countries, including China and Russia, have also been buying more gold, a trend that would likely continue while the U.S. economy remained volatile. On average, countries hold about 12.6% of their reserves in gold, up from 9.9% a year ago. Some of this represents an increase in gold holdings, but another driver of the increased proportion is the rise in the value of gold.
The price of gold has surged 52% since bottoming on Nov. 12 last year.
"Historically, gold has been a hedge against instability, has been a hedge against inflation, has been known to behave counter cyclically to equity markets," Mr. Melek said. "Gold has reasserted its historic role of being a hedge, basically insurance against bad stuff, against everything from geopolitical problems to inflation to dollar issues."
He said in the bullish case, gold could continue to push higher to average US$1,300 on an annual basis by the end of 2010 or early 2011.
Brian Christie, analyst at Desjardins Securities, said central-bank demand would be an important driver of the gold price, with India's purchase adding to the positive momentum for the commodity.
"China is rumoured to be interested in some or all of the remaining IMF bullion; however, it is likely very sensitive to price," Mr. Christie said. "Since the transaction with India was done at fair market value, the Chinese could be waiting for a pullback in the gold spot before pursuing this purchase further."
With holdings of US$2.3-trillion, China is the largest holder of U.S.-dollar reserves and has been actively looking to diversify its portfolio.
• DOW -17.53
• Dollar +.84c to 93.62
• Oil -$1.47 to $79.60US per barrel.
• Gold -$30.90 to $1,084.90USD per ounce after the International Monetary Fund announced it sold 200 tonnes of gold to India's central bank for a total of 6.7 billion dollars to bolster its finances.
Ford Motor Co issued a surprisingly strong quarterly profit of just under US$1 billion Monday
Gold seen as a hedge against greenback
Alia McMullen, Financial Post
Gold soared to a record high Tuesday after India surprised the market with the biggest single purchase of the commodity by a central bank in the past 30 years -- a signal governments around the world are becoming increasingly uncomfortable about the sliding value of the U.S. dollar.
"It's certainly indicative that the monetary authorities in India are not overwhelmingly upbeat about the outlook for the U.S. dollar," said Erik Nilsson, senior international economist at Scotia Capital. "Bear in mind too that we're talking about a jurisdiction that has had a long standing love affair with gold."
Mr. Nilsson said India had increased its gold reserves to hedge against its U.S.-dollar holdings, which total about US$268.4-billion.
He said the increasing demand for gold as a hedge against the greenback was helping to set the stage for an alternative reserve currency or asset to the U.S. dollar, a proposal that has been trumpeted by countries such as China, France, India and Russia. However, any such change would not come quickly, Mr. Nilsson said.
The cost of an ounce of gold rose US$30.90 Tuesday to hit a record US$1,084.90 after it was announced the Reserve Bank of India had purchased 200 tonnes of the precious metal from the International Monetary Fund.
The IMF said the purchases were made in installments between Oct. 19 and Oct. 30 for a total value of US$6.7-billion.
Timothy Green, author of The Ages of Gold, said it was "the biggest single central-bank purchase that we know about for at least 30 years."
Indeed, the purchase amounts to almost half of the 403.3 tonnes that the IMF approved for sale in September to diversify its sources of funding. The IMF owns more than 3,000 tonnes of gold.
Bart Melek, global commodities analyst at BMO Capital Markets, said the Reserve Bank of India's gold purchase pushed the country's gold reserves up to 7.1% of its total reserve assets. He said other countries, including China and Russia, have also been buying more gold, a trend that would likely continue while the U.S. economy remained volatile. On average, countries hold about 12.6% of their reserves in gold, up from 9.9% a year ago. Some of this represents an increase in gold holdings, but another driver of the increased proportion is the rise in the value of gold.
The price of gold has surged 52% since bottoming on Nov. 12 last year.
"Historically, gold has been a hedge against instability, has been a hedge against inflation, has been known to behave counter cyclically to equity markets," Mr. Melek said. "Gold has reasserted its historic role of being a hedge, basically insurance against bad stuff, against everything from geopolitical problems to inflation to dollar issues."
He said in the bullish case, gold could continue to push higher to average US$1,300 on an annual basis by the end of 2010 or early 2011.
Brian Christie, analyst at Desjardins Securities, said central-bank demand would be an important driver of the gold price, with India's purchase adding to the positive momentum for the commodity.
"China is rumoured to be interested in some or all of the remaining IMF bullion; however, it is likely very sensitive to price," Mr. Christie said. "Since the transaction with India was done at fair market value, the Chinese could be waiting for a pullback in the gold spot before pursuing this purchase further."
With holdings of US$2.3-trillion, China is the largest holder of U.S.-dollar reserves and has been actively looking to diversify its portfolio.
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