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By Devajit Mahanta
According to the International Monetary Fund (IMF), potential losses exceed over US$1 trillion as a result of the economic slowdown in the United States. To overcome this credit crisis US Treasury suggests merging the Securities and Exchange Commission with the Commodity Futures Trading Commission (CFTC) to make market more stable, safe and sound with government backing and business conduct. The risky lending and borrowing practises and excessive debt levels have caused adverse effects on the crude oil and gold.
Crude Oil: Crude oil lost 47 per cent of its value since shooting to a record high $147.27 on July 11. Crude oil fell to a 13_month low on Friday settling at $77.70 on the New York Mercantile Exchange (NYMEX) due to the cut in its forecast for 2008 global demand by 240,000 barrels a day and plunging share prices in Asia and Europe headed for the worst week since 1970.
After steep fall last week, oil bounced back again to $84 a barrel on speculation the US Government will invest $ 250 billion in nine banks, helping to stave off a global recession. US President George W. Bush announced on Tuesday that US plans to spend an initial $250 billion of a $700 billion bailout buying stock in private banks. The UK has already announced a 500 billion bailout of their banking sector. Although the massive rescue plans boosted sentiment, oil traders also look at the weekly U.S. petroleum inventory data to be released next week. Once the problems in the banking sector are straightened out crude oil demand will be again rallied back. The global sub prime crisis could make the Organization of the Petroleum Exporting Countries (OPEC) to cut oil output by early next year to control swelling stock and insure against a price collapse.
Gold: Gold futures fell to almost one month low $824.50 Monday on the NYMEX division with investment demand easing as equities soar. The key question is, why is gold dropping when everyone expects it to rise due to seasonal demands?
Indian jewellery is offering discounts to attract world’s largest consumer of gold. Fears and concerns in the world financial crisis and snapped-up gold at lower price in other parts of Asia pushed Indian gold prices, which are quoting below international prices by around 300 rupees per 10 grams. Gold is treated as a hedging tool against the inflationary pressure but recent outlook of the US tends to be deflationary, which could be negative for gold. After the financial crisis now the tax revenue in the US is falling rapidly. The only way to make up for losses will be by printing money which will again create the inflationary pressure. But this inflationary pressure will prove nothing compared to such a huge mortgage collapse. The US Treasury and Federal Reserve can control the dollar but they can’t produce gold. So gold is the real treasure.
Readers can send their feedback at devajitmahanta@gmail.com source: assam tribune
By Devajit Mahanta
According to the International Monetary Fund (IMF), potential losses exceed over US$1 trillion as a result of the economic slowdown in the United States. To overcome this credit crisis US Treasury suggests merging the Securities and Exchange Commission with the Commodity Futures Trading Commission (CFTC) to make market more stable, safe and sound with government backing and business conduct. The risky lending and borrowing practises and excessive debt levels have caused adverse effects on the crude oil and gold.
Crude Oil: Crude oil lost 47 per cent of its value since shooting to a record high $147.27 on July 11. Crude oil fell to a 13_month low on Friday settling at $77.70 on the New York Mercantile Exchange (NYMEX) due to the cut in its forecast for 2008 global demand by 240,000 barrels a day and plunging share prices in Asia and Europe headed for the worst week since 1970.
After steep fall last week, oil bounced back again to $84 a barrel on speculation the US Government will invest $ 250 billion in nine banks, helping to stave off a global recession. US President George W. Bush announced on Tuesday that US plans to spend an initial $250 billion of a $700 billion bailout buying stock in private banks. The UK has already announced a 500 billion bailout of their banking sector. Although the massive rescue plans boosted sentiment, oil traders also look at the weekly U.S. petroleum inventory data to be released next week. Once the problems in the banking sector are straightened out crude oil demand will be again rallied back. The global sub prime crisis could make the Organization of the Petroleum Exporting Countries (OPEC) to cut oil output by early next year to control swelling stock and insure against a price collapse.
Gold: Gold futures fell to almost one month low $824.50 Monday on the NYMEX division with investment demand easing as equities soar. The key question is, why is gold dropping when everyone expects it to rise due to seasonal demands?
Indian jewellery is offering discounts to attract world’s largest consumer of gold. Fears and concerns in the world financial crisis and snapped-up gold at lower price in other parts of Asia pushed Indian gold prices, which are quoting below international prices by around 300 rupees per 10 grams. Gold is treated as a hedging tool against the inflationary pressure but recent outlook of the US tends to be deflationary, which could be negative for gold. After the financial crisis now the tax revenue in the US is falling rapidly. The only way to make up for losses will be by printing money which will again create the inflationary pressure. But this inflationary pressure will prove nothing compared to such a huge mortgage collapse. The US Treasury and Federal Reserve can control the dollar but they can’t produce gold. So gold is the real treasure.
Readers can send their feedback at devajitmahanta@gmail.com source: assam tribune
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