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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: John Vosilla who wrote (42921)	12/16/2005 1:55:22 PM
From: mishedlo	Respond to of 116555

Commodity investment set to rise sharply LONDON (Reuters) - Investors plan to raise their exposure to commodities over the next three years, viewing direct investment in commodities as a long-term strategy designed to diversify their portfolios, according to a survey by Barclays Capital. Over 70 institutional investors were questioned at Barclays first annual Commodity Investor Conference in New York this week. Some 54 percent expected funds under management in the sector to increase from $70 billion (40 billion pounds) currently to between $90-120 billion by 2008, and 32 percent expect a figure even greater than $120 billion by then. Almost 70 percent of the respondents expected to increase commodity exposure to 5 percent or more of their portfolio. On average roughly two thirds of the respondents already had some commodity exposure, but for most this was 5 percent or less of their total portfolio, said Barclays. The bank found that investors were concerned about current high price levels and planned to reduce exposure to index-based products, substituting less directionally sensitive structured products such as commodity baskets and becoming more active managers of their commodity portfolios. The result was consistent with the audience's view that large new inflows of institutional investment into commodities were likely over the next three years, said the report. Almost half the audience expected to hold their commodity exposure for three years or longer with most citing portfolio diversification as the most important factor in the decision to add commodities to their mix of assets, said Barclays. The major concern of investors was current high commodity prices. Oil, base and precious metals are close to record highs. For this reason only 11 percent of the audience expected to invest in commodity indices over the next three years, whilst 68 percent expected their investments to take the form of a combination of different strategies including active management and structured commodity products. borsaitaliana.reuters.it Mish

To: John Vosilla who wrote (42921)	12/16/2005 2:04:07 PM
From: mishedlo	Respond to of 116555

Gold bounces back above $500, finds physical demand Friday, December 16, 2005 4:17:57 PM reuters.com (updates prices to afternoon, adds fresh comment) By Clare Black LONDON, Dec 16 (Reuters) - Gold bounced back above $500/oz in Europe on Friday, gaining nearly three percent, as investors took advantage of an earlier dip to a two-week low to buy. Prices fell as low as $492.90 during Asian trading as the yen's rise against the dollar sparked more heavy liquidation in Japan. While the precious metal could easily fall further due to the weight of selling from Japanese investors and potential year-end liquidation, most expected good buying on price dips. "I think the move down is overdone," said Peter Hillyard, head of metals sales at ANZ Investment Bank. "In my view, there will be new buying in the market." Many participants had retreated to the sidelines, warily eyeing gold's impressive near-$50 price fluctuations this week, which began with bullion peaking at $540.90 on Monday, its highest in nearly 25 years, only to fall sharply in recent days. Spot gold <XAU=> was quoted at $503.80/504.60 an ounce by 1555 GMT, unchanged from levels set late in New York on Thursday, but well off the low point in Asia. "We have moved the best part of $50 this week and as such I think that this will frighten people away until the New Year at least, leaving the speculators and the Japanese investors to fight it out," said Simon Weeks, director precious metals at Scotia Mocatta. "On that basis, the overall risk is still on the downside although there will obviously be pockets of demand which should be sold." Sentiment for Japanese TOCOM futures gold was dampened by the strength of the yen as well as an announcement earlier in the week that the exchange would require higher margins for its gold futures contracts from Wednesday. The dollar hit a new six-week low against the yen at $115.61 <JPY=> as investors continued to cover short positions in the Japanese currency and bail out of carry trades. Gold would certainly remain at the mercy of Japanese investors until they were able to unwind all of their trades. NEW ERA Generally gold's prospects ahead were regarded by most analysts and traders as bullish which they attributed to ongoing portfolio diversification from more mainstream investors, coupled with robust demand for physical metal. The physical sector saw some pre-Christmas buying from jewellers in Singapore and Malaysia. Alan Williamson, metals analyst at HSBC bank, said in his daily report that while it was still too early to conclude the market had found a bottom, it did seem as if the recent period of aggressive selling may have come to an end. Hillyard said he saw gold back up around $520 an ounce by the year end and was looking for higher levels next year. "I think we're in a new era for gold. I don't think it's (this week's rally) a flash in the pan. I think the market is going to live mostly above $500 next year," he said. A quarterly poll of 16 analysts released on Friday by PriceWaterhouseCoopers that tracks sentiment in the metals markets showed a median average price for gold of $490 an ounce for the first quarter of 2006 and an average of $475 for the whole year. futures.fxstreet.com

To: John Vosilla who wrote (42921)	12/16/2005 2:15:19 PM
From: mishedlo	Respond to of 116555

CBO: U.S. likely to face long-term fiscal woes Thursday, December 15, 2005 8:44:16 PM afxpress.com WASHINGTON (AFX) - Under most long-range scenarios, the federal government will see bigger deficits and skyrocketing debt unless policymakers take steps to rein in expected growth in Social Security, Medicare and Medicaid spending as baby boomers begin to retire, the Congressional Budget Office warned Thursday "As health care costs continue to grow faster than the economy and the baby-boom generation nears eligibility for Social Security and Medicare, the United States faces inevitable decisions about the fundamentals of its spending policies and its means of financing those policies," the CBO said in its biannual Long Term Budget Outlook The report's conclusions are little different than its last long-range report, issued in December 2003 In a speech at the New America Foundation, a Washington think tank, outgoing CBO Director Douglas Holtz-Eakin said the future burdens posed by federal entitlement programs are such that even in a world without hurricane relief, ongoing war spending, budget pork and the extension of recent tax cuts, "our country would face deficits as far as the eye can see and enormous fiscal challenges." In only one scenario in the report, in which federal spending grows much slower than average and revenues grow much faster than average, does the federal budget post a long-term budget surplus But that scenario assumes bracket creep, in which real income growth pushes taxpayers into higher tax brackets, and the alternative minimum tax would combine to cause revenues to continually rise until they reach 23.7% of GDP in 2050, well above the range of 16.1% to 20.9% seen since 1951. It also assumes a reduction in spending that's unlikely unless there are significant changes in health policy, the report said The worst-case scenario sees federal debt equal to 130% of GDP by 2030, growing steadily after that, the report said, noting that the forecast doesn't take into account the harmful effect long-term deficits would have on economic growth Holtz-Eakin dismissed notions that future economic growth would be sufficient to close the long-term fiscal gap "You can't grow your way out of this problem. It's just too big," Holtz-Eakin said The report concluded that fiscal policy could be financially sustainable if the growth of health care costs slowed significantly from historical rates. But tax revenues would still probably need to be higher than they have been in the past, unless other spending growth is also curbed, the CBO said If taxation is held at levels seen in the past, spending on programs for the elderly would need to see substantial cuts. Slowing growth of spending for defense, education, transportation, and other discretionary programs wouldn't be enough to ensure fiscal sustainability, the CBO said Holtz-Eakin will leave his post at the end of the month to take a position with the Council on Foreign Relations, a think tank. The former chief economist for President Bush's Council of Economic Advisers, Holtz-Eakin has served as CBO director since 2003 fxstreet.com