A little less than 12 months ago, the world’s biggest financial players suddenly found they could not turn some $1.3 trillion of their assets into cash. These assets - bonds backed by US home-buyers with low (or no) incomes - had become utterly illiquid. No one would buy or lend against them, not at any price. And an asset you can’t sell or borrow against is worth precisely nothing. The resulting mayhem? It would have sounded frivolous two years ago.
May 13th, 2008 | Adrian Ash | 1 comment | ContinuedArchive for Adrian Ash
City correspondent for The Daily Reckoning in London and formerly head of editorial at Fleet Street Publications Ltd, Adrian Ash has been studying and writing about the investment markets for the last 9 years. He is now head of research at BullionVault - giving you direct access to investment gold, vaulted in Zurich, on US$3 spreads and 0.8% dealing fees.
40 Years of Inflation, 80 Years of Dow/Gold
If Wall Street stocks can surge 160 points on falling earnings, an 11% drop in housing starts, and a 16-year record for consumer-price inflation, then so can everything else that doesn’t carry a picture of George Washington. Crude oil, rice, Gold, the Euro, wheat, emerging market bonds, copper…anything that’s not stamped with the all-seeing eye of the Dollar looks a great bet once again.
April 17th, 2008 | Adrian Ash | 0 comments | Continued
Why Choose Gold When Real Interest Rates Sink?
You can link the historic surge in gold prices starting mid-August 2007 to many apparently disparate things. Pick the right link, and you might be able to tell whether it’s worth you buying or holding gold today. One such link is the price of money, as decided by the US Federal Reserve. Gold’s stellar 58% gain in the seven months starting 18th August began with the Fed’s first change to US interest rates in 18 months…
April 16th, 2008 | Adrian Ash | 2 comments | Continued
Inflationary Losers in the Great Solvency Slump
Over in the plush hedge-fund suites a mile or two west in Mayfair, Plexus Partners lost one-third of its value since January after screwing up its arbitrage trades. Another crazy-named hedge fund – Polygon – has tried to stop its investors withdrawing their cash to defend its future. And sticking to English, rather than Latin, failed to save Russell Investments in New York from closing two of its three hedge funds this week. They dumped two-thirds of their value inside six months.
April 7th, 2008 | Adrian Ash | 0 comments | Continued
A New Floor in the Gold Price?
After noting an historic move higher in the gold price last month, maybe we should be wary of picking a bottom today. Cracking above 40,000 Deutsche Marks Per Kilo, the price of gold - when converted back from the Euros that German investors now clutch - promptly sank almost 14% from that 27-year top. In the ensuing sell-off (to date) it bottomed (so far) at the equivalent of €561 per ounce on Tuesday…
April 4th, 2008 | Adrian Ash | 2 comments | Continued
The True Cost of This Crisis
How to keep your head when all about you are losing theirs? “Steer clear of the new gold rush,” urges Jason Zweig, a senior columnist at Money Magazine. “Aw, just lend! Lend! LEND!” screams the Federal Reserve. Sporting its usual crystal-meth grimace, it’s stumping up $200 billion in Treasury bills for desperate New York brokers to kick-start the world’s capital markets. And now they can use flakey mortgage-backed bonds as collateral.
March 13th, 2008 | Adrian Ash | 0 comments | Continued
The Ghost of Gold at the Central Bank Banquet
Last weekend in Basel, Switzerland, central bankers from the G-10 group of rich nations met up for one of their regular hoe-downs. You can guess the main event in between canapés and champagne - academic chit-chat about interest rates, political pressure and banking supervision. The global financial crisis surely got plenty of air-time, too. After all, Ambac Financial - the giant “monoline” bond insurance group - last week issued and sold $1.5 billion in new shares and convertible bonds.
March 12th, 2008 | Adrian Ash | 0 comments | Continued
Euro Hits Fresh All-Time Highs Versus the Dollar
The Euro hit fresh all-time highs versus the Dollar already this month – and we’re only one trading day in. So might US investors want to switch out of gold bullion ahead of Easter this year and move into the single currency instead? After all, the Euro still pays 4.0% interest per year – a feat that dumb gold could never promise or achieve – and with Eurozone inflation holding at a record 3.2% year-on-year in February, the European Central Bank (ECB) is clearly in no mood to start slashing rates now.
March 4th, 2008 | Adrian Ash | 0 comments | Continued
This Week Marked the Six-Month Anniversary of the Fed’s First Cut to US Interest Rates During the Current World Banking Crisis
This week marked the six-month anniversary of the Fed’s first cut to US interest rates during the current world banking crisis. And it’s been fun, fun, fun ever since for hard asset investors…
February 25th, 2008 | Adrian Ash | 1 comment | Continued
Wiping the World’s Greatest Credit Bubble From History
One action alone won’t solve it - not even if that one action does come from Warren Buffett. Or the White House. Or the Federal Reserve. But altogether? And what if we throw in an extra $3.3 trillion of foreign government finance, pouring out of the oil- and export-rich sovereign wealth funds of Arabia and Asia? Might that be enough to wipe the world’s greatest-ever credit bubble from history?
February 14th, 2008 | Adrian Ash | 3 comments | Continued