I love reading this paper most weeks and this week's edition had a couple of articles on gold prices. Nothing new said really. There is a fair bit on the Bank of Japan injecting over 7 billion yen ($10 billion) into the economy over the next 2 years and potentially instigating a currency war in the region - particularly with South Korea. Also some interesting articles on the high Thai Baht. In summary... LACKLUSTER GOLD STILL A SAFE BET by Wu Yiyao Falling gold price has seen increasing demand in China (as anticipated). Notwithstanding the predicted economic slowdown in China, investment demand was up 24% in the fourth quarter on the previous quarter. Looking forward, the signs of economic improvement bode well for gold demand in China, although the indications are for a steady firming of demand rather than for strong growth. After the media exposed that some jewellery brands sell products made with iridium but claim that they are pure gold, investors have become more cautious about purity when buying the metal. The hedging value of gold may be weakened in the short term but its long term value for hedging risk is inherent. HAS THE GOLDEN AGE LOST ITS GLITTER? by Julian Jessop ...the trigger for the recent slump appears to have been aggressive selling by a handful of traders, rather than the reversal of the fundamental drivers that have lifted gold prices in the past and may well do so again. None of the fundamental explanations being discussed for the slump in gold prices really makes sense... [these being below but i haven't explained why 'cause i'm getting sick of typing - sorry] 1. troubled eurozone countries will be forced to sell their official reserves... 2. possibility that the US Federal Reserve may scale back its asset purchases under quantitative easing (QE3) later in the year. Rising real yields could reduce the attractiveness of an asset, like gold, that pays no income. A number of factors could still lift gold to new highs. The true test of a safe haven comes in bad, not good, times. i.e. the financial crisis in the eurozone is far from over. Inflation and inflation fears in the West have remained low despite the massive monetary expansion already taking place (or in the pipeline). But central banks will have to withdraw this stimulus carefully. Too late an inflation could take off. Too soon and the resulting increase in market volatility could shift demand toward gold as a safe haven, more than offsetting any drag from higher interest rates. We therefore do not expect the current weakness in the gold price to be sustained, privided the risk of an escalation of the eurozone crisis remains high and the global recovery is still fragile, thus keeping monetary conditions exceptionally loose. But the other stuff included a photo of a worker dressed as a bear 'mauling' another worker at Taiyuan Zoo as part of a drill to deal with emergencies, and a Chinese company advertising for a 200,000 yuan ($32,000) position for a chief appraiser to identify obscene information on the internet (porn). Over 300,000 people have left messages requesting additional information.
Essentially arguing internally over high Thai Baht and whether to take action and undertake capital controls and buy more dollars as opposed to cutting the policy rate. Former chairman of Bank of Thailand strongly opposed to cutting official rates which will increase consumption and thus inflation. vs Dean of a University suggesting policy rate to be cut by 25 basis points to curb massive capital inflow. and urging the Monetary Policy Committee to call an urgent meeting on the baht if the currency continued to rise and not wait until the next regular meeting on May 29. Strong Baht expected to hurt Govt revenues through export-orientated companies seeing declining revenue, lower profits and thus lower income tax payments. Also the Govt has cut corporate income tax to 20% which would slash annual revenue by another 80 billion baht. If corporate revenue increased by 25% this year then this tax revenue loss would be compensated.
There is also a lot on the Chinese earthquakes that i didn't read but it stated that national GDP will not suffer as the affected area is not an industrial base.
this is high thai baht against what ? from what i see on the exchange rate, it is still pretty much the same in comparison to USD
