THE Reserve Bank has declared that Australian banks are not too heavily exposed to volatile offshore funding markets and are among the best managers of risk in the world, which helped them survive the global financial crisis.

In a speech yesterday, the central bank’s deputy governor Ric Battellino said the major banks had become increasingly reliant on international funding markets because the establishment of the superannuation industry in Australia over the past two decades had reduced the size of the retail deposit market.

The banks are among the most active users of offshore markets, and account for nearly 40 per cent of Australia’s total foreign debt liabilities,

“There’s a natural tendency to believe that it is riskier for banks to borrow offshore than to lend offshore,” Dr Battellino said.

“Events over the past few years have shown that one activity is not intrinsically more risky than the other. It’s a matter of how the risks are managed.

“In the lead-up to the financial crisis, European banks were running very significant risks through their offshore lending, not only in terms of the credit quality of the US assets they were buying, but also in terms of short-term nature of some of the funding transactions that supported those assets.

“The US dollar shortages that keep recurring in global money markets are a manifestation of those funding risks. These risks were largely unrecognised and it seems not very well managed.”

Dr Battellino said the conservative practices of the Australian banks, compared with their troubled European peers before the downturn, helped the sector sail through the downturn.

“The Australian banks have long recognised the risks that come from their business model and in my experience are very focused on understanding those risks and managing them,” he said.

“This contributed to their relatively good performance through the global financial crisis.”

The current euro-zone debt crisis has caused costs to blow out on funding markets, and this is expected to have an effect on some of the Australian banks.

NAB and the Commonwealth Bank are fully funded for the next few months.

However, the ANZ Bank and Westpac still need to raise between $8bn and $13bn by the end of September.

The cost of raising five-year term debt has increased by at least 60 basis points in the past two months.

Funnily enough this week, the Sunrise television show was the source the media turned to. The Governor of the Reserve Bank of Australia (RBA), Glenn Stevens gave an exclusive interview with David ‘Kochie’ Koch from Sunrise.

Now, the interview was a very warm and fuzzy special. I’m sure the goal was to make Mr. Stevens look like he was in touch in with the ‘mum & dad’ folk at home.

You can watch the interview here, if you can stomach the intro ‘…the man who really did save the country from the worst of the global financial crisis’ from Kochie. [Ed note: bucket please!]

But what he had to say has created frenzy in the papers. Especially when he’s actually trying warned people against speculating on increasing house prices. So far, this is the closet we’ve come to anyone in government or the RBA acknowledging that Australia has a property problem.

We won’t expect them to say bubble, but this is a good start.

‘It’s a mistake to assume a riskless, easy and guaranteed way to prosperity is just to leverage to property’, Mr. Glenn Stevens said.

Er, I don’t think the property spruikers are going to like that statement. Every day readers forward emails to the moneymorning inbox from property bulls. Telling you, that property is the only way to ‘real wealth’.

These sorts of statements from Stevens, have further increased media speculation of the chance of a rate rise on the April 6 meeting. Mr Stevens reiterated that rates need to return to ‘normal levels’ as soon as possible. In fact, Stevens has suggested that cash rates could rise about 0.5% to 1% over this year.

Adding to the surprise comments from the Governor, he finally spoke on the topic of relaxed foreign investment legislation in Australia. Many bloggers on mainstream news websites are expressing their views on how much of a problem this has caused for Australian home owners. Until now, most forms of media have dodged this topic.

Apparently Mr. Steven said that ‘…question of the role of foreign purchases is an important one and it’s one we’re giving some attention to’. But he admitted that ‘hard facts’ are hard to find. And hard facts are hard to find because foreign investors no longer need approval to purchase in Australia, so the data of foreign ownership is no longer measured.

And, while the RBA use rates to slow the property market, this won’t matter to foreign investors. Generally they purchases houses for cash. So higher interest rates will only impact Australian purchasing power of properties, not foreigners.

A popular quote going around at the moment is from Steven Keen the doom and gloom – or realistic – economist, ‘If you let incomes in other countries determine your [housing] prices, all you’re doing is importing a bubble’

And finally, to end our short working week, there’ll be a rival to the Australian Stock Exchange (ASX).

The Japanese-owned London-based company, Chi-X Global, has finally their application approval to operate in Australia. The chief executive of the company Ronald Gould plans to drastically reduce trading costs to its users.

‘By significant I don’t mean 10 or 20 percent – I mean more than that’ he said.

The target market for Chi-X will most likely be institutional traders and it’s suspected that Chi-X will be restricted to the top 200 stocks in Australia.

Coincidently shares in ASX dropped to a nine week low on the news that the ASX’s monopoly as an exchange service would be ending.

In 2007 Chi-X Global launched in London and since then it has grown to 28% of the market share. The primary exchange in England, the London Stock Exchange has reduced its market dominance to 43%.

The plans for the new exchange won’t be finalised until the Australian Securities Investments Commission (ASIC) takes over into its new role as a market supervisor. This is unlikely to happen for a few months yet.

Now let’s have a look what happened on the market’s yesterday…

The S&P/ASX 200 ended the day down by 41 points to 4,875.50. The market started the morning up but the weak building data dragged the index down over 50 points from its high of 4,928.

The Dow Jones Industrial Average was down overnight by 50 points, ending the session at 10,856.63. The ADP Employer Services data showed that the private sector cut jobs for March.

America is desperate to see some growth in the job market. On Saturday morning our time, more employment data will be released regarding public sector employment. Investors are anticipating an increase of about 200,000 jobs. However this expected increase in jobs is largely due to the once every ten-year census. Most of the jobs that have been created are temporary.

Over in the UK, the FTSE finished the session up by 7 points to 5,679.64

The Nikkei added dropped 7 points closing to 11,089.94.

The price of spot gold in Australian dollars is trading at $1,214.64 while in US Dollars it is trading at $1,113.32. The price of silver in Aussie dollars is $19.07 and in US Dollars it is $17.48.

The Aussie dollar versus the US dollar was USD$0.9168, and gained against the Japanese Yen JPY85.66

Crude Oil closed at USD$83.76

For the biggest movers on the market yesterday click here…

That’s end of a short week. Have great a Easter.

Shae.

We bought GGP( golden Gate petroluem ) at 0.037 @ 28000 units  and are quite pleased with the results. At today asx price of GGP ( 0.056) we are already  made a small tidy sum and waiting to price in more.

Penny stock Price look Up – > GGP STOCK PRICE

Golden Gate is an independent oil and gas exploration and production company listed on the Australian Stock Exchange. Its focus of operations is onshore Texas and Louisiana Gulf Coast region of the USA.

There was a update on  golden gate news  today.

8 February 2010  ( Global stock Market )

Market Release GGP ( Golden Gate Petroluem )

The Board of Golden Gate Petroleum Ltd (ASX:GGP) is pleased to advise the T.G.R. Land Company, Inc #1 well at Fausse Point has begun testing the initial zone of interest in the lowest of three identified hydrocarbon formations. Perforation of this first zone of interest resulted in an immediate pressure build at the surface.

The pressure increased as the well bore liquid was unloaded (produced) and gas was registered at the surface along with a high percentage of clear high gravity distillate (light crude oil or condensate). For logistic
and safety reasons the well was shut in until Monday USA time when production testing will be continued to determine flow rates and the commercial significance of the discover

The GGP Board is very pleased with the results to date which seem to confirm its expectations and now looks forward to the extended production testing operation to determine the commercial significance.

GGP ( golden Gate Petroluem ) CANDLE CHART STOCK PRICE

Fausse Point is part of GGP’s strategy to invest in low-cost, high impact, known hydrocarbon bearing areas which in the Company’s view are moderately low risk in onshore Louisiana or Texas where its knowledge base and operational experience has been established from its other projects.

The Fausse Point exploration project provides a high impact exploration opportunity with near term upside to its current planned Bowtie West project. These high impact exploration wells which are relatively low cost provide good upside for GGP when combined with the current strong cash flow from Bullseye.

We’ve found what can only be described as the bankers’ “playbook.”

The top secret document that lays down the rules of banking. And, contrary to what you may think, this top secret document isn’t thousands of pages long.

It isn’t stored in a prestigious library or national archive.

It doesn’t even have leather binding. And it isn’t written in Latin.

In fact, the secret to banking is just twenty-three words long. I’ll reveal the secret to you in a moment. But before I do, a quick word on our publishing schedule over the holiday period…

Your editor is on a half-day today. Once we’ve finished chiseling these notes into a stone tablet we’re off to meet up with the rest of the Sayce Clan and then it’s into the Melbourne CBD for our annual trip to see the Myer windows, lunch, some shopping, movie and then home for dinner.

Our “relaxation” – with one eye on the market – will continue until next Tuesday. Then we’ll publish Money Morning on Tuesday and Wednesday of next week before we take another short break.

Full service of your Money Morning newsletter will then resume on the following Monday, 4th January.

Anyway, following on from yesterday we thought we’d begin our final run towards the end of the year in the same way as we started it – poking a big pointy stick at the property market and bankers.

In foresight it was an unlikely place to find the influence behind today’s Money Morning. Yet in hindsight it was perhaps obvious.

Over the past year and a bit we’ve struggled to work out where the mainstream economists and commentators get their ideas on finance and economics from. The most obvious is their idea that more debt is the solution to a debt problem!

We’ve also struggled to work out what influences the bankers and their overlords at the central banks.

Lord (John Maynard) Keynes is usually the easiest suspect to point the finger at. His whacky ideas on how an economy works have spread its way like an unstoppable cancer into the minds of nearly every business and economics student of the last fifty years.

But it’s hardly surprising his ideas are so popular. The belief that an all-knowing and all-powerful government and bureaucracy can manipulate the market is a powerful drug for, erm, governments and bureaucrats.

And it’s equally handy for the professors and other academics who receive their lifetime salaries thanks to stolen taxpayer funds.

No public servant in their right mind would push for a free market. They know they’d be the first ones out of work, or that they’d actually have to do work rather than living off the fat of the taxpayer.

Any theory that aggrandises the role of the coercive sector will obviously be favoured by those in the coercive sector.

But back to banking. As luck – or should we say Chance – would have it, there seems to be a much simpler text for the bankers’ to rely on rather than Keynes’ “The General Theory of Employment, Interest, and Money.”

It’s the twenty-three words that set the road map for banking. Or in the marketing phrase of the 2000s, the “mission statement.”

Here it is:

“The Bank never ‘goes bankrupt’ but can issue as much money as is necessary in the form of IOUs written on ordinary paper.”

There it is. The secret to modern banking. Everything Mike Smith at ANZ Bank or Ralph Norris at Commonwealth Bank, or Gail Kelly at Westpac, or… the tall dull looking dude at NAB never wanted to reveal.

We’re sure that wooden-headed governor Glenn Stevens would be mortified if he knew the secret to banking had been revealed.

The secret of banking is revealed not in some fancy text book written by an English peer of the realm. And it’s not contained within a leather bound book high on a shelf at Reserve Bank of Australia (RBA) headquarters on Martin Place.

Nope, the secret of banking was simply and succinctly described by the non-Nobel Prize winning Parker Brothers in their Monopoly board game.

As we’ve said before, playtime for the Sayce kids can be a hoot as their old man randomly spots otherwise insignificant things and relates them back to the world of finance.

Which is exactly what happened yesterday evening as we refreshed our memory with the rules to Monopoly as the girls laid out the board. Within minutes your editor’s eyes sparkled on reading the paragraph.

And within a few minutes more our interest in the game of Monopoly had waned, “Er, wouldn’t you prefer to play by yourselves rather than having this old duffer who’s hard of sight and hearing annoying you?”

We had to lay it on thick, but it’s good practice for when your editor becomes a frequent buyer member with Zimmer Holdings [NYSE: ZMH].

And so we made off to make some notes for today’s Money Morning.

The version we’ve quoted is our copy of the rules. You can find an almost identically worded version at the bottom of page one here.

Look, we’re only being slightly facetious here. But the fact is, the rules of banking laid down for the Monopoly board game by Charles Darrow and the guys at Parker Brothers nearly eighty years ago are the precise rules being implemented by the central banks and retail banks today.

Normally when we’re looking to draw an analogy with past events we’re left to draw a fairly long bow – “It’s kind of similar, but not quite…”

But if we took these twenty-three words: “The Bank never ‘goes bankrupt’ but can issue as much money as is necessary in the form of IOUs written on ordinary paper” and showed them to our pencil lipped RBA governor Glenn Stevens or his lifetime-in-the-public-service deputy Ric Battelino, they could not reasonably disagree that this is an exact definition of the role of central banks and the retail banks.

We remember years ago how the currencies of tinpot dictatorships were referred to as monopoly money. That the promises to “pay the bearer on demand” were worthless thanks to their inflationary policies.

Now – sadly – the same can be said for the paper (fiat) currencies of Australia, the US, UK, Europe, and anywhere else that runs a paper based currency system.

There can be no dispute that these same currencies should be labelled ‘Monopoly’ money. Because in effect they are almost worthless.

In essence there is almost no difference between the $20 issued by the Reserve Bank of Australia and the $20 issued by the little fat man with the moustache on the Monopoly box.

Neither is backed with anything of any value. And both are printed for little cost and no effort on a printing press. The only difference is that for now one of them will allow you to buy a Mighty Angus from McDonald’s while the other won’t.

But why should the RBA issued $20 note be worth any more than the Monopoly issued $20 note? Why can the RBA print money when it wants and circulate it around the economy when if we did the same thing we’d be hauled off to gaol?

How come the banks are allowed to create money out of thin air by telling you your money is available on demand in a savings account while simultaneously lending it out for someone to buy a house with?

The same money surely can’t be available at the same time to both borrower and lender…

In any other walk of life or business this would be considered embezzlement or fraud or counterfeiting. But not in banking circles. They can do what they like.

But it all goes to make a mockery of the nonsense you see in the papers about the robust banking system. It’s nothing of the sort. NABs $13 billion Italian debt problem is a perfect example.

This simple definition in an eighty year old board game shows you exactly why central banks can’t be trusted with your money. And neither can they be trusted to maintain the value of your money.

As we pointed out last week, since the RBA was established, the value of the Australian dollar has been decimated by 90%. In other words it has lost nine-tenths of its purchasing power.

Or to put it another way, if you were a young lad starting out in work at the end of the 1950s you would have needed to see your wages rise by 1,000% in the following fifty years just to maintain your standard of living!

That’s right, “maintain”, not to get ahead, but just to hold on to your standard of living.

Does that sound like the work of a competent central bank? No answer required there.

Yet this is the same central bank that lamebrain commentators such as Ross Gittens – “The Reserve Bank is relaxed about its forecast next year the economy will be right back in the groove… I can guarantee this forecast will be rock solid” – and Michael Pascoe – “Does anyone really think the Reserve Bank is silly enough to be forecasting two months out what it might or might not do in February? Nah, they leave that sort of nonsense to the poor old market economists.” – who believe the RBA are geniuses.

That the RBA can’t possibly put a foot wrong. That because the RBA is made up of a bunch of anaemic public servants it knows exactly how to forecast and manipulate an economy of 21 million people.

We’re sorry to break the news to Gittens and Pascoe, but the RBA ain’t geniuses. It has destroyed the Australian currency by 90% in fifty years simply by issuing “as much money as is necessary in the form of IOUs written on ordinary paper.”

That reader is why we’ve been saying all along, that a paper based monetary system is unsustainable. Unless it is backed by something of value, the bankers have unlimited ability to create as much paper money as they wish.

And it is that act of inflating the money supply which results in the value of your money, your wealth and your earnings being destroyed.

On that note, Merry Christmas, a Happy New Year, and try not to think too much about the theory of money when you settle down to play Monopoly over the holidays!

Cheers.
Kris.

60-Second Market Round Up
by Shae Smith

The S&P/ASX200 finished the day 1.49% up, closing at 4,704.20. International markets were all up overnight and the Aussie market has opened higher again today.

Making headlines today is the Australian Securities Exchange’s (ASX) criticism of Treasury’s planned new market supervision regime. Read more here.

The Dow Jones Industrial Average was up by 50 points overnight, ending the session at 10,464.93. The positive news on American housing numbers was seen as an optimistic sign to investors.

Overnight in the UK, the FTSE added 34 points to finish at 5,328.66

The Nikkei finished the day at 10,378.03, higher by 194 points.

The price of spot gold in Australian dollars is trading at $1,239.02 while in US Dollars it is trading at $1,084.16. The price of silver in Aussie dollars is $19.41 and in US Dollars it is $16.99.

The Aussie dollar was lower this morning against the US dollar as home sales in America were stronger than expected for November. Experts are suggesting that more data like this will see an interest rate rise in America by mid-2010.

The Aussie dollar versus the US dollar is trading at USD$0.8756, and against the Japanese Yen JPY80.41

Crude oil closed at 74.45.

For the biggest movers on the market yesterday click here…

That’s my final market wrap for this year. I’d like to wish you a very Merry Christmas and a safe and happy New Year. I’ll return on the 4th January 2010.

Here’s a sample of the posts to the Money Morning and Daily Reckoning websites. First off, a post railing against last week’s effort:

“Passing legislation in Australia takes at the minimum a month of two, from the initial bill to formal implementation, and if the government even mentioned proposals to confiscate individual super assets the result would be obvious. Every SMSF would sell its assets immediately, the ASX would crash immediately, and thirdly all money from the sales would leave Australia asap. And all this would happen while the legislation was still being discussed. Sayce’s article is paranoid nonsense.” – Ken, Daily Reckoning Website

Then there was this comment following an article we wrote on “Super Theft” back in May:

“Are you crazy? How do you justify a jump from the Govt recouping money from Super funds that is unclaimed by temporary workers a little faster than previously to them taking ALL Australian’s Superannuation? I cannot believe you are a fully-qualified advisor (assuming you are) and hold those views. I guess not all financial advisors are equal.” – Russ, Daily Reckoning website

Or this, commenting on the same article:

“Your logic is one of the more courageous leaps I have witnessed for some time. While your sentiment is appreciated your argument has a fatal flaw. This is still a relatively well functioning democracy and with so many voters having a stake in this system expropriation is still a fraught strategy for incumbent Governments. It can only occur in Argentina and Venezuela because they are affectively one-party states. I expect a more subtle approach will be more likely i.e. greater tolerance for inflation” – DG, Daily Reckoning website

And finally this one:

“Is this article some sort of experiment to determine the gullibility of readers of the Daily Reckoning. Will there be another article pointing us to a safe haven investment for our super where it is kept safe from the government? Maybe somebody will be able to suggest something that will keep it safe from us as well.” – Charfcutter, Daily Reckoning website

Of course, there were posts agreeing with our position as well. But we prefer to point out the ones that disagreed.

Well, it looks as though while we were tapping away on these thoughts and you were either reading them or ignoring them, the cheeky scamps in government have already been drying the ink on the next phase of the Super Theft campaign.

Don’t worry about the Henry or Cooper reviews, when you’re in government it seems you can get away with almost anything you like.

And what better cover than the Copenhagen conference – isn’t that playing out beautifully for the politicians? Headlines about the conference being in disarray and a stalemate, “Oh no, the world will end if we don’t do something!”

Then just in the nick of time, the world leaders arrive. What are the odds on a ’solution’ being found and leaders being hailed as heroes? The odds are unbackable, just make sure you’ve put enough money away to pay for it when the bill arrives.

Anyway, no mainstream journalist is going to bother themselves covering government thievery and deceit while there’s a brawl happening in Denmark.

Internet Censorship policy is a perfect example. Bring that old chestnut out while no-one’s looking.

You’d think the press would be up in arms over a potential threat to press and individual freedom. But no, the best the lame saps at the Australian Financial Review and The Age can do is to consign the story to the technology sections of the paper.

If you think that’s as far as the government will go with Internet censorship, think again. Because it’s just the tip of the iceberg.

Once a government gets its foot in the door on one issue, it calls in the heavies and before you know it the whole front door is barged down and government is camped out in your lounge room bossing you around, telling you what to do, and ordering you to hand over more cash otherwise they’ll beat the ‘carp’ out of you.

And that’s exactly what’s happening with Super Theft.

Earlier this year we warned the first tip of the iceberg was the theft of foreign temporary worker superannuation. This was the one where if foreigners who had accumulated Super subsequently left Australia, the super fund would be required to send those balances to the Australian Tax Office.

In effect, foreign temporary workers would be subject to a 100% tax on their superannuation if they left it here.

How about that, a 100% tax on a 9% tax. You can’t beat that for ingenuity.

What would happen to the money? That’s the best part – from the government’s perspective – because it goes straight to Consolidated Revenue. In other words, straight to the Federal Government’s bank account so it can spend it on useless trinkets like free home insulation and “Climate Change” solutions.

That little bit of thievery was estimated to add around $800 million to the government’s coffers.

Well, if foreign temporary worker super theft was the tip of the iceberg then what I’m about to tell you about is the bit of the iceberg just below the surface of the water – there may be a scientific name for it but I’ll be blowed if I know what it is!

As I mentioned above, while we were tapping away writing about the next phase of Super Thievery, on December 2nd the crooks in government and opposition nodded through a proposal that would steal $238 million worth of superannuation from Australian citizens and residents.

I’m not kidding. And I can’t even claim the credit for uncovering this scoop. And no, it wasn’t even our hapless friends in the mainstream press that spotted this one either.

Instead it was from intrepid Money Morning reader Steve.

The details are all contained in the mundane sounding, “Tax Laws Amendment (2009 Budget Measures No. 2) Bill 2009″. You can download a copy of it for yourself by clicking here.

Do you remember all the hullaballoo about the new tax arrangements for employee share schemes? You know the one, that’s where the government wanted to crack down on fat cat executives who were giving themselves a whole bunch of shares and minimizing their tax – terrible, terrible! Only the proposal managed to also capture a whole bunch of, erm, well, not fat cats as well.

Well, this little bit of superannuation thievery is tagged along in that bill.

And as the document notes:

“This Digest is an historical Digest, published after the Bill was read a third time in the Senate on 2 December 2009. The Bill was passed by both Houses unamended.”

We haven’t been able to locate details of how the vote went in the Senate, but odds are it was waved through by just half a dozen semi-comatose Senators.

So, what’s the deal with this bill? As I mentioned, this is the part of the iceberg below the tip. We’re not talking about the full scale theft of your superannuation – not yet anyway. For that we’ll probably have to wait until the Henry and Cooper reviews have reported.

This bill is just the government having another nibble to see what it can get away with.

Out of the 20-page document, the latest round of super thievery isn’t explained until page 18. In fact, it’s pretty clear that this proposal has nothing to do with the rest of the bill.

It has been tagged in there as an afterthought. It’s clearly a deceitful and malicious attempt by government to grab $238 million from everyday Australians with as little scrutiny over it as possible.

Here’s the details of what it means:

“[T]o require superannuation providers to give the Commissioner of Taxation details relating to small accounts of lost members and inactive accounts of unidentifiable lost members. The superannuation providers must also pay to the Commissioner the value of any such accounts.”

It goes on to state that a “lost member account” is where the super fund has been unable to contact the member and “the balance of the account is less than $200…”

Now, you may think, “Aww, if it’s less than $200 what are you fussing about you idiot? You’re making a mountain out of a molehill. 200 bucks, who cares!”

Like I say, the big scam is coming. This is just the hammy warm-up act. Besides, the bill widens the definition of what constitutes a “lost member account” to include where:

“the superannuation provider has not received an amount in respect of the member within the last five years; the superannuation provider is satisfied it will never be possible for the provider to pay an amount to the member, and the account does not support or relate to a defined benefit interest”

We love how they’ve specifically excluded defined benefit schemes. Could that be because the coercive (public) service is the main beneficiaries of defined benefit schemes? Of course it is – the crooks.

The amazing thing is, the amount of cash the government is set to steal from Australian super funds is more than they’ll grab from the much publicized employee share scheme (ESS) tax.

According to estimates the ESS will reap about $135 million, while the Super Theft will clock up $238 million.

Although in typical government fashion that’s the gross amount. Because they estimate it will cost them $8.4 million to implement the proposal.

Not satisfied with plain old stealing your money, they’re going to charge you for it as well!

If there was still any doubt in anyone’s mind whether governments are a monumental waste of space with the sole aim of ripping ever greater amount of dollars from your wallet, then this must surely wipe that doubt from your mind.

The next stage of this distasteful affair is to see what Emperor Henry and Jeremy Cooper concoct in their reviews.

Whatever the result it’s likely to involve less control for you, more control for government, and the eventual expropriation of money which you thought was yours into the hands of the thieving tax man and government.

Cheers.
Kris.

60-Second Market Round Up
by Shae Smith

The S&P/ASX200 did very little yesterday, gaining only 19 points to close at 4,673.50. The Aussie market has opened down this morning thanks to the lead in from the US.

The Australian Bureau of Statistics releases a couple of reports today, including the gross domestic product (GDP) data, at 11.30am. Keep an eye out for those reports.

The Dow Jones Industrial Average finished lower by 49 points yesterday, closing at 10,452.00. The Federal Reserve has been locked up in a two day meeting regarding monetary policy. Read more here.

Overnight in the UK, the FTSE ended the day down by 29 points, to 5,285.77.

The Nikkei finished the day at 10,083.48, down by 22 points.

Gold is still down from the highs earlier in December.

The price of spot gold in Australian dollars is trading at $1,241.15 while in US Dollars it is trading at $1,123.50. The price of silver in Aussie dollars is $19.22 and in US Dollars it is $17.41.

The Aussie dollar versus the US dollar is trading at USD$0.9057, and against the Japanese Yen JPY81.17

Crude oil closed at USD$70.87.

For the biggest movers on the market yesterday click here…

Besides, buying activity gathered momentum as stockists indulged in creating fresh positions to meet demand from jewellery fabricators ahead of Diwali, they said.

In London, gold set a new peak of USD1,070.80 an ounce on weakening dollar. Gold has jumped around 20% this year. Silver also touched a fresh high of USD18.08 an ounce, the highest since July 2008, as weakening dollar shifted investors’ attention to fast yielding assets like bullion.

Diwali or Deepwali is a festival of lights. Diwali is the biggest festival celebrated in the Hindu Indian calendar. Diwali is a time of joy, happiness and a time to come close. This diwali come close to your near and dear ones and celebrate the day with full vigor. Send online diwali greetings, diwali ecards and egreetings.

Despite the ever high gold prices, Indians have ignored the price factor and continued to buy the yellow metal on the auspicious day of Dhanteras, when Indians believe they could attain fortuity by having gold.
Reports showed that around 15 tonnes of gold were sold off in a single day across India on Dhanteras, though the prices for a ten gram gold cost at Rs 16000 as against Rs 12070 per 10 gram in the previous year.

Traders said the business was dull during October until 15 Thursday, when consumers poured into the jewellery shops and banks to purchase gold. Traders expressed hopes that this buying streak is expected to continue to next couple days after Diwali.

The Gold Price ticked lower in early London trading on Friday, slipping through yesterday’s low of $1045 per ounce to stand unchanged on the week.
Dropping 2.5% from Wednesday’s new record high for Dollar investors, the Gold Price headed towards the weekend lower against all other major currencies bar the Japanese Yen.

US gold futures ended lower on Thursday as the dollar stemmed recent losses and the metal consolidated gains after a sharp rally to record highs in the last two sessions. Gold decreased $14.10 in New York trading to close at $1,050.60 per ounce.

GOLD SALES IN INDIA

“By tomorrow, we expect the sale of almost 200 kg of gold and 1,000 kg of silver in Lucknow city market alone,” Uttar Pradesh Bullion Association office bearer Shiv Narain Agarwal told Business Standard.

“There is no effect of high bullion prices or the so called economic slowdown in the buying pattern of the shoppers this year,” he noted.

Interestingly, he claimed that the sale of gold and silver jewellery was almost three times the volumes recorded last year. The bullion shops are open till late night hours to allow people buy.

With the Diwali festival of lights celebrated across the Hindu world tomorrow, "Some Indian buying has picked up," reports London dealer Mitsui, "but we expect this to retreat again fairly quickly.

"Perhaps that the supply side is winning the battle at the moment, with physical sales appearing in Asia today – the third day running we have seen this."

"Selling in the physical gold market is adding to resistance," agrees Walter de Wet at Standard Bank. "However, we still favour Buying Gold dips. Gold support is at $1402 and $1035."

REF: http://www.goldinvestmentstocks.com/

Can we recapitalize our own loss after BBI recapitalises itself

Credit Suisse and Macquarie Capital have agreed in principle to serve as the underwriters for Babcock and Brown infrastrucure , but the final documentation will not be completed until it is clear there is adequate market support for the recapitalisation plan. Babcock & Brown Infrastructure appears likely to be in a position to update the market on its long-awaited recapitalisation deal by tomorrow or Wednesday.

The key component left to finalise is a $600 million institutional placement to be matched by a placement to the new cornerstone investor, Canada’s Brookfield Asset Management.

The group of hedge funds backed by RBS, which had proposed an alternative plan, is believed to be not taking part.

Interestingly, on Friday evening, Moody’s placed Dalrymple Bay’s Baa2 credit rating on review for a possible downgrade that would see it lose its investment-grade status. However, the downgrade is not expected to happen if the recapitalisation plan succeeds

As part of the $1.5 billion deal to erase all of BBI’s corporate-level debt, Brookfield will take a 50 per cent stake in BBI’s most prized asset, the Dalrymple Bay coal port in Queensland and will buy the debt-laden PD Ports asset in Britain. BBI, now advised byGresham, had tried to sell all or part of those assets before it decided the Brookfield recapitalisation plan was the best option.

The BBI boss’s Payrise

Jeff Kendrew was appointed chief executive officer of Babcock & Brown Infrastructure (BBI) in June 2007.

The basic wage of Babcock & Brown Infrastructure’s boss has risen by more than $300,000, despite the company’s shares losing 90 per cent of their value, according to a market analyst.

Market analysts Wise Owl’s director Sven Restel told News Limited that Mr Kendrew’s basic wage has risen from $365,000 to $700,000, while BBI shares have tanked from $2 in 2007 to less than one cent.

“It’s unbelievable what they think they can get away with,” Mr Restel said.