China's economy hits turning point

he mainland economy improved more than expected last month after inflation dipped to a 33-month low, reducing the likelihood of "big bang" stimulus measures after the new leadership takes office.
Industrial output expanded 9.6 per cent from a year ago, while consumer inflation decelerated to 1.7 per cent year on year, the National Bureau of Statistics (NBS) said yesterday.
The October data confirmed that China's economic slowing has "truly bottomed out", said Lu Ting, an economist at Bank of America Merrill Lynch.
The October figures would "give people confidence" in the world's second-largest economy, Ma Jiantang, head of the statistics bureau said on Thursday on the sidelines of the Communist Party's 18th national congress.
Yi Gang, vice-governor of the People's Bank of China, said on Thursday that the economy had been stabilising and was set to bounce back. The Shanghai Composite Index dropped 0.12 per cent yesterday amid political uncertainties before the once-in-a-decade leadership transition. The Hang Seng Index lost 0.85 per cent.
The turnaround was broad-based. Inflation eased from September, thanks to much smaller vegetable price increases.
The Producer Price Index dropped 2.8 per cent year on year, but climbed 0.2 per cent from September on improved industrial demand. Electricity production rose 6.4 per cent year on year to 389.8 billion kilowatt-hours last month, the strongest growth since April, according to the bureau.
The mainland economy has slowed for seven quarters as exports were hurt by the European debt crisis and domestic demand was subdued by curbs to cool the property market.
Retail sales growth picked up from 14.2 per cent in September to 14.5 per cent last month, partly helped by vehicle sales which gained speed with the easing of discord with Japan over the islands in the East China Sea.
Growth of fixed asset investments grew from 20.5 per cent in the first nine months to 20.7 per cent in the first 10 months.
New investment projects, a forward-looking indicator on fixed investment, surged 26.7 per cent year on year, faster than the 25.7 per cent gain in September.
The economy expanded 7.7 per cent from a year ago in the January to September period.
JP Morgan economists said "the firming of economic data implies that the downside risk is mitigated and the government does not need to push up the scale of policy easing".
China is scheduled to release trade figures today.
Chen Deming, the minister of commerce, said yesterday that it would be very difficult for China to realise the annual target of 10 per cent growth for imports and exports combined this year.
The mainland's October exports rose more than 11 per cent on a year ago and imports grew by 2.8 per cent over the same period, Chen said.

What Are the Differences Between Investing in Gold Versus Silver?

There is an expression that silver is the "poor man's gold". This implies that gold is the preferred precious metal, and silver would be bought second. While there are people who subscribe to this idea, investing in gold versus silver does have some differences.

Gold and silver are the metals that are most in demand for jewelry, which is another commonality between them. In some countries, jewelry is being used as a store of wealth, which means it doubles as a currency. Gold and Silver also are very useful industrial metals for purposes of electricity, heat conductivity, malleability and industrial uses. Gold and silver are in fact the most useful industrial metals, but due to low supply and high cost, these metals are only used in high quality applications. Once the product is mass produced, cheaper metals are substituted for them to bring costs down if possible. There are also the speculators in gold and silver, which can be found in the futures markets, hedge funds and high net worth portfolios. So far, this covers a lot of common ground, but there are differences.

In terms of the similarity between the two metals, both of them are considered currency. The mints of many countries issue gold and silver collector coins. Historically, money that was circulating used to be made of silver until the cost became prohibitive and cheaper metals were used instead. Gold was the standard by which all paper currencies were based, meaning that gold was the ultimate currency. Gold is still being used today for trade between countries, and talk of gold backed currencies and central banks buying gold to securitize their paper currency means that gold is still underlying today's paper money.

t has been said that silver is half an industrial metal and half currency. This means that silver will react to positive GDP numbers and large economic growth, where gold may act inversely to GDP depending on how it is perceived. Gold prospers in the ultimate fear, currency meltdown, chaos involving government and inflation scenarios. Silver can act this way as well - but only if it hits the common person and if there is no hope left for the currency in the view of the masses. Since silver is used in so many industrial applications, there can be a shortage of silver supply, which can lead to price spikes without crises. Silver is manipulated more often by banks (think HSBC and JP Morgan) due to its thin volume. It should be noted that this manipulation is done via paper derivatives, not cornering physical supply. Should the paper market go askew and the physical market trades without any link to paper, these market dynamics would change from paper demand weighing on prices in favour of industrial supply and demand and the common person looking for a currency alternative.

Gold tends to be mined and it tends to exist in some form, because it does not get destroyed over time. This makes the supply of the metal fairly stable. Silver is used for many industrial uses, and much of the silver that is mined may not be recycled. Since gold is the standard by which paper money is based, many of the players that play gold may be different than for silver. A large player in the gold market right now is the central banks. They may also be buying silver, but not nearly as much. For this reason, the effects of quantitative easing and money printing differ for gold and silver. Gold is affected first because it is a currency that can act as a substitute for paper. Silver can do this as well - but the scale would not be as large - so silver correlates with gold, but not perfectly. The other factor at play is that gold can represent large quantities of goods more easily than silver can. One ounce of gold is worth about 50 times more than an ounce of silver at the time of writing.

Gold drops over $40, suffers fourth weekly loss

Gold futures dropped more than $40 an ounce Friday to mark their fourth weekly loss in a row after the government reported that nonfarm payrolls rose more than expected in October, providing a further boost to the U.S. dollar.
Gold for December delivery (US:GCZ2) sank $40.30, or 2.4%, to settle at $1,675.20 an ounce on the Comex division of the New York Mercantile Exchange after touching a low at $1,674.80.
Gold futures had been trading around $1,708 right before the Labor Department said that nonfarm payrolls rose by 171,000 in October, an increase higher than the 120,000 that economists had expected.
Also, more people were hired in the prior two months than previously believed, according to the government’s data. However, the October unemployment rate — derived from a separate survey — edged up to 7.9% from 7.8%, as expected.
Gold tested $1,700 twice last week, so it was always vulnerable to a strong nonfarm [payrolls] report,” said Ben Traynor, chief economist at BullionVault. “The move takes us back to where we were just after [Fed Chairman] Ben Bernanke’s Jackson Hole speech at the end of August, and offers further confirmation that September’s QE3 buzz has now well and truly worn off.”
The gold market is also beginning to think about when the Fed will change monetary policy and questioning the “validity of the asset reflation thesis,” said Vedant Mimani, lead portfolio manager of the Atyant Capital Global Opportunities Fund.
“We believe this re-think process is just getting started,” he said.
The jobs data further buoyed the dollar, weighing on gold futures. A stronger dollar tends to pressure prices for dollar-denominated commodities such as gold since it makes them more expensive for holders of other currencies to buy.
The ICE dollar index (US:DXY), which gauges the greenback’s performance against a basket of six major global currencies, climbed to 80.538 from 80.052 late Thursday.
Against this backdrop, other metals futures settled broadly lower, with silver leading the way. Silver for December delivery (US:SIZ2) fell $1.39, or 4.3%, to end at $30.86 an ounce. Prices, which hadn’t settled below $31 since late August, saw a 3.7% loss for the week.

Gold hits 3-week highs on U.S. fiscal fears

Gold hit a three-week high on Friday, boosted by expectations U.S. monetary policy would remain loose after President Barack Obama's re-election and a looming "fiscal cliff" that could slash U.S. public spending. Since the U.S. elections on Tuesday investors have become worried that Washington's politicians may struggle to find a compromise to cut the budget deficit before nearly $600 billion worth of spending cuts and tax increases kick in early in 2013.
Gold prices hit a 2-1/2 week high on Wednesday after Obama's re-election gave markets a boost by ending weeks of political uncertainty, and since extended gains to the three-week peak as concerns over the fiscal cliff intensified. "This is a question of a safe haven bid for gold in times of economic uncertainty," said Nic Brown, head of commodities research at Natixis. "It is a recognition that the negotiations between Obama and Congress will be difficult. The two political parties come from diametrically opposed positions on this issue."
Markets are also watching the debt ceiling, which needs to be raised to avoid a government shutdown. Spot gold was at $1,732.09 an ounce by 1150 GMT, up 0.12 percent, having earlier touched a three-week peak of $1,737.60, while U.S. gold edged up 0.39 percent to $1,732.70. A stronger dollar offset further upside in gold by making the yellow metal more costly in other currencies.
Brown said the Obama victory signalled a continuing environment of relaxed monetary policy, which was likely to underpin gold prices.
"An Obama victory enhances the likely longevity of ongoing quantitative easing," he said.
Money printing by central banks boosts gold's appeal as it keeps interest rates at a low level, reducing the opportunity cost of holding a metal that has no yield outside its actual value.
China's economy strode further along the road of recovery from its slowest growth in three years, data for October showed on Friday, as infrastructure investment accelerated and output from the country's factories ran at its fastest in five months.
China's gold demand is expected to grow 1 percent this year to a record of around 860 tonnes, Philip Klapwijk, the global head of metals at consultancy Thomson Reuters GFMS, said this week, with both jewellery and investment sales rising.
The festive season in India will peak with Dhanteras and Diwali, while the wedding season continues until December.
Gold importers in India, the world's biggest buyer of bullion, paused on fresh purchases ahead of festivals next week, as a weaker rupee helped the yellow metal hit its highest level in seven weeks.

What Do China’s Leadership Changes Mean for the Economy?

China’s once-in-a-decade leadership transition starts on Thursday in Beijing, and the rest of the world is waiting to see how things would change in the coming days in one of the most important economic powers in the world. China is now the world’s largest exporter, the second-biggest economy overall, and controls over $3.2 trillion in foreign exchange reserves. In such a scenario, who makes the Communist Party’s all-powerful politburo standing committee is being watched very closely. Current vice president Xi Jinping is expected to receive the position of the general secretary in the committee, and eventually take over as the country’s President’s from Hu Jintao. Li Keqiang, who is one of China’s vice premiers, is likely to assume the premier’s role, replacing Wen Jiabao. The remaining positions in the committee remain uncertain and some even expect its size to be cut to seven from the current nine members. The final outcome is expected to be made public by November 14.
Not making these transitions will put the country’s economy in risk of major damage, Peking University’s Guanghua School of Management professor Michael Pettis told Market Watch. One of the major issues threatening financial collapse relates to bank lending pushing investments. “I don’t think this is sustainable,” Pettis said. “If you keep investment rates high, you run into the debt problem, and I think China fully understands that.”
There are also some concerns that more conservative candidates may edge out the more reform-minded ones, which may put in danger economic changes required to turn the country’s growth model from exports to internal consumption. The new leaders will also have the hard task of convincing the country’s elites to accept changes to a long-standing economic setup.
While continuing old policies may even fuel a 1930s-style Great Depression, Pettis remains optimistic for now. “It looks like the new group understand the urgency of rebalancing” the economy, he said.

4 Top Real Estate Markets for Foreign Buyers

Wealthy foreigners from around the globe are taking advantage of America's housing bust to snap up U.S. properties at cut-rate prices -- helping the market rebound in the process.
"We've seen [foreign investors] buy $10 million to $20 million worth of houses in a single trip," says Peter Loewy, CEO of Los Angeles-based Teles Properties. "They think this is a good place to park money, and it's less expensive than the real estate back home." 
The NAR also found that foreigners spent more on average -- $400,000 per property vs. $252,000 for the overall market -- and paid cash for homes 62% of the time instead of taking out mortgages.
"Foreigners have been a good source of sales, and they're providing both stability in the market and some tendency toward a more normal price appreciation," report co-author Jed Smith says.
A recent National Association of Realtors study estimated that foreigners and immigrants who've lived here less than two years spent $82.5 billion on U.S. homes in the 12 months ended March 31. That's about 9% of the total paid for all U.S. housing purchases during the period. 
Many also need a place here for business trips, vacations or retirement or expect their children to study at U.S. colleges and need housing.
Additionally, some foreigners buy property in conjunction with buying U.S. businesses. That's because anyone who invests $1 million in a U.S. company and creates 10 jobs can qualify for an "EB-5" visa and eventual citizenship. (The requirement drops to $500,000 if you invest in a depressed U.S. locale.)
Texas Realtor Alston Boyd says lots of wealthy Mexicans are using the EB-5 program to relocate their families from crime-ridden areas south of the border. "It's mostly driven by people wanting safety for themselves and their families, particularly in areas where there's a danger of kidnapping," says Boyd, who leads the Texas Association of Realtors' international-sales committee. In fact, the NAR found that Mexicans accounted for 8% of all sales to foreigners and recent immigrants during the 12-month period studied.
Buyers from different countries favor different parts of America.
For instance, the NAR found that lots of Germans have bought property in southwest Florida, while many Canadians gravitate toward Arizona. Researchers attribute the variations to a given locale's closeness to a buyer's home country, coupled with word-of-mouth recommendations among buyers from the same nation. Here's a look at the four states the NAR found are most popular with foreign and recent-immigrant buyers. All percentages refer to home sales made during the 12 months ended March 31.

Ten Rules For Investing In Gold

"Gold is a controversial, anti-establishment investment. Therefore, do not rely on conventional financial media and brokerage house commentary. In this area, such commentary is even more misleading and ill informed than usual." - John Hathaway
1. Understanding the internal dynamics of the gold market can be helpful as to investment timing issues. For example, the weekly position reports of commodity trading funds or sentiment indicators offer useful clues as to entry or exit points for active trading strategies. Reports on physical demand for jewelry, industrial, and other uses compiled by various sources also provide some perspective. However, none of these considerations, non monetary in nature, yield any insight as to the broad market trend. The same can be said for reports of central bank selling and lending activity. Central banks are bureaucratic institutions and in their judgements they are essentially market trend followers.
2. A reasonable allocation in a conservative, diversified portfolio is 0 to 3% during a gold bear market and 5% to10% during a bull market.
3. The carnage of the last twenty years has simplified the task of individual stock selection because so few have survived the gold bear market. Although a rising tide may lift most boats, financial statements should be reviewed with special attention to hedging arrangements that could undermine participation in higher gold prices or even jeopardize financial stability. Individual stock selection is less important than identification of the primary trend.
4. Bullion or coins are a more conservative way to invest in gold than through the equities. In addition, there is greater liquidity for large pools of capital. Investing in the physical metal requires scrutinizing the custodial arrangements and the creditworthiness of the financial institution. Do not mistake the promise of a financial institution to settle based on the gold price, for example, a "gold certificate" or a "structured note", (i.e. derivative), for the actual physical possession of the metal. Insist on possession in a segregated vault, subject to unscheduled audits, and inaccessible to the trading arrangements or financial interest of the financial institution.
5. Don't settle for too little. Should outlier events now deemed unimaginable by consensus thinking actually occur, the price target for gold would be several multiples of its current depressed price. Gold represents insurance against some sort of financial catastrophe. The magnitude of the upside is a function of the amount of paper assets that would be converted to gold irrespective of price.
6. An investment in gold should be based on macroeconomic considerations. If one expects or fears rising inflation, destabilizing deflation, a bear market in stocks or bonds, or financial turmoil, gold should do well and exposure is warranted.
7. Excessive reliance on trading strategies to generate returns can be dangerous and counterproductive. Returns from a "buy and hold" strategy should be more than sufficient to compensate for the inherent volatility. Many who have tried to outsmart this market by hyperactive trading have under performed. Success is dependent in large part on the occurrence of "fat tail" events that lie outside the parameters of trading models.
8. Equities of gold mining companies offer greater leverage than direct ownership of the metal itself. Gold equities tend to appear expensive in comparison to those of conventional companies because they contain an imbedded option component for a possible rise in the gold price. The share price sensitivity to a hypothetical rise in metal price is related to the cash flow from current production as well as the valuation impact on proven and probable reserves.
9. Even though gold itself is a conservative investment, "gold fever" attracts a crowd of speculators, promoters, and charlatans who only want to separate investors from their money. Avoid offbeat "exploration" companies with little or no current production and gargantuan appetites for new money.
10. Gold is a controversial, anti establishment investment. Therefore, do not rely on conventional financial media and brokerage house commentary. In this area, such commentary is even more misleading and ill informed than usual.