Posts Tagged ‘Hedge Funds’



Rogers Says World Needs Higher Interest Rates, Commodities Set to Advance

China and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.
“Everyone should be raising interest rates, they are too low worldwide,” Rogers said in a phone interview from Singapore. “If the world economy gets better, that’s good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money.”
China’s central bank hasn’t increased rates since November 2007. In the U.S., the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 percent, where it’s been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 percent.
Policy makers in Malaysia, South Korea, Taiwan and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.
The global economy is at the risk of prolonging a recession after reports over the past two days showed U.S. home sales plunged by a record and Japan’s export growth slowed for a fifth month in July, he said.
“We never got out of the first recession,” Rogers said. “If the U.S. and Europe continue to slow down, that’s going to affect everyone. The Chinese economy is 1/10 of the U.S. and Europe and India is a quarter of China, they can’t bail us out.”
Rogers, who predicted the start of the global commodities rally in 1999, said he was short emerging markets and stocks and long on commodities.
“Commodities will go above their old high sometime in the next decade even if they only grow 5 to 6 percent annually,” said Rogers, who is a consultant for the Dalian Commodity Exchange.
Rogers said he would resume buying China’s stocks if they were to tumble as they did during the aftermath of the global financial crisis in 2008, when they plunged 65 percent. “I haven’t bought since the fall of 2008,” he said. “It it were to happen again, I hope that I’m smart enough to buy again.”
Allen Wan. With assistance from Chua Kong Ho. Editors: Richard Frost, Linus Chua
To contact the Bloomberg News staff on this story: Allen Wan in Shanghai at awan3@bloomberg.net

Rogers Says World Needs Higher Interest Rates, Commodities Set to Advance – Bloomberg

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India abandons plan for sovereign wealth fund – Finance – Economy – News – The Economic Times


NEW DELHI: India has abandoned the plan to create a sovereign wealth fund on the line of Singapore, United Arab Emirates, Saudi Arabia, China and Russia, the finance ministry said on Friday.

“The government had examined a proposal to create a sovereign fund of $5 bn for financing acquisitions of companies abroad. However, it was decided not to pursue this proposal,” Minister of State for Finance Namo Narain Meena said in written reply to a question in the Lok Sabha.

Currently, there are more than 50 sovereign wealth funds, managing assets worth nearly $3 trillion.

Most of these funds are run by the countries that have huge trade surplus. It is mostly funded by commodity revenues, predominantly from oil and gas exports.

Prominent sovereign wealth funds are of Saudi Arabia, UAE, China, Russia, Singapore, Qatar, Japan, South Korea and Bahrain.

India abandons plan for sovereign wealth fund – Finance – Economy – News – The Economic Times

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Speculators Hike Net-Long Positions In Gold

23 August 2010, 11:27 a.m.
By Debbie Carlson
Of Kitco News
http://www.kitco.com/

Chicago — (Kitco News) — Investor interest in gold jumped as prices held and advanced over $1,200 an ounce as safe-haven buying resumed.
According to data from the U.S. Commodity Futures Trading Commission, the weekly commitment of traders showed speculators added to long gold futures positions in the week ending Aug. 17.
Looking at the disaggregated futures and options combined data, the managed-money accounts added 16,233 longs are now net-long 182,276 contracts, the largest net-long for them since the week of July 13, when their net-long positions totaled 187,077. The peak for the year 2010 to date was 230,422 on May 18.
Similarly, in the legacy futures and options report, funds added 19, 557 contracts to make them net-long 226,964.
Commercials and swap dealers in the disaggregated reports added to their net-shorts, with the producer category increasing shorts by 10,271 contracts to make them net-short 172,129. Swap dealers hiked their short contracts by 11,878 to be net-short 100,750 contracts. Commercials in the legacy futures and options report raised 25,854 short contracts and are now net-short 272,879.
During the timeframe the report covers, Aug. 10 to Aug. 17, gold prices on the Comex division of the New York Mercantile Exchange rallied $30 an ounce for the December contract. A trigger for the rally was holding over $1,200 an ounce. Prices started at $1,198, which was the settlement on Aug. 10 and settled at $1,228.30 on Aug. 17, and prices continued to rise that week.
“This shows that financial investors have been a major force in this recent rally of gold prices. In the reporting week up to last Tuesday, prices advanced by 4%,” said Commerzbank in a research report on Monday.
Barclays Capital said in a research report Monday, using the legacy futures-only data, that the rise in fund longs was the largest one week rise on a net basis since late April.
The rally came on disappointing economic news, which spurred safe-haven buying of gold, as market participants worry about a double-dip recession. Traders also note, though, that volumes during the reporting period were light because of summer holidays.
In addition to investment buying, Commerzbank said physical interest could support prices, noting Tuesday starts the festival season in India, when gold is traditionally given as gifts. They also cited central bank buying, with Russia increasing its gold reserves by more than 15 tons in July to just under 725 tons, according to its central bank. “Although the rise in holdings is likely to have come from the country’s own production, this absent supply will contribute to a tighter gold market,” Commerzbank said.

In other precious metals data, there was little significant change in speculative holdings for silver, platinum and palladium.

Managed-money accounts in silver added 29 long contracts, but cut 144 short contracts and are now net-long 28,429 contracts. Swap dealers are net-short 1,916 contracts, having added 692 shorts and cut 117 longs. Producers are net-short 52,773 contracts.
In platinum, speculators trimmed slightly their net-longs by 299 contracts and added 97 shorts and are now net-long 16,103 contracts. Swap dealers cut shorts by 649 contracts and added 151 longs, making them net-short 6,599 contracts. Producers are net-short 12,804 contracts.
The managed-money accounts added modestly to net-longs in palladium, increasing longs by 326 contracts to be net-long 10,230 contracts. Producers remain net-short 9,802 contracts in palladium and swap dealers are net-short 4,400 contracts.
The data for copper shows managed-money accounts added to long positions, but increased their short positions by a greater amount. These accounts added 1,025 long contracts and 2,603 short positions, remaining net-long 19,180 contracts. Swap dealers and commercials remain net-short, at 44,550 and 56,432 contracts, respectively.
During the time period, most-active September copper rose 2.6 cents a pound, so the swift price drop copper suffered toward the end of last week over global economic health was not included. From Tuesday’s settlement to Friday’s settlement, September copper prices fell 4.75 cents to $3.2910.
Commerzbank said because of this: “net long positions have probably continued to fall since then. The still relatively high positions also hide a risk of new price corrections should market sentiment deteriorate further.”
By Debbie Carlson, of Kitco News;dcarlson@kitco.com; Allen Sykora contributed to this story.

Kitco News

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Goldman Backs Oil, Copper, Gold, Maintains `Overweight’ Commodities Call

Commodities demand from emerging markets and limited growth in supplies will help to support prices toward the end of the year, according to Goldman Sachs Group Inc., which backed oil, gold, copper, zinc and platinum.
The bank reiterated an “overweight” recommendation on commodities, analysts led by Allison Nathan and Jeffrey Currie wrote in a report. Goldman pared its 12-month forecast for the S&P GSCI Enhanced Total Returns Index to a 19 percent gain from 21.6 after recent gains in agricultural commodities and metals.
Commodities last week had the worst weekly performance in six after the Federal Reserve said the recovery is weakening and European industrial output fell, stoking concern that there may be a double-dip recession. Reports also showed China’s retail sales and new lending grew in July at a slower pace than June.
“We are not overly optimistic about commodities prices in the second half,” Ni Xiaolei, a trader at Donghai Futures Co., said from Jiangsu today. “‘We saw a very sharp ascent in commodity prices last month, which will be hard to sustain as global macroeconomic data emerges weaker than expected.’’
Goldman’s commodity ‘‘overweight’’ call was maintained even as the bank has been paring forecasts for U.S. and Japanese economic growth for next year. Ed McKelvey, Goldman’s senior U.S. economist in New York, has also said that the chance the U.S. may tumble back into recession is as high as 30 percent.
Gold, Crude
Gold, which surged to a record $1,265.30 an ounce in June amid concern sovereign-debt levels in Europe may be excessive, traded at $1,29.60 at 2:11 p.m. in Singapore, 11 percent higher this year. Goldman forecast a rise to $1,260 in three months and to $1,300 in six. New York crude futures were at $75.86 a barrel, 4.4 percent lower over 2010. Goldman’s report put them at $92 a barrel in three months.
‘‘The current softness in economic data, combined with increasingly mixed signals from the underlying commodity markets, is likely to continue to generate choppy commodity-price action in the near term,” the Goldman analysts wrote in the Aug. 13 report. Still, “high and rising emerging-market demand levels against limited supply growth in key commodities are likely to increasingly tighten balances,” they wrote.
Japan’s economy expanded at an annualized 0.4 percent in the three months to June 30, the Cabinet Office said today. That’s the slowest pace in three quarters. U.S. industrial production figures are due for release tomorrow, the same day as data on investor confidence in Germany.
Chinese Demand
Commodity prices may advance into the end of the year on evidence of increased oil demand in China, a decline in crude stockpiles in Europe and the U.S., and further falls in metals inventories, the report said.
“We expect upside to be greatest for crude oil, copper, zinc, platinum and gold,” it said. “Improved data will likely be required to sustain rising prices.”
Goldman Sachs last week backed gold to resume a rally and climb to a record $1,300 an ounce within six months on renewed investor interest. The precious metal, which has risen for nine years to last year, may also climb in 2011, the report said.
A ban on wheat exports by Russia helped to drive futures to $8.68 a bushel earlier this month, the highest price in almost two years. The country is battling reduced grains production amid the worst drought in at least 50 years.
‘Sharp Gains’
“Commodity returns rose over the past month led by sharp gains in the agricultural complex owing to weather-related supply shocks in wheat,” according to the Goldman report.
Zinc, trading today at $2,080 a metric ton, has fallen 19 percent this year, making it the worst performer on the London Metal Exchange. Goldman’s analysts forecast that the metal may climb to $2,121 a ton in six months, according to the report.
Copper rose 1.3 percent to $7,246.50 a metric ton, paring this year’s loss to 1.7 percent, while platinum gained 0.8 percent to $1,535.75 an ounce, 5 percent stronger this year. Goldman forecast copper at $7,925 a ton in six months.
Japan will grow 1.4 percent in 2011, compared with an earlier forecast of 1.7 percent, Goldman’s Tokyo-based senior economist Chiwoong Lee said in a report dated Aug. 7. The week before that Goldman lowered its projection for U.S. growth for the same year to 1.9 percent from 2.5 percent.
To contact the reporter on this story: Glenys Sim in Singapore at Gsim4@bloomberg.net

Goldman Backs Oil, Copper, Gold, Maintains `Overweight’ Commodities Call – Bloomberg

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Hedge Funds Cut Bets on Rising Gas by 23% as Prices Fall: Energy Markets

Hedge funds slashed their bets on rising natural gas to the lowest level this year as prices fell, a sign the fuel may repeat last year’s 19 percent August slide during a so-far quiet hurricane season in the Gulf of Mexico.
Hedge funds and other large speculators cut their bullish bets by 23 percent in the week ended Aug. 10, the Commodity Futures Trading Commission reported. Natural Gas has declined 14 percent this month, dropping to $4.228 per million British thermal units today on the New York Mercantile Exchange.
Investors retreated from gas markets this year as prices declined 22 percent amid forecasts that stockpiles will be near record highs by the end of October. Demand for the fuel will be slow to recover as consumer confidence hovers near an eight- month low.
“Last year, we saw prices go significantly below $4,” said Andy Lipow, president of consulting firm Lipow Oil Associates LLC in Houston. “There’s a significant amount of supply out there and the overall economy is really having trouble recovering and growing. The increases in demand for natural gas are going to be slower than people expect.”
Net-long positions in futures and options combined in four natural-gas contracts decreased by 28,719 futures equivalents, or 23 percent, to 94,058 in the week ended Aug. 10, the CFTC data showed.
Whether hedge funds and other large speculators will profit from their short bets remains to be seen, Lipow said.
“We’ve seen funds be big winners and big losers in the natural gas markets,” Lipow said.
Gas futures last year dropped to $2.508 per million Btu on Sept. 3, the lowest price in more than seven years.
Vulnerable Positions
The increase in short positions leaves hedge funds vulnerable to sharp moves higher in prices that would probably accompany the threat of a hurricane heading toward the Gulf of Mexico, said Teri Viswanath, director of commodities research at Credit Suisse Securities USA in Houston.
“We’re right around the corner from the heaviest portion of the hurricane season,” Viswanath said. “Given that possibility, is the market getting ripe for a short squeeze? I think it is.”
The U.S. on Aug. 5 reduced its forecast for the 2010 Atlantic hurricane season to 14 to 20 named storms, down from 14 to 23, because of less activity than expected in the first two months of the season.
Eight to 12 of those storms are expected to become hurricanes, according to Gerry Bell, the lead seasonal hurricane forecaster for the U.S. Climate Prediction Center in Camp Springs, Maryland.
Reduced Gulf Output
The sluggish economy, combined with rising production and inventories, will continue to weigh on gas, Lipow said. The bullish impact of any hurricane will be muted since the Gulf of Mexico accounts for 10 percent of U.S. gas production, down from 17 percent in 2005.
Consumer spending, which makes up 70 percent of the world’s largest economy, may not pick up in the absence of a recovery in the labor market, according to the Federal Reserve. Fed policy makers last week made their first attempt to shore up a recovery they said was likely to be “more modest” than earlier anticipated.
Natural gas inventories rose 37 billion cubic feet to 2.985 trillion in the week ended Aug. 6, the Energy Department reported Aug. 12. U.S. gas stockpiles at the end of October may reach 3.752 trillion cubic feet, the department said in an outlook on Aug. 10. Supplies touched a record 3.84 trillion cubic feet in November 2009.
Price Pressure
“Pressure is likely to continue on the natural gas prices,” Lipow said. “Supply disruptions are minimal and we’re seeing the forecast for storms decline.”
The Atlantic hurricane season so far has had less of an impact than expected on gas production, the department said in the outlook last week. Hurricane Alex and Tropical Storm Bonnie this year reduced production by 8 billion cubic feet, less than the 20 billion the government had expected, the report showed.
The funds’ “view of the market is bearish,” said Tim Evans, an energy analyst at City Futures Perspective in New York. “It’s a flow of selling that has weighed on prices, and we’ve got to get through that before prices can rise.”
The measure of net longs includes an index of four contracts adjusted to futures equivalents: Nymex natural gas futures, Nymex Henry Hub Swaps, Nymex Henry Hub Penultimate Swaps, and ICE Henry Hub Swaps. Henry Hub in Erath, Louisiana, is the delivery point for the Nymex futures, a benchmark price for the fuel.

To contact the reporter on this story: Asjylyn Loder in New York at aloder@bloomberg.net


Richard Russell’s Daily Letter

August 9, 2010 — Headline from page one, New York Times, Aug. 7: “Nation Lost 131,000 Jobs As Governments Cut Back. Hiring By Private Sector Anemic in July.”

Headline from the Weekend Investor section of the August 7 Wall Street Journal“How To Beat Deflation. Strategies to Protect Your Portfolio From and Take Advantage of the — Dreaded ‘D’ word.”

The specter of deflation is cropping up in many media outlets today. In fact, I’d say that deflation talk has almost become popular. The key question is this — Fed Chief Bernanke is obviously reading and hearing all about the “coming deflation.” What will Bernanke do about it? I think he will fight deflation with all the weapons at his command. And Bennie has a lot of weapons, least of which is printing “money.”
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The air is filled with rumors and contrary opinions, so many that it is literally impossible to follow them all. Some of the opinions and views have such earth-shaking implications that it’s difficult to ignore them. But as my subscribers know, we’re not a news site, and we don’t invest or divest based on the news of the day.

A few examples — I just finished my friend, John Mauldin’s always excellent column (how does he travel continuously and write the column?). Rather than paraphrase what John is writing, I’m including an actual segment from John’s latest column —“Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages are implicated.”
Russell Comment. Would Obama actually do this? My answer is that Obama and his buddies are so frantic to get the economy moving again that they would be willing to try anything.
Beyond mortgages, Americans are so loaded with debt that maybe the next Obama step would be to forgive ALL personal debts in the US. Better still, why not return to the year of Jubilee and cancel out ALL world debts (I don’t think holders of US Treasuries would go for that one).
The current issue of Barron’s is fascinating. The inimitable Alan Abelson notes that stocks are not cheap. Alan asks, “Where is it written that a market that in a not too distant-past values stocks at 60 time earnings, can’t value them, if the outlook sours, at six to eight times earnings?”
Russell Comment — Yes, I have noted that the big booster in bull markets and the big killer in bear market is the change in price/earning ratios, rather than the actual change in earnings.
But here’s what I really want to talk about. From the cover page of Barron’s — “Why the Fed Will Soon Print $2 Trillion.” The related major article is entitled, “Time to Print, Print, Print,” and is written by Jonathan R. Laing. The author believes that the Fed has only one way to go, “Quantitative easing,” and maybe printing another $2 trillion of fed notes (dollars). Laing concludes, “so it’s more than likely that the big artillery of quantitative easing will be unleashed to push the economy out of its despond. It’s high time to get out the money-printing machines. Damn the risks of triggering a bit of inflation and some modest investment bubbles. The alternatives are far worse.”
Then (believe it or not) in the same issue of Barron’s we see an article by my old friend, Robert Prechter, the guru of the Elliott Wave thesis. Robert explains how a great contraction in credit and debt will bring about deflation. Robert notes that the amount of dollar-denominated debt worldwide is some $57 trillion. . . The already-issued debt and potential debt is poised to overwhelm the possibility of management monetization. The Fed’s assets amount to $2.3 trillion, a drop in the global debt bucket.”
Robert concludes his frightening article as follows — “If you are positioned for more inflation — as the vast majority of investors are — you are likely to find yourself on the wrong side of the monetary bet. Positioning for deflation simply means avoiding traditional investments, especially risky debt, and maintaining maximum safety in cash equivalents, held in the safest institutions. If you shed market and institutional risk, you can sail through deflationary times unscathed.” 

Russell Comment — Whew, how’s that for a scary contrary opinion? Robert believes that way to safety in a deflation is to have cash, and lots of it. My concern with this approach is that I question the safety of the US dollar (and all fiat money, for that matter). So in an all-out deflation, Robert Prechter will be sitting in all cash or US Federal Reserve notes. But the dollar is collapsing, and with a US that is deflating, none of our foreign creditors will want dollars (in fact, they will be trying to get rid of dollars). With fiat money in retreat all over the world — and currencies devaluing against each other, the world’s peoples will turn to the only money they can trust — gold. I’m aware that Prechter believes gold will be heading down in a deflation, I disagree.

I was there during the Great Depression, and I can tell you nobody at that time had dollars. But if you did have dollars they were trusted and they were considered as good as gold. Today, it’s different. The very validity of the dollar is in question.

By the way, Prechter believes the Dow will end its bear market at a value of 400. If so, Prechter is looking for a calamity comparable to the Great Depression of the 1930s. 

Russell response — I distrust all scenarios and predictions, although I read ’em all and find many of them fascinating. In the end, I only trust the wisdom of the stock market. I haven’t liked the recent action of the stock market, and I’ve advised my subscribers to get out of stocks. From our standpoint, when it comes to news events, our main interest is not in the news, but in the stock market’s reaction to the news.

The stock market will tell its story as we go along and in its own good time. Our job is to ignore all opinions and forecasts and to follow the stock market and believe what it’s telling us.

Gold has advanced seven days in a row, and should be ready to back off a bit. The many arguments and rumors regarding gold are almost deafening. I don’t give a damn what the gold bulls or the gold bears say, I follow the price action as best I can. Often, the best test — is what an item can or can’t do. On the latest correction, gold held 1100 — bullish. Can Dec. gold climb into the 1300s, which would be a record high? That’s what I’m waiting to see. By the way, gold may be forming a head-and-shoulders bottom. More technicals — the 200-day moving average for Dec.gold is at 1155.10. The 50-day MA for Dec. gold is at 1215.90, which is bullishly above the 200-day MA. If Dec. gold can close above 1215.90, that would be a bullish development.

The Federal Open Market Committee meets tomorrow. Will they hold interest rates at zero and will they accelerate their printing? If they do, it will put pressure on the dollar and it will be bullish for gold. If they boost interest rates, expect gold to correct.

TODAY’S MARKET ACTION:

My PTI was up 7 at 6117. The moving average at 6095, so my PTI is bullish by 22.
The Dow was up 45.19 to 10698.75.
Transports were up 59.09 at 4516.35.

Utilities were up 1.30 to 395.02.

NASDAQ was up 17.22 to 2305.69.

S&P was up 6.15 to 1127.79.

September crude was up 0.78 at 81.48.
Total Volume on the NYSE and associated exchanges was 3.43 bn.

There were 2199 advances and 830 declines on the NYSE.

There were 305 new highs and 15 new lows
The Big Money Breadth Index was up 4 at 807.

Dollar Index was up 0.26 at 80.67. Euro was down 0.49 at 132.25. Yen was down 0.60 to 116.48. Currency prices as of 1 PM Pacific Time.

Bonds: Yield on the 10 year T-note was 2.82. Yield on the long T-bond was 4.01. Yield of the 91 day T-bill was 0.14%.

December gold was down 2.70 to 1202.60. September silver was down 0.23 to 18.24.

My Most Active Stocks Index was up 2 to 200.

GDX was up 0.02 to 50.19.

HUI was down 0.22 to 459.72.

CRB Commodity Index was down 0.12 at 274.59.

The VIX was up 0.40 to 22.14.

Late Notes — Dow up 45, Trannies up 59, Utes up almost 2. It’s increasingly more difficult to be bearish on this market when my PTI remains bullish. It was up 7 today to 6117, making my PTI bullish by 22 points. As for the “internals,” well you heard the PTI report. NYSE breadth was good, 2199 issues higher, only 830 down, 305 new highs and 15 new lows. Up volume on the NYSE was an impressive 71% of up + down volume. 

Dollar Index was up 0.26 to 80.67. Are there too many bears on the dollar. When the shorts overdo it, you know what happens — the item goes UP. Bonds were slightly lower. Dec. gold was down 2.70 to 1202.60, but still holding above 1200. Tomorrow Bernanke and the gang meet for the Fed Open Market Committee, and everybody is waiting breathlessly to hear what the gang comes up with. 

My pen-pal, the one and only Dennis Gartman notes that the M-2 is diving and that the adjusted monetary base has gone nowhere for the last nine months. John Williams reconstructs the broad M-3 money supply and shows that it is diving. So what’s going on — is the Fed playing games with us? Can the market and the economy go up without a rising money supply?

Never mind, we go by the action of the market, and so far, the action has been OK, although a bit ragged. 

See you tomorrow, with diamonds hidden in my hair — wait, Faye just cut most of my hair off. I’m walking around with a buzz cut, can this be me?

Adios,

Russell

Expensive stones, most of them over one billion years old.

With the advent of GIA (Gemological Institute of America) certificates, diamonds are becoming a leading safe-haven item. You can send a diamond to the GIA and get a recognized certificate showing the cut, carat, color and clarity of your diamond. Seasoned buyers will not buy a diamond without a GIA “cert.” These certs have finally put diamonds in a different category. You can now buy a diamond a receive (with a cert) a close approximation of what the stone is worth.

India is fast becoming the center of diamond cutting and trading. The best diamonds have come from the Golconda area of India. The Golconda diamonds were “whiter than white.” By the way, the Golconda mines are exhausted. The lower the nitrogen content of a diamond, the whiter the stone is. Golconda diamonds have a nitrogen content of 2% to down to 1%, making them the whitest of all diamonds. Actually, a few other diamonds sport this low nitrogen content, and despite the fact that they don’t come from India, they are still called Golconda diamonds. Only about 1% of all diamonds are classified as Type IIA or Golconda diamonds. These special diamond bring huge prices. For instance, a well-cut internally flawless Type IIA diamond of 5 carats may sell for over one million dollars. 

As a rule, white diamonds are judged on their whiteness — the whiter, the better. Colored stones are judged by the depth of their color and the evenness of their color throughout the stone. 

Diamonds as a safe haven have one big advantage over gold. Millions of dollars worth of stones can cross a border hidden in a tiny packet or sewed into the lining of your pants. And with the advent of GIA certs, you can be reasonably assured of what they are worth. High-grade stones are so hot today that dealers have been calling retailers and asking them if they have any overage in their diamond inventory. There is almost no bargain diamonds for sale today. The best deals are seen when a professional outfit buys a diamond from a private party, a party that knows nothing about the value of their diamond. 

Thus you see ads in the newspapers as follows: “We want your gold and jewelry and particularly your diamonds. Nobody pays higher prices than we do.”

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Goldman Sachs Lost Money on 10 Days in Second Quarter

Goldman Sachs Group Inc., the bank that makes the most revenue trading stocks and bonds, lost money in that business on 10 days in the second quarter, ending a three-month streak of loss-free days at the start of the year.

Losses on Goldman Sachs’s trading desks exceeded $100 million on three days during the period that ended on June 30, according to a filingtoday by the New York-based company with the U.S. Securities and Exchange Commission. The firm also disclosed that trading losses surpassed its value-at-risk estimate, a measure of potential losses, on two days.

Trading results across Wall Street firms declined after Goldman Sachs and its biggest rivals posted perfect results, with no losing days, in the first quarter. Goldman Sachs’s $5.61 billion in second-quarter trading revenue exceeded all of its Wall Street competitors. The bank, overseen by Chairman and Chief Executive Officer Lloyd Blankfein, relied on trading for 71 percent of its revenue in the first half of the year, down from 80 percent a year earlier.

Today’s filing also shows that the firm’s traders generated more than $100 million on 17 days during the quarter. Of the 65 days in the quarter, Goldman Sachs traders made money on 55 days, or 85 percent of the time.

Morgan Stanley said separately today it lost money on 11 days during the second quarter. The losses never exceeded $75 million daily, and never surpassed the firm’s value-at-risk estimate. Morgan Stanley’s traders made more than $175 million on one day, the firm said in an SEC filing today.

Goldman Sachs agreed last month to pay $550 million to settle a fraud lawsuit filed by the SEC over Goldman Sachs’s 2007 sale of a mortgage-linked investment. In the settlement, a record for the SEC and a Wall Street firm, Goldman Sachs said it made a “mistake” by failing to disclose that a hedge fund that helped construct the investment was also planning to bet against it.

To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

Goldman Sachs Lost Money on 10 Days in Second Quarter – Bloomberg

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