World Financial Watch

There is an ever growing demand for platinum pushing the current prices to over $2000 per ounce, almost double the price of gold.  It doesn’t stop there, though.  As long as power shortages in South Africa (which provides 80% of the world’s platinum) do not have too big of an effect on mining, prices are expected to go even higher.

Companies involved in automotive manufacturing and precious metals buy most of the world’s platinum. Automotive companies mainly use it for catalytic converters as deemed by the government.   It does not look like their needs for the metal are going to go down any time soon, either.

The line between supply and demand of platinum is razor thin, another reason why prices are so high.  If all mining stopped today, there would be only enough to go around for approximately one year.

Companies are looking to expand by pulling platinum and platinum like metals from near-Earth asteroids to offset some of the shortage.  Of course, this is not something that will be a possibility for another 20 years or so.  However, during that time, there could be a sharp decrease in prices even as the demand continues to go up.

Like many other precious metals, there is a huge demand for silver, and not a whole lot of supply.  The stockpile of silver that was built in the 1950s is nearly gone, forcing miners to search longer and harder for new places to find it.  This, of course, is one factor driving the price up.  It has been estimated that silver could be hitting $20 per ounce soon if trends continue.

With the US economy spiraling and the dollar weakening, investors watch precious metals with a keen eye.  The price of silver, like gold, goes up when the dollar declines.

Gasoline and grocery prices are forcing US consumers to spend less money on products that aren’t absolutely necessary.  However, the growing economies of China and India are taking over where the US is lacking in the precious metals market.

The Federal Reserve is lowering interest rates to combat the problems the real estate market is having.  While this is helping homeowners, it makes investing in US markets less appealing to foreign investors.

Some analysts believe the current decline in the price of silver is the lowest it will go.  While the recent shortage is making some investors nervous, it is though that most likely silver prices will jump back up, and fairly soon.

The foreign exchange market is the largest financial market in the world, with an average of $3 trillion traded daily.  Most financial trading is done in American dollars, so the current depreciation of the American currency is somewhat unsettling for some full time investors.

With the US dollar currently weakening, the exchange rate is going up.  This means that it costs you (an American trader) more US dollars to buy foreign money.
Rising gas prices, expensive groceries and a failing real estate market are all contributors of the dollar’s demise.

Gas prices are causing American consumers to spend less money on products than normal.  The US government has recently created an economic stimulus package to combat some of this.  Giving out $600 to each taxpayer, $1200 to couples and $300 to each dependent child hopefully will send taxpayers on a spending spree, thereby jumpstarting the economy.

The Federal Reserve has been reducing interest rates to help stabilize the real estate market and slow down the mass foreclosures of homes.  Although this does help homeowners, it also deters foreign investors from putting their money into the US.  Also, citizens who would invest domestically could place their money in foreign investments because of their higher interest rates.

The US dollar is used in most international transactions, so it stands to reason that anything that happens with the US economy will affect international finances in a substantial way.

As the United States Federal Reserve raises interest rates, the foreign exchange value of the dollar usually goes up as well.

One of the biggest ways the US affects the world’s economy, though, is its buying power.  With gas prices going up and the dollar not worth as much as it used to be, Americans are buying less.

Many countries that export goods to the US will have a reduction in demand for their products.

Nations with less than stable economies could suffer dramatically from this downturn in spending, which would cause them to be less capable of buying American exports, furthering the downward spiral.

The US government has tried to combat this vicious cycle by promoting free trade with foreign countries and a new economic stimulus package.  The stimulus package gives free money to American citizens in hopes that they will spend the money on products instead of bills or investments, thereby stimulating the economy.

Some countries stand to lose a lot if the United States were to fall into recession; there are many people watching to see if the recent proposals of the US government will turn the financial situation around.

The US dollar is weakening, the real estate market is in trouble, unemployment is slowly climbing, and gas prices are higher than they have ever been.

Many economists believe the US is headed into a recession or may already be there.  President Bush, however, disagrees.

His stance seems to be one of preventative measure.  The Economic Stimulus Package was put into effect recently, giving millions of taxpayers ‘free money’ to help jumpstart the economy.  This program is giving $600 to each taxpayer, $1200 to couples, and $300 for each dependent child.  The hope is that this money will offset spiking fuel prices and send consumers on a shopping spree giving the economy a boost.

President Bush is also attempting to convince Congress to make his tax cuts permanent, disallowing tax hikes in the future.  This will hopefully “create certainty in the tax code.”

Will the program be enough to strengthen the spiraling economy?  That is a question that quite a few economists are debating.

While President Bush, during his State of the Union Address, expressed that the long term stability of the economy would be fine, he made it clear that the short term problems need to be dealt with before the situation gets any worse.

The US dollar is weakening for many reasons.  Attributing factors include high gas prices and the failing real estate market.

Rising gas prices are causing American consumers to spend less money on extras than averages in the past.  This causes major companies to earn less profit, making their stocks look less inviting to foreign and domestic investors.  To combat this, the US government has created an economic stimulus package.  The goal is that taxpayers will take this incentive check and use the money on a spending spree, thereby jumpstarting the economy.  Unfortunately, recent polls have shown that many will use the money to pay bills instead.

The Federal Reserve has been reducing interest rates to help stabilize the real estate market and take some financial pressure off of homeowners in hopes of stalling the mass foreclosures of late.  While this does help homeowners, it also deters investing when US interest rates are lower than those of foreign counterparts.

Having a weak dollar is not all bad, though.  Since foreign travelers get more for their money, the US is an ideal vacation area.  Companies also find their prices much more competitive in foreign markets.

While there are positives and negatives for a weak or strong dollar, going to extreme in either direction can be dangerous to the US economy.  With the Federal Reserve keeping a close eye on the direction of the market, it is possible the dollar will begin to stabilize.

The US government has recently introduced a program to help combat the downward spiral of the economy.  The Economic Stimulus Package is free money given to taxpayers in hopes to jumpstart the economy.

$600 to each taxpayer, $1200 to couples, and $300 for each dependent child will be given out.  The hope is that this ‘free money’ will be used on shopping sprees to stimulate the economy, as the proposal suggests.  Another purpose of this package is to help offset the costs of rising gas prices.  At over $3.50 a gallon in places, many people are unable to buy much else.

As far as the rebate checks for individuals go, there are no stipulations on what the money must be used for.

The US government is using $145 billion to pull this off.  Some economics say that this is about the right amount of money needed to give the economy a big enough boost to hopefully avoid a recession.

This package also includes tax incentives for businesses if they make new and major investments during the year.

It is too early to tell if this program will end with its intended results.  As it usually is with the economy, it will be a game of wait and see.

If you have gotten gas recently, you might have noticed that the price of fuel is a little bit on the high side.  Reaching prices over $3.50 in some places, it is only natural to wonder how much higher they will rise.

Many people wonder how gas prices can be so high and the oil companies can make such exorbitant profits at the same time.  Part of that answer revolves around the fact that gasoline is an inelastic product, meaning that no matter how high prices get, the demand will not usually decrease as a result.  It’s a lot like cigarettes… or crack.

The Organization of Petroleum Exporting Countries is a group of countries that produce oil.  The organization basically controls everything to do with oil in those countries, including price.  Now, this group is not a monopoly, but it does control two-thirds of the world’s oil, so it does have some monopoly like powers, and their job is to make sure that investors in oil get the best return on their money.

For the summer holidays, especially Memorial Day and the 4th of July, prices will most likely increase.  This is a long standing trend.  The good new is that they are supposed to level off to somewhere under $3.50 a gallon afterwards.  You never thought you would be so excited about $3.40 a gallon, did you?