10 things you'll be paying more for soon

Buyers who are holding on to their money waiting for lower prices, may want to start spending now. The U.S. Bureau of Statistics' Consumer Price Index shows prices are on the rise and they are going to continue to climb.

Before prices get too high, here are 10 things you may want to buy now. The price of these items are on the rise and soon they will be costing you plenty more:

1. Coffee
The price of coffee futures recently hit a 13-year high, which drove up the price of a cup of Joe at places like Starbucks. Blame bad weather in South America and low U.S. stockpiles of coffee beans.

Coffee from Folgers, Dunkin' Donuts and Millstone already cost an average of 9% more. Kraft Foods raised prices on Maxwell House Coffee and Yuban coffee products by about 9% in September, translating into a price hike of 5 to 30 cents per pound of ground coffee and an increase of 2.5 cents per ounce for instant coffee.

And prices on single-serve K-cups -- sold as Tully's Coffee, Timothy's Coffee, Newman's Own Organics, Caribou Coffee and other Green Mountain Coffee brands -- will rise 10% to 15%, starting Oct. 11.

2. Cotton clothing
Again, blame the weather in part for this increase. A drought in China is damaging cotton crops there, causing the world's largest cotton producer and consumer to increase prices. Another major cotton producer, Pakistan, was devastated by floods, and another, India, is restricting its exports.

All that should add up to another $2 on the $12 t-shirt you planned to buy next year, reports CNN Money, along with higher prices for jeans. With 80% of U.S. cotton exported, it may be good news for U.S. cotton farmers, who are at an advantage compared to their competitors in the far East. For consumers, maybe it's time for a polyester revival? (more)

The Economist – 02 October 2010

The Economist is a global weekly magazine written for those who share an uncommon interest in being well and broadly informed. Each issue explores the close links between domestic and international issues, business, politics, finance, current affairs, science, technology and the arts.


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Crisis and collusion The 50 years under OPEC have been eventful

The Economist,
OPEC, the cartel of oil producers, celebrated its 50th anniversary on September 14th. The organisation was founded in 1960 with the explicit purpose of manipulating oil prices by controlling supplies. It has generally proved successful. OPEC controls around 80% of the world's proven reserves and over 40% of the world's production among its 12 member states. The Gulf states that dominate OPEC have the biggest reserves and lowest costs, so can most easily turn the taps on and off when required to keep prices high. Despite the slow return to health of a sickly world economy, oil fetches a lofty $75 a barrel, which Saudi Arabia, OPEC's most influential member reckons is "ideal".

Have Central Banks Lost Control of the Gold Market?

A brief history of Central Bank control of gold

When Eurodollars appeared in Europe, European central banks were not happy and sold them for U.S. gold. Then President Nixon, in his infinite wisdom closed the ‘gold window’ [After Europe had boosted their reserves after sending around 12,000 tonnes of gold across the Atlantic into European vaults]. In a mutually beneficial but clandestine accord, the world then saw the U.S. dollar rise to be the sole global reserve currency. It has continued to reign supreme because it is the only currency that is used to buy oil, oil that we all need.

Control lost

After 1971, gold began to rise in earnest as every man and his dog bought some, taking the gold price from $42.35 to $850. This was a public statement that the global investing public did not accept paper currencies with no gold to back them. These had become simply government obligations with no settlement date.
Central banks had to act to ensure the public accepted these currencies and were moved away from gold as money. To do that, the U.S. and by extension the I.M.F. decided on limited [limited because central banks still wanted it in their vaults as an important reserve asset] gold sales through auctions. All the gold sold there was snapped up. The reality of central banks wanting to keep gold then kicked in and the auctions were halted. (more)

Five Tech ETFs to Look at Now

Moneyandmarkets.com,

You can always count on one thing in the technology sector: Change! The cutting-edge inventions that fascinated us so much back in the 1990s are de rigueur now. Where will we be in ten years? I can only imagine.

As I said last year in my Trade Technology with ETFs column, playing tech trends with individual stocks is a high-risk game. You never know where the next big breakthrough will originate. Even a portfolio of 15-20 tech stocks might not catch the big winners.

The ideal solution: Exchange traded funds (ETFs). But you still have to know what you are buying. These days, the answer is not as easy as it might look.

Here’s the problem: “Technology” is a very broad term. You can take your pick of tech-oriented ETFs and mutual funds. The big ones will be composed of the same few dozen names — highly liquid stocks that won’t get anyone in trouble.

With the plain-vanilla segment well covered, ETF sponsors are defining narrower and narrower niches in an attempt to distinguish their offerings. Unfortunately, the “definitions” are not always as clear as they might seem. (more)

Investors should pay more attention to dividends

The Economist,

DIVIDENDS do not get the respect they deserve. Over the long run they provide the bulk of equity investors’ returns. Work by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School* found that over the period from 1900 to 2005, the real return from global equities averaged 5%. The mean dividend yield over that period was 4.5%.

Despite this, stockmarkets devote a lot more time to forecasting and analysing profits than they do to thinking about payouts. Profits can be easily manipulated and come in a bewildering variety of forms (operating, reported, post-tax, pre-exceptional, etc). Dividends are (mostly) paid in cash and so are hard to fake.

In America dividends seemed to go out of fashion in the 1990s. A yield of 2% or so appeared trivial when the market was rising by 20% a year. The disrespect for dividends also reflected the belief that, for tax reasons, share repurchases were a better way of returning cash to investors. But share repurchases are much more volatile than dividend payouts and were briefly negative in 2008 (firms issued more shares than they bought back). Dropping a buy-back programme can be done on the quiet. A dividend cut is a very public statement of corporate weakness. (more)

Rare Earth Metals – The Next Gold Rush?

uncommonwisdom,

China and Japan are having a small but potentially painful dispute over the ownership of a small chain of islands in the East China Sea.

These islands have very little significance other than the oil deposits that may lie around them. Whoever owns these islands would have claims to the mineral deposits on the ocean floors surrounding the islands.

Tensions heated up when a Japanese coast guard boat collided with a Chinese fishing vessel on September 7. Japanese authorities detained the Chinese captain and tough talk flowed from both sides.

The culmination was the temporary halt of exportation of rare earth metals from China to Japan.

Rare earth? No, I’m not talking about the 1970′s rock group nor am I talking about uranium or plutonium. I’m talking about a group of minerals that contain elements quite rare when discovered in Sweden in 1787. (more)