Bloomberg Businessweek - 04 October - 10 October 2010

Bloomberg Businessweek - Worlds leading business magazine. Timely, useful, provocative, innovative. Each issue of Businessweek features in-depth perspectives on the financial markets, industries, trends, technology and people guiding the economy. Draw upon Businessweeks timely incisive analysis to help you make better decisions about your career, your business, and your personal investments.


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Siddharth Rajeev and Vincent Weber: Uranium's Upside

While the prices of gold and silver are reaching death-defying heights, uranium stocks are waiting in the wings. In this exclusive interview with The Gold Report, Sid Rajeev, head of research for Fundamental Research Corp. in Vancouver, exposes the reasons why now-stagnant uranium plays have more upside than gold or silver. He and his research associate Vincent Weber uncover some plays that allow investors to take advantage of all three.

The Gold Report: Sid, in your interview with The Gold Report in February you said gold could creep back down to around $750 an ounce by 2012 if there is a strong economic recovery in the U.S. Has anything in the last eight months changed your mind?

Sid Rajeev: We have made some revisions to our forecast, but our overall outlook on the market and gold has not changed. We were expecting a gradual recovery in the U.S.; however, the recovery has been much slower than expected. The housing and labor markets continue to be weak. We have been seeing a lot of mixed results in the past six months. These factors have created a lot of uncertainties in the market. Gold most often is the answer for uncertainty, which is why gold prices are at such high levels.

Even though the recovery has been slow, we believe that the U.S. is in a much better position than it was last year. Unemployment levels have dropped. It's now close to 9.6% versus more than 10% last year at this time. The stock market is a leading indicator—the TSX Venture Exchange is up 29% year over year. These are signs of improvement. (more)

More Reasons Gold Is Going to $2,000

The biggest holder of U.S. Treasuries isn’t happy.

And why should they be? They’re sitting on the sidelines holding US treasuries worth $797 billion. That’s quite a chunk of change.

Of course I’m talking about China.

The Chinese have been the biggest foreign creditor to the United States and in recent statements they’ve made it clear that Washington needs to maintain the value of the dollar.

“We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” said Chinese Premier Wen Jiabao.

It’s estimated that around 50% of China’s total reserves are held in US treasuries. And they know that the reserve currency they hold is depreciated with each passing day.

With so much riding on the price of the dollar you can bet that Beijing has been keep a close tally on America’s spending — and the results can’t be pleasing. (more)

Is the US Government About to Forgive Mortgage Debt?

Is it possible for the US Government to choose to forgive mortgage debt? Sounds outrageous? Read on for the legal theory behind this claim and let me know what you think? I thought it was little esoteric as well, but as I looked deeper… Well, I’ll let you be the judge.

A lot of attention accrued to Representative Grayson’s calling out of foreclosure fraud, and for good reason. The story is absolutely amazing, and kudos to a member of congress that defends his constituency.

It’s not as if other entities have failed to take notice. ZeroHedge has its usual witty commentary regarding the possibility of foreclosure transactions potentially being unwound due to fraudulent foreclosure activity. The NYT ran an article stating that Fitch will look into lowering the credit rating of companies that participated in the submission of inappropriate foreclosure paperwork, which apparently seems to include an awful lot of companies. It goes on to state (as excerpted by Zerohedge): (more)

Weekly CFTC Report - Kill (Dollar) Bill

This week's CFTC Commitment of Traders reports validates what everyone knows: that the "short dollar" is now the biggest groupthink trade in the world. Or let us paraphrase - the "Ben Bernanke QE2 Is Imminent" trade is now the biggest groupthink trade in the world. One glimpse at the move in the COT data confirms what we speculated earlier when we discussed Goldman's virtual certainty that QE2 is coming in 31 days: that if there is no QE2 announcement, the shock that would reverberate from this as all the Kill (Dollar) Bill trades are unwound, may just blow up world markets and make the flash crash seems like a dress rehearsal for midgets (of the SEC intellectual variety). Of course, what this means for contrarian traders is more than obvious. (more)

How To Buy a Home at a $100,000 Discount

To pare down their growing inventory of properties, Fannie Mae and Freddie Mac are scrambling to unload nearly 150,000 foreclosed homes. And that means 2004-esque deals — like requiring as little as 3% down, offering to pay a portion of the closing costs and arranging special financing and warranties for repairs and renovations.

It's another option for home owners who want to trade up — and an easier way into the market for first-time home buyers, says Dean Baker, co-director of the Center for Economic and Policy Research who studies the housing market.

The best bargain might be the home's price. A SmartMoney analysis revealed that buyers could save $100,000 by buying a Fannie or Freddie home instead of similar fair-market properties just a few blocks away.

And while many of Fannie and Freddie's homes are at the lower end of the market and in less-desirable areas, a SmartMoney.com search of Fannie Mae and Freddie Mac listings revealed that buyers could find properties in good neighborhoods — and for $100,000 less than comparable houses nearby. For example, a five-bedroom, three-bath with a backyard, deck and two-car garage in tony Alexandria, Va., was listed for $445,000, $100,000 less than the average listing price in the area, according to Trulia.com. Four blocks away, a similar non-foreclosed colonial is listed for $639,900. (more)