Gold Investments Market Update - The Citi "Supermarket" Says a Lot Must Go
-- Posted Tuesday, 18 November 2008 | Digg This Article | Source: GoldSeek.com
Citigroup to cut 52,000 jobs
Vikram Pandit, the Chief Executive of Citigroup announced yesterday that in a bid to revive their ailing share price, a massive 52,000 jobs would be cut. That's 1 in every 7 employees and slash costs by $10bn. Citi shares have lost more than 75% of their value over the past year and suffered over $50bn in writedowns and credit provisions. An analyst likened Citigroup to a super tanker; turning it around takes a long time.
Japan's 7 year glitch
The Japanese economy has entered its first recession for 7 years as growth declined for the second quarter in a row. There are fears that the situation could worsen further amid the global downturn. The slumping economy forced the Japanese government to unveil a Y5,000bn stimulus package last month while the Bank of Japan slashed interest rates for the first time in 7 years on 31st October.
Russia slashes oil duty
Russia plans to cut its oil export duty by a third next month to relieve companies that are making a loss on their crude oil exports. Russia is the second biggest oil exporter and had been hit hard by lower oil prices and crippling export taxes. An oil analyst was quoted as saying, "It is not easy in a time of financial crisis for the government to cut taxes but they cannot kill the milk cow of the budget….oil." Urals, the Russian crude export blend dipped to $48.22 yesterday, the lowest it had been since January 2007.
Gold Contracting
In the near term, gold seems to have settled into a contracting range between $700 and $770. The next step is likely to be higher but might be met with further resistance at $780. In the medium term, a further downturn may be likely although this may be tempered by the fact that the G20 failed to agree any substantive measures and risk aversion remains high, a time when the prudent investor retreats into the safe haven qualities of the yellow metal.
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