SAN FRANCISCO (ResourceInvestor. com) -- The dollar lost another 0.4% against the euro Monday after tumbling to a 1 1/2-year low against the euro on Friday. Gold futures gained nearly 2% as the euro traded at $1.313. Most of the speakers at the San Francisco Hard Assets Conference are in agreement - the U.S. dollar is heading lower and precious metals are heading higher.
Ron Paul, Congressman for the U.S. House of Representatives, slammed the sentiment home today when he said, "We are living on borrowed money and borrowed time and that will eventually come to an end."
"We are facing serious economic problems," he said. The fact that "the government can literally create money out of thin air is a recipe for disaster."
James Turk, founder and chairman of GoldMoney.com, said when central banks, such as the Bank of China, are diversifying away from the dollar, "there's something wrong."
However, analysts disagree about what impact a slowing U.S. economy would have on China and its demand for base metals and other pure commodities.
Yesterday, Marc Faber, Editor of the Gloom, Boom & Doom Report, said that an U.S. economic slowdown will not curb China's growth. He said Asian exports will continue to rise despite a slowing U.S. economy, and thus China's demand for commodities will remain strong.
However, Paul van Eeden, President of Cranberry Capital Inc., said consumers will spend less, meaning the U.S. will import less, and this will negatively impact China with 30% of its GDP gained from exports.
Van Eeden said copper, aluminium, lead, zinc and molybdenum prices have all been driven up this year on soaring demand from Asia and speculation by financial institutions. He said a fall in demand from China would force these financial institutions to pull out completely.
In recent study entitled "The Coming Nuclear Winter Base Metals," Frank Veneroso agreed that speculation by hedge funds has resulted in the price increases in base metals.
"If hedge funds have been managing base metals prices, eventually these funds and the base metals should go the way of Amaranth," he said. "I believe it is the activities of these funds and their eventual failure that will determine the price break that begins the inevitable deep decline back to marginal cost for this complex."
He said any economic weakness somewhere around the globe would result in record sustained surpluses and a "mountain of inventory."
In an issue of the Financial Monitor, Martin Murenbeeld, Chief Economist of Dundee Group of Companies, actually calculated the effect that past U.S. recessions had and found that "China is not as dependent on the U.S. economy as one might have thought."
According to Murenbeeld, for the seven years (not counting 1960) that the U.S. economy was in recession, the average increase in Chinese exports as a percent of GDP was 0.14%, with a range of -0.75% in 2001 to 1.29% in 1991.
"U.S. recessions don't seem to hurt Chinese exports in any consistent manner!" Murenbeeld exclaimed.
He added that for the same seven years the change in U.S. imports as a percent of GDP averaged -0.09%, meaning that "U.S. recessions do hurt U.S. imports in a consistent manner!"
A U.S. recession might cut 1% off the Chinese exports to GDP percentage, meaning that Chinese
GDP growth is damaged by at least 1% with the loss of exports, according to the report. But simple regression analysis for the period 1980-2006, suggests a 1% rise in U.S. GDP adds 0.58% to Chinese GDP. Assuming Chinese GDP would grow at 9.6% in a world where U.S. GDP grows 3.0%, a U.S. GDP growth of -1% would knock 2.3% off the Chinese growth rate.
"This is less than one might have imagined!" Murenbeeld said. "My inclination is to suggest that Chinese exports and Chinese GDP dance to their own drummer more than to the U.S. drummer."
In other words, demand for commodities in China will not wither away in the event of a U.S. recession.
Conclusion
Regardless of whether a U.S. recession will negatively impact China's growth, and in turn, demand for base metals, analysts agree the dollar is falling and gold is rising.
Van Eeden said gold is still "on its way to $900 and $1000." Turk predicted gold will hit $850 early next year.
Gold for December delivery closed up $11.60 at $640.60 an ounce today after hitting a high of $641.60 on Nymex.

Chandigarh, Nov 26 Hallmarking on gold jewellery shall be made mandatory from January 1, 2008 by the government, Mr Y P Singh, Additional Director General , Bureau of Indian Standards (BIS) said today.Addressing a seminar on hallmarking of gold/silver jewellery, organized by BIS here, he informed that in order to promote gold hallmarking among consumers and bring more jewellers under assaying ambit, BIS is planning to spread its network of assaying and hallmarking centres in the country. Thirty five additional assaying centres will be set up by March next year, he added.The government shall be giving one time financial incentive of 15 per cent of the cost of machinery and equipments subject to maximum of Rs 15 lakhs per centre for hallmarking, he added.Mr Singh informed that according to an estimate there are more than three lakh jewellery retailers, manufacturers and over 100 large-scale units manufacturing jewellery in the country. He informed that BIS had conducted a market survey on 120 samples drawn from eight cities, which revealed failure of 88 per cent samples with average purity shortage of 11 per cent.Another market survey revealed that more than 90 per cent samples failed against the purity declared as wide as 44.66 per cent and average shortage of 13.5 per cent . In Chandigarh, all the 10 samples drawn failed with maximum shortage in purity of 18.71 per cent and average shortage of 10.4 per cent.Mr Singh said that uptil October 31 this year, 2,708 gold hallmarking licenses had been issued by BIS in the country. About 162 lakh pieces of gold, silver and artefacts had been hallmarked uptil October this year.

By Reuters
Sunday November 26, 10:05 PM
NEW DELHI (Reuters) - Oil producing nations are exploiting oil consuming countries with high oil prices and India is being deprived of 1 percent of economic growth because of costly oil, its finance minister said on Sunday.
Finance Minister Palaniappan Chidambaram told a regional World Economic Forum that speculation was driving oil prices, as prices had fallen from near $80 a barrel to $58 when there had been no change in demand and little change in supply.
"I continue to say that it is speculation driven and the world must come to some kind of understanding between oil producing countries and oil consuming countries to how these shocks can be reduced. We are at risk here," he said.
India imports 70 percent of its oil. The Asian Development Bank says every $10 rise in average global oil prices over a one-year period hurts Asia's economic growth by 0.6 percentage points.
"The world must come to terms with the fact that oil producing countries are exploiting the requirement of oil consuming countries," Chidambaram said.
"India's being robbed of at least 1 percent of growth because of high oil prices."
India's economy, Asia's fourth largest, is forecast to grow about 8 percent in the fiscal year to March 2007, although the government is keen to boost this to nearer 10 percent to bring down its fiscal deficit and lift nearly a quarter of the population out of poverty.
Oil's descent from a record of $78.40 in July prompted OPEC in October to cut oil output by 1.2 million barrels per day from Nov. 1.
Prices over the past few weeks have dipped below $55 before rebounding to about $60 on Friday.
"It's not in our hands. Until we search for more oil and gas reserves we are dependent on the world," Chidambaram said.

Researchers use genetics of wheat to boost its nutrients WASHINGTON -- Scientists have found a genetic way to boost the protein, zinc, and iron content in wheat, an achievement that could help bring more nutritious food to many millions of people worldwide.

ECB MAY HIKE INT RATE......................BE CAUTIOUS

Euro breaks above $1.30 for first time since April 2005...........Bullion follows Up direction

New Delhi, Nov 24 - The Forward Markets Commission [FMC] would look into alleged speculative actions, if any, in maize trading on exchanges in recent days, assured Finance Minister P Chidambaram here. FMC is the regulator for the commodities futures exchanges.
Chidambaram said the Cabinet did discuss existing price trend in commodities in its recent meet, but the issue [misconduct in maize trading] did not come up for special focus. If required, the FMC will conduct an enquiry, he added.
Chidambaram said though sugar and wheat price have come down marginally, but the satisfactory level has yet not arrived. Commenting on the soaring trend in pulses, Chidambaram said dwindling supplies have forced the rise