Continued safe-haven demand amid worries about the global economy and financial sector underpinned gold futures, although the market remained within its recent trading range. Spot gold was last quoted at $858.95. Comex gold futures strengthened $8.70 (1.02%) to $858.80. Spot silver was last quoted at $11.41.
West Texas Intermediate was last quoted at US$42.27 per barrel.

Base metals continued to slide Thursday, as worse-than-expected US housing and jobs data weakened sentiment on demand for industrial metals.

Base metals on the LME finished mixed. Aluminium fell $8 (0.60%) to $1,335 while copper weakened $145 (4.46%) to $3,105 and nickel rose $125 (1.15%) to $10,975. Zinc dropped $20 (1.74%) to $1,130 and lead shed $18 (1.64%) to $1,053. Comex copper was last quoted at 138.10 US cents per pound.

US Stocks Retreat as Banking System Remains Under Fire
US stocks traded lower late Thursday as an afternoon bounce collapsed under the weight of more dire concern about the banking system and its impact on the overall economy.

Setting the tone in a volatile trading session continued to be the banking sector as insurers and regional banks were hit hard by concerns about their profits, while larger Wall Street bellwethers suffered from continued speculation there might be even more government oversight and directives from the incoming Obama administration.

The Dow Jones Industrial Average weakened 105.3 points (1.28%) to 8,122.8 as a morning release of job cuts and lower second-quarter earnings from bellwether Microsoft continued to weigh on the index. Read more »

Bank of America Worries Loom

US stocks popped into the green Thursday afternoon as traders used the psychologically significant level of 8,000 for the Dow Jones Industrial Average as an entry point, though investors still fretted about Bank of America’s capital needs.

The Dow Jones Industrial Average climbed 12.4 points (0.15%) to 8,212.5.

Shares of BofA were down by 18% at $8.38, off their low at $7.35 after a report that the largest US bank by assets could require government assistance to absorb losses from its Merrill Lynch acquisition. Shares of the bank pared their losses after a report that the US might guarantee $100bn to $200bn for BofA. Citigroup, which rushed into the sale of a controlling stake in its brokerage recently to raise capital, was off 19%.

The Dow hit its low for the session around 12:40 EST, off more than 200 points at 7,995, with the move marking its first intraday trek below 8,000 since Nov. 21. The Dow recorded its low of the current bear market on Nov. 20, when it closed at 7,552.

The Standard and Poor’s S&P500 increased 1.1 points (0.13%) to 843.7.

The financial sector remained the fulcrum of a volatile market, leading moves up and down.

From an earnings standpoint, JPMorgan shed 17 cents to $25.74 after posting a profit of 7 cents a share for the fourth quarter. Earnings fell 76% from a year ago and Chief Executive Jamie Dimon said loan demand “is dropping rather dramatically.”

Many veteran traders and analysts believe the market is likely to test its lows in the coming weeks, though there is some disagreement over whether the old lows will hold, considering the continuing flurry of fourth-quarter profit reports that are likely to contain more nasty surprises.

The Nasdaq rose 22.2 points (1.49%) to 1,511.8 though it was hurt by a 3% drop in Apple on worry about the health of CEO Steve Jobs. He had said late Wednesday he would take a medical leave from the company.

Commodity prices fell, hurting the energy and industrial sectors. As demand in economies worldwide seems to weaken with each data point, markets are pricing in a “deflationary” phase, where the prices of all assets decline, reducing incentive for investment and trade.

For Australian ADRs listed on the NYSE, BHP Billiton firmed $1.23 (3.19%) to US$39.78, Rio Tinto Plc added $3.42 (4.12%) to US$86.42, ResMed advanced 26 cents (0.68%) to US$38.36, Telstra Corporation improved 20 cents (1.67%) to US$12.20, Telecom Corporation of NZ dropped 18 cents (2.74%) to US$6.38 and Westpac climbed 14 cents (0.26%) to US$53.95.

In economic news, US producer prices fell last year for the first time since 2001, while the number of idled workers filing new claims for jobless benefits in the last week resumed an upward trend. One piece of news not as bad as feared, Read more »

From the New York Times entitled “Buy America. I Am”, here are the oracle’s wise words in full!

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Just to give an idea of what has happened, here are the falls over the past 15 days.

The DOW is down 25% in 15 days

The SP500 is down 28% in 16 days

The NASDAQ is down 29.5% in 15 days

In Australian, The XJO (ASX200) is down 20.6% in 15 days

“The world is at severe risk of a global systemic financial meltdown and a severe global depression,” warned Nouriel Roubini, a New York University economist known as “Dr Doom” for his foresight in predicting the crisis.

“The US and advanced economies’ financial systems are now headed towards a near-term systemic financial meltdown as day after day stock markets are in free fall, money markets have shut down while their spreads are skyrocketing, and credit spreads are surging through the roof,” he wrote in his newsletter.
Not the sort of stuff which instills confidence is it?

The DOW falls below 9000 for the first time in 5 years! Where to next … that is a trillion dollar question on everyone mind I’m sure! Frankly we’re seeing the capitalist towers falling down, not slowly rotting away unchecked like over the last decade. Funny that, as a capitalist system cannot work without CAPITALs, and this is the dilema Wall Street found itself in.

• Dow Jones 8579 -679 -7.33%
• S&P 500 910 -75 -7.62%
• NASDAQ 1645 -95 -5.47%

The Dow Jones Industrial Average lost almost 679 points, for its the worst seven-session performance since the one that ended Oct. 26, 1987.

For Thursday’s session, the Dow Jones Industrial Average slid 678.91 points (7.33%) to 8,579.19, its lowest close in more than five years and comparable to the 777-point decline of Sept. 29, the biggest point-decline of its history.

Trade was volatile again, with the Dow up more than 150 points at one stage.The Standard & Poor’s 500 fell 75.02 points (7.62%) to 909.92. Both the S&P 500 and the Dow are off by more than 20% for October, comparable to the stock-market declines of October 1929 and October 1987.

The Nasdaq Composite shed 95.21 points (5.47%) to 1,645.12.

Fear indicators, such as the Chicago Board Options Exchange volatility index, hit all-time highs. The VIX is known as the market’s “fear gauge” because traders pay up for protection when nerves are jangled.

These falls came on the one-year anniversary of the highs of the Dow and the S&P 500. The Dow has lost 5,585 points, or 39.4%, since closing at 14,198 on Oct. 9, 2007. The S&P 500, meanwhile, is off 655 points, or 41.9%, since recording its high of 1,565.15.

In so far, the market had surpassed all previous falls bar the 1929 stock market crash.

Back then the DOW total lost was 77.9% which started on Oct 24th 1929 and ended on Aug 12th 1932. That was almost 3 years of pains and America had to endure a decade of depression. How will America, and in fact the world fair this time around? If we take 1929 crash as a point of reference then there are still be more of the same to come just yet! Braise yourself for the ride! We are not even half way through October yet.

It sure is measuring up to the past crashes in pass century and given all the massive negative press and reporting that the sky is about to fall. This crash will go down in history as hugely monstreous!

Not even a coordinated barrage of rate cuts could prevent the stock market crash of October 2008 measuring up to those of October 1987 and 1929.
US stocks slid late in the session Wednesday, weighed down by continued tightness in credit markets, the need for capital at financial firms like Bank of America and a disappointing kickoff to the earnings season from Alcoa.
The Dow Jones Industrial Average fell 189.01 points (2%) to 9,258.10, its sixth straight decline and its lowest close since Aug. 11, 2003, more than five years ago.
For the week so far, the Dow is down 10%, on top of a 7.3% loss last week. By comparison, in the worst week of the 1929 crash, the week ended Oct. 19 that year, the Dow took a loss of 8.2%; the blue-chip index lost 13% on the week that started with Black Monday, Oct. 19, 1987. So far in October, the Dow is off 15%, compared with a loss of 20% in October 1929 and a loss of 23% in October 1987.
The broad Standard & Poor’s 500 fell 11.29 (1.13%) to 984.94, its lowest finish since Aug. 13, 2003. As of Tuesday, the S&P 500 had wiped out about $1.48tr in wealth during October, according to S&P.The technology-heavy Nasdaq Composite fell 14.55 (0.83%) to 1,740.33, also its lowest since August 2003.

Don’t believe in everything you read in the press. This perhaps could turn out to be an opportunity of a life time for many people (and not the mass). Take a look at all this from a different perspective. A “blessing in disguise” is the phrase I’d be inspired to in time of extreme crisis. If anything, at least we still have time on our side. Well, most of us anyway, and certainly I.

Let me now spell out how the new paradigm differs from the old one……. Instead of being always right, financial markets are always wrong. They have the ability, however, both to correct themselves and occasionally to make their mistakes come true…….George Soros: The New Paradigm For Financial Markets

In New York, the Dow Jones Industrial Average lost 35 points to 11,807.43 points on thin trading due to anxiety around the Federal Reserve’s interest rate meeting tonight. Inflation concerns underscore the Fed’s decision with recent oil price records adding pressure. General concerns about the economy abound and a report showed that consumer confidence was at a 16-year low. Financial stocks rallied on speculation that HSBC will takeover UBS. UBS shares gained 7% and Lehman Brothers gained 6.8% with the US Financials Index (XLE) gaining 1.2%.