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U.S. Auto Makers Driven towards Bankruptcy

Companies / US Auto's Nov 19, 2008 - 10:21 AM GMT

By: Mark_OByrne

Companies As auto manufacturers across the globe go to their respective governments, carrying empty fuel tanks hoping for a bail out, the shine has definitely dulled on platinum and palladium.  Tumbling car sales in North America and Europe have contributed to a dramatic shift in investor sentiment towards these metals, which play a vital role in diesel and petrol catalysts in reducing emissions. Johnson Matthey said it expected demand from carmakers in North America for platinum to dip by 36% this year and palladium by 20%. This news coincides with Republican Senators in the US attacking carmaker's pleas for another $25bn bail out on top of the $25bn already in place for the big three US manufacturers.


Senators argued that they should consider bankruptcy protection instead. Their European counterparts have approached Brussels for a €40bn bail out from the European Investment Bank (EIB.) The EIB are planning to produce a proposal before  a 2nd December meeting of European finance ministers, which could prove pivotal. Platinum is currently trading at $829 down from $2290 in March. Palladium is trading at $212 from a high of $540, also in March. Given the economic turmoil and supply cutbacks that are inevitable as a consequence in the Platinum and Palladium markets, pricing is difficult but  a return of risk appetite could see the metals rise to $1400 and $300 respectively over the next 6 months.

Barclays Board Chastened

A partial retreat by Barclays over their plans to raise £7bn in capital from Middle Eastern investors failed to dampen shareholder anger. The bank had planned to issue £500m of securities to Qatar Holding and Sheikh Mansour Bin Zayed Al Nahyan, a member of the Abu Dhabi royal family, but was forced into a limited retreat after leading investors, including Legal and General and Aviva threatened to vote against the capital raising at next week's shareholder meeting.

However, the limited action has failed to assuage investors furious that the capital raising ignored the pre-emption rights that were designed to protect their investments from dilution and would leave the Middle Eastern investors with nearly a third of the bank. More good news followed when Alistair Darling, the British Chancellor, issued a warning to shareholders in banks that they should not expect favourable treatment if they tried to change their bail out terms.

$40 for a Barrel of Oil

Fu Chengyu, the head of China National Offshore Oil Corporation said that oil companies expect oil prices to fall due to decreasing demand and will cancel most planned investment projects. A meeting in Beijing predicted that oil could fall to $40 a barrel.

Precious Metals


Gold is currently $735.60 (11.45GMT) down from a close in New York of $740. Silver is $9.48; Platinum $829 and Palladium $212.

 

By Mark O'Byrne, Executive Director

Gold Investments
63 Fitzwilliam Square
Dublin 2
Ireland
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Gold and Silver Investments Limited
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London,
EC3V 3ND
United Kingdom
Ph +44 (0) 207 0604653
Fax +44 (0) 207 8770708
Email info@www.goldassets.co.uk
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Gold and Silver Investments Ltd. have been awarded the MoneyMate and Investor Magazine Financial Analyst of 2006.

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Gold and Silver Investments Limited hope to inform our clientele of important financial and economic developments and thus help our clientele and prospective clientele understand our rapidly changing global economy and the implications for their livelihoods and wealth.
We focus on the medium and long term global macroeconomic trends and how they pertain to the precious metal markets and our clienteles savings, investments and livelihoods. We emphasise prudence, safety and security as they are of paramount importance in the preservation of wealth.

Financial Regulation: Gold & Silver Investments Limited trading as Gold Investments is regulated by the Financial Regulator as a multi-agency intermediary. Our Financial Regulator Reference Number is 39656. Gold Investments is registered in the Companies Registration Office under Company number 377252 . Registered for VAT under number 6397252A . Codes of Conduct are imposed by the Financial Regulator and can be accessed at www.financialregulator.ie or from the Financial Regulator at PO Box 9138, College Green, Dublin 2, Ireland. Property, Commodities and Precious Metals are not regulated by the Financial Regulator

Disclaimer: The information in this document has been obtained from sources, which we believe to be reliable. We cannot guarantee its accuracy or completeness. It does not constitute a solicitation for the purchase or sale of any investment. Any person acting on the information contained in this document does so at their own risk. Recommendations in this document may not be suitable for all investors. Individual circumstances should be considered before a decision to invest is taken. Investors should note the following: The value of investments may fall or rise against investors' interests. Income levels from investments may fluctuate. Changes in exchange rates may have an adverse effect on the value of, or income from, investments denominated in foreign currencies. Past experience is not necessarily a guide to future performance.

All the opinions expressed herein are solely those of Gold & Silver Investments Limited and not those of the Perth Mint. They do not reflect the views of the Perth Mint and the Perth Mint accepts no legal liability or responsibility for any claims made or opinions expressed herein.

Mark O'Byrne Archive

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