THE immediate retreat with which global stock markets greeted European Central Bank (ECB) president Mario Draghi's statement after the bank's two-day meeting on Thursday said it all. Markets had once again set themselves up for a fall. In that whole mess, I guess someone out there made themselves a healthy profit, but for the rest of the participants it was just another disappointing day.
It's been a week in which the world's leading central bankers faced considerable scrutiny to see if they could boost confidence in the global economy and the future of the euro. And in both cases they've left markets about as unsure as they were before the bankers' efforts.
In truth, there's not much more the central banks can do. Draghi's statement on Thursday covered all the bases. He sent a message that the central bank would do all that it took, including interventions in sovereign bond markets, to save the euro and kick-start the economy.
Draghi may not have offered the immediacy that the markets were counting on, but there was commitment, at least, which has been lacking over the duration of the European sovereign debt crisis.
The solution to the euro crisis will not and cannot be found by the ECB. Any possible future intervention can only buy time for the fiscal repair and structural reforms that need to be undertaken by European governments, which may come to be led once again by populists such as Silvio Berlusconi.
"The ECB cannot replace governments," Draghi said on Thursday.
The current wave of crisis is not over. There is still the risk, albeit receding, of a Greek exit. One positive development is that the ECB may be willing to buy the bonds of nations such as Spain, which has been cutting spending for some time, and to intervene when debt costs become unsustainable.
Markets can't hope for more, and neither will Germany allow it.
We have to hope that governments in the common monetary union can see through the necessary structural changes, while avoiding a deeper recession.
Manufacturing contracted in almost all 17 of the eurozone states last month, despite an interest rate cut and a weaker exchange rate. The core economies of Germany and France were the key drivers of the current weakness.
Commodity prices have weakened this year, due to the slowdown in Europe, US and China. Metals and other raw materials accounted for 45% of South Africa's exports last year.
GOLD is having its worst year since 2005, with the metal losing about 2,6% in value in the first couple of days this month. From its record high in September, the metal has fallen 16.5%. Locally listed miners are also under pressure, with the gold mining index down 15% this year.
What has become evident about gold since its record run last year is that it has lost the pivot of its 11-year bull run, its safe-haven status. US treasuries, German and Japanese bonds have removed that status.
The absence of that pivot has seen the metal now track risk sentiment on any given day, making it rather difficult to judge just where the metal will trade.
Investors who aren't devout followers of gold, are wondering if the loss of its safe-haven status is just a temporary blip or a much longer shift in how the metal is viewed.
Its faithful disciples are holding on, waiting for economic data that will trigger a sustained increase in the metal.
With uncertainty likely to persist around Europe and a fiscal cliff in the US, I think the loss of its safe-haven status is temporary.
DEPENDING on which cycle of the commodity market you are in, a resource company can look foolish for being diversified, or too concentrated in one particular commodity.
There was a time when Exxaro Resources was too dependent on the dividends from its 20% shareholding in Kumba Iron Ore's Sishen Iron Ore Company. At one stage about 70%-80% of its earnings came from the iron ore mine in the Northern Cape.
The company's coal and mineral sands business has since bulked up its presence in the portfolio, bringing down its iron ore dependency to about 50%.
So while iron ore and export coal prices have come under pressure because of the economic slowdown, the almost forgotten business in the stable of the miner led by Sipho Nkosi, mineral sands, stepped up to the plate in its first half. This is as good a time as any to have some diversity. Mind you, too much of it can also be cancerous, if one takes a look at Anglo American's earnings last week.
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