Thursday, November 26, 2009

News alert - fear of debt default by Dubai

On Monday, China stock market fell 3% because of fear of inadequate capitalization of major banks. Now it is fear of a debt default by Dubai.

There will be a flight to safety. But the challenge whether the market is going to move to dollar or to gold for safety or to both. I bet gold will ultimately win as market and central bankers realized it is a better refuge for a debt collapse in the market.

Looks like this morning action, gold is decoupling from the dollar. The dollar went up and gold went up too. The highest was 1195. This is a very important test of any potential change in the price of gold. If it holds, it could really go parabolic as shorts will be forced to cover the next few days.

Also, watch companies with high debt. They had a great time since March as most of these companies are able to raise funds through issuing capital. Among these are companies like CAL, SPG, MGM, GE ( yes GE!) etc where mounting debts could cripple the companies anytime.
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About Me

An engineer by training graduated with B.Sc (hons) and MBA from Strathclyde university in Glasgow, Scotland. Started as an engineer in R&D for 3 years with Philips. Then, worked with DuPont for 13 years. Last job was VP, Marketing for Asia Pacific. Left to start a number of companies in various segments which include a large electronic distribution, a VoIP provider, an internet trading portal in Australia,and an executive training consultancy firm. Have listed companies in NYSE, Australia Stock Exchange, Singapore Stock Exchange Main Board. I was on the Board of Directors for 1 company listed in Thailand, 1 in Singapore and 1 in Australia. Was in the senior management of a company listed in NYSE. Still holding major share positions in the VoIP and Executive training companies. Both are private companies.

Disclaimer

These articles merely reflect the opinions of this author and are by no means a guarantee of future economic conditions, market or stock performance. Though the author strives to provide accurate and relevant data, he sometimes relies on external sources and cannot assure the reader of the accuracy of these external sources. Additionally, these articles are provided for INFORMATIONAL PURPOSES ONLY and are NOT MEANT to provide investment advice to anyone. For investment advice, please consult your professional adviser.