Business Brief for December 14, 2005

From Wikinews, the free news source you can write!
Jump to navigation Jump to search

Wednesday, December 14, 2005

These are short blurbs about current events in the business world.

A World Bank lead economist speaks on Bird Flu

In an online discussion Milan Brahmbhatt, World Bank lead economist for East Asia and the Pacific, answered a few questions about Bird Flu. Brahmbhatt said that the first thing to note is that "economic impacts can only be based on very broad assumptions." Brahmbhatt said that estimations of economic impacts are based on the SARS epidemic of 2003.

Brahmbhatt said "the most immediate economic impact might arise actually not from actual death or sickness, but from the efforts of people to actually avoid becoming infected, and this was at least the experience during SARS, when people tried to avoid infection by minimizing face-to-face interactions with other people, and this resulted in a very severe demand shock for services sectors."

Brahmbhatt indicated that since a pandemic flu would be a global disease that wouldn't end as quickly as SARS did that the severe demand shock for services would occur globally and last longer. "this could entail a loss of world GDP of four to five percent of world GDP, which, according to Oxford, would amount to the sort of staggering of figure of $1,500 to $2,000 billion." Brahmbhatt continued. Brahmbhatt said "One study for the US calculated that a mild epidemic similar to that which occurred in 1968 might lead to US losses with a present value of perhaps $100-200 billion in today’s dollars." Brahmbhatt said that the World Bank will continue to calculate the economic impact as more information about the disease becomes available.


Gold prices drop

Gold ingots.jpg

Japanese gold buyers took in profits causing gold prices to drop. Gold has risen 8% since the start of December. Gold rose to $540.90 a troy ounce on Monday, the highest level since January 1981. Gold has now dropped over $20 in late London trading. If gold stays above $500 for the remainder of the trading day it will mark the 10th successive day of trading above the mark. Gold has not traded above $500 for 10 days in a row since 1983.

Other precious metals were affected by gold's drop. Silver has dropped 8% from an 18 year high of $9.23 a troy ounce. Platinum has fallen $24 from a 26 year high of $1,015 an ounce. Palladium is down 9% to $269 an ounce.

Advisors are walking both sides of the Gold fence. "It has been a substantial rise in prices and the recent moves seem to be a case of profit taking before the end of the year," said, chief economist at Commonwealth Securities Craig James, "But the fundamental situation is still solid. We believe the price of gold is well supported at $475 an ounce."

Tobin Gorey of Commonwealth Bank of Australia said "Gold has had a good run and the Fed lifting rates by an expected quarter-percentage point wasn't going to reverse the selling trend we've seen in recent days."

"We're seeing a lot of book-squaring and portfolio readjustment away from gold as the end of the year approaches," Gorey continued.