News You Can Use for Friday

Story #1: We've been predicting this at Weiss for some time now ...

Dollar's Share of Currency Reserves Falls, IMF Says

The dollar's share of global foreign-exchange reserves fell to a record low in the third quarter as demand for U.S. assets waned after the subprime- mortgage market collapsed.

The U.S. currency accounted for 63.8 percent of reserves at the end of September, down from 65 percent at the end of June, the International Monetary Fund said today in Washington. The share of euros increased to 26.4 percent, from 25.5 percent.

The figures suggest central banks diversified out of the dollar as it fell to the lowest level in a decade. Investors sold a record amount of U.S. securities in August when defaults on subprime mortgages rippled through financial markets and the Federal Reserve signaled it would cut interest rates.

Also in the same article ...

Foreigners were net sellers of long-term U.S. financial assets in the third quarter, U.S. Treasury figures show. Monthly sales averaged $11.8 billion in the period, compared with average net purchases of $64 billion in the previous five years.

Read the whole thing.

Story #2: Sales of New Homes in U.S. Decline 9%, More Than Forecast, to 12-Year Low

Sales of new homes in the U.S. fell to a 12-year low in November, pointing to bigger declines in construction that will hobble economic growth throughout 2008.

Purchases dropped 9 percent to an annual pace of 647,000 and October sales were revised down to a 711,000 rate, the Commerce Department said today in Washington. Last month's sales were weaker than the lowest forecast in a Bloomberg survey.

The deepest housing recession in 16 years will worsen as discounts fail to lure buyers and mounting foreclosures swell the glut of unsold properties. Falling property values may cause consumer spending to cool, increasing the odds the expansion will falter in 2008.

Story #3: Gold Rises, Heads for Biggest Annual Gain Since 1979, as Dollar Declines Gold rose, heading for the biggest annual gain since 1979, as a decline in the dollar boosts demand for the precious metal as an alternative investment.

old has gained 31 percent this year as a weaker U.S. currency, record energy costs and continuing conflict in the Middle East sparked demand for the metal. Investment in the StreetTracks Gold Trust, an exchange-traded fund backed by bullion, has climbed to a record 628 metric tons.

``Gold currently has such a strong supporting cast in the dollar, energy prices and geopolitical tensions,'' said Matt Zeman, metals trader at LaSalle Futures Group in Chicago. ``One would be hard-pressed to find a reason for gold not to continue to rally at this point.''

Story #4: Chicago Soybeans Rise to 34-Year High as Crude Oil Advances; Corn Gains Soybean futures in Chicago rose to the highest in 34 years and corn reached an 11-year high as a jump in crude oil prices may increase demand for the crops to make biofuels at a time of reduced supplies.

Chicago soybean prices have gained 82 percent this year on reduced planting in the U.S. and rising demand for soybean meal, used as livestock feed, and soybean oil, used in cooking and increasingly as a feedstock for bio-diesel.

Corn has risen 17 percent this year on record demand to produce grain-based ethanol and to feed livestock and poultry. The contract for delivery in March traded 0.2 percent higher at $4.555 a bushel at 12:21 p.m. London time.

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