The Long term credit

The long-term funding is a funding for a period of not less than seven years. The credit is generally used to finance the purchase or construction of property of significant value, for example, buildings or industrial buildings, large equipment whose useful life is more than seven years.  It is also the capital funding for businesses, but the amortization period exceeds seven years. So it's heavy capital.

 Thus, when a company or an individual looking for a competition to fund the construction of a road, a factory or a building, it is clear that the importance of investment capital is such that reimbursement may be considered in time similar to those of medium-term credit for the good reason that the tax depreciation of these investments may not be realized in the long term.  In fact, the newly built factory will bear fruit only after several years.  It leads inevitably to the concept of depreciation that occurs and determines the time of repayment.

 It is therefore imperative, like the medium term, to focus the profitability of the company and consider the elements on: the evolution of turnover in recent years and its prospects especially future, and the cash flow of past and future, net profit after tax also past and projected.
 
Unlike the medium term, the proportion of bank intervention that is 70% or less of the total project to incur the long term is limited to 50% maximum.  All the rest of the conditions and terms for this category of credit remains the same as the medium term.

 Finally, it is clear that the classification, whether it is long-term credit or the medium term credit is only according to their duration, which is, more than seven years and can reach 20 years and over, for the long term, and between two to seven years for the medium term. The fact remains that it is closely and directly from the purpose and its funded depreciation determines the time of repayment.

US debts and the Chinese pressure!!!

China one of the largest creditor of the United States recently urged Washington to take a precautionary measures to safe guard the investors. This was given after Standard and Poor, the debt rating agency of US gave the warning. On Monday Standard and Poor’s showed the negative views about the debt situation in US. Apart from budget deficits, the main reason was no clear policy to resolve the issue.

The US government has challenged the sensational negative announcement of Standard and Poor’s views, and said the agency had under estimated the government’s efficiency. The fact remains that this deterioration in the U.S. took effect on global trade, the Shanghai falling by 1.91% Tuesday.

 According to the US government, as on August 2010, China had a total of 868.4 billion dollars in U.S. Treasuries. Hence China fears that any explosion of US debt will further weaken the American dollar which will result in a de facto devaluation of Treasury bills held by China.

By posting a negative outlook, Standard & Poor's warning seems to Beijing on the inability of U.S. policy to contain the situation, context likely to impact significantly the value of Chinese investment in dollars or even encourage an overhaul of global financial system currently focused on the dollar.

Some analysts however said China appears to have little choice, its accumulation of foreign currency forcing it to invest more than $ 50 billion out of the territory each month. Indeed there are some more alternative markets of sufficient size as that of US market is there to accommodate the Chinese fund.

Gold extended its record-breaking rally

The gold reached the record of 1500 dollars an ounce, It has never been a similar rise in the financial markets. With this crisis and expressed fears about the U.S. deficit and debt in Europe, investors prefer to acquire more gold to slow the risks.

It is obvious that holding gold resources does not yield large monetary benefit, but may qualify its holder as a good asset. In times of financial instability, investors are constantly looking for safe way to invest. The gold is the best immediate alternative for them. Hence this is the reason for this recorded historic outbreak in gold rate.

Since most of the global market is unstable this trend may continue and hence more procurement by the investors will lead to more price rise. In our neighboring country China inflation was reached 5.4% as on March 2011and hence their banks are required to increase the reserve and hence there is no immediate down trend in the price of yellow metal. The current crisis and un rest in African and Middle East countries are another main reason for the price raise of the yellow metal.

In relative point of view; the prevailing price of Gold is not expensive compared with the price of 1980 considering the inflation in price in mind. Even the poor man’s gold also rose to certain extent and the metal traders highly praise this metal.


However, all metals are not aware of such enthusiasm from buyers. The platinum price has not changed while that of palladium was down 6%. Their courses have been affected by the earthquake and tsunami in Japan.

Saudi Arabia And The Present Oil Crisis

The impact of the current situation in Libya on oil prices offer some advantages to some of the OPEC countries. While oil prices soaring, driven in particular by fears of shortages, Saudi Arabia is trying to pull out of the game by offering his "help". Finally, Saudi Arabia is trying to utilize this opportunity to inflate its oil wealth to greater extent.

Last Sunday, the Saudi oil minister has said in his country, as a leading member of OPEC, Saudi Arabia is ready to meet any additional supply to full fill the international demand. More over Minister Al al Nuaimi told they have enough stock as reserve for the supply since the raise in demand of Asian countries are more. Moreover he said their offer would impact heavy on the oil markets. Saudi Arabia the world's biggest exporter had already lowered its production. It was 8.29 million barrels per day in March against 9.1 million barrels per day in February.

Most of the petroleum user countries urged the Organization of Petroleum Exporting countries to raise its production targets in an attempt to stop the current surge in oil prices. Here I wish to point out one thing, in late February, Tehran has called on member countries of OPEC, and in particular Saudi Arabia not to  unilaterally raise their crude production. Iranian Oil Minister Massoud Mir Kazemi, emphasized the OPEC members not to take hasty unilateral decisions in case of any shortage in Oil. And their argument is current production suffices to fill the gaps created by the Libyan internal crisis.

Gold hits another record

The gold price has again hit a record on Friday, getting closer every day just over a threshold of 1,480 dollars an ounce.

Main factors leading to this historical rise were; the worrying situation of some of the member countries of the European Union beset by serious difficulties with their internal debt and sustained rise in inflation.

The price of an ounce of gold has risen to its latest peak on Friday in the international market, by breaking the previous Monday record.

According to the Analysts the investors in Greece, Portugal remained concerned over the threat of default, a situation that encourages them to buy precious metals, which are the safe-haven assets.

 The debt restructuring in Greek, Ireland also raised the new concerns and hence the raise in the precious metals.

On Friday, ratings agency of France lowered the rating two notches in their country alone.

Another main reason for this rise is; the Investors are alarmed of the signs of runaway inflation. Many European countries afraid, that their local market gold price will be in raise compared with the expected price in China and India. The sovereign debt and the inflations of some of the countries are the main reason behind the rise.

Because of the market instability, threat of default in certain European countries and inflation kept the precious metal price on its present high. You have put eye on the market trend for few more days to predict the trend of the precious metal.