Investment Articles

According to the reports by the panel of expert analysts at the London Bullion Market Association, the prices on silver will not rise up to a remarkable extend as expected the same in April 2012. However, gold will display its flares in 2012 because of ongoing precious metals price prediction competition. As statistics from the competition on the prices, gold appears to touch elation unlike its counterpart the white metal.

From the analysts’ forecasts, it is clear that the average silver price in 2012 was US$33.98, but it shored up to a height of $44.49 that was a consecutive predication representing a substantial 39% increase. This is a blueprint of the current silver price, which is around $32. If you take both of the metals in combination, you will see that the gold: silver ratio may fall a little from the current 52 to around 46, which is rated above the low point achieved in 2011 as well above the so-called historic ratio of 16:1.

As six out of 25 participants in the competition assume that the prices on silver will exceed $ 48.70 at some stage in 2012 taking for grand 28th April last year’s silver price rise. Some analysts believe a maximum $50 increase for the white metal as the rounded off figure for silver at the current moment. With their last year prediction, they were unfortunately wrong with their $10 below guess. Hence, they feel that it is very difficult to predict fate of silver.

The survey participants’ doubts on silver’s performance occur as a result of agitation about the global economic recovery and the proportion of silver demand, which depends on industrial usage. Some bullish forecasters say that the increasing industrial demand in the mid of the year provide sufficient boost to silver prices. Hence, it offers an edge to its counterpart, gold as well a strong witness of silver’s performance where both metals move forward at the same time.

The white metal appears to be more volatile metal than its counterpart, gold whereas the variation is enormously notable because of high and low over the prices. According to the forecast of the analyst participants, the average silver price may fall down $20 whereas the average low price will stay at $24.06, which is huge difference representing a difference between high and low of around 85%. Because of volatile nature of silver, it is referred the Devil’s metal and a point to note down that it is hard to predict about its altering prices.

Kyles Humphrey is a veteran journalist in silver market, mining & stocks, who frequently writes articles related to silver prices, silver spot price including tips on investment in silver. Please visit silverprices.com for more details.

Should you hold Alternative Investments in your portfolio?

So you’ve decided to reduce your exposure to equities in order to avoid the price volatility that seems to be driven by the latest piece of political rhetoric about national debt or economic growth. You’re no longer seeing the value of your investments rise and fall by considerable margins on a daily basis, and you’re sitting on a nice pile of ’safe’ cash. But you probably also need to find a home for your capital where it will grow at least in line with inflation, hopefully generate some income, whilst sharing little correlation with the performance of equities, bonds and other traded financial instruments.

So now is the time you start to consider alternative investments. but where do you start? Do you buy fine wine, rare stamps, farmland, timber or any other of the plethora of emerging alternative investment asset classes currently being touted as the ‘perfect’ investment?

I suggest that the first place one should look should be to their requirements, really establish the end goals you wish to achieve, and the limits you have in terms of liquidity, asset allocation for your alternative investments (as a % your total portfolio) and risk. From there you can, with enough research, discover which asset class might be the right alternative investment for you.

Let’s look at a case study, and see if we can match the Investor to an alternative investment asset class that offer the performance e and characteristics he or she is searching for.

John has a total pension portfolio of £250,000, held in a flexible Self Invested pension Plan wrapper (SIPP). John chose to move his assets into a SIPP some time ago in order to take more control over decisions affecting his investments, rather than be reliant on a Financial Advisor who can only advise on a couple of asset classes – equities and bonds.

John pulled 50% of his portfolio into cash 12 months ago, with the remainder held in defensive stocks and bonds. He has decided to allocate 10% of his overall pension to non-financial, real-asset alternative investments. He does not need income, and he is prepared to hold an asset for up to 10 years, aiming to capture capital growth. John has self-certified as a Sophisticated Investor, but does not wants to invest in funds, he wants tangible assets.

Taking into account John’s position and requirements, it might be suggested that the following alternatives may be a good starting point for Johns research process:

Fine Wine
Land – Particularly productive agricultural land
Timber Properties
Collectibles

All of these assets display certain characteristics that John might find particularly appealing. Fine wine – when selected and managed by an expert – has been shown to deliver returns of up to 20 per cent per annum. The forward looking story looks good too, as increasing demand from Asia, particularly a growing wealthy class in China is demanding more fine wines that the world can currently produce, and they are prepared to pay increasingly large sums of money as wines get older and rarer as more of a particular year is consumed. This increase in demand for a finite asset is what drives capital growth, and a good wine investment manager might help John to pick and choose a suitable portfolio, or cellar’ of wine and also advise, perhaps on a discretionary basis, when to buy and sell to maximise profit and minimise risk. Also, the performance equities has absolutely no bearing on the investment performance of fine wines, allowing John to collect long-term capital appreciation.

Much the same thing can be said for collectible such as rare stamps, where again demand is driven by increasing rarity and increasing demand from wealthy overseas and domestic collectors and investors.

Agricultural land also benefits from increasing demand, as populations in developing economies grow and incomes rise, they demand more protein (meat), which requires many more resources to produce than their traditional grain-based diets. It takes about 3kg of grain to produce 1 kg of beef, so this adds considerable pressure to current agricultural productivity. At the same time we lose millions of hectares of arable land every year to urbanisation, degradation and climate change, so it is likely that farmland will continue to become more valuable over time, again giving John the long-term capital appreciation, as well as separation from financial markets that he requires. This would also generate income from farm rents, or perhaps even through a joint venture farming agreement that would allow John to share in the profits from harvesting.

Forestry investment may also offer John a potentials alternative. Essentially, purchasing a timber-producing property, through leasehold or freehold, and simply sitting back and watching the trees grow bigger and more valuable each year, a biological process that cannot be interrupted by an economic crisis. The actual price of timber also moves every year, having risen by an annual average of 6% for the past 100 years. This means John capture true growth in its truest sense. A huge number of institutional investors are investing in forestry, including pension funds, university endowments (Harvard and Yale to name but two) and hedge funds, all of which are investing in forestry for long-term capital growth. Again, the same principles of supply and demand hold true for forestry. We require more timber as the enormous populations of China and India enter into their most aggressive and resource-intensive phase of growth, requiring more timber for paper, biomass and construction, whilst at the same time natural forests are now protected, creating huge demand for sustainable sourced plantation timber.

In summary, there are a range of alternative investments for John to consider, and really the best thing for him to do would be to conduct his own research in to each subject, and speak to a range of Advisors with specific experience of each individual asset class and choose to work with a professional that can substitute a good track record of investment selection/management for the options he chooses. So, speak to a few fine wine brokers and measure their pitch against the knowledge gained from researching the asset class. Speak to a forestry investment advisor and agriculture investment advisor, and choose to work with someone that knows their sector, and has delivered success for Clients previously. Heck, why not ask to speak to any potential investment partner’s previous clients; I’m sure that any Advisor worth his salt would be proud to have a Client sing their praises.

David Garner is Partner at DGC Asset Management, an alternative investments boutique specialising in property transactions in the agriculture and renewable energy sectors.

Although crude oil is still vastly available in the earth’s crust, it is not an infinite resource. At some point it will eventually be exhausted. The demand for crude oil has increased by gigantic proportions. However, discoveries of new oil fields and investing in the oil industry has helped keep up with the increasing demand for oil. The crucial question is, how long will the oil resources last?

Advanced technology has made drilling oil more effective and efficient. With the aid of new methods it is possible to draw almost 65% of the oil as opposed to the old methods. Better infrastructure and more investments have also made the drilling of oil wells more effective. Currently most of the transportation is dependent on oil and many industries are born out of or lean on by products of petroleum. Although alternative sources of energy are now applied like solar and wind energy, it is still a long way to be completely independent of crude oil.

There has been much debate and predictions of the remaining resources of oil, over the last few years. A lot of factors need to be taken into consideration before oil resources can be declared scarce. Even oil wells proven depleted can be able to draw crude if technology advances. In such a scenario it is impossible to make the accurate observation of when the oil resources will be completely exhausted. Such a change can make predictions go utterly false. The statistics of countries reporting their proven reserves of oil also is not much assuring to rely on. While some countries are obliged by law to report honest statistics, others are influenced by political and economic conditions. So there is a strong possibility that these statistics do not paint the true picture.

Analysts, economists with a positive outlook believe that the search for alternative sources of energy will be given an impetus long before the world sees scarcity of oil. High oil prices will be the stimulus for spurring the development in renewable energy. When prices on oil are low there is very less reason to seek out alternative sources of crude oil. In fact as the oil price soars, alternatives sources of energy may prove more competitive. However, unconventional sources of energy will only be in demand when they can be exploited against high prices on petroleum. The alternative sources need to be at competitive prices than crude and to be economically feasible.

Kyles Humphrey is an accomplished journalist in oil related fields, who regularly writes articles related to oil prices & indexes and crude oil including tips on investment in oil. Please visit oil.com for more details.

Private investing is another option for people who want their money to grow over a period of time. A lot of the investment opportunities available in this area involve ideas for start-up companies that financial institutions are not willing to give a chance to. This is why private investors are also called Angel Investors because they help those budding entrepreneurs to realize their business goals. It’s quite risky considering that you are investing in a start-up company and that you would have to help develop it and sometimes take an active management role to ensure a good return on investment. Surely, this type of investment is not for the faint of heart, but it can really give you good returns if you choose the right company to help and invest in.

Advantages and Disadvantages of Private Investing

Private investing has its own pros and cons. The obvious disadvantage is the risk you should be willing to take when investing in a start-up company. Unlike investing in stocks of an established company or corporation, you will have to deal with the growing pains of building the business up from scratch and this may mean losing money in the process. This type of investment also requires you to play an active role in the business, so if you’re looking to sit back and wait for your money to grow like stock market investments, this may not be a good option for you. The advantage to private investing can outweigh the negative aspects if it’s done properly. As a private or angel investor, you are helping people who need someone to believe in their business plan and give them the financial support they need. As mentioned earlier, this is a hands-on investment option, which can be a good thing if you have business experience and you want more control of what the company does with your money. Since it’s your money that the company is using for its operations, your input is valuable during the decision making process and you can even take a more active management role if necessary.

As a private investor, the return on investment you get will depend on the decisions you make and how you handle your share of the business responsibilities. Investments like these can work for or against you depending on the choices that you make from selecting the right company to invest in to making sound business and financial decisions for the good of the company. Private investing may be a big risk, but it can be very rewarding if you know what you’re doing.

How to Generate Passive Income

Most people agree that the key to success is diligence. They are afraid to get behind the race. These proactive people have proven to become stable in their life. On the other hand, the lazy don’t have any problem simply because they don’t have anything as well. Both types of people have chosen to be so. It sounds fair, doesn’t it?

However, this equilibrium is the thing of the past. If this is our mindset, we will surely be surprised at the great fortune of those who have exerted less effort and at the frustration of those who have done their best. It doesn’t mean that life is unfair. In fact, we earn not only from what we do but also from what we don’t do. The former is known as active income; the latter, passive.

Active income is an income we generate from our hard work. When we work for money, it is active income. But, when it is our own money that works for us, it is passive income. Passive income is an income we generate from our investment. How to generate passive income without active intervention is not a kind of magic that everyone could have.

How to generate passive income? Passive income is generated when our investment earns because of our timely decision. In this type of income, we are paid for the decision we make and for the risk we take. When we become afraid of investing, we tend not to make any decision. Consequently, nothing happens to our money. To generate passive income, we should make the right decision on what and when to invest and not decide about not investing. We must also calculate the risk – the higher the risk, the higher the return. The lower the risk means the longer it takes to get the potential return. It depends on who we are and what investment fits our personality. Proactive people are naturally career oriented so they can successfully generate active income. On the other hand, patient people are wise decision makers and risk takers.

Now, the question is which type of earners we should be. Active earners have full control of how much they could earn, but there is limit in the amount as there is limit in their energy and time. When they stop, so does their income. However, passive earners are more efficient in the sense that they enjoy the unlimited potential of earning high with less energy. Moreover, passive earners can be both active and passive earners. Apparently, passive income is more advantageous.

It is not difficult to know how to generate passive income. There is a lot of available information around us that can help us learn to begin this with. We generally have heard about investing and among the popular are stock market, bonds, mutual funds, insurance, pension plans, and treasury notes. Before investing, it is important to study your choice investment. We don’t have to be the jack of all trades. What is important is that we understand the risk and the potential of the market we want to enter and start small just for a try. As time goes by, we will gain experience and will master the market we have chosen. In the advent of technology, it has become easier to get more information about any field of endeavor. The internet offers numerous tools we need to become equipped.

The most crucial part of how to generate passive income is our attitude toward investment. Some people think that investment is done in order to sustain our daily need and this is a wrong notion. If so, it is not any more investment. It is livelihood. Our immediate need can only be sustained by active income. To depend on investment for daily needs is irresponsible. We should work in order to live and we invest because we secure our tomorrow. Real investors are future oriented. They don’t exactly make money right away. But their money makes them. That is the reason why we call this condition passive. Everybody’s need today is different from our need in the future. Our immediate need is answered by our immediate action and immediate results make us grow. But passive income is not something that should make us grow. This is something that we should grow. So, whatever we earn now is what we need now. Active income is the reflection of we do now. The right attitude toward passive income is to treat it as a separate living entity. Active income is what we need now. And passive income is what our investment need now. It is like a pet that we should raise.

What about business? Is it a kind of active income or passive? Actually, it is the combination of both. A businessman actively controls his cash flows to sustain his daily needs and at the same time spare some bigger portion for his business as a separate entity. However, businesses are complex nowadays depending on their size. Large corporations are mostly owned by a number of people called stockholders. They hire managers and even CEO’s to actively control their operations. Sometimes, they intervene in a macro level. But their control and effort are limited compared to the significant income they get every year if their companies continuously grow.

For these people, these large companies are their source of passive income. For small businessmen, they must exert all their effort for their business. They have trouble making their businesses grow because they also depend on the active income they generate from operating their businesses. Would this mean that in order to generate passive income, we should have had large capital to invest? Not necessarily! We can do so by investing in shares of stocks even in smaller amount of money. This is also true with mutual funds that pool individual investments in small amount to make it one big investment. This means that we generate passive income like big investors.

In a nutshell, we need to learn how to generate passive income while maintaining our active income so as not to compromise the balance between these two types of benefits. How to generate passive income is to keep our active income.

Michael F. Anyayahan is a freelance forex trader and writer. To learn more, visit: http://www.forexuniverse.yolasite.com

In the current investing climate many investors are seeking out alternatives to traditional investment assets in an effort to boost poor returns and bolster the limp performance of their pension portfolios. While stocks and shares continue to display the kind of up-and-down volatility that would make a rollercoaster jealous, real-assets including fine wine, stamps, land and forestry have all continued to grow in values as rising global incomes combine with a growing global population to boost demand against a backdrop of limited supply.

Whenever supplies of an asset are limited and demand increases, we see the value increase as buyers compete for the best assets, so those investors in control of finite resources are likely to continue to capture capital growth regardless of the performance of the wider economy.

Whilst in is certainly true that some alternative investment assets rely on the existence of wealth for their end-use market; for example stamps and fine wine rely on the existence of wealthy buyers, it is also true that certain essential assets will enjoy a demand even if the global economy were to collapse tomorrow. These safe haven alternative investments include agricultural land, energy-generating assets, infrastructure and commodity driven properties such as forestry investments.

There is a limited global stock of land suitable for agricultural production and demand for food commodities and feedstock for animal feed and biofuels in growing exponentially as developing nations expend their populace and rising incomes lead to greater consumption of commodities. Indeed the giant populations of India and China are entering their most resource-intensive phase of growth, just like the west during the industrial revolution. The difference here is that the populations and resource requirements of these countries is much larger. This makes agricultural land a precious resource that is likely to become one of the most valuable assets on earth. Not only that, but goof quality farmland produces annual income from the production and sale of food commodities, so income streams also rise as food prices increase. It is worth noting that the amount of arable land per person on the plant has halved since only the 1960’s, going some way to explaining why so many institutional investors are holding more and more agriculture investments.

Renewable energy investments that produce income from solar, wind or agricultural crops are also seen as a potentially great alternative investment opportunity as they continue to generate revenue regardless of dividend performance in traditional investment markets. As long as the wind keeps blowing and the sun keeps shining, those in control of renewable energy investment assets will continue to earn up to 20 per cent per annul income yields based on current project establishment costs.

For the long-term investor, forestry investments continue to grow in any economic weather, because the majority of financial returns is actually driven by the biological growth of trees, not the performance of the economy. Whilst a relatively buoyant economy is essential in order for there to be demand for timber products, it is growth in emerging market economies what will drive future demand, and so investors who own a stake in a commercial forestry investment property close to emerging markets are likely to capture non-correlated growth and be able to create substantial revenues from the sale of essential commodities as trees turn into valuable timber stands.

In summary, alternative investments are popular because they generate returns not dependent on traditional markets, but investors should always be careful as these kinds of real-asset alternative investment all carry asset, location, sector and counterparty specific risks that many investor may not recognise or be able to screen for, so the use of an experienced consultant with a good track record of identifying successful alternative investment assets is essential in order to avoid undue risk and maximise upside potential.

David Garner is Partner at DGC Asset Management, an alternative investments boutique specialising in property transactions in the agriculture and renewable energy sectors.

Last year the stock market roller coaster had a lot of investors wary about investing in stocks. In a single day, investors lost hundreds of thousands of dollars. Quite a few IRA’s were completely wiped out and many took nose dives. While all this happened, comic investing flourished. Demand for certain issues rose in value, and certain golden and silver age comic books set record prices in 2011.

A CGC 9.6 Amazing Fantasy #15 (1st Appearance of Spider-Man) sold for $1,100,000 in March 2011, while a Fantastic Four #1 CGC 9.4 sold for $300,000 in 2011, beating its previous sales record of $210,000 in 2010.

There’s no doubt that long term comic investing can be quite profitable, and for those who are new to the idea, there’s one simple secret that can help you when it comes to investing in comics.

What is it?

It’s comic book movies. Yes, Hollywood has turned to the superhero genre for fresh content when it comes to movies. What’s better is these movies are extremely successful.

Learning about which movies are rumored or even coming out for a certain superhero is critical in choosing comic books to invest in. Researching and keeping up to date on the development of a certain comic-related movie is vital, because the hype pushes the demand and the value of the comic a lot quicker than it normally would.

A movie about Superman will spark interest and demand in his books. Pretty simple, huh? Not really.

Not just any comic will do. Sure, Captain America: The First Avenger did spark more interest in Captain America comics, and they sold quite well during the hype of the movie. However, we are talking about investing in comics that will rise in monetary value. Just because it’s a Captain America book doesn’t mean it will rise in value.

In this case, the values of only certain comic book issues are increased during a movie’s hype. Finding these key issues is just another important part of making wise comic book investment choices. You need to research what’s going on with these movies, and not just grab any thing off the shelf just because that character will come out with a movie.

So know you know one simple secret to help guide you to smarter investment comic choices. Now, it’s time to find out just which of these key issues you should be on the hunt for.

Discover the top comic books to invest in for 2012? Visit the link to read more articles about comic investing and which comic books will increase in value quickly and steadily for the next few years.

http://www.totalcomicmayhem.com

Whilst forestry investments are seen by many institutional and private investors as a potential safe haven from the volatility associated with traditional asset s like equities, at the same time there are a number of variables linked to the general economy that do have a significant bearing on the performance of the asset class.

For the most part, current market demand for timber in any given location is the biggest influence over timber prices. As with any commodity, when stocks of the product are high and demand is suppressed then prices fall as assets are sold off at knockdown prices to create revenue. Likewise, when supplies are limited and demand is high, then we see the opposite happen; commodity prices rise as buyers compete for the best quality and indeed quantity.

In fact, it is worth touching on the cyclical nature of any commodity market, but especially soft-commodities. If a poor global harvest causes a shortfall of wheat, then prices rise, as the price rises, farmers plant more of the crop the next year as the higher price makes it more profitable. So the next year you have a surplus of supply as more acres are sown to wheat and subsequently the prices fall. And there you have it! A beginner’s introduction to the basic rule of commodity price cycles.

So we have ascertained that demand affects prices, but what impact is that likely to have on the performance of forestry investments? Well the answer in short is not as much as one would expect. A number of credible academic studies have revealed that forestry investment returns are driven by the biological growth of the tree into valuable timber stands (605 of returns), whilst timber price appreciation accounts for just 6%, and besides, when prices are depressed, timber growers simply leave their trees to grow, getting bigger and offsetting and drop in timber prices, an action known as storing value on the stump.

One must also consider that demand for timber is regional, which effectively means that a forestry investment in one area might perform markedly better than a timber investment in another area, simply because demand for wood products in region A is much higher. I for one have always found it to be quite misleading to use global statistics to define the potential performance of a local property-based investment such as forestry. Let’s look at like this; housing starts in the USA are low because the economy is depressed so timber prices are low due to a low demand (fewer people and businesses are building or remodelling homes), whereas in China, India and Central America, demand is increasing daily as both countries enter into their most resource-intensive phase of growth, building houses, infrastructure and demand more biomass for energy production. It goes without saying then that a timber stand in Florida might be worth less today than a timber stand in Latin America where demand is much higher and the property is better positioned geographically to participate in the supply chain in the region.

In summary, a range of factors affect demand for wood products and therefore the potential performance of forestry investments, but these variable are not global but local, so one must look to the dynamics of the market most relevant to the location of a particular forestry investment if one is to plan and project effectively and accurately.

David Garner is Partner at DGC Asset Management, an alternative investments boutique specialising in property transactions in the agriculture and renewable energy sectors.

Investors are confused about the future of silver ETFs with lots of speculations going in the market. They presume that silver and silver ETFs will slug down as a result of ups and downs in the global market. It is clearly noticeable from the market estimations that silver and silver ETFs have declined in the last weeks. The alteration is on account of the gold bust and investors more concern to put money in flat currencies, which according to them is the safest form of exchange.

On 13th of January 2012, silver prices declined to $29.42 per ounce, which was assumed to decrease by 1.54% compared to a day before. Due to fluctuation in the market, silver ETFs such as the iShare Silver Trust slumped 1.67% as well as the Global X Silver Miners ETFs declined 1.52% on 13th of January 2012.

A number of analysts deem that the silver will relinquish this year after studying 2011 evaluations that depict dissimilarity in silver prices from record $50 per ounce ascend to drastic $20 per ounce descend. Because of prevailing situations, investors consider that silver will be more volatile in 2012.

Silver has a volatile nature, but it has always considered as a safe haven currency like its counterpart gold. Investing in silver is all the time advantageous in spite of the flat currencies like US Dollars, Euro Dollars and Japanese Yen, which are guaranteed by their respective governments. Because of a large number downgrades in metals by ratings agencies and a potential global crunch in Europe, investors have reduced investing in precious metals to save their networth.

As a result of ongoing scenario in the global market and increasing importance of the flat currencies, the precious metals are expected to become more volatile. The European Financial Crisis has duly affected the commodity market where Europe is the key ruler that knows about the future of the white metal. Despite all variations in the commodity market and downgrades by S&P in the past, many countries such as France, Italy and Austria have managed to increase enough money to fulfil their obligations. Euro as a flat currency will stay safe and intact, which will influence the precious metals. This will pave a new way where the white metal will undergo huge decline in 2012. Therefore, it is better for you to think twice before investing in silver ETFs as presuming the market situation will stay in such stage.

The writer is an accomplished journalist in silver market, mining & stocks, who periodically writes articles related to silver prices, silver spot price including tips on investment in silver. Please visit silverprices.com for more details.

The New Year began with a rally in Europe. Considering the damage Europe did to world markets last year, a rally there is certainly welcome. Unfortunately, turning the calendar page has little to do with turning the page on past conditions. Europe remains today the same as it was yesterday: a project under construction. We remain hopeful that Europe will get on with the project, but hope only takes us so far.

As we said in the last issue, Europe will be a chronic pain for the markets over the course of this year, but short of a breakup of the eurozone (not to be ruled out but highly unlikely), Europe will not determine market performance. What will determine performance in our view is the fortune of the U.S. economy.

In that regard, the year end has brought good news in the form of the extension of the payroll tax cut and extended unemployment benefits. Upon passage of the extension Wall Street raised its outlook for this year’s growth by about one percentage point. Speaking very broadly, the top Wall Street forecasters are now looking for 2.5% growth over the year. But this is not unanimous. IHS Global Insight, which has a top forecasting record, is looking for slower growth of about 1.5%.

The extension of the tax cut was only for two months. Wall Street is assuming that the extension will run for the full year, on the basis that Congress will be reluctant to refuse a tax cut it just supported. It’s a pretty safe assumption.

Our own view is on the side of the higher outlook. We are impressed by the American consumer’s behavior over the last quarter. We know that consumer incomes are not rising fast enough to allow the recent increases in spending to continue at the same rate. However, real consumer spending power is being bolstered by a source not contained in the official statistics-the decline in inflation.

We overlooked the effect of this decline in our year-end global outlook. This was brought home to us when Wall Street included the benign inflation forecast as one reason for a sunnier view of the consumer this year.

The economy went out with a bang last year. Estimates of last quarter’s growth run as high as 3.5%. As the views for this year show, no one expects to see a repeat this quarter. Neither do we. But if there are surprises, the early economy may be stronger than expected. We are singularly impressed with the turn in the housing data. In particular there was an unexpectedly large increase in pending home sales in November. As Moody’s Analytic’s Dismal Scientist commented, “…the index is at its highest since the expiration of the second homebuyer tax credit in April 2010.”

The earliest reports on December activity are also providing pleasant reading. The key manufacturing report (ISM) rose to its highest point since June. The index had been flat over the summer and fall and kicked into gear over the last two months. More significant for us, the new orders index, which had also disappointed over the summer and fall, climbed again and is now at a healthy level.

Do not expect the surprises to continue to occur at this rate or with this importance. But we do expect the positive tone to continue.

China

You may have noticed that in our general discussions of the outlook we always manage to bring China into the discussion. This is deliberate. China is a key player in the global outlook. Jim O’Neill, Goldman Sachs’ Chief Global Economist, headlined an article in The Financial Times two weeks ago, “Global growth in 2012 will hinge on China’s soft landing.”

This might strike you as something of an overstatement. Is China that important? According to O’Neill it is. As he writes, “The rest of the world is increasingly relying on China importing from it, and so helping those economies still suffering hangovers from 2008 to overcome them.”

Talking of China as an importer rather than exporter must make you wonder whether O’Neill has everything topsy-turvy. What he is talking about we assume is China as an importer from the developing world. China is a huge importer from countries such as Brazil (food) and Australia (iron ore) as well as from Africa. A Chinese soft landing means the developing world will continue to have a market for its exports. Otherwise, as O’Neill says, China “will add to the world’s woes.”

The news from China has been mixed. The latest has been encouraging. The Chinese equivalent to our manufacturing index rose in December, as did their nonmanufacturing index.

A successful soft landing for China will be a great boost for investing in emerging markets once again. We will be talking about solid 8% growth for China then and much better performance from the Asian markets.

While the opening days’ performance tells us nothing about the year, we are heartened to see something of a January Effect occurring. We’ll take it.

Walter S. Frank has been the Chief Economist and Chief Investment Officer for Moneyletter for the past 25 years. He has had a long and distinguished career as an economist, financial advisor, and money manager. Mr. Frank is a regular contributor to Barron’s and The Economist magazine.

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