Credit-Card Consumer Protection Law May Reduce Purchasing Power

By Alexis Leondis

May 22 (Bloomberg) -- Jack Krupansky declared bankruptcy three and a half years ago. Now he worries the credit-card legislation Congress passed this week will make his banks, including Barclays Plc, penalize him as a riskier borrower.

“This legislation could boomerang and hurt the same people it’s designed to help during the credit crunch,” said Krupansky, 55, a freelance software developer in New York.

The “bill of rights” that U.S. President Barack Obama signed today is intended to protect cardholders from excessive fees and last-minute contract changes. It also may prompt banks to slash available credit by as much as $90 billion to avoid risk, said Robert Hammer, chief executive officer of R.K. Hammer Investment Bankers, an adviser to card companies.

That reduction could choke off a consumer-led recovery and hurt retailers struggling amid the longest recession since the 1930s, said Andrew Caplin, an economics professor at New York University. Consumer spending accounts for 70 percent of the U.S. economy.

“The bill may stop various forms of abuse, but it will also stop some various forms of credit,” Caplin said. “If the economic recovery is going to rely on consumer spending, it will be a long wait.”

In 2007, purchase volume on all U.S. consumer and commercial credit cards equaled $2.11 trillion, up 8.4 percent from 2006, according to the Nilson Report, the Carpinteria, California-based newsletter.

Cardholders Spend More

“When people walk into stores with credit cards instead of cash, 90 percent of them spend more,” Britt Beemer, founder of America’s Research Group, said in an interview. “Apparel, which is in the dumpster already, is going to be hurt the most. Nonessential, big-ticket items like TVs and electronics could certainly be impacted a lot.”

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Gold Climbs in New York as Dollar Pares Gains; Silver Advances

May 27 (Bloomberg) -- Gold prices rose in New York, reversing an earlier loss, on increased demand for the metal as a store of value while the dollar pared gains. Silver advanced.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, climbed 1.9 percent to 1,118.76 metric tons as of May 22, the first gain in seven sessions, the company’s Web site shows. Gold assets held by Zuercher Kantonalbank’s exchange-traded fund jumped to a record 4.603 million ounces last week, the bank said today.

“Investors took advantage of intraday weakness by adding to their long positions,” Tom Pawlicki, an analyst at MF Global in Chicago, said by e-mail.

Gold futures for August delivery rose $4.50, or 0.5 percent, to $959.60 at 12:21 p.m. on the New York Mercantile Exchange’s Comex division. The metal fell as much as 0.7 percent earlier today. Futures for June delivery, the most-active contract until today, climbed $4.30, or 0.5 percent, to $957.60 an ounce on the Comex.

Bullion for immediate delivery in London climbed 0.6 percent, to $957.95 an ounce. The metal rose to $949.50 an ounce in London’s morning “fixing,” used by some mining companies to sell their output, from $945 in yesterday’s afternoon fixing.
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Perez-Santalla: Gold To Fall $200/Ounce !!!

Mike Norman and Perez-Santalla give another perspective on gold claiming that it will fall by $200 an ounce
Santella says : " So in the short term, I could see gold in December coming down to around $700, and at that level the jewelry market will pick up again, so it will buoy it and hold it up between 700 and 800. In the longer term, it should come off, or if there’s inflation, maybe it will hold up around there. Those are harder things to see of course, so I’m just guessing.
as to the three industrial precious metals, which are silver, platinum and palladium. Silver consumption has been brisk and remains brisk, and part of that, I believe, is the jewelry sector, which is that people have turned to silver to buy jewelry. So there’s a lot of jewelry sales in silver, so silver remains brisk at these levels … even right now it’s trading above $13. It can remain there for a while, though I think silver will also trade down because it follows gold a lot of times, as there is also a percentage of people that buy for investment purposes.

Platinum and palladium are being held up by investment money at the moment, but their primary demand is industrial. Once people realize they’re not going to get any earnings if the metals stay stagnant in the price level, they will abandon it, and so I think platinum and palladium can still come off a bit." he added