Gold was at $941.75 per ounce at 1256 GMT, up from $938.05 quoted late in New York on Friday. The precious metal earlier hit an intra-day high at $942.50 but is some way off a two week high of $948.20 hit last Friday.

A cautious approach to risk kept global stock market gains in check, while crude held under $70 per barrel following a bearish report on demand from the IEA, sapping gold’s appeal as a hedge against oil-induced inflation.

Analysts said the precious metal was holding onto gains but lacking upward momentum as currency markets would be indecisive until U.S. non-farm payroll data was released on Thursday.

“The dollar is going to be critical, and as long as it continues to weaken that tends to mean that gold will slowly grind higher,” said Dan Smith, an analyst at Standard Bank.

“We’re looking at more risk averse behaviour in coming weeks, which we think will push gold higher,” he added.

DOLLAR STEADIES

The dollar slipped after data from the Chicago Federal Reserve showed U.S. economic activity remained extremely weak in May, consistent with a continuing recession.

The currency was under pressure last week following Chinese calls for a super-sovereign global reserve currency.

But the case for a dollar alternative was undermined on Monday when the central bank governor of the United Arab Emirates told Reuters that the prospect was difficult to contemplate and plans to replace the dollar would not succeed.

U.S. gold futures for August delivery strengthened to $941.90 per ounce, up 0.7 percent on the day.

Analysts also said the precious metal could be due for a slight correction following last week’s rally.

“The price of crude oil is still below $70 per barrel, and that (crude) has been a key driver of inflation fears and also the gold price,” said Jesper Dannesboe, an analyst at Societe Generale.

“We had the correction from $1,000 down to around $910, and then another correction upwards. Now I think we’re heading down again,” he added.

Reflecting concern that gold may have lost some of its appeal to investors, the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , said its holdings remained at 1,125.74 tonnes as of June 26, when it fell 0.5 percent.

It is currently down 0.7 percent from a record volume of 1,134.03 tonnes, marked on June 1.

Further undermining physical demand, ETF Securities said the amount of gold it holds to back its Gold Bullion Securities exchange-traded commodity fund had declined 567 ounces on June 26.

Noncommercial net long U.S. gold futures positions fell 5.3 percent to 166,294 lots in the week to June 23 from 175,543 lots, a weekly report by the U.S. Commodity Futures Trading Commission showed.

In other precious metals markets, spot silver eased to $13.96 quoted late in New York on Friday, while platinumdropped to $1,185.50 and palladium rose slightly to $245.50.

LONDON, June 29 (Reuters)

• In its latest global outlook, the International Monetary Fund (IMF) slashed the growth forecast for every major country and urged more recovery actions. The IMF said the global economy will likely contract 1.3% this year and post a 1.9% gain next year, Reuters reported.

• Mercatto Estrategia FI, a Brazilian hedge fund that is beating 97% of its peers, is selling assets of the country’s largest homebuilders and banks, saying they are overvalued, Bloomberg reported. “Since we’ve lived through a liquidity crisis, it shook up the economy a lot and there have been huge declines in healthy names,” Regis Abreu, the head of equity at Mercatto, told Bloomberg.

• Prices of U.S. single-family houses rose a seasonally adjusted 0.7% in February, the Federal Housing Financing Agency (FHFA) said. The FHFA’s index is calculated by purchase prices of houses financed with mortgages sold or guaranteed by Fannie Mae (FNM) and Freddie Mac (FRE), Reuters reported.

• Home prices in Dubai could sink as much as 70% from their peak values late last year on sour demand and a halt in mortgage lending, UBS AG (UBS) said in a report. “We are still in relatively early stages of the property down-cycle in United Arab Emirates,” Saud Masud, a Dubai-based analyst at the Swiss bank, wrote in a report to clients, Bloomberg reported. “We believe risk-reward profiles are not yet compelling for investors to consider market re-entry, hence continued price declines are expected.”

• Apple Inc. (AAPL) reported second-quarter profit and sales that exceeded analysts’ estimates. Apple’s iPhones and new iPod models helped spur sales of $8.16 billion that yielded net income that amounted to $1.21 billion, or $1.33 a share, in the period which ended March 28 Apple said today in a statement. Analysts predicted profit of $1.08 a share and sales of $7.95 billion, according to a Bloomberg survey.

• Agents with the Pentagon’s Defense Criminal Investigative Service searched the Malvern, PA offices of a unit of Germany’s Siemens AG (ADR:SI) on Wednesday.  The search was part of an ongoing investigation, a Pentagon spokesman said.  Ed Bradley, special agent in charge, said the search began early on Wednesday and continued throughout the day, but he gave no details on the nature of the investigation, according to Reuters.
• David Kellermann, the acting Chief Financial Officer at Freddie Mac (FRE), was found dead early Wednesday in the basement of his home in a Washington suburb, police said. Early reports from sources in the police department indicated Kellermann’s wife reported a suicide. There were no signs of foul play, and the death is under investigation, Fairfax County, Virginia, Police Officer Shelley Broderick told Bloomberg. The medical examiner’s office said it’s conducting an autopsy.

• In a sign that efforts to overhaul its main auction and fixed-price retail site may be working, EBay Inc. (EBAY) reported sales and profit that beat analysts’ estimates, Bloomberg reported. The most-visited U.S. e-commerce site said net income was $357.1 million, or 28 cents a share, compared with $459.7 million, or 34 cents, a year earlier.  Excluding some items, earnings were 39 cents a share, beating the 34-cent estimate by analysts.

Source: Global Investment News Briefs Thursday April 23, 2009

Oil rose above $36 a barrel on Friday after the United Arab Emirates joined leading exporter Saudi Arabia in deepening supply curbs in line with OPEC’s biggest ever output cut announced last week.

U.S. crude gained $1.01 to $36.36 a barrel by 1219 GMT, off a session high of $36.90.

London Brent rose 94 cents to $37.55.

“The only positive news (for the market)… came from the UAE,” Olivier Jakob of Petromatrix wrote in a report. “For now at least, Saudi Arabia and the UAE seem to be fully complying with the cuts.”

Abu Dhabi National Oil Co (ADNOC), the main producer in the UAE, the world’s fifth-largest oil exporter, said it would cut supplies of February Murban and Upper Zakum allocations by 15 percent and Lower Zakum and Umm Shaif by 10 percent each.

A source with an Asian refiner said the ADNOC cuts were more than expected.

“ADNOC had already allocated January volumes, but they reversed the decision, so that messes up our schedule,” the source said. “For February, the reduction volumes are very large, so we may need to adjust our ship loadings.”

The allocations follow a decision last week by the Organization of the Petroleum Exporting Countries to reduce supplies by 2.2 million barrels per day.

Saudi Arabia informed its customers even before the OPEC meeting they would be receiving less oil.

The OPEC reduction is its deepest ever as the producer group battles a market slump that has sliced around $110 off the price since a July peak above $147 a barrel.

Oil markets were closed on Thursday to mark Christmas Day.

On Wednesday, U.S. crude had settled more than $3 lower after U.S. inventory data showed a fall in crude stocks, but rises in inventories of refined products and another slowdown in fuel demand.

Negative economic data, including news jobless claims in the United States, the world’s biggest oil burner, had risen to a 26-year high and that consumers had cut spending for the fifth consecutive month in November, deepened the bearishness.

Asian economies, once seen as a guarantee of high oil demand even if the United States faltered, have not escaped.

Japan’s deepening recession is expected to cut oil demand in the world’s third-biggest oil consumer after the United States and China, by almost 5 percent in the year starting April.

Consumption was also seen sliding by 5.7 percent in the fiscal year ending next March, the Institute of Energy Economics, Japan, said this week.

Barbara Lewis, LONDON, Dec 26 (Reuters)

Frontier Life

When the stock market turns ugly, the quest for “non-correlated assets” intensifies. A non-correlated asset is fancy Wall Street talk for something that doesn’t move lock-step with the overall market. When the market falls, a non-correlated asset might actually rise, or at least hold its own better than the market.

Gold is a classic example. Its price tends to rise during times of stock market distress. But very few investments can rival gold’s long history of non-correlation. Imposters abound. The imposters might move independently of the overall market for months or years at a time, thereby creating the impression that they are non-correlated. But when the markets really turn nasty, investors often learn that their “non-correlated” asset tumbles just as sharply as an S&P 500 Index fund.

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However, some investors think they’ve found a reliable new non-correlated asset: “frontier markets.” Merrill Lynch recently created an index not only to track them, but for investors to buy and sell them.

Frontier markets include Pakistan, Kuwait, the United Arab Emirates (UAE) and other markets throughout Africa and the Middle East. They also include Vietnam, Kazakhstan, Cyprus and others. They are individually too small for institutions to invest in, but cobble them together in a new index that allows you to buy and sell the basket and… well, then you have something.

Merrill Lynch’s new Frontier Index tracks the 50 largest companies in 17 frontier markets. Even so, the market value of all these companies combined is only about $330 billion – or about that of General Electric. Right now, the index heavily tilts toward the Middle East, with 50% of the index in the region. Asia is the second largest component, with 23%, followed by Europe at 14% and Africa at 13%.

As for industry groups, banks usually are among the biggest companies in any emerging market. So banks and financial service companies represent about 65% of the index. Oil and gas is the next largest sector, weighing in at 13%. As far as countries go, the top three are the UAE (23%), Kuwait (18%) and Pakistan (14%).

So far, these frontier markets have lived up to their advance billing of not following the broader markets. Since Sept. 30, for example, the frontier markets actually gained 31% while the broader market lost ground. Merrill Lynch backtested the index several years and found that between February 2000-December 2007, the index return’s correlation with the S&P 500 was only 32%. Basically, that means that about two-thirds of the time, the frontier markets zigged while the S&P 500 zagged.

I love the idea of frontier investing, because I’m an optimist when it comes to global trade and booming overseas markets. Maybe it’s my globe-trotting that’s skewed my view. But when I travel overseas, I see great opportunity. I see people building businesses. I see the impact of global market forces on local energy, food and resource markets. I see the world getting smaller.

I’m long-term bullish on markets such as the UAE, Kuwait, Vietnam and others. But I also realize that the ride in some of these markets will be absolutely gut-wrenching. Just look at Vietnam.

The Vietnamese economy is growing somewhere between 7-9% per year. It is a cheaper place to do business than many other parts of Asia. Hence, Vietnam continues to attract a strong flow of investment.

While I liked what I saw going on there, I found no direct investment ideas for us. The market is just too small and illiquid. Heck, before March 2002, the market traded only on alternate days. Moreover, as with most of these frontier markets, Vietnam suffers from poor disclosures and low transparency. When you invest here, you’re really not sure what you’re getting.

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I remember listening to Carlo Cannell, a very good investor at Cannell Capital, talk about his trip to Vietnam and his investments there. This was back in May 2007. The theme was investing in the dark. In Vietnam, he basically made many blind bets on lots of companies, figuring enough of them would work out.

But the market has tanked since then.

Perspective, though, is everything in markets. That chart looks nasty, with a near 50% drop from the high in less than a year. But as recently as July 2005, the index was only 250. You’d still have more than doubled your money in less than three years. In 2000, it was only 100. Investors are still up sixfold from 2000, which is a lot better than an investment in the S&P 500 Index. And that’s really the key to the whole frontier market idea. As an investor, what’s most important is what happens over the years.

I’m skeptical of the idea of frontier markets as an “non-correlated asset” for all seasons. Links between these small markets and their bigger brothers are probably stronger now than in the past. Vietnam, for example, depends heavily on foreign investment. Vietnam’s currency, the dong, is still linked with the dollar. So we have to be careful in taking the past and saying the future will work the same way.

And if you thought things couldn’t get any worse, the Financial Times reported on Monday that U.S. mortgage rates soared last week amid a sharp rise in Treasury market yields. Make no mistake, inflation’s back. A Volker-like response may seem alarmist, even far-fetched, to many. However, investors are bracing for the Federal Reserve to raise rates going forward.

At least those rate increases could help U.S. Treasury Secretary Paulson fulfill his recent promise to “defend the dollar.” Secretary Paulson is on the final day of a four-day trip to Saudi Arabia, Qatar and the United Arab Emirates to negotiate currency and economic issues (i.e., a supply increase) from members of the OPEC cartel.

Shall we say America’s relationship with OPEC is a bit strained? Perhaps we’ve stayed a bit too long and expected a bit too much. The greenback keeps sliding down a cliff. Oil-producing states holding their dollar currency pegs are importing more and more inflation. At some point, both parties must reconcile that M3 – the fullest measure of U.S. money supply – can’t outpace a nation’s GDP forever.

Regardless, the Fed seemed content to exchange $16 billion worth of Treasury notes for mortgage- and asset-backed securities last Thursday. In its 10th Term Securities Lending Facility (TSLF), the Fed gave desperate investment houses another chance to dump their worthless derivatives for good ol’ American IOUs. To date, brokerage firms have dumped $175 billion on the Fed’s balance sheet.

Even holders of the mighty euro are feeling the pinch. We read in The Economist last week that customs seizures of counterfeit goods rose by 17% in the EU last year. Cigarettes and clothing accounted for more than half the sham gear seized.

It seems like desperate times call for desperate measures. And the masses, desperate for answers, call on politicians for help.

And any political production worth its salt has three main characters: the hero, the martyr and the villain. Heroes (politicians) need a martyr (America’s middle class) and a villain (oil companies) – and, if they’re lucky, a super villain (foreign oil companies).

Our colleague Eric Fry sums it up best: “When share prices soar, we call it a ‘bull market.’ When home values soar, we call it ‘healthy price appreciation.’ But when oil prices soar, we call it ‘speculation’ and ‘manipulation’…and then we gaze around for someone to blame.”

The members of Congress recently convened a special hearing to berate, rebuke and ridicule executives from five major oil companies. Each congressional inquisitor took a turn excoriating the oil companies for daring to earn a profit, especially when so many Americans have so little money. It just isn’t fair.

A few months earlier, you may recall, Congress invited the heads of America’s leading financial institutions to a little tête-à-tête. During that encounter, the congressional inquisitors took turns admonishing the finance CEOs for feathering their nests a bit too lavishly. But none of the execs in attendance drew much criticism for frittering away billions of dollars of shareholder wealth.

Therefore, the essential message from the nation’s top lawmakers is clear: Losing billions of dollars of shareholder wealth is a bad thing, but not nearly as bad as adding billions of dollars to shareholder wealth. In fact, earning billions for shareholders is such a bad thing that it must be legislated away or taxed into extinction.

Where were the nation’s top legislator-inquisitors when the NASDAQ bull market of 1999 and 2000 was powering higher? Where was the outrage over the “speculation” that produced obscene “windfall profits” for the Wall Street firms?”

We’re not so sure. But we continue to see that many in the West want to go through life pretending they’re still the greatest story never told.

It comes as no surprise. From Dutch tulips to dotcoms, people fool themselves into believing it’s “different” this time.

It’s never different this time.

Christopher Hancock
for The Daily Reckoning Australia

P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Source: Congress Berates, Rebukes and Ridicules Executives from Five Major Oil Companies

The day’s action was more than a bit counterintuitive, since the Energy Information Administration’s weekly inventory report had crude supplies plummeting by 8.8 million barrels for the week ended May 23, the biggest drop since 2004. Analysts were looking for a 750,000 barrel gain in stocks.

However, “Lower oil stocks were due to problems offloading oil in the Gulf of Mexico, and this week’s deficit will show up in next week’s report as the tankers offshore are unloaded,” wrote James Williams of WTRG Economics.

Meanwhile, the Commodity Futures Trading Commission said that it started a wide-ranging investigation of U.S. oil markets six months ago, with a focus on possible price manipulation. The CFTC said it took the unusual step of publicizing the probe “because of today’s unprecedented market conditions.”

In OPEC news, the United Arab Emirates says that current crude prices are going too fast too high, according to a Reuters news report Thursday, and that the UAE is “willing and well prepared” to raise output if there is a supply shortage, according to the report. And Indonesia, struggling to keep up with its oil production quotas within OPEC, said it will withdraw from the cartel by the end of the year.

Source: Crude Beats a Retreat – Drop Comes Despite Huge Inventory Plunge

Maybe if they’d known this before hauling the oil executives up to Capitol Hill last week, they might not have made as many fatuous statements as they did. Then again, who am I kidding?

For all the attention paid to China’s increasing energy thirst, rising energy demand in the Middle East may pose the greater challenge. Last year, the region’s six largest petroleum exporters — Saudi Arabia, United Arab Emirates, Iran, Kuwait, Iraq and Qatar — curbed their output by 544,000 barrels a day. At the same time, their domestic demand increased by 318,000 barrels a day, leading to a loss in net exports of 862,000 barrels a day, according to the U.S. Energy Information Administration.

Demand in the Middle East is a major factor right now, said Adam Robinson, an oil analyst at Lehman Brothers in New York. Mr. Robinson predicts the region will constitute more than 40% of increased demand next year.

Now that I think about it, maybe we should conceal the rising usage/falling exports within OPEC nations from members of Congress. It’ll just make them more inclined to follow through on the notion of suing OPEC.

The unstated assumption would go something like this: The nerve of those countries, using more of the product that lies under their soil, when everyone knows we have the right to buy as much as we want at a price of our choosing so we don’t have to drill off our own coasts. (Yes, I know they subsidize, and we all know that’s foolish. What do you want to do about it?)

Oh, and there’s this cheery sentence buried in the article: “Mexican officials announced Monday that output from the country’s once-mighty offshore Cantarell field had plunged by a third in less than a year.”

Someone call a priest to administer last rites to Cantarell. Then call a bookie to place bets on the year when Mexico ceases exporting oil, like Indonesia, which acknowledged its status this week by announcing it will pull out of OPEC at year’s end.

Source: Oil Exports Down

• Exxon Mobil Corp. (XOM) said yesterday (Thursday) that record crude prices helped its first-quarter profit climb 17% to $10.9 billion – the second-biggest U.S. quarterly corporate profit ever, the Associated Press reported. The company said earnings for the first three months of the year came to $2.03 per share, up from $9.3 billion, or $1.62 per share, a year ago.

• General Motors Corp. (GMC) has taken an undisclosed stake in Mascoma Corp., a renewable energy company that is working to develop ethanol from wood chips, waste paper sludge and switch grass, according to the Associated Press. GM said the new collaboration would further develop non-grain forms of ethanol for more environmentally friendly vehicles.

• The Home Depot Inc. (HD) announced yesterday (Thursday) that it will shut down 15 of its core retail stores in a move that will affect 1,300 employees. The announcement comes 7 1/2 months after its Chief Executive Officer Fred Blake said there were no plans to close any core retail stores. The stores to be closed consist of three in Wisconsin, two in Ohio, two in New Jersey, two in Indiana and one each in Kentucky, Louisiana, Minnesota, North Dakota, New York and Vermont, the Canadian Press reported.

• Ajman, one of the United Arab Emirates, announced that it has partnered with Solidere International to develop a $60 billion new coastal city to be named Al-Zorah, Bloomberg reported. Twelve kilometers of coastline will be set aside for development of officers, shops, schools and hotels.

• Wheat hit a five-month low yesterday, as rising supplies and a resurgent greenback have pushed the soft commodity’s July delivery futures to $7.7835 a bushel, Bloomberg reported. Since hitting a record $13.495 on Feb. 27, wheat prices have fallen 42%.

• Shares of NetManage Inc. (NETM) surged over 67% yesterday (Thursday) after London-based Micro Focus International PLC announced it would buy the California-based software firm for $73.3 million, or $7.20 per share, Reuters reported. NetManage stock gained $2.79 per share to close at $6.94.

• Miami-based Burger King Holdings Inc. (BKC) announced first quarter earnings increased 21%. The fast food burger restaurant said it earned $41 million, or 30 cents per share, an increase from $34 million, or 25 cents per share for the same period last year. Revenue increased to  $594 million from $539 million for the same period in the prior year.

• PharmaNet Development Group Inc. (PDGI) shares plunged yesterday (Thursday) after the company announced a first quarter loss of $10.1 million, or 53 cents per share, due to canceled contracts. The global drug firm also lowered its outlook for full-year 2008. The stock dropped $6.76, a decline of 28%, to close at $17.10.

To the southwest, they’ll see – with binoculars – a vast desert spotted with dune buggies and recreational vehicles.

Looking down, they’ll see the emirate’s eight free economic zones, built to attract foreign companies such as Microsoft Corp. (MSFT), Nokia Corp. (NOK), Siemens AG (SI) and many more.

If they take a tour of the tower, they’ll find 30,000 homes, nine hotels, a mall and a man-made lake.

But nowhere will they see remnants of the Dubai of a half-century ago, when the city was better known as a pearl fishing village.

If there is one emblem of Dubai’s fast growth, it’s the Burj, whose completed height of 2,684 feet is a symbol of the emirate’s transformation into the Middle East’s financial and tourism hub.

Indeed, the Burj’s stated goal “is not simply to be the world’s highest building. It’s to embody the world’s highest aspirations.”

‘The World’ in its Hands

That transformation began in 1971, when Dubai was incorporated into the newly formed United Arab Emirates, a coalition of seven Persian Gulf states rich in oil and natural gas.

Foreign investment in the emirates’ wealth of resources came easily, and the UAE quickly became a prosperous nation situated on one of the main waterways of the Middle East.

However, unlike its fellow emirates and neighboring Saudi Arabia and Qatar, Dubai’s source of natural resources is running low. Oil and natural gas contribute less than 6% of its revenues.

Instead, Dubai’s Jebel Ali Free Zone, an economic zone with lucrative business and tax incentives, is the primary source for the country’s revenues. Increasingly, however, the Emirates are evolving into a tourist destination.

A typical Dubai vacation (or business trip) can include indoor skiing, sand dune cruising, swimming in the Persian Gulf, paying top dollar for a stay on its heralded Palm Islands (predecessor to the soon-to-be completed The World, a man-made archipelago of 300 islands) and shopping during the heralded, month-long, citywide Dubai Shopping Festival.

Instead of oil, the economy has shifted its focus to services, and real-estate prices have cycled higher, in kind. The value of Dubai real estate is evident in the enormous skyscrapers and hotels, such as the Burj Dubai and Burj Al Arab, one of the world’s tallest hotels and the world’s only (self-proclaimed) “7-star” hotel.

Disneyland, Meet Wall Street

But this display of wealth can only go do so much to attract tourists, as Dubai city needs to develop larger sources of income – the kind that builds more skyscrapers.

And that’s where global investments come into play. Dubai’s government plays a very active role in the country’s economy. In the past year, Dubai’s sovereign wealth funds – controlled by the emirate’s ruler and UAE Vice President Shiekh Mohammed bin Rashid Al Maktoum – have doled out serious cash for projects around the world, including:

• $448 million for a stake in a Malaysian super city,
• $1.26 billion in hedge fund Och-Ziff Capital Management Group LLC’s (OZM) Oct. 2007 initial public offering,
• $5.1 billion for a 9.5% stake in MGM Mirage (MGM),
• $942.3 million for Barneys New York Inc. luxury department stores,
• $1.8 billion for two U.S. aviation-maintenance companies owned by The Carlyle Group, the noted Beltway buyout firm,
• An undisclosed sum for a stake in Japan’s electronics and media juggernaut Sony Corp. (SNE).

Unlike other funds that “get strategic,” Dubai is approaching its investment strategy both as a business, and as a means to an end – a business double-play that’s virtually certain to make it a winner with one or both of its strategic mandates.

With these kinds of big-time investments, Money Morning calls sovereign wealth funds, whether they’re from Dubai or elsewhere, “Global Cash Barons.”

Following Cash Barons for Long-Term Profits

For U.S. investors, the problem with the government’s close attention to the emirate’s revenues is that relatively few public companies are listed overseas, let alone on the New York Stock Exchange.

Add that to the lack of liquidity in the young Middle Eastern indices, and all this talk about the burgeoning Middle East is a giant tease for U.S. investors.

Later this year, Middle East ETFs will be available, but for now, the best way to invest in Dubai is to shadow invest in the companies it – along with other sovereign wealth funds – is pouring billions into.

The investments that these massive cash pools make over the next 12 months will be some of the biggest profit opportunities investors will ever find. Shrewd individual investors would do well to closely watch the moves they make – and follow suit whenever possible.

“Sovereign wealth funds provide an important data point for investors,” says Money Morning Investment Director Keith Fitz-Gerald. Despite what critics say, “sovereign funds operate out in the open, and their objectives are very clear. This is in stark contrast to the secret workings of hedge funds, that operate in private, and only divulge their holdings and objectives after the fact.”

Many of those Cash Baron investments are U.S.-based companies – some beat down by the credit crisis, others well positioned to profit from global emerging markets such as China, India and Brazil.

Important to note: Cash Barons aren’t day traders. They’re investing for the long term.

Also keep in mind that investors shouldn’t blindly follow every public-company investment of sovereign wealth funds.

That’s why Money Morning has identified two recommendations:

• Citigroup Inc. (C), the beleaguered financial titan that has received a $7.5 billion cash infusion from Abu Dhabi Investment Authority, nearly $7 billion from Singapore Investment Corp. Pte. and $3 billion from the Kuwait Investment Authority.

“It all comes down to cash flow, as so many things do. And in this case, Citi’s valuations have been pummeled at a time when the underlying cash flow really hasn’t changed all that much,” Fitz-Gerald said.

• MGM Mirage (MGM), the Las Vegas-based casino-resort operator, whose China strategy received a major boost from the $5.1 billion it received from Dubai.

“At the most basic level, Dubai is hoping to grab a share of the ever-increasing power of the Chinese consumer at a time when China’s consumers have not yet formed opinions about branding or luxury travel experiences,’ Fitz-Gerald said. “Given that Asian consumers in general – and Chinese consumers in particular – tend to be much more highly brand savvy than their European and American counterparts, this is an especially important strategy to execute at the present time.”