Now that's a vending machine!

Shoppers in Germany will soon be able to buy gold as easily as bars of chocolate after a firm announced plans to install vending machines selling the precious metal across the country.

TG-Gold-Super-Markt aims to introduce the machines at 500 locations including train stations and airports in Germany. The company, based near Stuttgart, hopes to tap into the increasing interest in buying gold following disillusionment in other investments due to the economic downturn.

Gold prices from the machines – about 30 per cent higher than market prices for the cheapest product – will be updated every few minutes. Customers using a prototype "Gold to go" machine at Frankfurt Airport on Tuesday had the choice of purchasing a 1g wafer of gold for €30, a 10g bar for €245, or gold coins. A camera on the machine monitors transactions for money laundering controls.

Thomas Geissler, who owns the company behind the idea, said: "German investors have always preferred to hold a lot of personal wealth in gold, for historical reasons. They have twice lost everything. "Gold is a good thing to have in your pocket in uncertain times."

I should cocoa

London cocoa futures have hit a 23-year-high as cocoa turned out to be the most lucrative commodity in 2008. Cocoa for delivery in May peaked at £1,820 per tonne in London, which was its highest price since October 1985. Cocoa traded in the US has also been rising, although not as strongly because of the strength of the dollar.

Most commodities are priced in dollars, even in London trading, but London cocoa is priced in sterling, meaning traders can benefit from the weaker currency. There are concerns about falling cocoa production in Africa, while demand for cocoa is holding up much better than other commodities in the downturn. The three largest producers of cocoa are Côte d’Ivoire, Ghana and Indonesia. Between them they account for over 70% of global production.

Ethiopia trades its coffee

Ethiopia, Africa's largest coffee producer, has started trading the crop on a national commodity exchange. In a move aimed at both increasing quality and the amount farmers get paid for their beans, coffee is being traded on the Ethiopian Commodity Exchange. Replacing the previous, more informal, system of sales through middlemen, farmers will now be able to get direct access to current market prices. The exchange has set up a network of warehouses to collect the beans.

Ethiopia is the birthplace of coffee cultivation and the crop continues to account for more than a third of its export earnings. It earned $525m (£354m) from coffee exports in the 2007-08 financial year. However, Ethiopia still remains one of the world's poorest nations, and is ranked 170 out of 177 on the United Nation's Human Development Index.

Russian economy under pressure

An interesting article in this morning's Financial Times examines the current state of play in the Russian economy. As one of the BRIC economies Russia could be excused for having had very positive aspirations for its continued future growth. Before the crisis hit home, Dmitry Medvedev, Russia’s President (pictured above with Prime Minister Putin), boasted in June that Russia was not part of the problem but part of the solution. Its cash-rich companies would invest abroad, Moscow would become a world financial centre, the Rouble would become a reserve currency and so on. On August 8th, their currency reserves peaked at just under $600bn - the third-largest in the world, however by this week they had fallen to $484bn. This week’s fall, $31bn, was the steepest so far. Other factors are also hitting their economy, namely:

• The Russian stock market has lost 70% of its value this year.
• The commodity prices that spearheaded its boom are now falling. Metals, energy, and food account for 80% of Russian exports. Russia is the world's second-largest oil exporter and the government’s spending plans are based on a $70 a barrel oil price, so every $1 decrease in the barrel beneath this price implies $3bn less in export revenues a year.
• Any growth in the non-energy sectors had been fuelled by loans from western banks. However the credit crunch has ensured that this easy money from the west has now fled.
• Russia has failed to diversify its economy and its politics have long made investors nervous.

Full article, Financial Times, 31 October 2008

"New Anxiety Grips Russia's Economy", New York Times, 31 October, 2008