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These are stories Report on Business is following Tuesday, Jan. 15, 2013.

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Germany and gold
Germany's central bank is said to be planning to repatriate thousands of tonnes of gold held at other central banks in a throwback to the Cold War.

The Bundesbank has scheduled a news conference for tomorrow, but there are no details, other than that the meeting with reporters will be about its gold reserves.

But Handelsblatt, a daily German paper, reported that the central bank will bring home some of the 1,500 tons held at the Federal Reserve in New York and more at the Bank of Paris.

The Bundesbank says it holds almost 3,400 tonnes of gold that was valued at €132.8-billion ($176.6-billion U.S.) as of Dec. 31.

Of that, the Bundesbank holds more than 1,000 tonnes in Frankfurt, the Fed more than 1,500 tonnes in New York, The bank of France almost 400 tonnes in Paris, and the Bank of England 450 tonnes in London.

In total, there are more than 270,000 bars.

Most of the reserves have been held in other countries for reasons that date back to the Cold War and fears of a hot war involving then-West Germany.

"This move by the Bundesbank may trigger a chain reaction, prompting other countries to start repatriating the gold stored in London, New York or Paris," said the Montreal-based Centre for Research on Globalization.

"So far, only countries that have a strained relationship with the U.S. have resorted to gold repatriation. Now, Bundesbank will be seen as walking in Hugo Chavez's footsteps."

Repatriating bullion could drive up prices because of the move to physical gold.

"If gold repatriation becomes a worldwide trend, it will be obvious that both the U.S. and U.K. have lost their credibility as gold custodians," the CRG said.

An independent auditing office, the Federal Court of Auditors, recommended last year that the Bundesbank monitor its gold holdings outside Germany more frequently, sparking a political row, and officials said they would listen to the recommendations where possible. The Bundesbank said, though, that it had "differing views" with the FCA over the scope of an audit sought by the agency, which did not conform to the practices of central banks.

In the wake of that, Bundesbank executive board member Carl-Ludwig Thiele stressed the central bank's confidence in the system.

"We do not have the slightest doubt that our holdings in New York and Paris are also made up of the purest fine gold," he said in a press interview still posted on the central bank's website.

"We have at our disposal fully documented lists of the bars, and our partner central banks send us every year confirmation not only of the bars' existence but also of their quality," he added.

"We receive confirmation of our gold reserves, measured in troy ounces. The Bundesbank has been drawing up its accounts on this basis since it came into existence. All external auditors have confirmed our accounting practices outright since then."

The Bundesbank, he said at the time, "decided to strive" for balanced distribution.

"Gold stored in your home safe is not immediately available as collateral in case you need foreign currency," he said in the interview.

"Take, for instance, the key role that the U.S. dollar plays as a reserve currency in the global financial system. The gold held with the New York Fed can, in a crisis, be pledged with the Federal Reserve Bank as collateral against U.S. dollar-denominated liquidity. Similar pound sterling liquidity could be obtained by pledging the gold that is held with the Bank of England."

German economy contracts
Europe's growth engine is sputtering, a dire sign for a continent already in deep trouble.

Germany's Destatis, the country's statistics agency, issued a report today titled "German economy withstands the European economic crisis in 2012."

That's a somewhat optimistic view. True, Germany's economy expanded by 0.7 per cent in 2012, according to today's data, but contracted by an estimated 0.5 per cent in the fourth quarter as Europe's crisis took its toll on the region's powerhouse.

The annual growth was well shy of the 3 per cent achieved in 2011 and the 4.2 per cent of 2010.

While the 17-member euro zone is in recession, it has stabilized from the worst of its debt crisis, buoyed by an agreement for bank supervision and by some measures taken by the European Central Bank.

"Whether 2013 marks the beginning of the end of the euro zone crisis depends on governments delivering on deficit reduction and structural reform, especially in the periphery, and on greater fiscal and financial risk sharing," David Riley, the global chief of sovereign ratings at the Fitch agency, said at a conference today.

"With elections in Italy and Germany and the region in recession, the challenge of maintaining the positive momentum gained in the latter part of 2012 should not be underestimated."

Housing cools
Canada's housing market continues to cool markedly, with sales plunging 17.4 per cent in December from a year earlier. Prices, however, still held up, with a gain of 1.6 per cent from December, 2011.

On a month-over-month basis, sales were little changed from November, the Canadian Real Estate Association said today. New listings slipped 1.3 per cent from November as home sellers pulled back.

The MLS Home Price Index, which factors out changes in the types of properties sold, rose 3.3 per cent from a year earlier, marking the slowest growth since April, 2011, The Globe and Mail's Tara Perkins reports.

For 2012 as a whole, sales of 452,372 slipped 1.1 per cent from a year earlier, and were 1.4 per cent below a 10-year average to 2011.

Sales in December fell in four of every five housing markets measured, the real estate group said, with Calgary the standout exception.

Canada's housing market can best be plotted on two timelines: pre-Flaherty and post-Flaherty. And for many, the post-Flaherty era is a good thing.

Sales have slipped since Canada's Finance Minister Jim Flaherty brought in new mortgage restrictions in July in an attempt to engineer the slowdown we're now seeing, and most observers expect a soft landing, not a crash.

"National sales activity continues to hold fairly steady at lower levels since mortgage rules were changed earlier in 2012, but there are still some real differences in trends between and within local housing markets," said CREA president Wayne Moen.

The Toronto area saw the biggest drop in New listings, the group said, but they also slumped in fully half of all markets, including, and as expected, the Vancouver area, the Fraser Valley and Vancouver Island.

Vancouver, in particular, has taken it on the chin, and observers believe it is the one market to have gone beyond a soft landing.

"The decline in new supply may reflect purchase offers below asking price that are made to sellers who are under no pressure to sell. Instead they choose to take their homes off the market once their listing expires," said CREA's chief economist, Gregory Klump. "In the absence of economic stresses like a spike in interest rates or a sharp drop in employment, this dynamic can be expected to keep the housing market in balance."

Home sales are expected to continue at a lower level, as is construction of new homes.

The average price in Canada still climbed to $352,800 in December. If you take out Vancouver and Toronto, CREA said, the national average would be 3.3 per cent.

"Canada's housing market is clearly in correction mode as we had been warning would occur well before the figures began to roll over," Derek Holt and Dov Zigler of Bank of Nova Scotia said before the CREA report.

As for inventory, the supply of unsold homes would take almost 7 months to deplete, but that hasn't changed much since late 2010, said senior economist Sonya Gulati of Toronto-Dominion Bank.

Ms. Gulati expects the market will stabilize now over the next few months, and that the impact of Mr. Flaherty's changes are now priced in.

"When looking at previous mortgage rule tightening episodes, the housing market impacts have been temporary in nature," she said. "There is no reason to think that this time will be any different."

Both the sales-to-listings ratio and the timeline for unsold inventory are within a normal range, she added, though at some point prices will slip.

"When we compare prices to other standard metrics like price-to-income, we still believe that prices have deviated from underlying economic fundamentals.  With this in mind, house prices will likely resume their trek downwards once higher interest rates come into effect in the fourth quarter of 2013."

Stocks to watch today
Shares of Research In Motion Ltd. slipped today. Yesterday, the stock climbed more than 10 per cent in the run-up to the crucial launch of its BlackBerry 10. And that, The Globe and Mail's Iain Marlow notes, followed a 13-per-cent surge on Friday.

Apple Inc. shares slipped again, to below the $500 (U.S.) mark, continuing yesterday's decline on reports by two news organizations that the tech giant has cut orders to suppliers amid softer-than-expected demand for the iPhone 5.

Shares of Dell Inc. rose again, following a surge yesterday driven by reports that the computer company is looking at the possibility of a takeover by private equity funds.

Lululemon Athletica Inc. shares tumbled after it reported late yesterday that it sees a slightly better outlook for its fourth quarter than originally forecast. It expects revenue for the quarter, which ends in early February, at the "high end" of its original projection of $475-million (U.S.) to $480-million and earnings per share of 74 cents, up from an earlier 71 cents to 73 cents.

And Corus Entertainment Inc. rose after it announced yesterday it was boosting its dividend by 6.25 per cent. On top of that, The Globe and Mail's Steve Ladurantaye reports today, speculation is on the rise that Shaw Communications Inc. could bid.

HMV sinks
HMV Group just might want to update the home page of its website, which still says "we are evolving as a broad-based entertainment business."

Because deeper on the site, the British company notes how it is evolving into the abyss, with its shares suspended, today.

HMV, among other things a music retailer struggling in an e- and i-world, disclosed last month that it was in deep trouble and likely to breach its bank covenants at the end of this month. With 235 stores, it also runs live music shows and festivals, and employs more than 4,300 people in Britain. Its first store opened in 1921.

"Since that date, the company has continued the discussions with its banks and other key stakeholders to remedy the imminent covenant breach," it said today.

"However, the board regrets to announce that it has been unable to reach a position where it feels able to continue to trade outside of insolvency protection, and in the circumstances therefore intends to file notice to appoint administrators to the company and certain of its subsidiaries with immediate effect," it added in the statement.

"The directors of the company understand that it is the intention of the administrators, once appointed, to continue to trade whilst they seek a purchaser for the business."

HMV is the second British specialty retailer to collapse in as many weeks, following the troubles of Jessops, a photography concern also facing online retailers.

"As for HMV the retailer had been living on borrowed time for quite some time as management have sought to restructure the business over the past 18 months, in the wake of the growing popularity of iTunes downloads and other digital download sites," said senior analyst Michael Hewson of CMC Markets.

"Unfortunately its demise became inevitable once management failed to deal with the loss making parts of the business and chose to hive off the profitable bits like the live music business to raise capital, in what can only be described as a flawed sticking plaster solution to a bigger problem."

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