Gold’s bull market stumbled in January, with the price sliding more than 7% from its all-time high.

But that may have been a gift to Chinese investors, many of whom apparently were buying aggressively into the metal's downtrend.

From Fayen Wong in Reuters’ Shanghai bureau:

Demand in China for physical gold and gold-related investments is growing at an "explosive" pace and its appetite for the yellow metal is poised to remain robust amid inflation concerns, said an Industrial and Commercial Bank of China (ICBC) executive.

ICBC, the world's largest bank by market value, sold about 7 tonnes of physical gold in January this year, nearly half the 15 tonnes of bullion sold in the whole of 2010, said Zhou Ming, deputy head of the bank's precious metals department on Wednesday.

"We are seeing explosive demand for gold. As Chinese get wealthy, they look to diversify their investments and gold stands out as a good hedge against inflation," Zhou told Reuters.

The January surge in Chinese gold purchases followed strong buying for much of 2010. The country's imports of the metal rose fivefold last year from 2009.

Even so, gold's rally hit an air pocket last month. After reaching an all-time high of $1,422.60 an ounce in New York on Jan. 3, the price fell for three straight weeks as some investors took profits after the metal’s 30% surge in 2010.

Gold bottomed at $1,318.40 on Jan. 27. The price then turned up again amid the recent wave of unrest in the Middle East.

On Wednesday, near-term futures in New York added $1.10 to $1,374.70 an ounce, still off 3.4% from the Jan. 3 peak.

The Chinese government has been battling rising inflation, particularly in food costs. China’s inflation gauge showed prices up 4.9% in January from a year earlier. Beijing also has been trying to slowly deflate the country’s hot real estate market by tightening credit terms.

Zhou told Reuters that "unlike the property market, investment in the gold sector is something the government is encouraging."

"China has a centuries-long cultural attraction to gold and because we have started at such a low base, I think demand growth will likely stay strong for quite some time," he said.

-- Tom Petruno

Several Borders stores in Southern California will be shuttered as part of the book giant's bankruptcy filing. Affected stores are expected to close by the end of April.

Cerritos: Cerritos Towne Center, 12741 Towne Center Drive

Chino: Chino Spectrum Town Center, 3833 Grand Ave.

El Cajon: Parkway Plaza East, 159 Fletcher Parkway

Glendale: Glendale Marketplace, 100 S. Brand Blvd.

La Habra: La Habra Westridge Plaza, 1310 S. Beach Blvd.

Long Beach: Los Altos Market Center, 2110 Bellflower Blvd.

Long Beach: The Pike at Rainbow Harbor, 101 South Pine Ave.

Los Angeles: Westfield Century City, 10250 Santa Monica Blvd.

Los Angeles: Howard Hughes Center, 6081 Center Drive, Suite 118

Mira Loma: Eastvale Gateway, 12423 Limonite Ave.

Montclair: Perimeter Plaza, 5055 S. Plaza Lane

Orange: The Block at Orange, 20 W. City Blvd.

Oxnard: Esplanade Shopping Center, 241 W. Esplanade Drive

Pasadena: South Lake Avenue, 475 S. Lake Ave.

Pico Rivera: Pico Rivera Town Center, 8852 Washington Blvd.

Rolling Hills Estates: The Promenade on the Peninsula, 550 Deep Valley Drive, Suite 261

San Diego: Gaslamp District, 668 6th Ave.

Sherman Oaks: Ventura Boulevard, 14651 Ventura Blvd.

Tustin: The District at Tustin Legacy, 2493 Park Ave.

Valencia: Valencia Town Center, 24445 Town Center Drive

Yorba Linda: 22401 Old Canal Road

-- Andrea Chang

Being unemployed is, for many, not fun. There are no co-workers to mock at the water cooler, no expense accounts on which to wine and dine associates and no impressive title to drop when you're trying to pick up the ladies (or men, for that matter).

Now there's a growing trend of employers refusing to consider the unemployed for job openings, according to a number of people who testified before the U.S. Equal Employment Opportunity Commission on Wednesday. They say that employers are barring the unemployed from job openings, which is particularly unfair to older workers and African Americans because more of them are unemployed.

"Excluding unemployed workers from employment opportunities is unfair to workers, bad for the economy, and potentially violates basic civil rights protections because of the disparate impact on older workers, workers of color, women and others," said Christine Owens, executive director of the National Employment Law Project, in her testimony.

Several examples of discriminatory help-wanted ads were offered: a Texas electronics company said online that it would "not consider/review anyone NOT currently employed regardless of the reason"; an ad for a restaurant manager position in New Jersey said applicants must be employed; a phone manufacturer's job announcement said "No Unemployed Candidates Will Be Considered At All," according to Helen Norton, associate professor at the University of Colorado School of Law.

Even if the companies pull the language from their ads, many still discriminate against the unemployed, Owens said. The long-term unemployed are perhaps in the worst shape; employers worry that their skills are outdated and pass over them for positions, which means they are unemployed for even longer and have more difficulty finding work.

“The use of an individual’s current or recent unemployment status as a hiring selection device is a troubling development in the labor market,” said Fatima Goss Graves, vice president for education and employment at the National Women’s Law Center.

More than 6 million Americans have been unemployed for more than 27 weeks. The unemployment rate for African Americans is 15.7%, compared with a U.S. unemployment rate of 9%.

-- Alana Semuels

Photo: Job hunting in a tough job market is tougher when you're unemployed. Credit: Napalm filled tires via Flickr

Individual investors continue to buy U.S. stock mutual funds at the strongest pace since spring 2009, providing more fuel for Wall Street’s rally.

Net cash inflows to domestic stock funds totaled $4.92 billion in the seven days ended Feb. 9, the largest one-week inflow since May 2009, the Investment Company Institute said Wednesday.

Over the last five weeks U.S. equity funds have taken in a net $16.6 billion. That’s equivalent to only about 0.4% of total fund assets of $4.16 trillion, but it’s the trend that’s important.

Fund net cash flows measure new purchases minus redemptions, so an increase in inflows can mean more buying, less selling, or a combination of the two.

Until the start of this year Americans were net sellers of U.S. stock funds almost consistently since the market “flash crash” last May. Outflows averaged $11.3 billion a month in the second half of 2010, according to ICI data.

Instead of buying domestic stock funds last year, many investors favored either foreign stock funds or bond funds.

But this year foreign-fund purchases have tailed off, hurt in part by losses in key emerging markets such as India and by Middle East social unrest. Foreign funds took in a net $928 million in the seven days ended Feb. 9, or less than one-fifth the inflow to domestic funds.

In the bond market, worries about state and local government finances have triggered heavy investor redemptions from tax-free municipal bond funds since November. Net outflows have eased in the last two weeks, but still totaled $1.5 billion in the seven days ended Feb. 9, according to the ICI.

So U.S. stocks are, in part, winning by process of elimination as the appeal of other assets dims.

And, of course, people like to buy what’s already going up: Major U.S. stock indexes were at new multiyear highs Wednesday as Wall Street continues to bet on economic growth.

At noon Pacific time the Dow Jones industrial average was up 68 points, or 0.6%, to 12,295. It now is up 6.2% year to date.

-- Tom Petruno

RELATED:

The unhappiest bull market ever

Here's your walk-on-by Wednesday roundup of consumer news from around the Web:

--Borders is bankrupt. The company has filed for bankruptcy protection and says it will close nearly a third of its outlets. According to Reuters, the long-expected Chapter 11 filing will give the second-largest U.S. bookstore chain a chance to fix its finances and shrink its business at a time when buyers are increasingly going online for their literary needs. Analysts say Borders' struggles may only have a modest benefit for rival Barnes & Noble, which needs to focus on its efforts to win more of the growing e-books market. Borders started out in 1971 as a small chain of bookstores in Michigan. It pioneered the concept of superstores in the early 1990s along with Barnes & Noble, but has struggled to adapt to sweeping technological changes.

--The classic phishing scam has a new face, and it's targeting Netflix subscribers. Buckets of spam are pouring into people's inboxes disguised as e-mail warning Netflix subscribers that their credit card is about to expire. It provides a link to update your billing info. That link, of course, takes you to scam central, where fraudsters await your credit card number and other personal information. "This is an example of the types of phishing scams our office sees on a regular basis," says Mississippi Atty. Gen. Jim Hood. "Consumers are urged not to comply with this or similar e-mail requests and to use caution when opening e-mails or downloading documents from unfamiliar sources."

--Heads up: About half a million baby bassinets made by Burlington Basket Co. are being recalled because of concerns that they could collapse if not assembled properly. The recall involves about 500,000 bassinets, all made by the company before June of last year. The Consumer Product Safety Commission says the bassinets can collapse if the support rails that hold the basket are not fully locked into place. Two infants have been injured in incidents involving the bassinets. However, Burlington isn't offering to take back the products, but is instead giving consumers free repair kits. More info can be obtained by calling the company (800) 553-2300.

-- David Lazarus

Photo: Borders has filed for bankruptcy protection. Credit: Gary Friedman / Los Angeles Times

The federal commission that investigated the financial crisis descended into partisanship, with its Democratic majority pushing to find "villains and victims" rather than the true causes, the panel's top Republican said Wednesday.

"It was clear from the beginning it was a partisan environment," former Bakersfield Congressman Bill Thomas told the House Financial Services Committee on Wednesday, noting that the commission had six Democrats and four Republicans. "The math is simple."

The Democratic chairman of the Financial Crisis Inquiry Commission, former California Treasurer Phil Angelides, defended the 525-page report released last month. Only Democrats supported the panel's majority findings, which cast blame widely among regulators, corporate executives and consumers for a crisis deemed avoidable.

"The facts have not been challenged," Angelides said. "Everyone can draw their own conclusions."

"But we were looking to you for the conclusions," Rep. Scott Garrett (R-N.J.) said.

Republicans on the committee blasted the panel for not reaching consensus the way that the commission that investigated the September 2001 terrorist attacks did. 

"It's sad that important work is hard to take seriously when it was conducted on a partisan basis," said Rep. Jeb Hensarling (R-Texas).

Republicans also criticized Democrats in Congress for passing an overhaul of financial rules last year before the commission even issued its report. Democrats on the committee generally praised the commission's work.

Although Angelides and Thomas had a long history as aggressive partisans, they began their work in mid-2009 saying they wanted to emulate the bipartisanship of the 9/11 commission. That panel, which was split evenly among Republicans and Democrats, produced a widely praised report that  became a bestseller for its compelling narrative of the events leading up to the attacks.

Angelides said the financial crisis panel's report was selling well and this weekend would be No. 10 on the New York Times nonfiction bestseller list.

"In 2009, Congress tasked the commission to examine 'the causes of the current financial and economic crisis in the United States' and to probe the collapse of major financial institutions that failed or would have failed if not for exceptional assistance from the government," he said. "We were true to our charge and we fulfilled our mandates."

Gold: Trading now at $1,371 per ounce, down 0.2% from Tuesday. Dow Jones industrial average: Trading now at 12,284.62, up 0.5% from Tuesday.

Madoff talks. Bernie Madoff gave his first interview from prison and said that the banks he dealt with "had to know" about his fraud.

Banks sell cities loans. As municipalities have a more difficult time in the bond market, banks are proposing that cities take out big loans.

Poison pen dissent. Michael Lewis has penned a devastatingly ironic "third dissent" to the financial crisis commission's report, explaining what really caused the crisis.

-- Nathaniel Popper

Credit: Spencer Platt / Getty Images

Crisis over?

The municipal bond market increasingly looks like it's moving out of panic mode, as selling abates and buyers come in from the sidelines.

That's showing up in falling bond yields and in rising share prices of muni mutual funds.

On Tuesday, the annualized tax-free yield on the Bond Buyer newspaper's index of 40 long-term muni issues nationwide (charted below) slipped to 5.71%, down from 5.75% on Monday and a two-week low.

The Bond Buyer muni yield had peaked at a two-year high of 5.95% on Jan. 18. It began to pull back after that, then briefly moved higher again in early February as U.S. Treasury bond yields also resurged.

What's significant about the muni rally since last week is that it set in before yields hit new highs -- or, to put  it another way, before bond prices fell to new lows. That suggests some buyers were anxious to get in at current yields.

By contrast, buying interest evaporated quickly after yields temporarily fell in mid-November and again in mid-December.

The muni market suffered a vicious sell-off beginning in late October, first as investors shied away from bonds in general, then as fears mounted about the strained finances of many state and local governments. Wall Street banking analyst Meredith Whitney's now-infamous late-December prediction of a wave of muni bond defaults in 2011 triggered another wave of selling in January.

But in the last few weeks traders say the market has been buoyed by interest from so-called crossover buyers -- investors such as hedge funds and life insurance companies that normally wouldn’t hunt in the muni market, but found tax-free yields too enticing to pass up.

It also has helped that redemptions by muni mutual fund investors have eased. The net cash outflow from the  funds totaled $1.2 billion in the seven days ended Feb. 2, down from $2.7 billion the prior week and $5.7 billion the week before that, data from the Investment Company Institute show.

Another ray of light: This week the Obama administration proposed reviving the Build America Bond program, which for the last two years allowed many state and local governments to sell taxable bonds subsidized by Uncle Sam. The program, which expired Dec. 31, kept the supply of tax-free munis limited.

Still, it may be premature to bet on the return of Build America Bonds: Republican opposition to the  program seems steadfast.

And the Bond Buyer's Dan Seymour noted last week that the muni market rally since mid-January has occurred amid a dearth of supply, as new bond issuance has plunged. The real test for the market will come when issuance rises significantly.

From Seymour:

It is far from clear what will happen when municipalities finally come to market with a hefty, or even normal, amount of [long-term] tax-exempt supply. Few market participants believe the crossover buyers who have somewhat buoyed the market amid a small amount of municipal supply so far this year can sustain the market permanently.

But for now, at least, the fear factor in the muni market continues to recede.

-- Tom Petruno

A year after tighter credit card regulations took effect, an advocacy group study concludes that they succeeded in making banks come clean about how much consumers actually pay to use cards.

The Center for Responsible Lending study examined the effect of the Credit Card Act of 2009, which the industry had predicted would result in higher card interest rates. It said that, after adjusting for the effect of the troubled economy on card issuers, "actual prices [for credit card use] have remained stable and available credit has not tightened beyond what would be expected."

(Plenty of borrowers, of course, have seen rates on individual credit cards rise. The Center for Responsible Lending relied on a Federal Reserve national average called "accounts assessed interest"; click the link to the study for details.) 

The law stemmed from complaints that consumers had been misled for years into thinking they would pay less for credit card debt than was true. It imposed the greatest changes in three decades on the credit card industry, including tougher restrictions on interest rate hikes and late fees.

From a Los Angeles Times story when regulators first proposed the new rules in December 2008:

The new measures were needed to reverse a trend in which the pricing schemes and terms of credit cards have grown increasingly complicated and obscure, leaving consumers frustrated by mysterious charges, Federal Reserve Chairman Ben S. Bernanke said.

The banking industry opposed the measures, contending that card issuers would be less likely to take a chance on people with weak credit. Card companies will also be forced to raise interest rates to cover the expense of the new measures, saddling most card users with higher costs, said Edward L. Yingling, chief executive of the American Bankers Assn.

But consumer advocates said the measures, adopted by the Fed, the Office of Thrift Supervision and the National Credit Union Administration, were needed to address hidden traps and fees nestled in the fine print of card applications.

A spokesman for the American Bankers Assn. said the group has not yet produced its own studies on the effect of the legislation and that it's too early to gauge the law's effect.

The ever-proliferating studies on outsourcing almost always treat the phenomenon as a corporate cost-cutting strategy. That reduces the argument against it to one of morality, not economics or proper corporate management.

As my Wednesday column reports, the most potent argument against outsourcing is that it doesn't save money, but can drive up costs instead.

How did this elementary fact escape the notice of corporate executives who plunged wholeheartedly into outsourcing over the last couple of decades? Simple: They judged it against a business metric known as "return on net assets," or RONA. The idea is that if you bring in the same profits while reducing your assets, you raise your RONA, and huzzah!

What was missed in the RONA frenzy is that not all assets are created equal, and that sometimes reducing assets by outsourcing work while shutting down facilities and laying off employees simply creates costs elsewhere in the corporate ledger -- and overall.

The 787 is the ultimate reproach against RONA. Unfortunately, up to now that hasn't been widely known except in places like Seattle, where Seattle Times reporter Dominic Gates has been all over the story.

The column begins below.

The biggest mistake people make when talking about the outsourcing of U.S. jobs by U.S. companies is to treat it as a moral issue.

Sure, it's immoral to abandon your loyal American workers in search of cheap labor overseas. But the real problem with outsourcing, if you don't think it through, is that it can wreck your business and cost you a bundle.

Case in point: Boeing Co. and its 787 Dreamliner.

The next-generation airliner is billions of dollars over budget and about three years late; the first paying passengers won't be boarding until this fall, if then. Some of the delay stems from the plane's advances in design, engineering and material, which made it harder to build.

But much of the blame belongs to the company's quantum leap in farming out the design and manufacture of crucial components to suppliers around the nation and in foreign countries such as Italy, Sweden, China and South Korea.

Read the whole column.

--Michael Hiltzik

Sure, Watson the robot beat one of the winningest men on "Jeopardy," Ken Jennings, in a match last night. But that doesn't mean robots are smarter than we, that they're going to take over the world and massacre us until John Connor comes to save us. Does it?

Maybe. If you ask economist Martin Ford, author of The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future, that robot might soon take your job. Maybe it won't be Watson, whose voice is honestly a bit snooty, and who probably isn't making any friends by beating Mr. Nice Guy Ken Jennings, but perhaps one of his robot brethren.

"Technologies like this will find their way into 'the cloud' and that they’ll eventually be deployed to automate a great many tasks and jobs (call centers, customer service, tech support) throughout organizations," Ford wrote on his blog.

In an IBM video about Watson on the company's website, Katharine Frase, vice president of industry solutions and emerging business for IBM Research, says she believes "Watson has the potential to transform many industries."

To Ford, this means in the jobs arena. Many of today's jobs are specialized, he said, which means training a robot such as Watson to do highly specialized tasks will be within the reach of many companies soon. A MIT researcher is developing a trainable manufacturing robot that will cost as little as $5,000, Ford said, which would save employers significant money in salary and benefits.

The robots aren't just limited to manufacturing. Ford argues. In an essay in the Atlantic, he speculates that robots could even be trained to do a lawyer's job. After all, lawyers research case law and summarize past decisions; one research area in artificial intelligence creates algorithms that can search and summarize information. 

Further, since most lawyers make a lot of money, there's a significant incentive for employers to replace lawyers with robots to save costs, Ford contends.

Is Ford just being paranoid? Or will computers and robots soon be able to do a wide range of jobs, including the one that you spent $100,000 to learn how to do in law school?  It's still up in the air. Maybe we should ask Watson. What is the future, Alex?

-- Alana Semuels

Photo credit: p_a_h via Flickr

U.S. consumers spent less in January than analysts had expected, with retail sales rising 0.3% from December instead of the 0.5% rise that was economists’ consensus forecast.

The question is whether people cut back because they felt strapped for cash or whether they were mostly holed up at home because of the relentless winter storms that hit much of the country.

Consumer spending fueled the economy’s acceleration in the fourth quarter from the third quarter, and with the stock market near multiyear highs, Wall Street clearly has been counting on that momentum spilling into the first quarter -- particularly given the Social Security tax cut that showed up in workers’ paychecks last month.

So, blame Old Man Winter for January’s disappointment? Many economists are leaning that way. The government’s breakdown of sales by category provides “clear evidence of weather effects,” economists at Goldman Sachs said in a note Tuesday.

Case in point: Sales of building materials sank 2.9% for the month, the biggest decline of any category. You’d expect home improvements to be a casualty of weather delays.

Also, sales of sporting goods fell 1.3% for the month. Those kinds of purchases also could easily fall victim to weather issues.

Same with spending at restaurants and bars, which declined 0.7% for the month.

By contrast, sales at grocery stores were up 1.4% in January, and general-merchandise retailers saw a 0.8% rise in sales. Those increases suggest that people got out of the house to buy what they needed, even if more discretionary purchases were delayed.

Another sign that many Americans still were shopping in January: Sales at non-store retailers (i.e., online retailers) advanced 1.2% for the month.

Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi in New York, noted that the weakness in January sales overall was boosting expectations for a February rebound, assuming that pent-up demand would have to be satisfied.

Home Depot said Tuesday it would hire more than 60,000 temporary workers for what it expects to be the traditional spring sales rush in its business.

Still, Zentner wonders whether five straight months of rising gasoline prices are taking a serious toll on consumers’ wherewithal to spend on other things. Total retail sales were up 0.8% in November, then decelerated to a 0.5% gain in December. The latter was revised down Tuesday from the originally reported 0.6% increase. January marks a further deceleration.

Zentner suggests watching restaurant and bar sales in February as an indicator of consumers’ ability to keep spending. “Eating out is one of the first categories that families will cut back on when gas prices are rising,” she said.

-- Tom Petruno

Photo: A worker prepares a display at a Home Depot store in Chicago. Credit: Scott Olson / Getty Images