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The GoldBugg Report - April 1

April 1, 2008

-“The U.S. economy will get much worse in 2008, making gold the premier asset of choice, but not the best performing precious metal. That honor will go to silver, which I expect will clear $30 in 2008.” James Turk

We agree with Turk that silver will shine brighter in 2008 for a number of reasons. Here are some of the most important:

1. Supply and Demand. Silver, quite simply, has better supply and demand characteristics than gold. For 18 straight years now, we’ve consumed more silver above ground than we’ve been able to extract from below ground (compared to only 4-5 years for gold). And the rate at which industry finds new, unique uses for the white metal is staggering compared to gold.

2. Emerging Markets. Despite fears to the contrary, we anticipate that industrial demand for silver will continue to be robust should the United States slip into recession this year or next. That’s because the true driver toward higher commodity prices, in general, is the emerging markets of China, India, Russia and Eastern Europe. China’s expansion alone can be compared to the industrial explosions that took place in Japan in the 1960s and the United States at the turn of the last millennium. 

3. Market Capitalization. The silver market is much less capitalized than the gold market. Less dollars trade daily on the silver exchange than do on the gold exchange. As a result, every dollar spent on silver will have a greater impact on the silver market than the dollars spent on gold will have on the gold market. To visualize this concept, consider the relative impact of a rock tossed into a pond versus the same rock being tossed into a puddle.  Michael Checkan

On the brink of disaster
By Allan Sloan, senior editor at large
http://money.cnn.com/2008/03/28/news/economy/disaster_sloan.fortune/index2.htm

Central bank currency riggers buy dollars sold by central bank investment arms
http://www.gata.org/node/6189

Treasury’s Plan Would Give Fed Wide New Power
http://www.nytimes.com/2008/03/29/business/29regulate.html?_r=2&pagewanted=2&hp&oref=slogin&oref=slogin

-Hedge funds and other speculative institutional players with short term horizons likely exacerbated the recent sell off in the futures market as they continue to focus on short term profits rather than the long term fundamentals of the gold and precious metal markets. Mindless black box computer models with no concept of intrinsic value and which automatically sell on breaching certain support levels have definitely intensified the sell off.

Also the huge commercial shorts were suffering billions in losses after gold and silver’s recent surge in price and there can be little doubt that it was in their interest that there be a sharp sell off in order that they stop hemorrhaging on their short positions and in order to allow them to cover and buy back their short positions at far lower levels. This will likely be seen in the coming days.

This is a speculative futures driven sell off and physical buyers of gold and silver for diversification benefits have not been selling indeed many market timers with medium to long term outlooks are now coming into the marketplace and buying into the sharp sell off. It would be wise not to be seduced by short term movements in markets and continue to focus on the all important macroeconomic ‘big picture’ which remains poor and extremely uncertain.  Gold.ie

-“Today’s prices for silver remind me of a beat up painting that someone buys at a garage sale or flea market for a nothing price, only to discover later that he holds a valuable masterpiece.”  Israel Friedman

-The toxic mix of stagflation and a growing solvency and systemic crisis means that risk aversion should remain paramount for investors. Gold and silver should be a cornerstone of all portfolios in the current unprecedented macroeconomic climate. Cash is not a safe haven in an economic environment threatened by systemic risk and significant inflationary risk. Gold.ie

-Bank customer: “What's the difference between a recession and a depression?” Bank manager: “In a recession, you lose your job. In a depression, I lose mine.” When the going gets tough, banks yelp for nanny-Read full story at-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/26/ccjeff126.xml

-Is there still time to get into the precious metals? Yes, but few will be willing to climb onto the bull’s back, because the mainstream will be calling gold and silver dead. The Ultimate Trade Simply, Buy low hold on through all the dips Sell High!  David Morgan-Read more at-http://news.silverseek.com/SilverInvestor/1206081753.php

- I don't believe we've seen the phase of frantic global gold-buying yet. That phase, I'm convinced, lies ahead. The gold bull market should wind up with some eye-opening fireworks. It should end up in a state of speculative fever. Or as my old-timer subscribers remember, "There's no fever like gold fever." Believe me, we haven't seen the gold-fever yet at least not during this bull market.  Richard Russell

-“Gold is a great portfolio diversifier. An allocation to gold or gold shares should be a welcome addition for investors who believe that there are still considerable risks to their other more mainstream investments.” Joseph M. Foster, portfolio manager for the Van Eck International Investors Gold Fund

-“I believe the U.S. is heading into the worst recession in many years and one that could possibly spread throughout the globe. The magnitude of the housing meltdown and the unprecedented failure of the credit markets make it unavoidable. I believe these problems will be supportive of gold for the many years it will take to return the markets to some form of normalcy. It’s an environment in which gold will thrive.” Joseph M. Foster, portfolio manager for the Van Eck International Investors Gold Fund

-“I don’t think this gold bull market will end until there is a material change in the way governments manage the fiat monetary system. -Read full interview at-http://www.resourceinvestor.com/pebble.asp?relid=41378

-Despite the usual misguided and uninformed commentary there is no change in the long term fundamentals driving the gold market. Some of the superficial commentary is by those who came late and are recent converts to the precious metals markets. Many did not forecast or predict gold above $1,000 (nor did they predict oil over $100 or the dollar at $1.60 to the euro) and now they incorrectly assert that the ‘bubble’ is burst. This is a dangerous and deluded assertion especially as we are in the midst and likely the early stages of the worst financial crisis since the Wall Street Crash of 1929 and the Great Depression.

With the financial crisis set to continue, this is another short term healthy correction in gold’s bull market. While the severity of the sell off will have made newcomers to the market understandably nervous, it was not unexpected given the extent of gold’s surge in recent weeks. Indeed despite this latest sharp sell off gold remains up more than 14% so far this year unlike all major stock markets which remain down and some significantly.

Gold below $950 and silver below $18 are table thumping buys and investors and diversifiers should use this short term correction to increase allocations to gold and silver. Silver remains extremely undervalued (especially from an historical inflation adjusted point of view and the crucial supply demand point of view) and will likely outperform all other. Rumours of supply shortages are rampant on the internet and in the financial mainstream. While the rumours are exaggerated there is some truth to them.

Silver in a smaller bar format (1 oz and 10 oz bars) is extremely tight and some of the larger suppliers and wholesalers have sold out. Silver bags, silver 100 oz and 1000 oz bars and silver eagle coins and maple coins remain available for delivery from wholesalers. There certainly is tightness in the marketplace and should the supply issues being seen in smaller silver bars spread than silver could quickly soar to new record highs in the coming weeks and challenge the 1980 record high of $50.00 per ounce in the coming months. Gold.ie

-Unfortunately all the problems we have been warning about for years are upon us. That is the bad news. The good news is you all own gold and silver related assets and they will allow you to offset the losses that have been inflected on you by the collapse of our economy and our financial system. We assume as well, except for your mortgage and vehicles that you are out of debt. The times we are entering into will be worse than you have already imagined.

The game is on whether we like it or not. The Federal Reserve and the US Treasury are attempting to hold the financial system together. Thus far they have been unsuccessful. In fact, the problems are worse than they were eight months ago and they are getting further out of control. The dollar has been abandoned in order to save Wall Street and the bankers, who caused these problems in the first place.

The professionals on Wall Street finally realize that it’s the “Working Group on Financial Markets” that is providing the only support holding the stock market up. That is why so many are now switching into the gold, silver and commodities markets. They finally see the implosion and the inevitability of what they face.  Bob Chapman

-10 of the Most Important Economic Events of the Last 10 Years.  Read more at-http://www.chycho.com/?q=node/1638

GOLD

-Gold has potential to double: UBS. Gold may have eased back from last week’s record high of US$1,030.80 an ounce, but the yellow metal is well positioned for growth and could potentially double in price, Tony Lesiak, analyst at UBS, says in a note to investors.

Mr. Lesiak says gold appears relatively cheap compared to oil on a historical basis, holding the potential for gold to more than double to levels where it will regain its long term average relationship. However, he said the price of gold was hard to call at present and prices may not move much in the coming weeks.

“In the near-term, fundamental value will not mean very much: positioning and the need to raise liquidity will determine what happens to precious metals and indeed other asset classes,” Mr. Lesiak says. “This environment is one where gold should do well, although de-leveraging may prevent the metal from moving higher, it should certainly outperform other metals and has a genuine chance of trading much higher should the dollar weaken further and de-leveraging become overwhelmed by safe haven buying.”  Nationalpost.com

-Gold’s support is now between $900 and $906 and below that strong support is at previous resistance at the 1980 record nominal high of $860. Resistance is at the recent new record nominal high of $1030.80 and $1000. Gold Investments continue to see gold reaching at least $1,200 per ounce in 2008.  Gold.ie

-The evidence continues to mount that gold's spectacular plunge in the past week was a mere correction in an ongoing bull market.  Read full story at-http://www.marketwatch.com/news/story/contrarians-continue-bullish-gold/story.aspx?guid=%7B1987E425%2D4997%2D4A1D%2DBCB3%2D1A6D99E48255%7D

-BlackRock says gold record high may be challenged.  Read more at-http://www.reuters.com/article/idUSNOA62770720080326

-10 Reasons Why Gold Has Farther to Run.  Read more at-http://seekingalpha.com/article/69340-10-reasons-why-gold-has-farther-to-run

-The $95 price drop in gold a week ago is therefore nothing short of a gift. An unparalleled buying opportunity that will quickly be acted on, and one of a likely good number, as the volatility in the commodities, debt, and equities markets is going to stay high for the foreseeable future.  Next stop: $2,000 gold.  James West

-People’s Bank of China and Central Bank Reserve Diversification. The Chinese central bank is on record as saying that they are going to increase their allocation to gold. They are already diversifying their huge foreign-exchange reserves into what they have termed 'strategic' resources and metals including gold bullion. Last April The Wall Street Journal reported that People's Bank of China Vice Governor Xiang Junbo reiterated this intention. So this is no idle speculation rather it is real demand and potentially even greater real demand.

China, the U.S.’ largest creditor may not take kindly to western and U.S. criticism of China’s actions in Tibet and could at the very least sell some of their massive dollar holdings which would result in an even greater fall in the value of the dollar. Some Chinese economists are urging Beijing to quadruple its gold reserves to 2,500 tonnes from the current 600 tonnes (The U.S. Federal Reserve is believed to have 8,500 tonnes).

Tan Yaling, an economist at the Bank of China, backed the call for higher gold reserves to "help the government prevent risks and handle emergencies in case of future possible turbulence in the international political and economic situation". Interestingly, a mere 5% Chinese allocation to gold would be very small in the light of the fact that Greece has 80% of its reserves by value in gold, Portugal 79%, Italy 66%, Germany 63%, Netherlands 56% and France 56%.

Some of this gold may have already been leased onto the market. Thirty years ago China held 95% of its foreign reserves in gold. Today, China’s gold reserve only accounts for 1.3% of total reserves. A figure well below the average minimum 3%-5% adopted in many other countries. China with an estimated gold reserve of 600 tonnes has a fraction of that believed held in the U.S. with some 8,500 tonnes, the world's largest holder.

This Chinese demand is not solely governmental and there is a significant increase in private demand for jewellery and investment. It is often forgotten that the Chinese gold market was only opened in 2002 and that was the first time in over 50 years (since 1949) that Chinese individuals could buy gold in jewellery or bullion format. With the huge increase in volatility in the Chinese stock market and fears of a crash, many of their huge and growing middle classes and nearly some 500,000 plus millionaires (in 2004 Merrill Lynch & Co estimated that there were more than 300,000 mainland Chinese with a net worth over $1 million, excluding property) will diversify partly into gold.

The global credit crisis will likely lead to many western central banks curtailing gold sales and indeed likely becoming buyers again under to create faith in paper fiat currencies. Meanwhile there is increasing demand from the Chinese central bank and also what are termed "tier 2" central banks: Russia, Argentina, South Africa and others.  Gold.ie

-Doug Casey: “Gold is Going to the Moon.”  Read more at-http://news.goldseek.com/DougCasey/1206546971.php

-Ron Paul urges gold standard, abolition of Fed on CNBC.  Watch video here-http://news.goldseek.com/RonPaul/1206397102.php

SILVER

-Gold Investments continue to see silver reaching $25 per ounce in 2008 especially in the light of the incredibly and unprecedented supply demand imbalance in silver. All the above ground refined silver in the world is only worth at today’s prices roughly a miniscule $9 billion (500 million ounces X $18). Roughly what the Federal Reserve is printing on a daily basis in order to rescue the world’s financial system.

Any one of hundreds of billionaires, hedge funds or sovereign wealth funds could decide to take a significant position in silver or even corner the silver market as the Hunt brothers did in 1979-1980. Such an action which appears increasingly likely would result in a surge in the price of silver that would make that seen in the 1970s very tame in comparison. This would especially be the case if those cornering the silver market did not make the same mistake as the Hunt brothers. They failed to take delivery of their silver bullion and amassed a huge stake in the leveraged futures marketplace.

Outright ownership of physical bullion by buying ‘off exchange’ and taking delivery of all silver on expiration of futures would eliminate this risk. There is further confirmation of shortages of refined silver coin and bar products in the U.S. bullion marketplace. Not only are 1 ounce and 10 ounce silver bars not available in many wholesalers and large dealers but there are also issues with regard to silver eagles and silver maples with the mints being out of stock and with there being delays of some 3 to 4 weeks prior to delivery.  Gold.ie

-I did my Silver Bullion Dealer survey, which I have not done for some time. I personally phone most of the major physical dealers in the U.S. and ask how the orders for silver bars, rounds, and bags are doing? What I found was that most dealers reported that February was the biggest month they have had for physical silver in a very long time, additionally it was almost all buying very few sellers. We even spoke to a few dealers that were having trouble filling large orders. I want to remain objective here. We do not find this to be the case all over the country.  David Morgan

-A shortage of another kind presented itself: Physical silver the metal itself was reportedly becoming hard to find. By midweek, online precious-metal discussion groups were plastered with reports of neighborhood coin shops that had little or no supply of silver bullion.

Reports soon followed that regional and national bullion distributors themselves had run dry. Citing overwhelming demand, the American Precious Metals Exchange had frozen its online ordering platform, while other major bullion dealers are reporting no stock or delivery delays. An apparent disconnect has emerged between the spot price for silver and its physical availability within the marketplace.

Fundamentally speaking, this is a noteworthy development. As economist David Morgan points out in his book Get the Skinny on Silver Investing, the entire supply of above-ground silver bullion worldwide was estimated in 2006 at about 500 million ounces.  Read full story at-http://www.fool.com/investing/general/2008/03/24/dont-miss-the-silver-lining.aspx

-March 19-Guess who is running low on Silver!  Jason Hommel-Read more at-http://news.silverseek.com/GoldIsMoney/1205981676.php

-March 20-Silver Shortage: 19 dealers reported "Sold Out." You know me, I don't send out two emails in one day, so this must be important.  Since my email earlier tonight, where I reported that 5-6 major silver dealers (Amark, Tulving, 2 in Vancouver, my local dealer, NWT Mint) are "out of inventory", 13 more reports came in, saying that the dealers were out of silver inventory. 

Some of these names are big names in the business, Scotia bank, the Perth Mint in Australia, CNI Numismatics in LA, APMEX says they have some items, but are looking to buy. If there are any coin dealers or bullion shops that have an inventory, in stock, of more than 100, 100 oz. bars, let me know, and I'll give you FREE Advertising within 24 hours in my next newsletter. Jason Hommel-Read full story at-http://news.silverseek.com/GoldIsMoney/1205995646.php

-March 21 2008-Silver Shortage gets worse. Three more major silver dealers are reported to be out of silver today: The U.S. Mint, Kitco, and Monex.  This, on top of the major dealers yesterday, Amark, Perth Mint, CNI Numismatics, and APMEX, all reported sold out.  Further, nearly all of Canada is reported to be out of silver, from Vancouver to Toronto. Jason Hommel-Read more at-http://news.silverseek.com/GoldIsMoney/1206119500.php

-March 25-Update of Silver Shortages. Jason Hommel-Read full story here-http://news.silverseek.com/GoldIsMoney/1206460150.php

-Gold and Silver updates-Clive Maund-Read more at-http://www.321gold.com/editorials/maund/maund032408.html

-Got Gold Report COMEX Commercials Surprised by Gold, Silver Swoon?  Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41471

PLATINUM-PALLADIUM

-The investment case for platinum and palladium.  Read full story at-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=49681&sn=Detail

COMMODITIES-NATURAL GAS

-An outbreak of sharp eyespot disease (SED), which affects cereals, is threatening 72.46 million mu (4.83 million hectares) of wheat in China's major producing regions, according to local agricultural authorities. SED might erode the wheat output by 10% to 20%, while a more serious epidemic could cut output by as much as 50%, officials from the Henan Oil and Grain Product Quality Inspection Center told Interfax. "As it is still the early growth stage for wheat, the impact on output might be reduced, although wheat quality may be downgraded," an official from the center said.  Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41387

-Commodities Attracting `Enormous' Investments, JPMorgan Says.  Read more at-http://www.bloomberg.com/apps/news?pid=20601012&sid=aHe6yOZiFFjo&refer=commodities

-Commodities bust? Don't count on it.  Read more at-http://biz.yahoo.com/rb/080320/markets_commodities.html?printer=1

OIL-GASOLINE

- Iraq Pipeline Fire Curbs Supply to Export Terminal. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=amhqN5Hs9kc0&refer=home

-Oil Sands Attracting Interest Due to High Crude Prices and Reserve Concerns.  Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41415

-Oil demand by China rose 6.2 percent in February, picking up the pace from a sluggish January as state-owned companies increased imports to ensure plentiful domestic supplies before the Olympics, according to data released Monday. Read more at-http://www.iht.com/articles/2008/03/24/business/chioil.php

-Record-High Gasoline Never a Better Buy, Say Citigroup, FBR. Read more at-http://www.irnnews.com/news.asp?action=print&article=20902

-Top scientists warn against rush to biofuel. Read more at-http://www.guardian.co.uk/environment/2008/mar/25/biofuels.energy1/print

INFLATION

-Medvedev Says Inflation Is Price of Being World Power. Russian President-elect Dmitry Medvedev said inflation, which accelerated at the fastest pace in 31 months in February, is a result of the country's success at developing an open global economy. ``Inflation remains a rather serious issue for Russia,'' Medvedev said in a transcript of an interview with the Financial Times posted on his Web site today. ``This is the price that we are essentially paying for our presence in the club of world economic powers.'' Read more at-http://www.bloomberg.com/apps/news?pid=20601068&sid=aWcDP5OySNOE&refer=home

WORLDWIDE CREDIT CRISIS

-Democrat Barack Obama said the government must overhaul the rules governing banks and other financial institutions in the wake of a collapse in the subprime mortgage market that has shaken confidence in the U.S. economy.  Read full story at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aXyotbCavFtc&refer=home

-Fed auctions another $50 billion. The eighth sale of short-term loans designed to inject liquidity into the banking system brings the total to $260 billion since December.  Read more at-
http://money.cnn.com/2008/03/25/news/bc.na.fin.us.fed.credit.ap/index.htm

-Big Wall Street investment companies are taking advantage of the Federal Reserve's unprecedented offer to secure emergency loans, the central bank reported Thursday. Those firms averaged $32.9 billion in daily borrowing over the past week from the new lending facility, compared with $13.4 billion the previous week. The program, which began last Monday, is part of the Fed's effort to aid the financial system. On Wednesday alone, lending reached $37 billion.  Read more at-http://apnews.myway.com/article/20080327/D8VM0BPO1.html

-FDIC adds 140 workers to bank-failure division. Federal regulators will increase by 60% the number of workers who handle bank failures.  Read full story at-
http://money.cnn.com/2008/03/25/news/economy/bc.na.fin.us.bankfailur.ap/index.htm

-Equity Loans as Next Round in Credit Crisis. Little by little, millions of Americans surrendered equity in their homes in recent years. Lulled by good times, they borrowed sometimes heavily against the roofs over their heads. Now the bill is coming due.

As the housing market spirals downward, home equity loans, which turn home sweet home into cash sweet cash, are becoming the next flash point in the mortgage crisis. Americans owe a staggering $1.1 trillion on home equity loans and banks are increasingly worried they may not get some of that money back.  Read more at-http://www.nytimes.com/2008/03/27/business/27loan.html?ei=5065&en=9f7a9c9b8785d2ff&ex=1207281600&partner=MYWAY&pagewanted=print

-What Created This Monster? Like Noah building his ark as thunderheads gathered, Bill Gross has spent the last two years anticipating the flood that swamped Bear Stearns about 10 days ago. As manager of the world’s biggest bond fund and custodian of nearly a trillion dollars in assets, Mr. Gross amassed a cash hoard of $50 billion in case trading partners suddenly demanded payment from his firm, Pimco.

 “Bear Stearns has made it obvious that things have gone too far,” says Mr. Gross, who plans to use some of his cash to bargain-shop. “The investment community has morphed into something beyond banks and something beyond regulation. We call it the shadow banking system.”  Read more at-
http://www.nytimes.com/2008/03/23/business/23how.html?_r=2&oref=slogin&ref=business&pagewanted=print&oref=slogin

- The worry is that the shadow banking system with its $516 Trillion of exotic and untested derivatives or “Buffett’s financial weapons of mass destruction” may lead to what is being called a ‘Derivatives Chernobyl.’  Read full story at-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/23/ccfed123.xml

-Wall Street banks, brokerages and hedge funds may report $460 billion in credit losses from the collapse of the subprime mortgage market, or almost four times the amount already disclosed, according to Goldman Sachs Group Inc. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aIGeO4anyk.c&refer=home

-Junk Bond Losses Top $35 Billion, JPMorgan Sees More. Read full story at-
http://www.bloomberg.com/apps/news?pid=20601087&sid=a1hPDYsWY9zQ&refer=home

BEAR STEARNS FALLOUT

-JPMorgan Chase & Co. quadrupled its offer for Bear Stearns Cos. to $10 a share and struck a deal to buy 39.5 percent of the company without a shareholder vote, making it unlikely opponents can block the takeover.  Read full story at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aa3pP2hIfFBs&refer=home

-Taxpayers May Be Liable From Bear, Mortgage Rescue. Even as the Bush administration insists it won't risk public funds in a bailout, American taxpayers may already be liable for billions of dollars stemming from Federal Reserve and Treasury efforts to quell a financial crisis. History suggests the Fed may not recover some of the almost $30 billion investment in illiquid mortgage securities it received from Bear Stearns Cos., said Joe Mason, a Drexel University professor who has written on banking crises.

Treasury's push to have Fannie Mae and Freddie Mac buy more mortgage bonds reduces the capital the government-chartered companies hold in reserve at a time when foreclosures and defaults are surging. Regulators ``are playing with fire,'' said Allan Meltzer, a Fed historian and economics professor at Carnegie Mellon University in Pittsburgh. ``With good luck, none of these liabilities will come due. We can't expect that good luck, and we haven't had it.''

Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson were forced to respond after capital markets seized up and Bear Stearns faced a run by creditors. In an emergency action that jeopardizes the dividend it pays the Treasury, the Fed authorized a $29 billion loan against illiquid mortgage- and asset-backed securities from Bear Stearns that will be held in a Delaware corporation. JPMorgan Chase & Co. contributed $1 billion.  Read more at-http://www.bloomberg.com/apps/news?pid=20601109&sid=a4ZyPj4AHfmU&refer=home

-JPMorgan Chase & Co., the third- largest U.S. bank, will pay brokers at Bear Stearns Cos. a maximum bonus of 100 percent of the annual revenue they generated to keep them from leaving as the two companies combine.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=a9ykinzrvGvk&refer=home

-Jim Cramer: "I Was Wrong Bear Stearns Was in Trouble."  Read more at-http://www.mediabistro.com/tvnewser/cnn/cramer_i_was_wrong_bear_stearns_was_in_trouble_80531.asp

U.S. ECONOMY-HARD TIMES ARE HERE

-Wall Street Firms Cut 34,000 Jobs, Most Since 2001 Dot-Com Bust.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aTARUhP3w5xE&refer=home

-How Deep Is Economic Abyss, Americans Ask As They Face Stream of Bad Financial News.  Read more at-http://biz.yahoo.com/ap/080323/economy_on_the_edge.html?.v=10&printer=1

-Slump Moves From Wall St. to Main St. Read more at-
http://www.nytimes.com/2008/03/21/business/21econ.html?_r=1&ei=5089&en=dbb413b1d88aa67b&ex=1363838400&oref=slogin&partner=rssyahoo&emc=rss&pagewanted=print

-A new Great Depression? Dysfunctional capital markets, frantic central banks, stressed-out consumers, fear and uncertainty all are alarming echoes of the global economic cataclysm of the 1930s. Which raises the inevitable question: Could another Great Depression be lurking over the horizon?  Read more at-http://www.latimes.com/business/la-fi-depression20mar20,1,832563.story

-U.S. consumer confidence fell more than forecast in March as Americans' outlook on the economy dropped to the lowest level since Richard Nixon was in the White House. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=afZ8HSAxwbCE&refer=home

-Some economists say the United States is not in a recession, but don't tell that to the majority of American consumers Read more at-
http://money.cnn.com/2008/03/21/news/economy/CNN_poll_review/index.htm

-America is already in recession, say top economic global experts and that spells trouble for the UK.  Read full story at-http://www.dailymail.co.uk/pages/live/articles/news/worldnews.html?in_article_id=541172&in_page_id=1811

-America's Coming Garage Sale.  Read full story at-http://www.time.com/time/printout/0,8816,1725094,00.html

-Rebate checks won't get spent. Majority of Americans say they plan to put their tax rebate checks in the bank or use it to pay off debt, according to a recent poll.  Read more at-
http://money.cnn.com/2008/03/24/news/economy/rebates_poll/index.htm

-1 IN 10 Ohioans, food stamps double since '01, but price of food means they don't go as far now. Read more at-http://dispatch.com/live/content/local_news/stories/2008/03/22/foodstamps.ART_ART_03-22-08_A1_NN9NE83.html?sid=101

U.S.-U.K. PERSONAL DEBT PROBLEMS

-Desperate for cash, many in U.S. taking high-interest 'payday' loans. Read more at-
http://www.iht.com/articles/2008/03/24/business/loan.php

INTEREST RATES

-Tighter lending conditions have made the Bank of England more inclined to cut interest rates as the credit crunch enters a new and difficult phase, BoE Governor Mervyn King said on Wednesday.  Read more at-http://www.reuters.com/article/companyNewsAndPR/idUSL2635165820080326

-Iceland's central bank raised its key interest rate by a record 1.25 percentage points at an emergency meeting to halt a slump in the krona and a surge in inflation. Read more at-http://www.bloomberg.com/apps/news?pid=20601068&sid=aGebxAuBuKYA&refer=home

-Bank of Israel Cuts Base Rate to Lowest Ever at 3.25%. Read more at-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a387AJWNWR7s

U.S. STOCK MARKET VOLATILITY HIGHEST IN 70 YEARS-DON’T TRUST STOCK RALLY

-The U.S. stock market is the most volatile in 70 years, according to a Standard & Poor's study of daily price swings in the S&P 500. The benchmark for American equities has advanced or declined 1 percent or more on 28 days this year. That's 52 percent of the trading sessions so far, which is the highest proportion since 1938, said Howard Silverblatt, S&P's senior index analyst. The S&P 500 lost 12 percent in 2008 through yesterday following $195 billion in bank losses related to subprime mortgages.

``The enormous uncertainty of the market is translating into volatility,'' New York-based Silverblatt said in an interview. ``Everyone is reacting to the day-to-day events as opposed to the longer-term trends.'' In 1938, the most volatile year since the index's inception in 1928, the S&P 500 rose or fell at least 1 percent during 57 percent of the trading days, according to Silverblatt's analysis. The measure advanced 25 percent that year. Option prices, which increase when investors expect wider share-price swings, have risen this year.

The Chicago Board Options Exchange Volatility Index, the price gauge for contracts linked to the S&P 500, has averaged 26.15. That's 49 percent higher than the level in 2007. The so-called VIX closed at a five-year high of 32.24 on March 17. In 2002, when U.S. stocks hit bottom after collapsing in March 2000, 1 percent moves in the S&P 500 occurred 50 percent of the time, Silverblatt said.

That fell to 12 percent in 2006 and 13 percent during the first half of last year. The figure increased to 39 percent during the second half of 2007. ``The upcoming earnings season appears poised to add to the volatility,'' Silverblatt wrote in a report. Profit ``estimates are unusually wide, given how close to the quarter end we are.'' The first quarter concludes in less than two weeks. Alcoa Inc. is scheduled to become the first member of the Dow Jones Industrial Average to report results for the period on April 7.  Bloomberg 

-Don't trust the Wall St rally. Divining future profitability of the nation's financial firms tells us stock market valuations are still too high.  Read more at-
http://money.cnn.com/2008/03/24/news/companies/McLean_wallst.fortune/index.htm?postversion=2008032416

BERNANKE’S OWN HOME SHOWS HOUSING BOOM AND BUST

-The U.S. housing recession has arrived literally on the doorstep of Federal Reserve Chairman Ben S. Bernanke. Bernanke lives in Washington's Capitol Hill area in a four- bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000. Almost four years later, it may not be worth any more, according to real estate records and local agents. Bernanke's timing wasn't the best values in the area peaked a year later and he is hardly alone among Americans living in an investment that's turned cold. Read more at-http://www.bloomberg.com/apps/news?pid=20601109&sid=a_SQurUfHic0&refer=home

REAL ESTATE

-New-Home Sales in U.S. Fall to Lowest in 13 Years. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=am3T3LRU3MhY&refer=home

-U.S. Economy: Existing-Home Sales Rise, Prices Fall. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aHOMZAVSyBks&refer=home

-S&P/Case-Shiller Home Price Index Falls Record 10.7%. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=a4kZQNXUFpW4&refer=home

-California freefall: Home prices fell 26% in February.  Read more at-http://latimesblogs.latimes.com/laland/2008/03/california-free.html

-Buy-to-let U.K. investors who fear they may be left homeless. Read more at-http://www.guardian.co.uk/money/2008/mar/22/buyingtolet.investmentfunds

FORECLOSURES-MORTGAGES

-California Leads U.S. in Defaults, Home-Price Decline. Read more at-http://www.bloomberg.com/apps/news?pid=20601109&sid=a_IN0W3.lFV0&refer=home

-Banks Fail to Lower Mortgage Rates as Bernanke Cuts.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=a3Vhp40UwPFM&refer=home

GEOPOLITICAL NEWS

-Four U.S. soldiers were killed in a bomb attack in Baghdad, taking the American death toll in the Iraq War to at least 4,000, according to the independent icasualties.org group that tallies fatalities in the conflict.  Read full story at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aN2hLgttrfKw&refer=home

-Iran 'behind Green Zone attack.' Read more at-http://news.bbc.co.uk/2/hi/middle_east/7311565.stm

-Qaida No. 2 Urges Attacks on Israel, US.  Read more at-http://www.breitbart.com/print.php?id=D8VJK20O0&show_article=1

-Osama bin Laden urged Palestinians to use "iron and fire" to end an Israeli blockade of Gaza, in a recording after the Vatican rejected accusations by the al Qaeda chief of a "new crusade". Read more at-http://www.reuters.com/article/topNews/idUSL2086543620080320?feedType=RSS&feedName=topNews&rpc=22&sp=true

-Osama bin Laden accused Pope Benedict XVI of helping in a "new Crusade" against Islam and warned of a "severe" reaction to European publications of cartoons of the Prophet Muhammad that insulted many Muslims. Read more at-http://apnews.myway.com/article/20080320/D8VHCSC81.html

-Russia's foreign minister laid out a tough negotiating position on America's missile defense plans Thursday ahead of a visit by President Bush, saying the best solution would be for the U.S. to scrap the idea altogether. Read more at-http://www.breitbart.com/article.php?id=D8VLUK4G0&show_article=1

-With Iranian backing, Hezbollah guerrillas have dramatically increased their rocket range and can now threaten most of Israel, senior Israeli defense officials said. Read more at-http://apnews.myway.com/article/20080327/D8VLNEFO0.html

-U.S. Treasury Secretary Henry Paulson and the sovereign wealth funds of Abu Dhabi and Singapore agreed to adopt rules for greater disclosure and to ensure their investments are for economic, not ``geopolitical,'' purposes.  Read more at-http://www.bloomberg.com/apps/news?pid=20601068&sid=a2Bs51SaAkFE&refer=home

© 2008, Worldwide Precious Metals.
www.wwpmc.com

The GoldBugg Report - April 1
Posted by Worldwide Precious Metals on Tuesday, April 01, 2008