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The GoldBugg Report - Liars, Wall Street & Your Gold

April 22, 2008

Liars, Wall Street & Your Gold

Few seem to remember that Wall Street is not a non-profit community driven by altruism or any sense of service. They would gladly cheat you out of your entire life savings if their actions were legal, or at least not prosecuted. In the last two to three years, the lies, deception, misdirection, false reporting, corruption, and grand fraud will be the topic of historical accounts for decades. When returning on my flights from another successful Cambridge House gold conference, this in Calgary Alberta, many thoughts came to mind, jotted down while gazing at the natural beauty made up from cloud blankets with a sun guarding its lot. The sun and clouds care not at all about economic landscapes underneath, even if in turmoil. Whenever travels take me across national borders, nationalism, idealism, culture, and dreams come to mind. It seems pursuit of truth, clarity, and integrity has become negotiable, one and all in the United States. Its people are being stripped of so much. Perhaps this layout will be helpful. Routinely such matters are covered in the Hat Trick Letter reports. Gold & silver continue to do well to protect individuals and their wealth. Banks are no longer safe, an astonishing conclusion. Bonds are not safe, and neither are money market funds!!!
Read more at-http://www.financialsense.com/fsu/editorials/willie/2008/0416.html

All empires come to an end, and the American one is no exception. We've fought too many foreign wars, swept too many domestic problems under the rug, and paid for our greedy consumption with money borrowed from too many countries around the world. The end isn't just near, it's inevitable.
For these people I'm an advocate of financial education, but I also know that many of them aren't interested in becoming more financially astute. So instead, I recommend that they buy silver coins, as long as silver is under $25 an ounce. Today, silver is cheap and easy to acquire and manage, while real estate and businesses are both management-intensive; silver requires no management, expect for a safe storage place. Silver is consumed in many industries, and it's reported that the world has less than a 10-year supply of it left. That's why I believe silver is currently one of the best investment opportunities there is - even for people with limited financial training.

Even if the end is near, there's always a silver lining. Robert Kiyosaki

-James Moore, of TheBullionDesk.com writes, "Given the ongoing recessionary/inflationary fears and liquidity issues dogging the credit market, we remain bullish in the mid to longer-term and expect gold to reclaim $1,000 an ounce later in the year."  Kitco Daily Resource

-The next intermediate term target for the silver price is $24.50 to $26.50, again towards the second half of 2008 or early 2009.  Troy Schwensen CPA

-Rush for silver if you want to make moolah! You know this time around white metal may prove to be a better option for you to invest than in yellow metal. There are several reasons for that. Mainly, according to Jason Homel's Silverstockreport.com, silver has all the monetary properties of gold, and more.

It is interesting to know this. If you want know the enviable properties of silver, read on. The historic price ratio of silver to gold shows that about 10 ounces of silver would buy one ounce of gold, a 10:1 ratio. Recently, the ratio is about a 50:1 ratio (with silver at $20/oz., and gold at $1000/oz.) As the silver to gold ratio returns to historic values, from 50:1 to 10:1, you may make over 5 times more money investing in silver, than gold!

Silver prices may rise to exceed the 10:1 ratio, for the following reasons: More than all of the silver produced by the mines each year is consumed by industry, which leaves little to no room for substantial investment demand. A marginal increase in investment demand will drive prices sky high.  Read more at-http://www.commodityonline.com/news/topstory/newsdetails.php?id=7291

 

Record-high crude nears $120 on supply concerns
Weekly U.S. crude stockpiles seen rising; gasoline hits new high at the pump
http://www.marketwatch.com/news/story/crude-hits-new-intraday-high/story.aspx?guid=%7B8B6DEB5D%2DD66F%2D4985%2D8DE3%2D3ED8E103A099%7D

-With oil and commodities surging, the dollar continuing to weaken and economic growth slowing gold's best friend stagflation is a real and growing threat to much of the global economy.

Oil has remained near record levels above $114 per barrel and this will mean that the worrying inflation statistics of recent weeks will soon get worse, making central banks' jobs even harder and continuing to make gold an important part of a properly diversified portfolio.  Gold.ie

-Gold Standard. A monetary system in which a country's government allows its currency unit to be freely converted into fixed amounts of gold and vice versa. The exchange rate under the gold standard monetary system is determined by the economic difference for an ounce of gold between two currencies. The gold standard was mainly used from 1875 to 1914 and also during the interwar years.

The use of the gold standard would mark the first use of formalized exchange rates in history. However, the system was flawed because countries needed to hold large gold reserves in order to keep up with the volatile nature of supply and demand for currency.  

After World War II, a modified version of the gold standard monetary system, the Bretton Woods monetary system, was created as its successor. This successor system was initially successful, but because it also depended heavily on gold reserves, it was abandoned in 1971 when U.S president Nixon "closed the gold window".  Investopedia.com

-"It's puzzling why bankers have come up with these new ways to lose money when the old ways were working so well."  Wells Fargo CEO John Stumpf

-"China is going to be the next great country. The 19th century was the century of the U.K. The 20th century was the century of the U.S. The 21st century is going to be the century of China."  Jim Rogers

-Western economies are losing momentum due to rising average oil and food prices, falling house prices and turmoil in financial markets which will continue to underpin the gold market. In these circumstances it is absurd to suggest that gold is in a bubble despite being one of the few asset classes or commodities that is actually less than half its inflation adjusted high of 28 years ago ($2,300 per ounce).

Real diversification into non correlated assets is now more than ever essential. Risk aversion and capital preservation should remain prevalent in all investors' minds given the unprecedented challenges facing financial markets internationally.  Gold.ie

-Financial crises do not happen in a vacuum and the current U.S. banking debacle is linked to imbalances in an economy that favoured spending at the expense of saving, Paul Volcker, the former Federal Reserve chairman, said on Wednesday.The U.S. economy is on the verge of recession as a persistent housing slump drags down the banking sector, pushing up unemployment. Volcker said a propensity to consume more than it produces is what got the United States into this sort of trouble.  Read more at-http://www.iht.com/articles/reuters/2008/04/09/business/OUKBS-UK-USA-ECONOMY-VOLCKER.php

-Financial stocks, which have taken a pounding from the subprime mortgage meltdown, could take up to 25 years to recover to their pre-credit crisis levels, a senior hedge fund manager said last week. Speaking at the Reuters Hedge Fund & Private Equity Summit in London, Hugh Hendry, Chief Investment Officer of Eclectica Asset Management, said financial stocks were set to fall further after the credit crisis burst a 16 year bubble in their prices last year.  Read more at-http://www.reuters.com/article/HedgeFundsandPrivateEquity08/idUSL0986422020080409?pageNumber=1

-Goldman Sachs and Wells Fargo warn 'delusional' investors on stocks. Wall Street faces the growing risk of an equities bloodbath in coming months as the credit crunch spreads to the wider economy and earnings crumble, according to a pair of grim reports issued by Goldman Sachs and Wells Fargo.

David Kostin, the chief US investment guru for Goldman Sachs, expects the S&P 500 index of Wall Street equities to plummet a further 15pc over the "near term" as companies scramble to lower their outlook for this year. "Although only a few firms have reported first quarter results, early signs are awful. We expect a swath of lowered profit guidance," he said in a research note published today, entitled 'Fasten Seatbelts'.  Read more at-http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/04/14/bcngold114.xml

-Food Costs Rising Fastest in 17 Years. Read more at-http://biz.yahoo.com/ap/080414/inflation_squeeze.html?.v=4&printer=1

-The more Alan Greenspan whines about his tarnished legacy since leaving the helm of the Federal Reserve, the more his predecessor Paul Volcker looks to claim the title as the "greatest central banker who ever lived." That's what Greenspan was hailed as in 2005, when the economy was booming and inflation remained low. Economists lauded his significant contributions during his 18-year Fed tenure, which included making the central bank more communicative and weathering two recessions.

Those accolades largely overshadowed Volcker's achievements. He left the Fed in 1987 after an 8-year run of steering the economy through a tough battle against double-digit gains in inflation and a punishing economic decline. Volcker's legacy seems to be soaring now, while Greenspan's is sinking despite his intense effort to shift blame away from himself as the cause of today's punishing financial crisis.  Read more at-http://www.msnbc.msn.com/id/24052851/

-Greenspan critics: One voice stands out.  Read more at-http://www.globeinvestor.com/servlet/story/RTGAM.20080410.wreynolds0411/GIStory/

-Why China is the REAL master of the universe.  Read more at-http://www.dailymail.co.uk/pages/live/articles/news/worldnews.html?in_article_id=559133&in_page_id=1811

-What Power Looks Like. They ride on Gulfstreams, set the global agenda, and manage the credit crunch in their spare time. They have more in common with each other than their countrymen. Meet the Superclass.  Read more at-http://www.newsweek.com/id/130637/output/print

 

GOLD

-James Moore, of TheBullionDesk.com writes, "Given the ongoing recessionary/inflationary fears and liquidity issues dogging the credit market, we remain bullish in the mid to longer-term and expect gold to reclaim $1,000 an ounce later in the year."  Kitco Daily Resource

-Peter Grandich, editor of the Grandich Letter, writes that gold "Appears to be building a base after a massive rally this past winter. While seasonal factors come into play in a couple of months, worldwide economic and political concerns should keep us from seeing any sharp corrections."

And considering how closely gold has been tracking the dollar, Grandich's medium-term currency prediction is notable: "So long as economic weakness persists, rallies should be just bear market corrections. Somewhere down the road, when the inflation genie is out of the bottle to all, then we could see a significant dollar rally as interest rates rise sharply. But that is more likely at the minimum, 12-24 months from now, if not longer."  Kitco Daily Resource

-The bottom line is gold's bull market is universal and global, far transcending the myopic and quaint dollar-centric notions Wall Street is babbling about today. True, there was a time when the US dollar bear drove gold. But that became history when Stage Two dawned in mid-2005. Since then gold has risen powerfully all over the world, in all currencies, because soaring global investment demand is driving it higher.

And nothing begets more investment demand like sharp runs higher leading to record prices. Investors who would have scoffed at gold three years ago are starting to pay attention today. The higher it runs, the more they will want it. Nothing sparks greed in the human heart like gold, as history testifies abundantly. Today's early Stage Two uplegs are the vanguard of a coming massive shift into hard assets. Adam Hamilton CPA-Read more at-http://www.321gold.com/editorials/hamilton/hamilton041108.html

-Gold could rally strongly and post fresh highs later this year and into 2009.  GFMS Gold Survey 2008-http://www.resourceinvestor.com/pebble.asp?relid=41816

-John Embry: Central banks face Custer's Last Stand with gold. Sprott Asset Management chief investment strategist John Embry writes in new commentary for Investor's Digest of Canada that the credit-creation mechanism of the central banks seems to have broken. But, Embry says, the central banks likely will wage Custer's Last Stand against gold at $1,000 per ounce. Embry expects a result for the central banks similar to what happened to General Custer along the Little Big Horn. You can find Embry's commentary, "Credit-Creation Mechanism Appears to be Broken," at the Sprott site here: http://www.sprott.com/pdf/investorsdigest/digest.pdf

-How much risk is gold discounting? Inflationary forces and counterparty risk are impacting the gold positively, but how much of this risk is being accounted for in the current price?

We have the perfect environment for gold prices, in dollar terms at least, to continue to rise; a bearish dollar outlook, rising inflation and more importantly, inflationary expectations, negative interest rates in parts of the global economy, and counterparty risk. The question is, is all the bad news in the price?  Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=51297&sn=Detail

-The mettle of precious metals. Research suggests that experimenting with precious metals diversification is worth considering. With gold trading at approximately $1000 (£592) an ounce and the S&P Metals and Mining ETF trading near all-time highs, investment exposure to precious metals has certainly helped some investors weather the turmoil in equity markets.

It is reasonable to ask then whether precious metals tend to improve portfolio performance in general, on both an absolute and risk-adjusted basis. If so, what is the best way to include precious metals into your portfolio, and when is a good time to do it?  Read more at-http://www.ftadviser.com/FinancialAdviser/AssetClass/Features/article/20080410/2ded5d12-009b-11dd-9a61-0015171400aa/The-mettle-of-precious-metals.jsp

-Chavez Muses about Buying IMF Gold. Chavez Says Venezuela Could Afford to Buy Some of IMF's Gold Reserves. Venezuelan President Hugo Chavez said Saturday that his government could afford to buy some of the International Monetary Fund's gold reserves as the Washington-based lender faces hard times. Chavez raised that idea with a chuckle as the IMF, the lender of last resort for countries in trouble, considers trimming costs by selling off some of its gold reserves.

"Look at how the U.S. empire must be in unimpeded decline, that the International Monetary Fund is selling its crown jewels," Chavez said during a speech at a military parade. "The International Monetary Fund is selling what gold it has left to be able to pay salaries," Chavez said. "We could give a loan to the Monetary Fund. We could buy some gold bars. I think they're selling gold cheap."  Read more at-http://biz.yahoo.com/ap/080412/venezuela_us_finance_meetings.html?.v=1

-The I.M.F. Gold Sales Will Be Very Good for the Gold Price.  Read more at-http://news.goldseek.com/GoldForecaster/1208198925.php

-South African gold output fell 28.2 percent year-on-year in February in volume terms, while total minerals production fell by 7.3 percent, official data showed on Thursday. Production of non-gold minerals declined by 3.2 percent, Statistics South Africa said. South Africa's mining sector has been hit by a power crisis, with utility Eskom [ESCJ.UL] cutting electricity supply to 90 percent at the end of January before upping that to 95 percent in March.  Reuters

 

SILVER

-Over the past week silver again showed a significant increase in the Silver ETF Silver Trust up 151.35 tons to 5,730.30 tons. You might ask how does silver sell down from $21.00 to $16.60 with no negative money flow and physical silver very hard to get. The answer is your government is manipulating the price. You should approach all politicians and demand this be stopped.  Bob Chapman

-Silver nanoparticles could improve the safety of the world's food supply, according to a research project at Iowa State University. Silver nanoparticles cannot currently be added directly to foods as little is known about their adverse effects on human health and their impact on ecological systems. However, the university's current research programme is examining how silver nanoparticules could work as an antimicrobial in foods, with the goal of developing food-related applications such as microbe-resistant fabrics or non-biofouling surfaces.

Silver nanoparticles are emerging as one of the fastest growing nanomaterials with wide applications. However, Brehm-Stecher, an Iowa State University assistant professor in food science and human nutrition, admitted that the science of silver nanoparticles on food is currently at a basic point. Brehm-Stecher hopes that his research could change this. Silver is thought to have anti-microbial properties, and according to Brehm-Stecher, research has found that impregnating other materials with silver nanoparticles is a practical way to exploit its germ-fighting properties. Major consumer goods manufacturers already produce goods that utilize the antibacterial properties of silver nanoparticles.

Current applications for silver nanoparticle-impregnated materials include household items, clothing (for example, socks to prevent foot infections for soldiers deployed in jungles), and laundry detergents. In the food industry, the technology has a variety of uses including detecting bacteria in packaging. Silver nanoparticles are already being used in food packaging to extend the shelf life of fruits by soaking up the plant-ripening hormone ethylene, Brehm-Stecher explained.  Read more at-http://www.foodproductiondaily.com/news/printNewsBis.asp?id=84601

-The market for silver conductive inks will almost triple over the next eight years to reach $2.4 billion by 2015, industry analysts NanoMarkets predicts. In their report, "Silver Inks and Pastes for Printable Electronics: 2008-2015," NanoMarkets said businesses "are suddenly sitting up and taking notice of opportunities in the silver ink business, when they haven't paid made attention to this kind of material in years."

The report covers the future of both conventional inks and pastes and new nanosilver inks. Printed electronics are attracting attention as an opportunity for conductive silver inks, according to the study. "Since silver is the best conductor known to man (especially since its oxide is also conductive), silver conductive inks immediately assume a pre-eminence in the pursuit of PE."

The biggest opportunity in the demand for silver inks "will be found in the RFID space where revenues from silver inks for RFID antennas alone will exceed $880 million by 2015. Based on the current excitement surrounding alternative energy, NanoMarkets expect the use of silver inks for solar panel contacts to grow to almost $250 million by 2015."  Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=50689&sn=Detail

 

PLATINUM-PALLADIUM

-Platinum Supply Deficit to Remain in 2008. The VM Group reported on Tuesday that the platinum market will remain in a deficit of 360,800 ounces in 2008, although down from 412,400 ounces in 2007, as mine supply continues to fall thus offsetting any drop in demand foreseen in the automotive industry. Platinum prices will remain strong so long as supply remains tight.

"The platinum market has suffered a supply shock due to the [South African] power crisis and, as one would expect, the platinum price has moved higher," said Jessica Cross, CEO of VMG.  Read more at-http://www.resourceinvestor.com/pebble.asp?relid=42005

-Swiss fund to increase platinum holdings with second PGM fund. Swiss fund manager BAC plans to lauch a second platinum fund focusing on platinum juniors and explorers in South Africa and Africa. It wants to increase current platinum holdings.  Read more at-http://www.mineweb.net/mineweb/view/mineweb/en/page35?oid=50587&sn=Detail

-Power crisis sparks platinum struggle. The ‘supply shock' suffered by the platinum market as a result of South Africa's power crisis is likely to result in a deficit of 360 800 oz in 2008, down from 412 400 oz in 2007. This is according to Virtual Metals Research & Consulting's VM Group and Fortis Bank, which on Tuesday released the fourth issue of The White Book, a bi-annual analysis of global platinum group metals fundamentals.

Mine closures late in January and restricted power supply to mines will see South African platinum production decline again this year, making 2008 the second consecutive challenging year after 2007 was plagued by safety stoppages. South African mine supply is forecast to drop to 4.775 million ounces in 2008 from last year's estimated 4.909 million ounces.  Read more at-http://business.iafrica.com/news/691482.htm

-Palladium Explodes at Basel Watch Fair: Major Brands Celebrate the Many Uses of Palladium.  Read more at-http://ca.us.biz.yahoo.com/bw/080417/20080417006164.html?.v=1

 

COMMODITIES

-Jim Rogers fails to understand the bearish case on commodities. Nobody has brought on any new supply of anything in the past 25 or 30 years. The last gigantic oil field was discovered in the 1960s. The number of acres devoted to wheat farming has been declining for more than 30 years. Food inventories are the lowest they've been in 60 years... in 2018, or whenever this bubble finally starts to peak, if I'm lucky you will call me up and I'll say it's time to sell commodities.  Barrons

-Prices soaring as biggest grain exporters halt foreign sales. Read more at-http://www.gata.org/node/6233

-China grain trade in deficit for Jan, Feb.  Read more at-http://www.chinadaily.com.cn/china/2008-04/16/content_6619449.htm

-An Explanation for Soaring Commodity Prices. It is hard to remember now, but mineral and agricultural commodities were considered passé less than ten years ago. Anyone who talked about sectors where the product was as clunky and mundane as copper, corn, and crude petroleum, was considered behind the times. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41910

-"Chindia's" Demand for Base Metals to Remain Strong in 2008.  Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41876

-The new underground currency. The gang descended on the house on Penn Avenue like carrion, ripping open wall board and gutting it of copper. They severed the pipes connected to the gas furnace and water heater, then hit the kitchen sink. Piles of lath lay at the foot of the stairs, the wall torn open to expose the upstairs bathroom. By the time officer Richard Jackson knocked down the door, the gang was gone along with most of the home's copper.  Read more at-http://www.msnbc.msn.com/id/24085629

-The commodities frenzy has led to a shortage of giant tires and boom times for a niche business.  Read more at-http://www.businessweek.com/print/magazine/content/08_16/b4080046262873.htm

 

GLOBAL FOOD CRISIS

-UN Chief: Food Crisis Is Now Emergency.  Read more at-http://ap.google.com/article/ALeqM5gZkSrMax7_TollHxvIGxFgLMjE_gD901PT181

-World Bank urges action on food prices. The president of the World Bank said governments need to deal with surging food prices in order to curb violence in developing countries.  Read more at-http://money.cnn.com/2008/04/13/news/economy/bc.apfn.financemeetings.ap/index.htm

-Finance Ministers Emphasize Food Crisis Over Credit Crisis.  Read more at-http://www.nytimes.com/2008/04/14/business/14finance.html?_r=4&oref=slogin&ref=business&pagewanted=print

-Price shock in global food. Riots over grain prices call for a rethink of global stability based on better farming.  Read more at-http://www.csmonitor.com/2008/0407/p08s01-comv.html

-The White House on Monday authorized the release of 200 million dollars in emergency food aid to help alleviate a growing global food crisis, a spokeswoman said. Read more at-http://afp.google.com/article/ALeqM5hofN-LUekInWFpm7b0EVboSvbtEA

-Global food crisis, the fury of the poor. Read more at-http://www.spiegel.de/international/world/0,1518,druck-547198,00.html

-Global warming rage lets global hunger grow.  Read more at-

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/14/ccview114.xml

-A Drought in Australia, a Global Shortage of Rice.  Read more at-http://www.nytimes.com/2008/04/17/business/worldbusiness/17warm.html?_r=1&ref=business&oref=slogin

-Chile Thirsts for Rain as Goats Drop, Mines Face Power Cuts. The reservoir at the Laja dam south of Santiago gauges Chile's predicament: It has been less than half full since August.

Chile is in the grip of the most damaging drought in a century. The water shortage is reducing output at hydroelectric dams, pushing up energy prices and forcing the government to consider restricting power supplies to mines and factories. Subsistence farmers' crops and livestock are dying. Read more at-http://www.bloomberg.com/apps/news?pid=20601109&sid=ayzSmNhAJMug&refer=home

-EU defends biofuel goals amid food crises.  Read more at-http://news.yahoo.com/s/afp/20080414/sc_afp/euunfarmpovertyenergypoliticsbiofuel_080414143918&printer=1;_ylt=AiyP9hFTsHQLbllBMqWT9HzQOrgF

-Fuel Choices, Food Crises and Finger-Pointing.  Read more at-http://www.nytimes.com/2008/04/15/business/worldbusiness/15food.html?_r=1&ref=business&pagewanted=print&oref=slogin

 

OIL-GAS-GASOLINE

-Nigerian Oil Output Could Decline 30 Percent by 2015, FT Says. Nigeria, Africa's biggest oil producer, could lose 30 percent of its oil output by 2015 due to funding problems, the Financial Times reported, citing a government report.  Read more at-http://www.bloomberg.com/apps/news?pid=20601116&sid=aQUWFNn9fzuM&refer=africa

-Iran Thumbs Nose At West Over Oil Demands. Iranian Oil Minister Gholam Hossein Nozari taunted America and Britain after the two countries appealed for OPEC to increase supply.

"Why should OPEC try to lower prices? ... Let America and Britain continue demanding," the controversial minister said to journalists outside a conference in Tehran on Wednesday.

Read more at-http://www.forbes.com/facesinthenews/2008/04/16/gholamhossein-nozari-iran-markets-face-cx_jm_0416autofacescan01.html

-Peak Oil's Investment Implications.  Watch slide show here-http://www.321energy.com/editorials/simmons/simmons041108/simmons041208.html#

-Oil surges as investors hunt an 'anti-dollar'. Oil prices have surged to almost $115 a barrel as China builds up stocks before the Olympics and hedge funds pour money into commodity futures as a way to exploit the collapse of the dollar.  Read more at-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/17/cnoil117.xml

-Experienced commodity investor Tim Guinness expects the oil price will hit $150 a barrel in the next five to 10 years before a demand shock reverses the current trend of increasing prices. Read more at-http://www.citywire.co.uk/selector/-/news/fund-manager-interviews/content.aspx?ID=300587

-China Sees Record Crude Imports in March. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41919

-Global oil demand seen falling. International Energy Agency revises its overall 2008 forecast downward, says prices could still remain high due to supply concerns.  Read more at-

http://money.cnn.com/2008/04/11/news/international/international_oil.ap/index.htm

-OPEC Pres: Oil Prices High Because Of Weak Dollar.  Read more at-http://www.gata.org/node/6228

-LNG Supply to U.S. Could Come Under Pressure.  Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41892

-Saudi to leave some oil finds for future.  Read more at-http://www.business24-7.ae/cs/article_show_mainh1_story.aspx?HeadlineID=5523

-Russian Oil Slump Stirs Supply Jitters. Read more at-http://www.cbc.ca/money/story/2008/04/15/oilrecord.html

-Diesel hits new record. Nationwide average price for a gallon of diesel fuel hits all-time high of $3.365 as regular unleaded falls slightly, AAA survey says.  Read more at-

http://money.cnn.com/2008/04/14/news/economy/gas_prices/index.htm

-Thieves drill gas tanks to steal fuel.  Read more at-http://www.patriotledger.com/news/cops_and_courts/x2103872274

-Confirming the Obvious, High Oil Prices Stoke Nationalization.  Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41963

 

INTEREST RATES

Bank of Canada lowers target for overnight rate to 3%
http://www.marketwatch.com/news/story/canadian-central-bank-cuts-key/story.aspx?guid=%7BCE493DB9%2DD187%2D45FD%2DBC4E%2D8E9FA4C54477%7D&siteid=bnb

-Fed Beige Book Says Economy 'Weakened' Since February. The Federal Reserve said economic growth has slowed in nine of its 12 districts since February, hurt by "anemic" real estate markets and a slowdown in consumer spending. "Economic conditions have weakened since the last report," the central bank said in its regional business survey, known as the Beige Book for the color of its cover. "Nine districts noted slowing in the pace of economic activity, while the remaining" three "described activity as mixed or steady."

The anecdotal reports are part of a package of analysis and data that will be used by Fed policy makers as they decide on interest rates at their meeting April 29-30. Today's release underscores a weakening economy, though with manufacturing benefiting from record exports.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYEr66G_zZmU&refer=home

-Fed Risks Higher Prices With Low Rates, Yellen Says. The Federal Reserve, while trying to revive credit markets and fuel economic growth, should ensure that reductions in the benchmark interest rate don't spur inflation, said San Francisco Fed President Janet Yellen.

The Fed "will have to be careful not to leave monetary accommodation in place longer than it is needed," Yellen said to reporters after a speech today in Alameda, California. Otherwise, policy makers may "put upward pressure on inflation" or create "a bubble" of speculation in the economy.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aFHrXQHTO0f0&refer=home

 

INFLATION

-Zimbabwe's annual rate of inflation soared to an all-time high of almost 165,000 per cent in February, according to the latest government statistics obtained Wednesday.  Read more at-http://www.globeinvestor.com/servlet/story/RTGAM.20080416.wzimbabweinflation0416/GIStory/

-U.K. Producer Prices Rise at Fastest Pace Since 1991. Read more at-http://www.bloomberg.com/apps/news?pid=20601068&sid=awym1zus7irM&refer=home

-U.S. March Producer Prices Rise More Than Forecast. Read more at-http://www.bloomberg.com/apps/news?pid=20601068&sid=aDNb.rLRAVr8&refer=home

-It's inflation, stupid! Rising oil and food prices fuel a much bigger jump than expected in producer prices. That's hurting the economy, and has to have the Fed worried.  Read more at-http://money.cnn.com/2008/04/15/markets/thebuzz/index.htm

 

GLOBAL LIQUIDITY-FINANCIAL CRISIS

-Central Bankers Say Crisis Not Over, Urge Regulation. Federal Reserve and European Central Bank officials said the eight-month credit squeeze is still festering and urged financial firms to speed disclosure of losses and improve the way they value assets. "The market is still adjusting, the turmoil has not yet settled down," Fed Vice Chairman Donald Kohn told reporters in Washington today. "It's still a fragile situation out there."

Capital markets have seized up in the aftermath of $245 billion in asset writedowns and credit losses tied to the collapse of the U.S. subprime mortgage market. Finance ministers and central bankers from the Group of Seven nations yesterday endorsed a series of proposals from the Financial Stability Forum including a 100-day action plan to strengthen market regulation.

"This is one of the few instances where people who have both the power, but also more critically the jurisdictional responsibility in each country, gathered and agreed to take action," Bank of Italy Governor Mario Draghi, who chairs the Basel, Switzerland-based forum, told reporters.

The forum's proposals are the most sweeping call for tougher oversight of financial markets since the cost of credit jumped last August. The cost of borrowing in euros and dollars for three months was still at the highest since December in the past week.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aXL58O.8xf1M&refer=home

-Subprime "train wreck" could continue to 2010.  Read more at-http://www.canadianunderwriter.ca/issues/ISArticle.asp?id=82954&issue=04152008

-Britain could be hardest hit by financial crisis, says IMF.  Read more at-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/10/ncredit110.xml

-The Bank of England said financial institutions bid for 50 billion pounds ($99 billion) in its weekly auction, three times the amount offered and the most since January, as the credit shortage worsened.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYloQpbi9EB4&refer=home

-Wachovia Corp., the fourth-largest U.S. bank, sold $7 billion of stock and cut the dividend after bad home loans in California triggered an unexpected first-quarter loss. Read more at-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLRwcl5rOii8

-Bear Stearns assets shrink 20%. Assets under the investment bank's management stood at $36 billion in March from $45 billion late last year, due to clients' withdrawal of funds.  Read more at-http://money.cnn.com/2008/04/11/news/companies/bear_stearns.ap/index.htm?postversion=2008041119

-Bear Stearns profit plummets 79 per cent.  Read more at-http://www.globeinvestor.com/servlet/story/RTGAM.20080414.wbearstearns0414/GIStory/

-The global credit crunch is making itself felt on Canadian businesses, the Bank of Canada said Monday in in its quarterly business outlook survey. Read more at-http://www.cbc.ca/money/story/2008/04/14/boc.html

-JPMorgan Chase & Co., the third- biggest U.S. bank, said the credit-market crisis is almost over after it reported a 50 percent drop in first-quarter profit on $5.1 billion of writedowns and provisions.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aPTfzdGrvj4c&refer=home

-JPMorgan Chase & Co. raised $6 billion of hybrid securities in the bank's biggest-ever sale, after reporting a 50 percent drop in first-quarter profit. JPMorgan, based in New York, is paying annual interest at 7.9 percent, or 4.19 percentage points more than U.S. Treasuries, for 10 years on the perpetual preferred shares, according to data compiled by Bloomberg. The securities are hybrid instruments that combine elements of equity and debt.

The third-biggest U.S. bank is shoring up capital reserves after profit declined to $2.37 billion and as a slowing economy hurts clients' ability to pay credit cards and consumer loans on time. JPMorgan agreed last month to buy Bear Stearns Cos. after lenders and clients fled on concern that the firm faced a cash shortage.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aHnlTlWkF6no&refer=home

-Merrill Lynch & Co. posted its third straight quarterly loss and will cut about 3,000 jobs after at least $6.5 billion of writedowns and a 40 percent drop in investment-banking fees.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=amUesQD5SlN0&refer=home

-Sallie Mae the largest U.S. student loan company, on Thursday affirmed its 2008 profit forecast, but warned of a "train wreck" in the $85 billion education financing market without urgent government intervention.  Read more at-http://news.yahoo.com/s/nm/20080417/bs_nm/studentloans_salliemae_outlook_dc_1

-Lehman Brothers Holdings Inc. bailed out five of its short-term debt funds, joining a growing list of securities firms and asset managers that have propped up investment vehicles crippled by frozen credit markets. Lehman took $1.8 billion of assets from the funds onto its books, the New York-based firm said in a Securities and Exchange Commission filing yesterday.

The company recorded a $300 million loss from the bailout in the first-quarter, according to a person familiar with the writedown.  Read more at-http://www.bloomberg.com/apps/news?pid=20601103&sid=aFCymcBt2qY0&refer=us

-UBS Set to Cut 10% of Jobs at Investment Bank, CNBC Reports. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aEGHGDiqzTKs&refer=home

-Mizuho's $4bn sub-prime hit Asia's biggest.  Read more at-http://www.theaustralian.news.com.au/story/0,25197,23525279-20142,00.html

 

U.S. RECESSION

-Canada's CIBC World Markets Says U.S. Has Sunk Into Recession. The U.S. economy has probably sunk into recession and the Federal Reserve will likely cut its benchmark rate by another percentage point this year, CIBC World Markets Inc. predicted in its quarterly forecast. Canada, which sends about three-quarters of its exports to the U.S., will follow with 75 basis points in reductions by June, Toronto-based CIBC World Markets said in a quarterly report published today.  Bloomberg

-U.S. Economy: Philadelphia Factory Index Unexpectedly Fell. Manufacturing in the Philadelphia region shrank by the most since 2001 and the number of Americans receiving jobless benefits jumped to a four-year high as the economic slowdown showed little sign of abating.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=alRaGPOP8E48&refer=home

-The number of workers on the unemployment benefit rolls hit the highest level in almost four years early this month and 372,000 more workers applied for aid last week, the government said on Thursday.  Read more at-http://news.yahoo.com/s/nm/20080417/bs_nm/usa_economy_jobless_dc_2

-Sen. John McCain this morning said "greedy" Wall Street investors are partly to blame for what he said is probably an economic recession the nation is now suffering. "There has to be a modification of the greedy behaviour of some of these people," he said, using the word "greedy" repeatedly in remarks to the Associated Press annual meeting at the Washington Convention Center today.  Read more at-http://www.washingtontimes.com/apps/pbcs.dll/article?AID=/20080414/NATION/195874612/1001&template=printart

-America's economy is in recession. Don't expect a quick recovery. It may not be official but it is increasingly obvious: America's economy has slipped into recession. The latest labour-market figures a jump in the unemployment rate to 5.1% and the loss of 98,000 private-sector jobs in March, the fourth consecutive month of decline point to a shrinking economy. So do surveys of manufacturing and services.

So does Ben Bernanke, chairman of the Federal Reserve. On April 2nd he told a congressional committee that output was unlikely to "grow much, if at all, over the first half of 2008 and could even contract slightly."  Read more at-http://www.economist.com/world/na/displaystory.cfm?story_id=11016296

-U.S. Consumer Confidence Index Falls to 26-Year LowRead more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aBlxa.ME3gi0&refer=home

-Fears of long recession rising. Growing number of economists worry that second-half recovery is out of reach and that recession will be longer and more painful than current forecasts.  Read more at-http://money.cnn.com/2008/04/14/news/economy/how_bad/index.htm

-Congress wants to jolt economy again. Democrats outline proposals, including jobless benefits, to counter downturn. President Bush wants to give the first stimulus law a chance to work.  Read more at-http://money.cnn.com/2008/04/15/news/economy/stimulus_options/index.htm?postversion=2008041508

-Sour economy casts pall over once sunny Florida. Read more at-http://www.reuters.com/article/ousiv/idUSN1131231020080415

-Working poor struggle to get by.  Read more at-http://www.individual.com/story.php?story=80522037

-Can't Get Ahead, Hard To Keep Up. A New Poll Finds Americans Feeling a Lot More Squeezed.  Read more at-http://www.washingtonpost.com/wp-dyn/content/article/2008/04/09/AR2008040901811_pf.html

-Retailing Chains Caught in a Wave of Bankruptcies.  Read more at-http://www.nytimes.com/2008/04/15/business/15retail.html?_r=4&oref=slogin&ref=business&pagewanted=print&oref=slogin&oref=slogin&oref=slogin

-Retailers post sluggish sales in March.  Read more at-http://news.yahoo.com/s/ap/20080410/ap_on_bi_ge/retail_sales_5&printer=1;_ylt=AjroCgCCN9lsNyIDuPPimShv24cA

-US credit rating under threat. The US government's need to provide financial backing to the state-sponsored mortgage financiers that dominate the US housing market could pose a risk to the country's triple-A credit rating, Standard & Poor's, the credit rating agency, said on Monday.

In the event of a deep and prolonged US recession, S&P said the potential costs of propping up government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac, which have implicit government backing, could cost the US government up to 10 per cent of GDP. The costs of supporting broker-dealers like Bear Stearns in a dire economic situation would be much lower, at below 3 per cent of GDP, S&P said. Ft.com

 

U.K. RECESSION

-The UK economy looks set for a serious economic correction Read full story at-http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/04/13/cccity113.xml

 

U.S. MID YEAR BUDGET DEFICIT AT ALL TIME HIGH

-Record federal deficit increases 20.5% from 2007, reflecting overall economic slowdown. The federal deficit through the first half of this budget year is at an all-time high, underscoring the pressure the budget is coming under as the overall economy slumps. The Treasury Department reported Thursday that the deficit through the first six months of the budget year totaled $311.4 billion, up 20.5% from the same period a year ago.

That was the largest deficit for the first half of a budget year on record, surpassing the old six-month mark of $302 billion set in 2006. Full-year estimate of $410 billion. The Bush administration, when it sent its budget proposal to Congress in February, estimated that the deficit for the whole year will total $410 billion, putting it very close to the all-time high in dollar terms of $413 billion.

However, private economists are forecasting a much bigger deficit, reflecting the country's current economic problems and a $168 billion stimulus package that Congress has passed in an effort to jump-start growth. Rebate checks will be mailed to 130 million households starting next month in an effort to boost consumer spending and make sure that any downturn is short-lived and mild.

The Treasury's monthly budget report showed that revenues for the first six months of the budget year, which began on Oct. 1, totaled $1.146 trillion, up 2.2% from last year. However, government spending was up by a much faster 5.7%, rising to $1.457 trillion. Both the spending and the revenues were records for the first six months of a budget year. The difference between revenues and spending left a deficit of $311.4 billion, compared to a deficit for the same period in the 2007 budget year of $258.4 billion.  AP

 

U.S.-CANADIAN DOLLAR

-James Turk, The Dollar Hasn't Bounced.  Read full story at-http://goldmoney.com/en/commentary-print.html or http://goldmoney.com/en/commentary.php

-Commodities to support economy and loonie, CIBC says. Strong commodity prices will keep the Canadian economy from sliding into recession and help to boost the loonie to $1.05 US by year-end, a new forecast from CIBC World Markets says. "The resilience of the resource markets, particularly, energy prices, heralds a new measure of economic independence for Canada," said chief economist Jeff Rubin, who paints a relatively optimistic picture of the country's economy over the next year or two. 

"The resource sector still enjoys booming economic conditions, and will continue to do so over the next four quarters, irrespective of the pace or timing of a U.S. recovery," he said. CIBC forecasts that the energy sector will lead the TSX to a record high 16,200 in 2009 an 18 per cent increase over its current level with oil prices averaging $110 a barrel US. Canada's GDP will grow by 1.6 per cent this year and 3.0 per cent in 2009, the forecast says.  Read more at-http://www.cbc.ca/money/story/2008/04/14/cibc.html or http://www.bloomberg.com/apps/news?pid=20601082&sid=aw1CKU48o7P0&refer=canada

 

STOCK MARKET

-Goldman Sachs Group Inc. strategists said the U.S. corporate earnings season got off to an "awful" start and shares will drop as companies slash forecasts for the rest of 2008.  Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=abVJmlzaDPMg&refer=home

-U.S. Treasury Panels Lay Out 'Best Practices' for Hedge Funds. Read more at-http://www.bloomberg.com/apps/news?pid=20601109&sid=azt5tTk..S.o&refer=home

-U.S. Treasury Secretary Henry Paulson urged the International Monetary Fund to adapt quickly to the growing complexities of the global financial system and improve its monitoring of currency markets. "The IMF must reform to retain its relevance and legitimacy," Paulson said in the text of a speech at the fund's semiannual meeting in Washington. "The fund must spring quickly and far to adapt to rapid technological change, the rise of dynamic emerging market economies and the increasing internationalization of financial markets."  Read more at-http://www.bloomberg.com/apps/news?pid=20601068&sid=aCILKhuMHf8o&refer=home

 

REAL ESTATE

-'Cooling' the watchword in Canadian real estate.  Read more at-http://www.cbc.ca/money/story/2008/04/17/realestate.html

-Canada March Existing Home Sales Rise 0.9 Percent, Realtors Say.  Read more at-http://www.bloomberg.com/apps/news?pid=20601082&sid=a.6jI7CzPfcU&refer=canada

-JPMorgan's Dimon Says Real Estate Is 'Getting Worse'. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he expects U.S. home prices to drop as much as 9 percent this year as even borrowers with the best credit have difficulty keeping up their mortgage payments. "Real estate is getting worse," Dimon said in a conference call today with investors after the bank, the third largest in the U.S., reported first-quarter earnings. "Home prices we still expect to go down."  Read more at-+-http://www.bloomberg.com/apps/news?pid=20601087&sid=af8Rtek9ahlk&refer=home

-U.S. Housing Starts Slide to Lowest Level in 17 Years. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=a2WtOEVhSUQM&refer=home

-The collapse of the housing bubble in the United States is mutating into a global phenomenon, with real estate prices down from the Irish countryside and the Spanish coast to Baltic seaports and even in parts of India. This synchronized global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes, but also jobs.Read more at-http://www.iht.com/articles/2008/04/13/business/housing.php

-U.K. House prices decline at record levels.  Read more at-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/15/nprices115.xml

-Britain's property boom turns to bust: prepare for a hard landing.  Read more at-http://www.economist.com/world/britain/PrinterFriendly.cfm?story_id=11024646

-Vacant Homes in U.K. Prove Speculator Nightmare as Losses Mount. Read more at-http://www.bloomberg.com/apps/news?pid=20601109&sid=alavZ8rOJcfc&refer=home

-Existing home sales in North Texas were down 25 percent in March, compared to a year ago, according to prelinimary figures from the North Texas Real Estate Information System.  Read more at-http://www.star-telegram.com/804/story/568136.html

-Another Sign of Desperation in Florida.  Read more at-http://thehousingbubbleblog.com/?p=4388

-A Deal with the Housing Bubble Devil.  Read more at-http://thehousingbubbleblog.com/?p=4384

-Buyers Haven't Gone Away, They're just waiting.  Read more at-http://thehousingbubbleblog.com/?p=4380

-Buyers Pay What A Home Is Worth, But Not A Penny More.  Read more at-http://thehousingbubbleblog.com/?p=4380

-We Need To Have This Correction, Bring It On.  Read more at-http://thehousingbubbleblog.com/?p=4376

-The Value Of Housing Has Come Unhitched In California.  Read more at-http://thehousingbubbleblog.com/?p=4381

-Taking Away the Comfort Zone in California.  Read more at-http://thehousingbubbleblog.com/?p=4377

-The Great Experiment Is Over.  Read more at-http://thehousingbubbleblog.com/?p=4382

 

FORECLOSURE-MORTGAGE

-U.S. Foreclosures Jump 57% as Homeowners Walk Away. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=ahJfJhKyxAWI&refer=home

-1 in 7 worry they'll miss mortgage payments. Read more at-http://www.charlotte.com/business/story/581406.html

-Wachovia Tightens Standards for Home Loans Nationally. Read more at-http://www.bloomberg.com/apps/news?pid=20601213&sid=akNmRzeoi5iU&refer=home

-Fannie warns homeowners who walk away. Read more at-http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/04/13/RE34101D2M.DTL&type=printable

-You Thought You Had an Equity Line Read more at-http://www.nytimes.com/2008/04/13/business/13gret.html?ref=business&pagewanted=print

© 2008, Worldwide Precious Metals.
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The GoldBugg Report - Liars, Wall Street & Your Gold
Posted by Worldwide Precious Metals on Tuesday, April 22, 2008