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The GoldBugg Report - May 06, 2008

May 6, 2008

-While the recent short term movements in the dollar and oil have led to weakness in gold, it is important to stay focused on the long term fundamentals. Oil and most other commodities remain near all time inflation adjusted record highs and this will lead to increasing inflation in the coming months which will see gold continue to outperform other markets and likely surpass the $1,000 per ounce mark in the coming weeks. We remain confident that given the increasing likelihood of stagflation, gold should reach $1,200 per ounce before year end. Gold.ie

-Bull market has more years to run. Some worry that the March peak was THE peak for gold. This is very unlikely considering the world situation and the economic imbalances today. Plus, demand for gold is growing strongly. It truly is an international, expanding market and it's easy for people to buy. Last month, for instance, Chinese banks began trading gold futures.

The gold market is currently more powerful compared to the 1970s. There is much more money behind the move. Whether it be China, India, the Middle East, Russia or elsewhere, the world has mega wealth and its acquiring gold. Aden Sister-Read more here-http://news.goldseek.com/AdenResearch/1209411888.php

-The Iranian naval incident is a reminder if one were needed that geopolitical risk has not gone away, remains as prevalent as ever and should remain to the forefront of investors' minds. Read more here-http://www.reuters.com/article/topNews/idUSWAT00939920080425?feedType=RSS&feedName=topNews&rpc=22&sp=true or http://www.breitbart.com/print.php?id=D90907000&show_article=1

Gold futures rise as crude oil hits record high

http://www.marketwatch.com/news/story/gold-futures-rise-crude-oil/story.aspx?guid=%7B488944DF%2DBB87%2D4C93%2DA2E4%2DF7E4834EE6D4%7D&dist=msr_2

-Physical gold should never be sold or traded but rather accumulated steadily on a monthly savings plan and squirreled away. Big traders are always ready to buy on the dips and normally never sell their gold and silver. You would be amazed how quickly your physical gold and silver will accumulate using this strategy. Roger Wiegand-Read more here-

http://www.kitco.com/ind/Wiegand/printerfriendly/apr302008.html

-Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, made a very profound statement at Monday night's Atlantic Council awards dinner that has received virtually no press notice: That we "will have to deal with Iran in the very near future." Read more here-http://www.outsidethebeltway.com/archives/2008/04/mullen_we_will_have_to_deal_with_iran_in_the_very_near_future/

-The huge global increases in money supply are of course highly inflationary and should continue to fuel a robust bull market in commodities, including gold and silver, even if they get put on the back burner and continue to correct for a while as the focus shifts to the broad stockmarket. Clive Maund-Read more here-http://news.goldseek.com/CliveMaund/1209327170.php

-The following is what has pressured gold and caused short covering in the dollar/euro. Media has convinced the public that the Fed will go hawkish, first by decelerating the drop in interest rates. The deceleration has been attributed to the Fed having done the right thing. Media has convinced the public that the ECB will reduce interest rates now faster than the Fed, thereby boosting the dollar versus the euro.

Although the business statistics are negative, the media has held out the carrot that it takes six months for the Fed's action to materialize in the economy so all will be well in six to nine months. The idea that the credit crisis is over is the message that firming financials are communicating as media supports that position. Media has declared gold as DEAD. 90% of the above is raving BS.

There is no way the Fed can go hawkish without causing, via the equity market, the revelation that nothing has changed for the better. There is no mention of the impact lower Federal Tax revenues will have on the US Federal Budget deficit and its negative weight on the dollar. There is no mention of the desire of many central banks to diversify out of the dollar when a short covering rally presents itself. I feel whatever gold has to do on the downside will be covered by the end of the first week of May. Jim Sinclair

-"Good-bye Kiss": Typically when markets breakout of large bases to higher levels, the tendency is for the price level to retract to the breakout level, giving that level a "good-bye kiss" before heading higher. In January 1980 the gold price reached $850 in the cash markets and $887 in the Futures markets.

The breakout above the $850/$887 level recently, followed by the rise to a new all time high of $1033, required a price retraction to the $850/$887 level to give it a "good-bye kiss." That has now occurred and we can probably look forward to a rise to new all time highs. Alf Field-Read more here-http://www.321gold.com/editorials/field/field050108.html

-Contrary to some analysis which claims silver is overvalued we continue to believe silver is very undervalued and will at least reach it's nominal high of $50 per ounce in the coming years. Gold.ie

-Market Sages Warn that Severe Recession Looms. Warren Buffett said yesterday that the U.S. economy is in a recession that will be more severe than most people expect. Somewhat modestly, Buffett said "this is not a field of specialty for me, but my general feeling is that the recession will be longer and deeper than most people think," Buffett said. "This will not be short and shallow."

Two other Wall Street legends, Jeremy Grantham and Peter Bernstein have made similar warnings. GMO founder Grantham predicts the U.S. market won't hit bottom until sometime in 2010, citing the painful experience of past post-bubble economies. "The unraveling of the 2000 bubble is a tale still being told," he writes.

Author, financial analyst, and market historian Bernstein, meanwhile, poured cold water over hopes for a V-shaped recovery in an interview with The Wall Street Journal. "You don't have a high-growth exit from this, as you've had from other kinds of crises," he says. "Here, the shape of the business cycle is like an L, where it goes down and doesn't turn up. Or like a U, a flat U." Wall Street's increasing optimism is misplaced and risk aversion continues to be warranted as does demand for real safe haven assets. Gold.ie

-Investors Pull Out of Mutual Funds. Early signs of how the financial crisis and turmoil in markets is affecting the investment industry was seen in the fact that all but one of the 25 largest U.S. mutual fund managers saw their long-term assets fall in the first quarter, as returns dived and investors pulled out of funds. In the worst start to a year for more than a decade, most money managers had retail outflows. The FT concluded that the trend suggests the credit turmoil is unnerving mainstream investors and could dampen consumer spending in coming months. Gold.ie

GOLD

-Gold Prices May Move From $1,000 to $2,000 in a Matter of Six to Eight Months. I don't like the way the US markets are looking. And I'm increasingly fearful about what we're seeing.

When you consider liquidity problems in the market, derivatives, the adjustable rate mortgage dilemma on the heels of all of this subprime mess just to name a few it's clear that we've got some major problems to deal with. And the outlook for gold is stronger than ever.

We have the US dollar hitting a all-time lows against many other currencies. At last look the US Dollar Index was just over 72. And we're getting to that critical 70 benchmark, which, once broken, I believe gold will start having $100 up days instead of $20 up days. I predict the metals market will be in a bull market for at least 10 to 15 years. The outlook for gold, other metals, and commodities as a whole are still very strong. Don't drop out yet. Stay long on gold and precious metals. Greg McCoach-Read more here-

http://www.goldworld.com/articles/outlook-for-gold/260

-Our conclusion is clear. While we are going through a correction with a real risk of a fall towards the $800-$825 level it is just that a correction within the context of bull market. That correction should end over the next few months. We should then embark on another up leg that could prove to be the most spectacular part of this bull market in gold that got underway back in March 2001.

So to answer our question "What Bubble?" it is simple we are not in nor have we been in a gold bubble. In fact the best may be yet to come. Investors should use this opportunity to re-balance their gold positions and also ensure that they are long bullion as well because past history has shown that bullion in these cases usually outperforms the stocks. David Chapman-Read more here-http://www.321gold.com/editorials/chapman_d/chapman_d_042808.html

-A few things to ponder as the battle for $900 gold rages. Current Correction Not Yet Exceptional. Since the current bull market began in earnest in 2001, there have been 9 corrections in excess of 8%. During the three worst pullbacks, gold fell 15.98%, 18.27%, and 27.7%, respectively. And the average of those corrections is 13.6%, so the latest, which touched 13.9% at its worst (so far), is only fractionally worse than average.

Put another way, for the current pullback to match the sharpest correction to date, a drop of 27.7%, gold would have to fall to about $730. Could it happen, again? Sure, why not? And if it does, rest assured that, just as they did when gold moved down by that percentage in May of 2006 falling from $725 to $567 analysts will line up to say that the back of the gold bull has been broken.

But if you had listened to the naysayers back then and bailed out at the bottom of that correction, you would have subsequently missed a rebound of close to 100%. I mention this to stress that the fits and starts we are currently experiencing are nothing unusual. Quite the opposite, they're the norm for any sustained bull market. In the 1970s' sustained gold bull market, a very similar pattern occurred.

The bottom line is that if you are going to invest in the resource sector, you need to take a long view. And, I would stress once again, you have to be invested with money that you can afford to lose a substantial portion of and not be overly concerned. Otherwise you'll invariably become shell shocked during periods of volatility and be prone to breaking ranks and selling at the worst possible time. David Galland Managing Director Casey Research, LLC.

-The golden years are back. With dark clouds looming in the horizon in the form of slowing economic growth and rising commodity prices, advisers and wealth managers should consider gold bullion, which can offer a decent hedge against adverse inflation and interest rates. Did you ever think you would see a run on a bank in your life time?

The answer for the vast majority of IFAs and wealth managers would have to be a resounding no. Yet Northern Rock happened and as Alan Greenspan, Paul Volcker, George Soros, Warren Buffet and others have warned we are now facing the greatest financial and economic crisis since the Great Depression. Read more here-

http://www.ftadviser.com/FinancialAdviser/AssetClass/Features/article/20080424/79c1af08-0ba5-11dd-96f5-0015171400aa/The-golden-years-are-back.jsp

-Gold is confidence evaporating? Factors which have taken gold to a fourfold increase over the past few years remain very much in place. I remain resolutely bullish for gold and see no reason for changing my view at this time. The fly in the ointment for gold is the manner by which it is currently behaving a bit like ‘old gold' steady constructive rise then big smack down. Unfortunately, this price action can weigh heavily upon the confidence of those that might otherwise view gold positively. Ross Norman-Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=52040&sn=Detail

-As for gold, an offbeat opinion was offered by Mark Hulbert, writing on MarketWatch. Hulbert notes that there has been a big shift in sentiment among gold newsletter writers over the past two weeks. Back then, Hulbert writes, "the editor of the average gold timing newsletter was short the market, which from a contrarian point of view was a good omen. Gold bullion did jump nearly $30 per ounce over the next week or so, but in the last few days it has plunged.

"That would be disturbing enough to contrarian analysts. But there's more: The editor of the average gold timer is now markedly more bullish than he was two weeks ago, despite gold's weakness. This suggests that the prevailing mood among gold timers has shifted away from scepticism that the bull market is alive and well, and towards one of belief." And that, Hulbert concludes, is "not a good sign." When the average gold timer is "ready to throw in the towel on gold's bull market," that's when "contrarians would return to the bullish camp on gold." Kitco Daily Resource

-$200 Oil, $2,000 Gold. Read more here-http://www.321energy.com/editorials/west/west042508.html?print=on

-China, Gold and The Coming Flood of Wealth. Read more here-http://www.321gold.com/editorials/phillips/phillips042508.html

SILVER

-Silver Wheaton chief sees $30/oz silver in 'next couple of years'. Vancouver-based silver reseller Silver Wheaton's president and CEO, Peter Barnes, expects the spot price for the precious metal will continue to rise, in the medium term, underpinned by both physical and investment demand, he said on Tuesday. "My view is that silver is going through $30/oz in the next couple of years," he said on a conference call with investors.

The supply and demand outlook was "pretty robust", and the combined effects of geopolitical risk and a weaker US dollar would continue to support higher prices. "My strong feeling is that, in the long term, the US dollar still has a long way to go [downwards]," Barnes said. Silver Wheaton buys silver from producers on a long-term basis, at predetermined prices, and then sells the metal at the current spot price.

The spot price for silver reached a 27-year high above $21/oz last month, but has since slipped back to around $17/oz. "It takes a bit of consolidation, whenever it hits new levels it consolidates for a while and then it takes another run," Barnes commented. Miningweekly.com

-From January to March, silver prices surged 40% to hit a 27-year high of $21.44 on March 17, more than doubling gold's return during that time. This followed gains of about 15% in 2007. Although silver prices have fallen back to below $17, CPM Group maintains that investor buying will continue to support prices in 2008. "Thus far in 2008 political, economic and financial uncertainties have continued to lead investors to buy silver," said the New York-based commodities consultancy and research firm.

"Higher prices are expected later in 2008 and early 2009." In its 185-page 2008 Silver Yearbook released on Tuesday, CPM Group forecasts that net investor buying will keep silver prices strong this year, but expects a period of price weakness during the second and third quarters as other commodity prices ease. The sell-off in silver in the middle of March has carried over in April with seasonally week months approaching. According to CPM Group, the March sell-off was part of a wide sell-off in commodities by shorter term traders and speculative oriented investors.

Many banks and brokerages had taken short-term long positions and were taking profits out of those positions. Even still, CPM noted that investors are buying silver for all the same reasons they are buying gold: As a safe haven during times of financial distress, as an inflationary hedge and as a hedge against a falling dollar. And this will continue so long as economic and financial problems remain in the U.S. and abroad. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=42353 or http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=51978&sn=Detail

-What is the most important silver news in the last month?" asked David Morgan as we sat in his office in the beautiful countryside just outside of Spokane, Washington. "The Mexican ‘Bill'!" promptly answered this writer, referring to the communiqué sent by the governors of all 31 states of the Mexican Republic to the Ways and Means Committee of the Mexican House of Representatives, in which they expressed their unanimous support for the monetization of silver and urged the Committee to approve a bill which aims to achieve precisely this objective.

(See original article by Hugo Salinas Price) "What is the most important silver news in the last year?" continued Mr. Morgan, nodding in agreement with my reply. "The Mexican ‘Bill' . . . ?" responded yours truly, this time with less confidence. "What is the most important silver news in the last decade?" further inquired Mr. Morgan, again nodding with approval.

"The Mexican ‘Bill'!" blurted out Mr. Morgan seeing that I had paused, trying to remember all that has happened to silver in the past ten years. There you have it from Mr. Silver himself: The most important silver news in the last decade is the ‘Bill' on monetization of silver submitted unanimously by the governors of the Mexican states to their House of Representatives. Read more here-http://www.gold-eagle.com/editorials_04/rakhimov123004pv.html

-Another Sick New Record By: Theodore Butler

http://news.silverseek.com/TedButler/1210018234.php

-Hugo Salinas Price: Dorothy's silver slippers. Hugo Salinas Price, president of the Mexican Civic Association for Silver and the world's foremost advocate of restoring silver's role as a circulating currency, addressed GATA's recent conference in Washington by video.

His address, "Dorothy's Silver Slippers," detailed his proposal for the issuance of a circulating silver ounce coin for Mexico a coin that, not being imprinted with any particular peso value, would never be at risk of withdrawal from circulation because its melt value had come to exceed its face value. Salinas Price's address to the GATA conference is 23 minutes long and you can find it in three parts at YouTube here:

http://www.youtube.com/watch?v=k7DHz6O1xPo

http://www.youtube.com/watch?v=mb_6pruXOU0

http://www.youtube.com/watch?v=PBw56tE-0gw

Chris Powell, Secretary/Treasurer-Gold Anti-Trust Action Committee Inc.

-Normally during a long-term bull market, it would be completely natural for gold and silver to be correcting after a run up like we just experienced. With the technical picture having been damaged to the extent we discussed, gold could go as lower and this would not worry me, I have been through this type of market sentiment before.

My point is that we may experience a tough summer once again, but in a bull market most surprises are to the upside not the downside. As more and more former gold bugs abandon ship, and the sentiment gets very poor you can rest assured the bottom has arrived. Then the precious metals continue to ascend the wall of worry. David Morgan-Read more here-

http://www.kitco.com/ind/morgan/printerfriendly/apr252008.html

-I will be waiting to jump back on board the silver train at some point because this bull market in a wider sense is not over. People think that we are somewhere akin to 1978 or 1979 in this bull market. I think they are too pessimistic. I think it is more like the mid 1960s when silver began its inexorable rise from $1.29 to peak first in 1967 before resting and taking off again. That means another 15 years or more rising silver prices, but don't forget the big corrections on the way! Roland Watson-Read more here-

http://www.321gold.com/editorials/watson/watson042808.html

-Silver prices hit 28-year highs in March and then pulled back sharply as the dollar strengthened and prices on a range of commodities weakened. Still, many analysts are bullish on silver, with some predicting prices of $30 per ounce before the year's end. If inflation continues to loom as a threat to economies around the world and industrial demand for silver remains high, the rally for this metal might just be getting started. Don Dion-Read more here-http://seekingalpha.com/article/74059-silver-etf-starts-off-the-year-strong-can-it-continue-to-shine

-Silver could be low-cost substitute for platinum in autocatalysts. If Mitsui Mining & Smelting new technology is proven effective, silver, not palladium, may prove to be the most cost-effective substitute for platinum in autocatalysts. Tokyo-based Mitsui Mining & Smelting announced Wednesday that it has developed a new catalyst to clean exhaust gases from diesel engines using silver, rather than the much more pricey platinum.

In a news release, Mitsui claimed that the new catalyst, which has particle matter purification efficiency that currently equals that of platinum now used in autocatalysts, can reduce precious metal costs by 90 percent or more.

A company spokesman told Reuters that Japan, Europe and the United States are all planning to impose tighter regulations on exhaust emissions for heavy equipment, such as that used in construction and farming, beginning in 2012. "We hope this catalyst will be used in these vehicles, and this is the market we are targeting."

Platinum demand from automakers for catalytic converters is increasing due to strong sales of light-duty diesel vehicles in Europe. Platinum and increasingly palladium are used in autocatalysts to reduce carbon monoxide and particulate emissions.

Previously, silver has not been used in autocatalysts because of its poor heat resistance. But Mitsui Mining said it has succeeded in making silver withstand heat of up to 800 degree centigrade by adding metal composite oxide. The company said the catalyst is now undergoing performance evaluation tests. Mineweb.com

-Mitsui Mining's silver-based autocatalyst. Read more here-http://www.platinum.matthey.com/media_room/120946909411112.html

-HK researchers prove silver nano-particles can battle hepatitis B virus. Hong Kong University researchers said Monday they believe that silver may hold a solution to one of China's worst health concerns, the spread of hepatitis B, which can cause liver cancer and liver failure. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=51895&sn=Detail

-Metals: Precious Little Supply. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=42265

-Not Enough Silver. Read more here-http://www.silver-investor.com/davidmorgan/NotEnoughSilver.html

-Silver's "Poor Fundamentals" Refuted! The Guardian just wrote a hatchet job on silver, to try to kill the market. Somebody must be very desperate. I will refute this article point by point. My rebuttal will be in italics. Jason Hommel-Read more here-http://news.silverseek.com/GoldIsMoney/1209470633.php

PLATINUM-PALLADIUM

-Platinum to crest a new record high this year. GFMS reckons that Platinum demand is nowhere near as flexible as it was; palladium demand to continue to improve. The 2008 Platinum and Palladium survey from GFMS Ltd released last week shows that the group remains positive towards both metals for 2008 and does not expect platinum prices to fall below $1,700 over the remainder of this year.

The risk in the platinum price lies to the upside, with every possibility of moving to a new high of $2,400 before year-end. The palladium price is forecast to trade between $400 and $550, with a promising outlook for demand in both autocatalysts and jewellery. Furthermore, although above-ground stocks are large, GFMS believes that there is a growing appreciation of palladium's underlying fundamentals. GFMS notes that with supply and demand tightly balanced, any supply disruptions will have noticeable consequences for the platinum market "let alone those [already] witnessed in 2007 and 2008".

The South African mining industry had been set to deliver further growth in 2007, but continuing mine-site fatalities and a prevailing shortage of skilled personnel have combined to derail these plans and South African mine production contracted by almost 7% last year. With another contraction in production from Russia and a fall in nickel by-product output in Canada plus shortfalls at Stillwater, overall mine production in 2007 was down by more than 400,000 ounces. Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page35?oid=51824&sn=Detail

-Supply Shocks, Electric Shocks, Low Stocks and the Platinum Price. Precious metals consultancy GFMS was broadly positive about the outlook for both platinum and palladium at the launch of its Platinum and Palladium Survey 2008 in London today.

Both metals are expected to trade at levels considerably above 2007 levels, but both are also expected to be highly volatile. Indeed it was clear that GFMS felt that it was putting its neck on the block even with the wide range of its forecasts for the remainder of the year.

Platinum, which averaged $1303/oz in 2007 is expected to trade for the rest of 2008 in the range $1700-2400 per ounce, while palladium, which averaged $355/oz last year, is expected to range from $400-550/oz. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=42213

A 4 MONTH REVIEW FROM JAMES TURK

-A 4-Month Review. It makes sense at the end of every month to review the gain or loss in various markets, but now is a particular opportune time for a review given that we are one-third of the way through 2008. It also makes sense to look at recent results given the growing chorus that the US dollar has bottomed and is therefore due to strengthen. The following table presents the gains/losses for the precious metals and major currencies for the past month, year-to-date and 12-month periods.

There is nothing in this table to suggest that the US dollar has turned the corner to reverse its bearish downtrend. Note particularly the 3.8% gain in commodity prices this past month. Rising commodity prices have been one of the strongest indications that the flight out of the dollar into tangible assets is a real phenomenon. Rising commodity prices last month provide strong evidence that any dollar 'strength' was illusory. Though the dollar may have risen against other national currencies, all of them were sinking against real things. Gold and silver were the exception.

Both gold and silver declined last month, but both have respectable year-to-date and 12-month gains. Though up 26.8% over the past twelve months, gold only rose in seven of those months. Silver achieved its 22.7% 12-month gain even though it rose in only six months. These results are evidence that it's always a bumpy ride with markets - like the one we are experiencing at the moment. But use these bumps wisely by continuing to accumulate precious metal. Here's how I explained it recently in an email responding to a question about the gold cartel and their ongoing effort to cap the gold price:

"I am not adverse to setbacks like the current one, or indeed, the ongoing capping by the gold cartel. They have in fact done us a favour. Their action is keeping gold at prices lower than they would be if the gold cartel were not in there intervening to cap gold. This has enabled me and everyone else who has been buying gold to acquire it at prices lower than the gold price would otherwise be without the price capping. In short, the gold cartel is keeping dollars and other fiat currency overvalued and gold undervalued, thus enabling me and others to accumulate gold month after month with available new earnings generated each month. That's a good thing in my view. Think back to the 1960s. The gold cartel was active then too, trying to keep gold at $35 per ounce when it was worth much more than that. We all know what happened to gold in the 1970s after the gold cartel was eventually overwhelmed back then by their foolish price capping activity. The same thing is happening this time around, except that the gold cartel is allowing the gold price to rise somewhat each time they recognize that they are losing a battle -- they retreat to fight another day. So in conclusion, the gold cartel may be able to keep gold under $1,000 for a few weeks, or perhaps even months. That just gives us more time to accumulate it with new earnings we generate each month. But eventually, values will be realized (like happened in the 1970s) and gold will soar over $1,000."

When asked about the gold cartel, its activity and its motivation, I often refer to an interesting observation by former Federal Reserve chairman Paul Volcker. It is from the Nikkei Weekly, which in 2004 published excerpts from his memoirs commenting on monetary policy and the rising gold price in the 1970s: "Joint intervention in gold sales to prevent a steep rise in the price of gold, however, was not undertaken. That was a mistake." It was a 'mistake' in his view because the gold price did something the government didn't like. It laid bare for all to see the government's empty rhetoric that it would fight inflation.

The parallel to today is simply too obvious to ignore, given the government's so-called 'strong' dollar policy, but the government is not making the same 'mistake' again. There is today "joint intervention" by central banks to interfere with the normal supply/demand activity in the gold market. These efforts are aimed at preventing gold from doing what it has always done throughout history. Gold is a monetary barometer because its rising price signals the mismanagement of a national currency.

So rather than take those steps needed to actually implement a strong dollar policy and thereby fight inflation, the government-directed gold cartel instead intervenes in the gold market "to prevent a steep rise in the price of gold", which was Volcker's lament. Central bank intervention in the gold market which to me has been particularly obvious in recent weeks is a bald attempt to make us believe that the dollar is worthy of being the world's reserve currency when in fact it is not. James Turk

GLOBAL FOOD CRISIS

-Food Crisis Starts Eclipsing Climate Change Worries. Gore Ducks, as a Backlash Builds Against Biofuels. Read more here-

http://www.nysun.com/news/food-crisis-eclipsing-climate-change

-Q&A: Food crisis. Read more here-http://www.guardian.co.uk/environment/2008/apr/29/food.qna

-World food crisis alarms media. Read more here-http://news.bbc.co.uk/2/hi/in_depth/7373485.stm

-UN sets up task force on food crisis. Read more here-http://www.theglobeandmail.com/servlet/story/RTGAM.20080429.wunfood0429/BNStory/International/?cid=al_gam_nletter_newsUp

INFLATION

-How inflation changes saving rules. If prices keep rising, you may need to rethink how to take care of your money and where to put it. If prices keep rising, you may need to think differently about a few things. Have you seen the price of milk lately? It's up 13% since last year. The pain isn't only at the supermarket, however. Read more here-

http://money.cnn.com/2008/04/25/pf/life_inflation.moneymag/index.htm?postversion=2008042905

-Food price rise could last another two years. Experts say there won't be a food shortage in the U.S., but more consumers will trade down in their grocery shopping. Read more here-

http://money.cnn.com/2008/04/30/news/economy/food_prices/index.htm?postversion=2008043011

-Why grocery bills are set to soar. Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20080424.wfood25/GIStory/

-Food inflation the 'monster' around Canada's corner, experts warn. Read more here-http://canadianpress.google.com/article/ALeqM5gPdx7XEUzZW7lyIOQw-lSAhHLHFg

-Inflation's real cost-As the price of flour, milk and rice increases, Americans find that inflation forces them to dig deeper into their wallets. Watch video here-

http://money.cnn.com/video/#/video/news/2008/04/28/velshi.chernoff.inflation.cnnmoney

-Farmers blamed for rising cost of food. Read more here-http://money.cnn.com/2008/05/01/news/economy/congress_foodprice/index.htm?postversion=2008050111

-Federal Reserve may want Inflation. Read more here-http://www.merkfund.com/merk-perspective/insights/2008-04-30.html

-Bank of England's dilemma: A house price crash or soaring inflation. Which would you rather face: a recession and house price crash or years of soaring seventies-style inflation? Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/24/ccmpc124.xml

-The Federal Reserve's rescue of Bear Stearns Cos. will come to be seen as its "worst policy mistake in a generation," a former top Fed staffer said. Read more here-http://www.gata.org/node/6265

-Hyperinflationary Depression. Howard Ruff-Read more here-http://www.kitco.com/ind/ruff/ruff.html

-Inflation Fears & Food Shortages. James Turk-Read more here-http://www.kitco.com/ind/Turk/turk_apr282008.html

COMMODITIES

-Commodity price surge could match increase of 1970s. Read more here-http://www.canada.com/vancouversun/news/business/story.html?id=ff4e0406-0340-412e-8e7b-f27ed67a0657

OIL-GASOLINE

-Report Says Crude Oil Will Hit $225 a Barrel in 2012. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=42212

-OPEC president sees $200 oil possible: report. Read more here-http://www.reuters.com/article/idUSL289112520080428

-Oil Rises to Record on U.K. Pipeline Shutdown, Nigeria Attack this week. Crude oil rose to a record, trading near $120 a barrel in New York, after BP Plc shut a North Sea pipeline and gunmen attacked police guarding Nigeria's largest oil and gas terminal. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a72zporve.4E&refer=home

-Gas prices top economic worries survey. About 44% of survey participants say that the pinch at the pump is a 'serious problem.' Read more here-

http://money.cnn.com/2008/04/29/news/economy/gas_concerns.ap/index.htm

-Gouging myth out of gas. When you're paying more at the pump, don't blame the station owner. He feels your pain. Read more here-

http://money.cnn.com/2008/04/24/news/economy/gas_gouge/index.htm?postversion=2008042513

-Gasoline May Soon Cost a Sawbuck. Big New Shock at the Pump Forecast by Two Analysts. Read more at-http://www2.nysun.com/article/75363

U.S.-EURO DOLLAR

-Mobius Says Fed May Lower Rates to 1%, Dollar Is `Bombed Out'. The Federal Reserve may cut interest rates to 1 percent as U.S. housing foreclosures worsen, said Mark Mobius, who oversees $47 billion in emerging-market equities at Templeton Asset Management Ltd. The Fed yesterday reduced the target rate for overnight loans between banks by a quarter point to 2 percent and said the economy remains weak amid the worst housing contraction in a quarter-century.

Mobius added that the dollar's slide, down more than 7 percent against the euro and yen this year, is likely to slow because its ``completely bombed out'' and has overshot. ``I was looking at 1 percent a few months back. I still adhere to that,'' Mobius, executive chairman at Templeton Asset Management, said in an interview with Bloomberg Television today. ``I don't think the fear is over. You're going to continue to get more pressure on them to lower and lower.''

Fed policy makers have cut the benchmark rate by 2.25 percentage points in 2008, including two three-quarter point cuts. In addition, the Fed invoked emergency authority in March to start lending directly to investment banks and provided $29 billion of financing to secure JPMorgan Chase & Co.'s takeover of Bear Stearns Cos. Even with continuing U.S. interest rate cuts, the dollar's slide against other currencies may slow and its ``devaluation'' may end, said Mobius.

``The dollar is completely bombed out,'' said Mobius. ``So the dollar may stabilize at this level or it may go a little lower.'' Asian currencies, including the yuan and India's rupee are still undervalued against the dollar, said Mobius, who said the China's foreign-exchange rate may rise another 5 percent. The Chinese currency has risen 10.3 percent against the dollar in the past year, according to data compiled by Bloomberg. Bloomberg

-Iran, OPEC's second-largest producer, has stopped conducting oil transactions in U.S. dollars, a top Oil Ministry official said Wednesday, a concerted attempt to reduce reliance on Washington at a time of tension over Tehran's nuclear program and suspected involvement in Iraq. Iran has dramatically reduced dependence on the dollar over the past year in the face of increasing U.S. pressure on its financial system and the fall in the value of the American currency. Read more here-http://www.iht.com/articles/ap/2008/04/30/business/ME-FIN-Iran-Oil.php

-Gulf States May End Dollar Pegs, Kuwait Minister Says. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=agTk6w61fGt4&refer=home

-Long-term cost of the dollar peg. Read more here-http://us.ft.com/ftgateway/superpage.ft?news_id=fto042720081708381018

-Another Record Low in the Dollar. James Turk-Read more here-http://goldmoney.com/en/commentary/2008-04-27.html

-A rising euro threatens American dominance. Read more here-http://www.tehrantimes.com/index_View.asp?code=167016

GLOBAL-U.S. RECESSION

-Warren Buffett: I think we're in a Recession. Read and watch more here-http://www.huffingtonpost.com/2008/04/28/buffett-i-think-were-in-a_n_98989.html

-U.S. Economy Expanded at 0.6% Pace in First Quarter. The U.S. economy expanded at a 0.6 percent annual pace in the first quarter as an increase in inventories compensated for weaker consumer spending and a drop in business investment. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFZ5qPxNMywA&refer=home

-Canada's Economy Unexpectedly Shrank in February. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=a1It1QMesz.0&refer=canada

-Confidence among U.S. consumers fell this month to the lowest level in five years as Americans worried about jobs, record gasoline prices and falling home values. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=aEFTDEXBNdyw&refer=home

-Consumer mood sours more in April: U.Mich survey. Read more here-http://news.yahoo.com/s/nm/20080425/bs_nm/usa_economy_sentiment_dc_3&printer=1;_ylt=ArMy2bIptMcxM0lsUUeaVvWb.HQA

-Americans tightening their belts. As paychecks shrink, consumers cut back on most non-essentials, polls say. Read more here-

http://money.cnn.com/2008/04/25/news/economy/doing_without.ap/index.htm?postversion=2008042509

-As consumers step on the brakes, will the economy hit the wall? After years of piling up debt and neglecting to save, Americans are reining in their free-spending ways which could signal a long road ahead. Read more here-http://www.latimes.com/business/la-fi-consumer30apr30,1,5924755.story

-Raised in boom times, many Gen-X and Yers see their dreams go bust. Read more here-http://www.latimes.com/business/la-me-generation27apr27,1,3327536.story

-Many states appear to be in recession as deficits grow. Read more here-http://www.breitbart.com/print.php?id=D908SP4O0&show_article=1

-Europe's Economic Slowdown Will Stretch Through 2009. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aBc6ToEqCyqA&refer=home

-Is the U.S. doomed? Norman and Schiff Debate America's Future. Read more here-http://www.hardassetsinvestor.com/index.php?option=com_content&task=view&id=800&Itemid=6&utm_source=newsletter&utm_medium=email&utm_campaign=WeeklyUpdate

WORLD LIQUIDITY-CREDIT CRISIS

-Wolfensohn `Pessimistic' as Financial Losses Rise. Former World Bank President James Wolfensohn said he's ``pessimistic'' on the outlook for financial markets and predicted losses from the global credit turmoil may climb to $1 trillion. ``I'm more pessimistic than optimistic,'' Wolfensohn, 74, said an interview today in London. ``That doesn't necessarily mean a crash, but it means we're not through the woods yet. There are continued dangers.'' Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=apWbGp4l2mVk

-Market Sages: The Worst Is Yet to Come. Positive sentiment is on the rise on Wall Street as the market moves further away from the March lows and the S&P 500 hits the top end of its 1,270-1,400 trading range. This weekend brought bullish results from the "big money poll" in Barron's, but also some more sobering commentary from two Wall Street legends: Jeremy Grantham and Peter Bernstein.

In his latest quarterly letter, GMO founder Grantham predicts the U.S. market won't hit bottom until sometime in 2010, citing the painful experience of past post-bubble economies. "The unraveling of the 2000 bubble is a tale still being told," he writes.

Author, financial analyst, and market historian Bernstein, meanwhile, poured cold water over hopes for a V-shaped recovery in an interview with The Wall Street Journal. "You don't have a high-growth exit from this, as you've had from other kinds of crises," he says. "Here, the shape of the business cycle is like an L, where it goes down and doesn't turn up. Or like a U, a flat U."

Notably, Bernstein isn't as bearish on stock as Grantham, but the message from both market legends is that Wall Street's recent flirtation with optimism is misplaced. Then again, a lot of the folks getting excited in recent weeks have much shorter time frames in mind than the big-picture cycles Grantham and Bernstein are talking about. Finance.yahoo.com

-One Guy Who Has Seen It All Doesn't Like What He Sees Now. Peter Bernstein has witnessed just about every financial crisis of the past century. As a boy, he watched his father, a money manager, navigate the Depression. As a financial manager, consultant and financial historian, he personally dealt with the recession of 1958, the bear markets of the 1970s, the 1987 crash, the savings-and-loan crisis of the late 1980s and the 2000-2002 bear market that followed the tech-stock bubble.

Today's trouble, the 89-year-old Mr. Bernstein says, is worse than he has seen since the Depression and threatens to roil markets into 2009 and beyond longer than many people expect. Mr. Bernstein, whose books include "Against the Gods: The Remarkable Story of Risk," sees two culprits. One is the abuse of securitization the trend for banks to hold fewer loans on their books and instead turn them into securities that were sold to other investors.

The other is simply years of overborrowing by financial institutions and consumers alike. Mr. Bernstein is hopeful that Federal Reserve intervention will prevent deflation and depression, but he says there is no guarantee. Read interview here-http://online.wsj.com/article/SB120916592206646195.html?mod=todays_us_money_and_investing

-British bank bailouts to be kept secret. The Bank of England has imposed a permanent news blackout on its L50 billion-plus plan to ease the credit crunch. Ferocious and unprecedented secrecy means taxpayers will never know the names of the banks that have been supported through the special liquidity scheme, which was unveiled by Bank Governor Mervyn King last week.

Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years the period after which all but the most sensitive state documents are released. Read more here-http://www.gata.org/node/6259

-Deutsche Bank Says It Had First Loss in Five Years. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=am77vUd.9uXA&refer=home

-EU bails out German bank for $7.8 billion. EU approves rescue package for Germany's WestLB bank. Read more here-http://biz.yahoo.com/ap/080430/eu_germany_bank.html?.v=5&printer=1

-Nomura Posts Record Loss on Bond-Insurance Provisions. Nomura Holdings Inc., Japan's largest brokerage firm, reported a record quarterly loss after setting aside $1.26 billion in case bond insurers can't cover losses on securities. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aPNMmb_9Po_k&refer=home

-Morgan Stanley see big bank woes just beginning. Morgan Stanley analysts on Monday told clients to "sell the rally" in financial stocks, slashing forecasts for big bank earnings and warning that the current credit crunch is only just beginning. Read more here-http://www.reuters.com/article/fundsFundsNews/idUSN2847796620080428

-Global adjustment will be long and painful. Read more here-http://money.ninemsn.com.au/article.aspx?id=453730

INTEREST RATES

-Fed Trims Rate to 2%, Seventh Cut Since Squeeze Began. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=al0QQ9dkK6z0&refer=home

-Trichet Says Beating Inflation Is Sole Aim of ECB. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid=as_IKQqFIGck&refer=home

-Bernanke May Have to Follow Volcker to Avoid Being Tagged Burns. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aBid7AnvOvNA&refer=home

REAL ESTATE

-Homeowners to suffer as global crunch hits UK hardest. Read more here-http://business.timesonline.co.uk/tol/business/economics/article3848321.ece

-Worst UK house price slide since 1996 raises negative equity fears. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/30/bcnnation430.xml

or http://www.bloomberg.com/apps/news?pid=20601068&sid=aAgvNxVKy5yE&refer=home

-U.K. house price inflation hits 'negative' as over half of properties lose value. Read more here-http://www.independent.co.uk/news/business/news/house-price-inflation-hits-negative-as-over-half-of-properties-lose-value-816722.html?service=Print

-Britain facing one of the worst housing crashes in history. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/25/cmwire25.xml

-Housing prices post record declines. Las Vegas, Miami and Phoenix all saw prices plummet by at least 20%. And so far, there is no sign of a bottom. Read more here-

http://money.cnn.com/2008/04/29/real_estate/housing_price_fall_deepens/index.htm?postversion=2008042912

FORECLOSURES-MORTGAGES

-Foreclosures spike 112% no end in sight. More than 155,000 families have lost their homes to foreclosure this year; one out of every 194 U.S. households received a foreclosure filing. Read more here-http://money.cnn.com/2008/04/29/real_estate/foreclosures_still_rising/index.htm?postversion=2008042909

-Housing relief efforts slow as pace of foreclosures rise. Hope Now reports that it has helped keep over a half a million home owners out of foreclosure this year. Critics say that still isn't enough. Read more here-http://money.cnn.com/2008/04/28/real_estate/Hope_Now_workouts_slow/index.htm?postversion=2008042817

-Countrywide Financial Corp., the nation's largest mortgage lender and servicer, said Tuesday it lost $893 million during the first quarter due to a sharp increase in its provision to gird against unpaid home mortgage loans amid a deepening housing downturn. Read more here-http://news.yahoo.com/s/ap/20080429/ap_on_bi_ge/earns_countrywide_6&printer=1;_ylt=AmtchE10ZqN56baSZYELAM5v24cA

GEOPOLITICAL

-"Hostile" Iran Sparks U.S. Attack Plan. A second American aircraft carrier steamed into the Persian Gulf on Tuesday as the Pentagon ordered military commanders to develop new options for attacking Iran. CBS News national security correspondent David Martin reports that the planning is being driven by what one officer called the "increasingly hostile role" Iran is playing in Iraq smuggling weapons into Iraq for use against American troops.

"What the Iranians are doing is killing American servicemen and women inside Iraq," said Secretary of Defense Robert Gates. Read more here-http://www.cbsnews.com/stories/2008/04/29/eveningnews/main4056941.shtml

-Iraq Retrospective: Read The Quotes That Sent the U.S. To War. Read full story here-http://www.huffingtonpost.com/2008/03/20/iraq-retrospective-read-_n_92575.html

"I believe demolishing Hussein's military power and liberating Iraq would be a cakewalk." Kenneth Adelman, member of the Pentagon's Defense Policy Board, 2/13/02

"Support for Saddam, including within his military organization, will collapse after the first whiff of gunpowder." Richard Perle, Chairman of the Pentagon's Defense Policy Board, 7/11/02

"Desert Storm II would be in a walk in the park. The case for 'regime change' boils down to the huge benefits and modest costs of liberating Iraq." Kenneth Adelman, member of the Pentagon's Defense Policy Board, 8/29/02

"Having defeated and then occupied Iraq, democratizing the country should not be too tall an order for the world's sole superpower." William Kristol, Weekly Standard editor, and Lawrence F. Kaplan, New Republic senior editor, 2/24/03

-CIA's Hayden: Syria was on verge of becoming nuclear power. Read more here-http://www.worldtribune.com/worldtribune/WTARC/2008/ss_syria0102_04_30.asp

© 2008, Worldwide Precious Metals.
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The GoldBugg Report - May 06, 2008
Posted by Worldwide Precious Metals on Tuesday, May 06, 2008