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The GoldBugg Report - July 08, 2008

July 8, 2008

-RBS issues global stock and credit crash alert. Barclays warns of a financial storm as Federal Reserve's credibility crumbles. BIS warns of Great Depression dangers from credit spree.

-"Buy gold! Buy silver! Buy them because they're the only defence against what's happening in all the other markets." Dale Doelling-Trends In Commodities

-Citigroup says long-term gold price could double or even triple.

GOLD

-"This Is It," Sinclair wrote. "Gold is preparing for an assault not on $1000, but for a brief penetration of $1200. Violent chopping will occur, then off it goes to $1650. This violent chop we have been living in here and now will resolve itself very soon and the take will be seen by history as having occurred in this last formation HERE AND NOW."

A bit less apocalyptic was Mark O'Byrne, of Gold and Silver Investments Ltd., who wrote that $952 is "now the key resistance for this market ... Any close above $952 should see us re-challenging the psychological $1,000 in very short order." Kitco Daily Resource

-On Friday 27 June 2008, gold surged $32.70 in what was the largest one day move since 1985 as the dollar weakened, oil prices surged to new record highs and stock markets fell sharply. While gold was up some 3%, most U.S. stock indices were down some 3%. Gold.ie

-"Buy gold! Buy silver! Buy them because they're the only defence against what's happening in all the other markets." Dale Doelling-Trends In Commodities

-"The Fed said that inflation is a major concern, but they're not going to do anything about it, which made gold go ballistic," said Leonard Kaplan, of Prospector Asset Management in Evanston, Illinois. "The dollar is going to get slammed again." Kitco Daily Resource

-Patrick Chidley, an analyst at Barnard Jacobs Mellet in Stamford, Connecticut, added that, "The Fed seems to have decided to protect growth by holding rates low and to accept the fact that this period of inflation is inevitable and unstoppable. Inflation is the lesser of two evils. Investors will increase their positions in gold, and it's likely to continue upward." Kitco Daily Resource

-"I look at gold as the only true way I can protect or accumulate real wealth and it is the only real store of wealth." Enrico Orlandini

-Russia's oil funds may invest in gold. Moscow-based agency RIA Novosti said, citing a finance ministry official. Russia's Reserve Fund and the National Wellbeing Fund were worth a combined $161.9 billion on June 1.

The Russian central bank along with the Chinese and other ‘emerging' market, second tier central banks has been increasing its gold bullion reserves in recent months. As more institutions, sovereign wealth funds and central banks increasingly diversify into gold, we will see gold rise to multiples of its current price as it is such a tiny marketplace when compared to the size of equity, bond and currency markets. Gold.ie

-Dale Doelling fromTrends In Commodities says he'll stick with his prediction of gold above $1,350 by the year's end and silver at $25. "I think you and I both have a better chance of winning the Lotto than metals prices have of falling at this juncture," said Doelling. Gold revs its engine and squeals down the track-Read more here-http://www.marketwatch.com/news/story/gold-revs-its-engine-squeals/story.aspx?guid={859C0FA3-EB68-4DC8-A361-0629E1A6F5D7}&dist=msr_1&print=true&dist=printMidSection

-Citigroup says long-term gold price could double or even triple. Citigroup suggests that inflation and the fabrication outlook favor gold. In their recent Gold Commodity Update, Citigroup metals analysts John H. Hill and Graham Wark also predicted that "longer term, we believe that gold is capable of doubling or tripling from current levels." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=55618&sn=Detail

-Given the confluence of so many bearish factors for bond and equity markets, we remain firm in our belief that gold will reach our 2008 prediction of $1,200 per ounce before the end of 2008. Gold.ie

-Let Big Brokers Fail; Buy Gold Not Oil: Marc Faber. The Federal Reserve should let the big investment banks go bust if they made unwise investment decisions, and investors should take refuge in gold, because the central bank has been "misleading" the markets, Marc Faber, editor and publisher of "The Gloom, Boom & Doom Report," told "Worldwide Exchange."

Fears that another major investment bank may get into trouble have hammered stocks recently but some analysts have said the major Wall Street banks were safe as the Fed cannot afford to let them fail. "I think there's a good chance that the Fed itself will fail one day if they say 'We're not going to let you fail,' and the government will have to bail out the entire system," Faber said.

"If I'm a bad businessman and I go out of business, who's gong to help me?" he said. "But Bear Stearns and the Wall Street elite, because they are tied into the Treasury and the Federal Reserve and they have lunch together, it's a club and so forth, they're bailed out. It's a joke!" Read and watch more here-http://www.cnbc.com/id/25406894

-Blanchard looking for new record gold price highs by end of year. Investors are shifting out of equities and into tangible assets to protect wealth as equities markets continue to decline.

While the summer months are traditionally slow months for precious metals, Blanchard Chairman and CEO, Donald W. Doyle, Jr., says the current strength gold is exerting only underscores what his investment firm has been predicting since the beginning of the bull market in 2002 that gold is tremendously undervalued, and he sees new record prices by year's end potentially $1,150 or higher.

"Inflation, a weak dollar, the rising price of oil, Middle Eastern geopolitical tensions, and the new influence of emerging markets around the globe are all factors supporting the uptick in the gold price," Doyle says. "However, the key fundamental driver over the next six months will be renewed investment demand by institutions and individuals who are looking for a safe haven."

Doyle says the equities markets have not hit bottom, and as investors see negative returns in stocks and steep declines in their 401K holdings, they are seeking out alternative investments where ever they can, particularly as the value of the dollar remains near record lows. "It's not that the financials are over-bought" Doyle says, "it's that investors just aren't buying.

They're looking for non-traditional financial vehicles, such as gold, to save the money they have. The good news for these investors is that gold has generated very nice positive returns of 43 percent over the last year and 11 percent year to date in 2008, and Blanchard sees this trend continuing long term as the economy continues to grapple with major issues that aren't going away anytime soon unfortunately."

David Beahm, Vice President of Marketing and Economic Research for Blanchard says the firm has seen year-to-date new customer growth in 2008 that has already surpassed that of all of 2007. "The markets are a very volatile and uncertain place to be for many investors," Beahm says, "and people are waking up to the fact that there are other investment vehicles that can perform exceedingly well during times of economic crisis and uncertainty, and gold and other tangible assets are a great place to be right now, and long-term we see them continuing to outperform the equities markets." Read full story here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=55973&sn=Detail

-The price of gold will find resistance at the high $950s and again at the major round number of $1000. The opposition at the latter level will have more gusto. The second try on $1000 will be followed by a modest reaction. After this reaction, a third attempt will see the price of gold burst upwards through $1000. The pull from the $1200 magnet is irresistible and will be accomplished in 2008. All else is noise. Jim Sinclair

-Gold Fields CEO reckons gold price will rise to $1,200 by June 2009. Gold Fields CEO Nick Holland expects the gold price to rise to $1,200 by June 2009, but says production costs are also rising fast. "I would see the price at $1,000 in December and at $1,200 by June next year." Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=55673&sn=Detail

-Calm before the storm gold set to rise. The factors which propelled the gold price to an all time high in March are still in place and it is just a matter of time before the bullion prices once again breaches $1,000/oz. "This is the calm before the next stage of the hurricane. It is very much the case that the same factors that have been in place since March are still there.

Perhaps people to some extent got used to the sub prime issues," said Nikos Kavalis a senior analysts with GFMS in London. Traditionally the gold price languishes while those in the north head for the sea and the lakes for their holidays but come autumn and winter the gold price may look very different.

"The summer (northern hemisphere) months historically have been quite poor for gold, very often it is a quiet period for investment activity, you can see it in the market at the moment," said Kavalis. "The gold price north of $1,000/oz is extremely probably, the price testing $1,200/oz is not improbable at all," he said. Read more here-http://www.miningmx.com/gold_silver/641494.htm

-Gold to catch-up with oil as inflation brews. Thomas Winmill, portfolio manager of the $225-million Midas Fund, said that the gold/oil ratio has only be so skewed in favor of oil in two cases since 1979, and each time it was followed by a rally in gold, a recent study by research firm Ned Davis showed. Read more here-http://www.guardian.co.uk/business/feedarticle/7615459

-Too Late to Buy Gold? Read more here-http://news.goldseek.com/GoldSeek/1214583360.php

-South African NUM miners will strike on August 6^th. The NUM said it would hold a series of protests in South Africa's nine provinces, starting on July 9 to July 23, culminating in the national strike by its members. South Africa's biggest miners union said on Wednesday it would down tools on August 6 in a national strike that could halt production in the world's biggest source of platinum and major gold producer. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=56054&sn=Detail

-Austria's central bank will sell little gold over the rest of the CBGA2. The World Gold Council says it expects Austria to continue selling small amounts of gold over the remainder of the second Central Bank Gold Agreement. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=55674&sn=Detail

-European Central Bank gold sales programme complete for this agreement year. The ECB has announced it has completed its sales of gold during the current sales agreement year, but overall it has sold 20% more metal this year than last. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=55960&sn=Detail

SILVER

-Embracing inflation. This economic cloud has a silver lining. It seems as if every time I go to the grocery store or gas pump lately the prices have moved higher, exponentially higher.

Most "experts" say it simply can't go on like this consumers can't handle it for much longer, right? In the meantime though, investors are looking for ways to ride out the wave of inflation and at the same time pray it's not a tsunami.

So what's an investor to do? Where can a consumer go to at least make it a more level playing field? Silver's path to protection. One way for investors to protect themselves from the impact of inflation and at the same time even make some profits, is to buy precious metals, most commonly gold. It's not a new situation for investors and consumers faced with rampant inflation to acquire gold and use it as a hedge for inflation it's been going on for a very long time.

As the U.S. dollar continues to fall and consumer staples keep trending higher and higher, gold's real worth shines through. Usually as gold moves higher the other metals do as well, and lately silver is even more attractive than gold. Silver has always been the poor red-headed stepsister to gold. Clearly, from a dollar standpoint, it will most likely never be more precious than gold, at least I don't think so anyway. When we examine silver more closely though we also discover that silver is as much an industrial metal as it is a precious metal.

Most people are unaware that it has many unique properties that make it ideal for use in the photography, technology, defence, and electronic industries as well as many other applications. As we continue to trudge through 2008, the rising global investment hunger for silver and worldwide industrial demand will become the key factors driving silver to new highs in 2009. Kevin Kerr-Read full story here-http://www.marketwatch.com/news/story/economic-cloud-has-silver-lining/story.aspx?guid=D54B7265-DE90-45ED-94D3-A7857E87F7D7&dist=SecMostMailed&print=true&dist=printMidSection

-Automakers turn to 'nanotechnology' as precious metal prices soar. The world's automotive manufacturers have gone well beyond the basic concept of PGM substitution, and are now looking to nanotechnology to reduce the use of precious metals.

Japan's Mitsui Mining and Smelting Co told Reuters last month it aimed to start commercial production in three years' time of a new catalyst that applies silver rather than platinum in diesel vehicles, at almost $2,000 an ounce cheaper. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=55405&sn=Detail

-Silver news from silver institute. Read more here-http://www.silverinstitute.org/news/2q08.pdf

-One question I often receive is how much money an investor should put into the precious metals. There is no simple answer, yet I want to remain consistent. When I wrote The Ten Rules of Silver Investing, it was stated that 10% was enough of a diversification. Since that book was published nearly a decade ago, I have told my readers that perhaps an allocation of up to 20% might be considered, due to the current economic environment on a worldwide basis.

In 2005, Ibbotson Associates prepared a study for Bullion Management Services Inc. This was the first modern asset allocation model that really defined the problem of true asset diversification, and it proposes a real world solution. On page 3 of this study we find, "Based upon the forward-looking resampled, efficient frontiers, asset allocations that include metals have a better risk-adjusted performance (as measured by the Sharpe Ratio) than asset allocations with the precious metals.

Investors can potentially improve the reward-to-risk ration in conservative, moderate, and aggressive asset allocations by including precious metals with allocations of 7.1%, 12.5%, and 15.7%, respectively. These results suggest that including precious metals in an asset allocation could increase expected returns and reduce portfolio risk." David Morgan-Read more here-http://www.kitco.com/ind/morgan/printerfriendly/jun272008.html

-The one thing I like about gold is its high price. This accentuates the great value of silver. It is the difference in price between these two comparable items that should be of interest to the long-term investor. Then a review of known facts and an application of sound common sense should cause the logical long term investor to run to buy silver. I know my calculations for the future price of silver will sound crazy to most, just like the Rabbi's advice sounded crazy.

I'll just ask you to remember that all great opportunities seemed crazy at first. If they didn't seem crazy, everyone would have invested already and there wouldn't be any great opportunity. There is 5 billion ounces of gold versus 2.5 billion ounces of silver (some, including Mr. Butler, would say it's more like 5 times as much). That means that gold should sell for half of the price of silver, or silver double the price of gold.

In 20 years, because we consume silver but accumulate gold mine production, there will be, for sure, five to ten times as much gold as silver. I honestly believe that silver must eventually sell for five to ten times what the price of gold may be. It will be many hundreds of dollars an ounce or more. Gold costs more than 50 times the price of silver today. The difference between where the price is today, versus where it should be, and where it will be in twenty years would shock you.

If you were to ask me how and why silver could be so under-priced compared to gold, I would tell you to read Mr. Butler's explanation of price manipulation. It is the only thing that makes sense to me. We may be in confusing times, but that doesn't mean we have to be confused about everything. If the Rabbi were here today, my guess is that he would say to buy silver. Ted Butler & Israel Friedman silver commentary here-http://news.silverseek.com/TedButler/1214918791.php

-First silver US coin with readable Braille unveiled. Read more here-http://ap.google.com/article/ALeqM5j7sdL1zUfJrW76TsqQVADojnZoqAD91LTN3G0

PLATINUM-PALLADIUM

-Look for more platinum price spikes in 2008. Assertive investor activity is likely to be sustained through 2008 according to CPM Group, looking for more metal than the market dynamics could supply from any excess in the underlying market. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=55528&sn=Detail

RARE COLORED DIAMONDS

-Diamond Investment Fund Falls Short of IPO Goal. Diamond Circle Capital listed on the London Stock Exchange yesterday as a closed-ended investment company under the Yahoo! ticker DIAM.L. It raised about $75 million, far short of its $150 million goal. However, the company raised $100 million prior to its IPO.

The fund plans to invest in high-quality diamonds. One unnamed source close to the deal told London's Financial News that the amount raised was lower than expected due to the fund being an innovative structure and the first of its kind. Diamonds.net

OIL

-Crude oil prices could rise to as high as $170 per barrel in the coming months but are unlikely to hit $200 and should ease towards the end of the year, OPEC President Chakib Khelil said in an interview on Thursday. "I forecast prices probably between $150-170 during this summer.

That will perhaps ease towards the end of the year," he told France 24 television, according to a text of the interview released by the station. The comments came as crude prices neared $135 per barrel, after rising about 40 percent this year. Khelil said he doubted prices would climb as high as $200. Read more here- http://www.bloomberg.com/apps/news?pid=20601087&sid=aclKiYe3Osv4&refer=home

-Options traders bet oil could rise another 40%. Read more here-http://www.gata.org/node/6393

-Saudi king says oil cheap, output hike will not help. Read more here-http://in.reuters.com/article/businessNews/idINIndia-34318820080701?sp=true

-Saudi king urges consumers to get used to high oil prices. King Abdullah of Saudi Arabia, whose nation is the world's number one oil exporter, called on consumer countries to get used to high prices in comments published on Tuesday. "Consumer countries have to adapt to the prices and the mechanisms of the market," the king said in an interview published by the Kuwaiti daily Al-Siyassah.

"We have nothing to do with the current sharp increase in crude prices," he said reiterating the Saudi position that speculation, rising demand and the taxation of oil products in consumer countries were to blame. "These countries must reduce their taxes on fuel if they want to contribute to easing the burden on ordinary consumers," he said. AFP

-Iran says OPEC powerless to reduce oil price-report. Read more here-http://uk.reuters.com/article/oilRpt/idUKDAH12693820080701

-U.A.E. Can Supply More Oil If Needed, Al-Hamli Says. The United Arab Emirates, OPEC's third-biggest oil producer, is ready to boost supplies to the market if needed, oil minister Mohamed al-Hamli said. ''As a member of OPEC, we're willing to supply more if the market needs more oil,'' al-Hamli said on the sidelines of the Asian Oil and Gas Show in Seoul today. "We believe the market is adequately supplied at this moment." Read more here-http://www.bloomberg.com/apps/news?pid=20601072&sid=aZo1EYTazm1A&refer=energy

-Canada Oil Sands Need Minimum Price $70 a Barrel, Statoil Says. Canadian oil sand deposits require crude prices of at least $70 a barrel to cover capital and operating expenses and provide an acceptable rate of return, a StatoilHydro ASA executive said. ''You cannot produce at $50 a barrel,'' Robert Skinner, StatoilHydro's senior vice president for commercial and business development in Canada, said in Madrid today. Rising costs mean New York oil prices need to be at least about $70 or $80 a barrel to make Canadian oil sands worthwhile, he said.

Oil sands, biofuels and exploration in harsh, untapped environments such as the Arctic, are among the possibilities for finding the ''third trillion barrels'' of oil resources, Saudi Aramco Chief Petroleum Engineer Khaled Buraik told a round-table panel today at the World Petroleum Congress in Madrid. About a trillion barrels of oil has already been produced and the world has another trillion of proven oil reserves, leaving the question of where the third trillion will be found. StatoilHydro is Norway's largest oil company. Bloomberg

-IEA says world in the grips of a 'third oil shock'. Energy watchdog says no end in sight for high oil prices as rapid growth in China and India drives demand. Read more here-

http://www.theglobeandmail.com/servlet/story/LAC.20080702.RIEA02/TPStory/Business

-Five-year oil squeeze predicted. International Energy Agency reports estimated daily oil needs will grow to 94M barrels by 2013 from some 87M today slightly less than supply. Read more here-http://money.cnn.com/2008/07/01/news/international/oil_supplies.ap/index.htm or http://www.bloomberg.com/apps/news?pid=20601072&sid=aG4Wm2P35WDc&refer=energy

-Offshore Drilling Won't Affect Prices Much, EIA Says. Expanded offshore drilling in the U.S. won't affect oil and natural-gas prices much, the head of the Energy Information Administration said. Guy Caruso, speaking today at a press conference in Washington, said his agency had considered the effect of more drilling in a 2007 report.

Higher energy prices this year might change the results, although the time needed for resource development would damp any outcome, he said. ''It does take a long time to develop those resources,'' Caruso said. ''Therefore the price impact is muted by that.'' Read more here-http://www.bloomberg.com/apps/news?pid=20601072&sid=adlgNMu.LrHg&refer=energy

-Matt Simmons, schools out let summer begin. See slide show on oil here-http://www.321energy.com/editorials/simmons/simmons070108/simmons070108.html

-Don't blame the oil 'speculators'. A campaign in Congress to punish traders for record oil prices reveals a fundamental misunderstanding of how futures markets work. Read more here-

http://money.cnn.com/2008/06/27/news/economy/birger_oil_speculation.fortune/index.htm

-Russia's Oil Output Falls in June, Extending Decline. Read more here-http://www.bloomberg.com/apps/news?pid=20601085&sid=aXC.9ub8iQL0&refer=europe

-Libya May Cut Oil Output on U.S. Threat to its Assets. Libya, the holder of Africa's largest oil reserves, threatened to cut oil output in response to a U.S. law that allows terror victims to seize assets of foreign governments as compensation.

Congress passed a law in January that would let families of American victims of Libyan-linked attacks confiscate Libyan assets and those of companies doing business with the North African nation. At least two lawsuits have already been filed in Washington. Read more here-http://www.bloomberg.com/apps/news?pid=20601072&sid=awsiwToPU570&refer=energy

GASOLINE

-Oil Shock: Analyst Predicts $7 Gas, "Mass Exodus" of U.S. Cars. Oil at $135? That was just the opening skirmish in the "peak oil" wars. The latest smart money? $200 oil in 2010, with gasoline at $7 a gallon. And that is going to turn Americans into car-shunning Europeans once and for all poor Americans, at least. That's the latest gloomy forecast from Jeff Rubin at Canadian brokerage CIBC World Markets, who just a few months ago figured $200 oil would be a thing of the distant future like 2012.

Mr. Rubin laughs off recent attempts to take the steam out of global oil markets. Saudi production promises of 200,000 barrels a day doesn't dent the 4 million barrel-per-day decline from aging fields every year, for starters. And it will just be "gobbled up" by increasing domestic consumption in Saudi Arabia, like other oil-producing countries that subsidize fuel. Read more here-http://blogs.wsj.com/environmentalcapital/2008/06/26/oil-shock-analyst-predicts-7-gas-mass-exodus-of-us-cars/

-Gas hits another all-time high. National average climbs to $4.087 a gallon. Alaska has the highest gas prices in the nation while drivers in South Carolina pay the least. Read more here-

http://money.cnn.com/2008/07/01/news/economy/gas/index.htm

-The record-high price of gasoline is putting a strain on motorists and spurring some to shift their habits. Here are their stories. Read more here-

http://money.cnn.com/galleries/2008/news/0805/gallery.real_people_gas/index.html

-Drivers blame D.C. for high gas prices. More than three-quarters of consumers say the government's energy policies are to blame for record fuel costs, according to Consumer Reports. Read more here-http://money.cnn.com/2008/06/26/news/economy/consumers_gas_prices/index.htm

COMMODITIES-FOOD

-Percentage change for the year, so far, in various items. Jim Sinclair

Crude oil up 42.5%

Ethanol up 20.7%

Heating oil up 43.9%

Natural gas up 76.5%

Unleaded gas up 39.5%

Cattle up 1.0%

Corn up 58.8%

Soy beans up; 26.4%

Coffee up 5.9%

Aluminum up 32.7%

Copper up 25.7%

Platinum up 33.4%

Gold up 6.0%

Silver up 13.4%.

S&P 500 down 10.24%

Frankfurt DAX down 18.32%

London FTSE down 12.23%

Paris CAC down 19.64%

Hong Kong Hang Sang down 18.33%.

Tokyo Nikkei down 9.47%

Singapore Straits down 14.04%.

Seoul Composite down 9.57%

Sydney All Ordinary down 15.76%

Taipei Telex down 7.40%

-U.S. Lawmakers' zeal versus speculators could backfire. Read more here-http://www.reuters.com/article/ousiv/idUSN2740094220080628

-Commodities Signal Bubble Bursting as First-Half Ends. Commodities finished their best first half in 35 years. The next six months may not be as rewarding because record prices for oil, copper and a dozen other raw materials may crimp consumption and encourage growth in supply.

The 19 commodities in the Reuters/Jefferies CRB Index jumped 29 percent through June 30, the most since 1973 and more than any second-half gain in at least five decades, data compiled by Bloomberg show. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aMdI79jc0i9w&refer=canada

-Food price spike: Is ethanol to blame? A devastated corn crop is likely to exacerbate costs at the grocer. Some people are pointing a finger at the ethanol production laws. Read more here-http://money.cnn.com/2008/06/27/news/economy/ethanol_food_prices/index.htm

-USDA says floods hurt corn crop. Farmers to harvest nearly 9% fewer acres than last year; food prices may rise as result. Read more here-

http://money.cnn.com/2008/06/30/news/economy/flooding_corn.ap/index.htm?postversion=2008063010

-Hoarding Nations Drive Food Costs Ever Higher. At least 29 countries have sharply curbed food exports in recent months, to ensure that their own people have enough to eat, at affordable prices. When it comes to rice, India, Vietnam, China and 11 other countries have limited or banned exports. Read more here-http://www.nytimes.com/2008/06/30/business/worldbusiness/30trade.html?_r=3&adxnnl=1&oref=slogin&partner=rssyahoo&emc=rss&adxnnlx=1214852783-23QcKmPzEpoBHeGpDRIZmw&pagewanted=print&oref=slogin

DIRE FINANCIAL WARNINGS

-RBS issues global stock and credit crash alert. The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks. "A very nasty period is soon to be upon us, be prepared," said Bob Janjuah, the bank's credit strategist.

A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets. Such a slide on world bourses would amount to one of the worst bear markets over the last century. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/18/cnrbs118.xml

-Barclays warns of a financial storm as Federal Reserve's credibility crumbles. US central bank accused of unleashing an inflation shock that will rock financial markets. Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero."

"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."

Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond. Read more here-

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/cnbarclays127.xml

-BIS warns of Great Depression dangers from credit spree. The Bank for International Settlements, the world's most prestigious financial body, has warned that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

Virtually nobody foresaw the Great Depression of the 1930s, or the crises which affected Japan and southeast Asia in the early and late 1990s. In fact, each downturn was preceded by a period of non-inflationary growth exuberant enough to lead many commentators to suggest that a 'new era' had arrived", said the bank.

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme appetite for risk shown by investors, and entrenched imbalances in the world currency system. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/25/cncredit125.xml or http://www.gata.org/node/6401

-Broad Says Economy in Worst Slump Since World War II. Billionaire investor Eli Broad said the U.S. economy is in the worst recession since World War II and a recovery in the housing market is ''several years'' away. ''This is worse than any recession we've had since World War II,'' Broad, 75, said in an interview yesterday. Broad, the founder of homebuilder KB Home, said the U.S. should avoid a depression on the scale of the 1930s because the country now has sufficient ''safety nets.''

With home sales and prices declining and consumer confidence at a 28-year low, ''I don't see it turning around very quickly,'' Broad said. The economy expanded at an annual rate of 1 percent in the first quarter, the Commerce Department said last week. That caps the weakest six months of growth in five years. ''This is the worst period of my adult lifetime,'' Broad said, speaking about the U.S. economy.

"I do not think things are going to get any better'' before the next president takes office in January. Selling off vacant, unsold homes could take ''several years,'' he said. The U.S. will avoid a collapse as severe as the 1930s thanks in part to Federal Reserve oversight of the banking system and other safeguards that didn't exist then, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAZwgRY7yikM&refer=worldwide

Definitions, Quotes and Quick Hits

-Interest Rate Risk. The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship.

Such changes usually affect securities inversely and can be reduced by diversifying (investing in fixed-income securities with different durations) or hedging (e.g. through an interest rate swap). Interest rate risk affects the value of bonds more directly than stocks, and it is a major risk to all bondholders. As interest rates rise, bond prices fall and vice versa.

The rationale is that as interest rates increase, the opportunity cost of holding a bond decreases since investors are able to realize greater yields by switching to other investments that reflect the higher interest rate. For example, a 5% bond is worth more if interest rates decrease since the bondholder receives a fixed rate of return relative to the market, which is offering a lower rate of return as a result of the decrease in rates. Investopedia.com

-"Inflation is a lot like toothpaste once it is out, it is very hard to get back into the tube." David Beahm-Blanchard and Co. Inc.

-"The Dow Jones Industrial Average had its worst June since the Great Depression." Bloomberg

-Wall Street: The bear is back. Dow and Nasdaq end at bear market levels July 2, down more than 20% from October highs. Cnnmoney.com

-Ray Ellis, owner of Escondido Coin and Loan pawnshop, is used to customers coming in with rare or collectible coins for one of the four-month loans that is the industry standard. Recently, customers have been seeking larger amounts, up to $50,000, Ellis said. He said one gentleman came in with a sack of gold coins in order to pay off debts on his investment properties in Orange County.

The credit crunch and economic turmoil is sending bigger fish their way. We're seeing lots of people that we wouldn't have seen before, said Mike Robinson, treasurer of the Collateral Loan & Secondhand Dealers Association and owner of Crown Jewelry and Loan in San Diego. We're definitely seeing more affluent people coming through because I'm seeing bigger diamonds.

Irene Longoria, store manager of the Oceanside Gems N' Loans, estimates that about 30 percent of her customers are new this year. She said they're coming from Del Mar, Solana Beach and other upscale residential areas. We've had people come in with sandwich bags of jewellery. This recession is hitting everybody, Longoria said. New customers are finding out a lot more than they bargained for at their local pawnshop.

John Martin, a jewelry professional at Gems N' Loans, which has locations in Vista and Escondido, said a woman recently expected hundreds if not thousands of dollars for the diamond ring she received as a gift, only to find out it was zirconium. She said, it's a diamond, and I said, it's not, Martin recalled. Then she said, that son of a b...! Thehousingbubbleblog.com

-Lunch with Buffett will cost more than $2 million. Lunch with Berkshire CEO Warren Buffett will cost more than $2 million; proceeds go to charity. Read more here-

http://money.cnn.com/news/newsfeeds/articles/apwire/13366a320132ddc5239fe79c449bd37f.htm

INFLATION

-Euro zone inflation reaches record 4 pct. Read more here-http://www.guardian.co.uk/business/feedarticle/7619535

-Core inflation losing accuracy as price predictor. Read more here-http://www.reuters.com/article/GCA-inflation/idUSL2613674720080630

-Money Supply Surge to Lead to Inflationary Depression in U.S.? When official government statistics are abruptly discontinued and no longer available to the public and when other government statistics like the Consumer Price Index indicate that inflation remains contained, many wonder, "is it just me and everybody else I know that is paying a lot more for food and energy and just about everything else that we use?"

John Williams of Shadow Government Statistics points out that the government has changed the method of calculating CPI figures, especially within the last fifteen years, lowering inflation figures significantly. Even more bizarrely and worryingly, the U.S. government has discontinued publishing M3 money supply data. But the diligent analysts in Shadow Statistics have reconstituted and it shows M3 surging by over 20%.

John Williams and Shadow Statistics are garnering increasing respect for their excellent research in this regard and were recently featured on CNN. The interview is excellent and in it Williams outlines his belief that the U.S. will experience an inflationary depression. The interview was in February of this year and since then M3 money supply has surged by even more and is now at over 20% as seen in the chart below.

In the CNN Money interview, Williams recommends that investors become more defensive and sell equities and bonds and become more liquid and move to cash and hold gold in order to protect against inflation. Gold.ie Watch video interview here-http://money.cnn.com/video/#/video/news/2008/02/28/news.hunter.shadowstats.Feb28.cnnmoney

-Rising prices hammer seniors on fixed incomes. Read more here-http://www.usatoday.com/money/perfi/retirement/2008-07-01-retiree-fixed-income_N.htm

-Inflation: 'Destroying governments since 1789'. Read more here-http://www.thisismoney.co.uk/news/article.html?in_article_id=443494&in_page_id=2&ct=5

-Inflation Menace Has Echoes of Volcker's Days. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=a30AR6y1nc4o

-Stayin' Alive in the New '70s. Read more here-http://news.goldseek.com/DailyReckoning/1214505689.php

GLOBAL-U.S. RECESSION

-Bean says economy facing most challenging time since 1990s. The economy is facing its most challenging time since the early 1990s or even earlier as policymakers grapple with two conflicting risks, Bank of England Deputy Governor Charlie Bean said on Wednesday.

In a written submission to parliament's Treasury Committee in his first week as deputy governor, Bean said it will be hard to get inflation to meet the 2 percent target without needless volatility in output. "There is no doubt that the UK economy presently faces the most challenging set of circumstances since at least the early 1990s and possibly earlier," said the central bank's former chief economist. Read more here-http://www.reuters.com/article/businessNews/idUKL0261445620080702

-New Zealand's Economy on Brink of First Recession in 10 Years. New Zealand's economy contracted last quarter, putting the nation on the brink of its first recession in 10 years as soaring credit costs damp domestic demand and a drought crimps exports. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYKzCL.T4USs&refer=home

-Consumer confidence nears all-time low. Most blame high food and fuel prices in latest survey from University of Michigan. Read more here-

http://money.cnn.com/2008/06/27/news/economy/consumer_confidence/index.htm

-Company Bankruptcies in U.S. Outpace Individual Filings in June. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a5W2zQLF1PVc&refer=home

-Overdue Home-Equity Credit Lines Rise Most Since 1987, ABA Says. Consumers fell behind on loans secured by their homes at the fastest pace in two decades in the first quarter, signalling deeper distress in the U.S. economy, the American Bankers Association reported. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aEGQR1.P0t4A&refer=home

-American Express Says Late Card Payments Increasing. American Express Co., the biggest U.S. credit-card company by purchases and cash advances, said customers are falling further behind on their debt, signaling the economy is worsening. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a5XZ_dtNNtPc&refer=home

-Teens Skip $50 Jeans in Squeeze of Gas, Job Shortage. The financial pressures of adults are finally catching up with American teenagers. Since summer jobs dried up, gasoline prices topped $4 a gallon and parents ran out of spare cash, teens have had to cool it on spending for clothes.

''I've had to cut down on a bunch of stuff because I don't like spending my own money,'' said 14-year-old Haley McClelland from Waldwick, New Jersey, who was shopping at the nearby Paramus Park mall. She said her parents are ''more careful'' about what they give her. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=a7WHUo_QBqkQ&refer=canada

-Starbucks to Close 600 Stores, May Cut 12,000 Jobs. Starbucks Corp. will close 600 U.S. coffee shops and eliminate as many as 12,000 jobs, the most in its history, as Chief Executive Officer Howard Schultz slows the chain's expansion after it doubled in size in four years. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeRM5wL1gkfQ&refer=home

-State, city layoffs: 45,000 and counting. A squeeze on tax revenues could force local leaders to cut tens of thousands of more jobs. That could add to the nation's economic woes. Read more here-http://money.cnn.com/2008/06/23/news/economy/local_government_layoffs/index.htm?postversion=2008062308

-Deepening Cycle of Job Loss Seen Lasting Into '09. Read more here-http://www.nytimes.com/2008/07/02/business/02jobs.html?_r=1&adxnnl=1&oref=slogin&partner=rssyahoo&emc=rss&adxnnlx=1215011051-UQMPUkMAgF4d49anb/SwkQ

-The Next Victim of the Real Estate Crisis. As the economy stalls, state and local governments will see less tax revenue roll in. Get ready for cuts in services. Read more here-

http://www.businessweek.com/lifestyle/content/jun2008/bw20080627_320852.htm?chan=top+news_top+news+index_top+story

WORLD FINANCIAL CRISIS

-The Federal Reserve has auctioned another $75 billion in loans to squeezed banks to help them overcome credit problems and announced it will provide a fresh batch of the loans this month. The central bank on Tuesday released the results of its most recent auction -- the 15th since the program began in December. It's part of an ongoing effort to ease financial turmoil and credit stresses.

In the latest auction, commercial banks paid an interest rate of 2.340 percent for the 28-day loans. There were 77 bidders. The Fed received bids for $90.88 billion worth of the loans. The auction was conducted on Monday with the results made public on Tuesday. The Fed also said it will conduct two auctions in July. Banks will have an opportunity to bid on a slice of $75 billion in short-term loans in each auction. Read more here-http://biz.yahoo.com/ap/080701/fed_credit_crisis.html?.v=4&printer=1

-The Shrinking Influence of the US Federal Reserve. Humiliation for Mr. Dollar: Ben Bernanke, the chairman of the United States Federal Reserve Bank, faces a general investigation by the International Monetary Fund. Just one more example of the Fed losing its power. Read more here-http://www.spiegel.de/international/world/0,1518,562291,00.html

-CDO Defaults Reach $220 Billion on Deerfield Failure. Deerfield Capital Management LLC and Declaration Management & Research LLC pushed the amount of collateralized debt obligations in default to $220 billion, according to Wachovia Corp. analysts.

Downgrades to mortgage bonds and their underlying securities triggered so-called events of default on 200 CDOs since October, including Rosemont, Illinois-based Deerfield's Knollwood CDO Ltd. and Kent Funding II, managed by Declaration in McLean Virginia, Wachovia analysts wrote yesterday. The total compares with 191 CDOs totaling $212 billion on May 21, according to the bank. The failures are equivalent to 36 percent of CDOs that include U.S. asset-backed debt sold since 2003, and 19.3 percent of all CDOs, Charlotte, North Carolina-based Wachovia said.

Losses on the securities that pool assets including subprime mortgages contributed to the almost $400 billion of credit losses and writedowns by banks worldwide in the past year. CDOs repackage assets such as mortgage bonds and other debt into new securities that are then sliced into pieces with different ratings. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aqMZ6GS5sEcU

-Fed saved Bear to avert 'contagion'. According to newly released documents, the Federal Reserved backed Bear Stearns to avoid the collapse of the U.S. financial system. Read more here-http://money.cnn.com/2008/06/27/news/economy/fed_bear_stearns.ap/index.htm

-Paulson Calls for Process to Liquidate Failing Firms. U.S. Treasury Secretary Henry Paulson called for regulatory changes that would allow financial firms to fail without threatening broader market stability.

The Treasury chief also proposed steps providing for the president to approve of any use of taxpayer funds to aid a financial company. In a speech in London today, Paulson identified a legal gap that leaves unspecified how to deal with failures of companies that don't take deposits, such as investment banks. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAsOy1NUvRPw&refer=home

-Banks brace for tough second half. After two particularly rough quarters, analysts predict more writedowns, dividend cuts and executive shakeups for the financial sector. Read more here-http://money.cnn.com/2008/07/01/news/companies/banks_outlook/index.htm

-Banks should fear a rate hike. The Fed left rates alone Wednesday. But with inflation fears brewing, an eventual rate hike could spell more trouble for embattled banks. Read more here-http://money.cnn.com/2008/06/26/news/companies/banks_margins/index.htm

-Anatomy of a bank failure: When the liquidators come calling. Read more here-http://www.charleston.net/news/2008/jun/08/anatomy_bank_failure_when_liquidators_comes_callin/

-Ritchie Capital bars investors from leaving fund. After big losses, hedge fund manager A.R. Thane Ritchie has barred investors from leaving his fund, Ritchie Capital Management, the Wall Street Journal reported on its website on Tuesday.

The article said the fund is currently valued at $2 billion, down from almost $4 billion in 2005. Ritchie told the Wall Street Journal that keeping his investors' money in the fund is the best move right now, since the alternative is to sell securities at "fire-sale prices". Ritchie told the Wall Street Journal that he has already returned some of his investors' money and has promised to return the rest within three years. Reuters

-AIG to lose up to $5 billion from investments: report. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aoGjre8ctFFk

-Barclays May Need 9 Billion Pounds, Citigroup Says. Barclays Plc, Britain's fourth- biggest bank, may need an additional 9 billion pounds ($17.9 billion) to absorb credit-related writedowns and bring its capital in line with European peers, Citigroup Inc. said.

The London-based bank will raise 4.5 billion pounds in a share sale announced earlier this week, lifting its core-equity Tier 1 capital ratio to 5.8 percent from below 5 percent, analysts led by London-based Tom Rayner said today in a research note. That will lag behind Royal Bank of Scotland Group Plc and make Barclays Europe's ninth-weakest bank in terms of capital, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aba5gLSqw7is

-Citigroup May Write Down $8.9 Billion, Goldman Says. Citigroup Inc., the bank that's posted the biggest losses from the collapse of the U.S. mortgage market, may take an additional $8.9 billion in net writedowns in the second quarter, Goldman Sachs Group Inc. said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aXXvsTcMNBKM&refer=home

-Fortis Scraps $2 Billion Payout, Sells Shares, Assets. Fortis, Belgium's biggest financial- services company, scrapped a 1.3 billion-euro ($2 billion) cash dividend and will sell shares and assets to shore up capital as the earnings outlook deteriorates. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aptv8E16PvTE&refer=home

-Merrill's Loss, Writedown Estimates Raised by Lehman. Merrill Lynch & Co. had its second- quarter loss estimate increased by Lehman Brothers Holdings Inc. on expectations subprime-related writedowns will be more than twice as big as previously thought.

Lehman analyst Roger Freeman said New York-based Merrill, the third-largest U.S. securities firm, will probably lose $2.78 a share, compared with his earlier prediction of a 64-cent loss. Freeman increased his writedown estimate for the quarter to $5.4 billion, from $2.4 billion previously, he wrote in a note today. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSXHQl1.cX84

-Gone by the board? Why bank directors did not spot credit risks. Read more here-http://www.ft.com/cms/s/0/6e66fe18-42e8-11dd-81d0-0000779fd2ac.html

U.S. DOLLAR

-Avoid Dollar 'At All Costs,' Investor Rogers Says. Jim Rogers, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, said investors should steer clear of the dollar as the U.S. economy slows and favor commodities this year.

The dollar has slipped 7.7 percent against the euro and 5.9 percent versus the yen in 2008 as the Federal Reserve cut interest rates to stave off a U.S. recession. Oil prices have doubled in the past 12 months, while gold is up 44 percent.

Avoid the dollar ''at all costs,'' Rogers, chairman of Rogers Holdings, said in a speech in Shanghai today. ''The best investments in 2008 are commodities and natural resources. Agricultural prices have much higher to go over the next decade. We have a shortage of everything, including seeds.''

Oil and metal prices in New York have surged as a slumping U.S. currency made them cheaper for non-dollar investors to buy as a hedge against inflation in a slowing global economy. The dollar has stabilized in recent weeks, with currency volatility falling by the most since 1999 this quarter.

The comments from Rogers, 65, come two days after he told investors at a conference in Nanjing not to ''give up'' on Chinese shares, which have made China the world's second worst performers this year. Rogers, who first started buying Chinese stocks in 1999, said he hadn't sold any of his holdings. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLr71mSZqOLI

-Sinking Currencies. Read more here-http://news.goldseek.com/GoldSeek/1214584561.php

-On the Precipice. It has been my view expressed in these alerts and elsewhere over the past several months that there will be a currency crisis this summer caused by a plummeting US dollar. Summer of course began a few days ago, so it is reasonable to ask whether my view has changed. It hasn't. The US dollar is now standing on the edge of the precipice. In fact, it is already peering over the edge as we can see in the following chart of the US Dollar Index. Read more here-http://goldmoney.com/en/commentary.php

-Bush's Dollar Drop Maps Loss of U.S. Clout at Final G-8 Summit. When President George W. Bush went to his first Group of Eight summit in 2001, a dominant issue was the dollar -- the strong dollar, that is. The U.S. currency was on a record-setting streak, and the free-marketeering president wasn't going to stand in the way.

On the eve of Bush's last G-8 appearance, the dollar's gyrations are again in the crossfire. This time, it is a weak currency, upended by slumping growth, a housing recession and record gas prices, that is gnawing away at the world economy.

The dollar's 41 percent drop against the euro during Bush's term writes the economic epitaph of an administration that set out to restore American preeminence. Instead, Bush heads to Japan next week for his final international summit with diminished leverage as Russian and Chinese influence grows. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=aH0_cYGS8Avc

-Intervention Will Not Stop the Dollar's Slide. Bambi vs. Godzilla! Peter Schiff-Read more here-http://www.321gold.com/editorials/schiff/schiff062708.html

-Dollar pain hits close to home. When you pay more for oil and other imported goods, that's the fault of the weakened greenback. Read more here-

http://money.cnn.com/2008/06/27/markets/dollar/index.htm

EURO

-Euro May Be Poised for 'Explosive Breakout,' Citigroup Says. The euro may be nearing an "explosive breakout," reaching record levels against the U.S. dollar, according to a Citigroup Global Markets Inc. research note. The trading pattern, including a so-called double-bottom that tested lows, resembles the one before Feb. 26 that preceded the surge to $1.6019 per euro, analysts Tom Fitpatrick in New York and Shyam Devani in London wrote in the note today.

"We cannot help but feel that things might be about to get very bad again," the analysts said, referring to the possible combination of falling bond yields and rising oil prices. The exchange rate may approach $1.69 per euro by September if previous patterns are duplicated, the report said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=azgZfuwN3MVM&refer=home

-East End businesses begin accepting payment in euros. Read more here-http://www.newsday.com/business/ny-bzeuro0702,0,303306.story

U.S. DEFICIT-$1 TRILLION?

-Obama May Produce $1 Trillion Deficit, Gross Says. Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co., said a Barack Obama administration may have no other choice than to produce the first $1 trillion U.S. budget deficit.

''You have inherited a mess,'' Gross, co-chief investment officer of Pimco, said in an open letter to Obama, the likely Democratic presidential nominee, published on the Newport Beach, California-based company's Web site today. ''What do I think you should do as the new president to rectify this mess? All I know is that any solution will come with a high price tag.''

Higher taxes for hedge-fund managers and oil companies will not cover the $500 billion stimulus the economy needs, including the anticipated Obama tax cuts for the poor and middle-class, universal health care and aid to the depressed residential real estate market, said Gross, a long-time Republican. The likely expenditures and increased borrowing suggest that ''intermediate and long-term yields on government bonds have already bottomed and will gradually rise'' through the next four years and possibly beyond, Gross said.

Gross domestic investment in machines, houses and inventories has fallen by $200 billion since its 2006 peak, Gross said. Domestic consumption will soon be $300 billion short of what's needed for an economic rejuvenation, he said. With the deficit already pushing $500 billion even before the next president is sworn in, Gross anticipates it will reach $1 trillion deficit by 2011.

Republicans ''will blame you for years and label you 'Trillion-Dollar Obama,''' said Gross, in his analysis that assumes Obama will defeat his presumptive Republican adversary, John McCain. "There is, in fact, not much that you or any other President can do." Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aOyoFye9PC6U

-National debt makes U.S. vulnerable, experts say. Lender nations could wage 'financial warfare.' Read more here-http://www.jsonline.com/story/index.aspx?id=767295

-The financial challenges facing the U.S. See the presentation from Ross Perot here-http://perotcharts.com/challenges/

REAL ESTATE-RENTAL

-Paulson: U.S. home prices to fall. U.S. Treasury Secretary Henry Paulson said on Wednesday that high oil prices, further home price declines and capital markets turmoil will prolong the American economy's slowdown, while Europe and the UK were also showing signs of slower growth.

Paulson, in remarks prepared for delivery to the Chatham House think tank here, said U.S. home foreclosures will remain elevated and "we should not be surprised at continued reports of falling home prices." Read more here-http://www.reuters.com/article/ousiv/idUKLAE00017320080702

-KB Home Founder Broad Says U.S. Home Prices Will Drop 10% More. U.S. home prices likely will drop another 10 percent from their peak before the housing market begins to recover, said Eli Broad, founder of Los Angeles-based homebuilder KB Home. ''Every housing market's different, but you can expect housing prices to continue to decline in most markets for the next year or so,'' Broad said in an interview from Los Angeles with Bloomberg Television. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHOHd1MVIx8Y

-Homes Less Affordable as Prices Fall, Rates Rise, Zillow Says. Rising mortgage rates are driving up the cost of buying a house even as prices fall, making property more expensive across the U.S., according to a new study by Zillow.com, an online provider of home valuations.

Monthly payments on 30-year fixed mortgages are 6 percent to 10 percent higher in 41 of the top U.S. housing markets than they were two months ago. First-quarter prices have declined from a year earlier in 88 percent of those areas, Zillow said.

"We're going to need about a 30 percent decline in house prices if you are going to keep payments stable," said Morris Davis, a former senior economist with the Federal Reserve and now a real estate professor at the University of Wisconsin-Madison's School of Business. Read more here-

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

-Manhattan Second-Quarter Apartment Sales Fall by 22%. Manhattan apartment sales dropped the most for a second quarter since 1998 and unsold inventory approached an eight-year record, two signs prices may be poised to drop in the nation's most expensive urban housing market. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=afobk1xd14tI&refer=home

-New home sales near historic lows. Sales of new homes last month were slightly higher than expected, but were down 2.5% from April and more than 40% versus last year. Read more here-http://money.cnn.com/2008/06/25/real_estate/new_home_sales/index.htm

-Existing home sales rise on price drop. Realtors' group says the number of existing homes sold in May gained 2% to an annual rate of nearly 5 million. Read more here-

http://money.cnn.com/2008/06/26/real_estate/existing_home_sales/index.htm

-Calif. home sales soar 18% as prices swoon. The median home price is down 35%, but that helped drive the number of sales higher in May. Read more here-

http://money.cnn.com/2008/06/25/real_estate/Calif_home_sales_soar/index.htm

-U.K. real estate, this is a real property crash. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/24/bcnhouse424.xml

-U.K. House Prices Drop Most Since 1992. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aFs.PFqy8CEk&refer=home

-Manhattan Office Rents Fall, First Time in 3 Years. Manhattan office rents fell 2.2 percent in the second quarter to $69.29 a square foot annually, the first decline in the most expensive U.S. office market since 2005, according to real estate broker Studley Inc. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.3zA59CZnFY&refer=home

MORTGAGES-FORECLOSURES

-L.A., Miami Foreclosures More Than Double, Property Shark Says. New foreclosures almost quadrupled in Los Angeles and doubled in Miami in the second quarter, with as much as $5 billion worth of loans going bad in L.A. alone, the on- line real estate data company PropertyShark.com reported. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=ad_l7Q0p9hGk&refer=home

-Three Million U.S. Mortgages Headed for Default, NYT Reports. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a0uc9das5pmM

-Homeowners Fall Further Behind on Mortgage Payments. Newly delinquent homeowners outnumbered those who caught up on overdue payments for a 26th straight month in May, according to a trade group that tracks loans to people who put down less than 20 percent.

In the worst housing slump since the Great Depression, 67,967 homeowners with mortgage insurance fell at least 60 days behind on their loans, compared with 40,687 who got back on track, the Mortgage Insurance Companies of America reported today. Borrowers who take on debt of more than 80 percent of a home's value are often required to buy coverage that pays lenders if they default.

"There's no doubt that 2008 is going to continue to be a challenging year," said Michael Fraizer, chief executive officer of Genworth Financial Inc., the fourth-largest U.S. mortgage insurer, at a conference in London last week. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajUBvSExvb6Q

-Florida sues Countrywide. Southern state joins California and Illinois in lawsuits against the troubled mortgage lender for accepting loan applications without regard for borrowers' ability to pay the loan back. Read more here-http://money.cnn.com/2008/06/30/news/companies/countrywide_lawsuit.ap/index.htm

-Wachovia quits offering risky loan option. Consumer bank to stop offering a mortgage payment option that lets borrowers pay less each month than the bank charges in interest. Read more here-http://money.cnn.com/2008/06/30/real_estate/wachovia_mortgages.ap/index.htm

-Celebrity foreclosures. The effects of the foreclosure crisis are rippling throughout the country and even the rich and famous are not immune. Read more here-

http://money.cnn.com/galleries/2008/real_estate/0806/gallery.celebrity_foreclosures/index.html

GEOPOLITICAL NEWS

-Bin Laden May Die of Kidney Disease in 6 Months, Time Reports. Read more here-http://www.time.com/time/nation/article/0,8599,1819280,00.html

-Israel has a year to stop Iran bomb, warns ex-spy. A former head of Mossad has warned that Israel has 12 months in which to destroy Iran's nuclear programme or risk coming under nuclear attack itself. He also hinted that Israel might have to act sooner if Barack Obama wins the US presidential election. Read more here-http://www.telegraph.co.uk/news/worldnews/middleeast/israel/2212934/Israel-has-a-year-to-stop-Iran-bomb,-warns-ex-spy.html

-Israel May Attack Iran, Pentagon Official Tells ABC. Israel is increasingly likely to attack Iranian nuclear facilities this year, a U.S. Defense Department official told ABC News. Iran's government dismissed as propaganda the ABC report on the unidentified Pentagon official's comments. Israeli government officials declined to comment on the report. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=ap887dZ8sYUE&refer=home

-Iran says any attack would provoke fierce reaction. Read more here-http://apnews.myway.com/article/20080702/D91LMHB80.html

-Iran to ready thousands of graves for enemy soldiers. Read more here-http://www.breitbart.com/print.php?id=080629185519.5hi45ii3&show_article=1

-Military strike on Iran would be 'catastrophic:' Russian ministry. Read more here-http://www.breitbart.com/article.php?id=080702100331.vhmvywp7&show_article=1

-Bush Says Diplomacy Is First Choice to Deal With Iran. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=affNAkkwIUqE&refer=home

-Iran Doesn't Expect War in Persian Gulf, Foreign Minister Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aA8zm9jnvllo&refer=home

-Iran War Resolution May Be Passed Next Week. Introduced less than a month ago, Resolution 362, also known as the Iran War Resolution, could be passed by the House as early as next week. The bill is the chief legislative priority of AIPAC. On its Web site, AIPAC endorses the resolutions as a way to "Stop Iran's Nuclear Program" and tells readers to lobby Congress to pass the bill.

In the Senate, a sister resolution, Resolution 580, has gained co-sponsors with similar speed. The Senate measure was introduced by Indiana Democrat Evan Bayh on June 2. It has since gained 19 co-sponsors. The bill's key section "demands that the president initiate an international effort to immediately and dramatically increase the economic, political, and diplomatic

pressure on Iran to verifiably suspend its nuclear enrichment activities by, inter alia, prohibiting the export to Iran of all refined petroleum products; imposing stringent inspection requirements on all persons, vehicles, ships, planes, trains, and cargo entering or departing Iran; and prohibiting the international movement of all Iranian officials not involved in negotiating the suspension of Iran's nuclear program." Read more here-http://www.antiwar.com/blog/2008/06/23/iran-war-resolution-may-be-passed-next-week/

-Iran says Gulf oil route at risk if attacked. Read more here-http://www.reuters.com/article/topNews/idUSBLA82623620080628?feedType=RSS&feedName=topNews&rpc=22&sp=true

-U.S. Won't Let Iran Shut Strait of Hormuz, Fleet Says. The U.S. won't allow Iran to shut the Strait of Hormuz, through which the bulk of Middle East oil is shipped, a spokesman for the Fifth Fleet said.

''They will not close it,'' Lieutenant Nate Christensen said in a telephone interview today from Bahrain, where the fleet is based. ''The Strait of Hormuz is vital international waters.'' Vice Admiral Kevin Cosgriff, Fifth Fleet commander, made similar remarks to reporters in Bahrain today, Christensen said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aZ5V4GuTsk5g&refer=home

-Preparing the Battlefield. The Bush Administration steps up its secret moves against Iran. Read more here-

http://www.newyorker.com/reporting/2008/07/07/080707fa_fact_hersh

-Ahmadinejad target of 'Rome X-ray plot', diplomat says. Iranian President Mahmoud Ahmadinejad was the target of an "X-ray radiation plot" during his trip to Rome for the UN food summit earlier this month, the official IRNA news agency reported on Monday. The news agency quoted Iran's ambassador to Italy, Abolfazl Zohrehvand, as saying that the plot was to use extreme radiation in the place where Ahmadinejad was due to stay.

The diplomat spoke out after Ahmadinejad himself charged that he had been the target of an assassination plot during his landmark trip to Iraq in March and his aides spoke of a similar attempt in Rome. Read more here-http://www.breitbart.com/print.php?id=080630140409.4ox0xel3&show_article=1

-Lieberman: U.S. May Be Attacked In 2009. McCain Supporter Says Terrorists Have Tested New Presidents By Launching Attacks In First Year Of Term. Read more here-

http://www.cbsnews.com/stories/2008/06/29/ftn/main4217516.shtml

-Al-Qaeda plans UK attacks with ambulances bought on eBay. Read more here-http://economictimes.indiatimes.com/AQ_plans_UK_attacks_with_ambulances_bought_on_eBay/articleshow/3180761.cms

-Amid policy disputes, Al Qaeda grows in Pakistan. Read more here-http://www.iht.com/articles/2008/06/30/america/30tribal.php

-Coalition troop deaths in Afghanistan surpass Iraq. Read more here-http://edition.cnn.com/2008/WORLD/asiapcf/07/01/afghan.deaths/?iref=mpstoryview

Story Highlights

May and June death tolls for foreign troops were higher in Afghanistan than Iraq

46 U.S. and allied troops died in Afghanistan in June; 31 in Iraq

Afghan deaths included troops from U.S., U.K., Canada, Poland, Romania, Hungary

Same trend seen with civilian deaths, analysts say

-Inside the Taliban jailbreak. Read more here-http://www.theglobeandmail.com/servlet/story/RTGAM.20080702.wafghanistan02/BNStory/Afghanistan/?cid=al_gam_nletter_newsUp

-North Korea Destroys Cooling Tower at Nuclear Plant. North Korea destroyed part of its Yongbyon nuclear plant where it processed weapons-grade plutonium in a symbolic gesture today, after the U.S. began removing the communist nation from its terrorism blacklist. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a7vzVCKLSLpk

© 2008, Worldwide Precious Metals.
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The GoldBugg Report - July 08, 2008
Posted by Worldwide Precious Metals on Tuesday, July 08, 2008