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The GoldBugg Report – July 22, 2008

July 22, 2008

-Safe-haven lure likely to buoy gold over summer lull.

-$1000 gold and $20 silver in sights again as investors flee financial stocks.

-Gold is the only finite currency as JP Morgan once testified to Congress, “Gold is money and nothing else”. Even more pertinently and more recently Alan Greenspan said “Gold still represents the ultimate form of payment in the world. Fiat money, in extremis, is accepted by nobody. Gold is always accepted” (Speech to Senate Banking Committee in May 1999).

GOLD

-Safe-haven lure likely to buoy gold over summer lull. Read more here-http://www.marketwatch.com/news/story/metals-stocks-golds-safe-haven-sparkle/story.aspx?guid={4383ED87-2F51-4DB8-ABBD-803A497F5B24}&dist;=hpts

-What if gold gave a party and everyone came? Generalists, momentum players may join bugs as metal surges. Read more here-http://www.marketwatch.com/news/story/story.aspx?guid={01A873BE-B409-4973-8E35-073A84CA0F51}&siteid;=rss

-Gold secular bull market is still intact and remonetization has begun! Austria’s Erste Bank predicts a ‘shiny outlook’ for gold in a very detailed Special Report. With seemingly massive support seen around the $850 level, the report suggests that the price will remain in the $850-$950 band during the summer months with the $1000 mark being clearly passed again later in the year. Passing $1200 is seen as the first target and in the long run the price is seen as passing the inflation-adjusted all-time high of $2,300. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=56597&sn;=Detail

-$1000 gold and $20 silver in sights again as investors flee financial stocks. The collapse of world stock markets is again pushing gold’s safe haven status to the forefront within the investment community. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=56823&sn;=Detail

-UBS forecasts $1000 average gold price next month and $1050 next three months. Continuing financial turmoil has caused UBS to increase its short term gold forecasts on safe haven scenario. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=56726&sn;=Detail

-Special Got Gold Report-Fearful Funds Flood Into Gold ETFs. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=44321

-Investors shun gold mining stocks, in favour of ETFs. Major gold miners, suffering from rising costs and falling output, are being deserted by investors favouring gold ETFs. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=56852&sn;=Detail

-There’s nothing like the prospect of war to kick-start the gold price again. Sabre rattling in the Middle East from Iran and Israel is again having a positive impact on the gold price, while other fundamentals are supportive too. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=56625&sn;=Detail

-Saudi market faces scrap gold shortage. Saudi Arabia, the Middle East’s largest gold jewellery consumer, is facing a shortage of scrap as jewellers and buyers expecting record prices to rise further hold onto their gold, traders and experts said. Read more here-http://www.kuwaittimes.net/read_news.php?newsid=MjgxNzc5OTky

-Just in case you have been on Mars for the last week, Fannie Mae and Freddie Mac in the U.S. seem to be having some financial trouble. For those outside the U.S., these two private companies are involved in funneling money to the U.S. housing market. Well, funneling might not be the right word. Shoveling, with big ones, might be more appropriate.

Now that they are having financial problems a major question must be answered. Who will eat the losses? The shareholders have already had more than $900 million of market value vaporized. If shareholders’ equity does not cover future losses, who then takes the losses?

Apparently the Secretary of the Treasury along with some pals in Congress seem to think the taxpayers should take those losses. For you see, if bonds take the hit, selling new bonds will be difficult. And who does that hurt? The brokers that sell the bonds would get hurt, and that is apparently against the policies of the U.S. Treasury.

For those not aware, 2008 is an election year in the U.S. Each and every member of the House of Representatives is up for election, and one third of the Senate. Passing a law that puts those losses on the taxpayers while making bond investors whole would seem to be a long shot this year. Some big risks exist in how this is resolved.

The chart above is the ownership of U.S. government and agency debt by official foreign institutions, and held at the Federal Reserve. Agency debt includes that of Fannie Mae and Freddie Mac. Foreign official ownership of agency debt is just shy of a trillion dollars. The chart to right shows net purchases of agency debt over the past year. These foreign institutions have purchased more than $230 billion of agency debt in the past year.

How will foreign institutions react to the possibility of losses on these holdings? I imagine they will not take it well. This situation is another solid brick in the foundation of the dollar’s long-term bear market and the bull market in Gold. So, we have another reason to own Gold in portfolios. Likewise, Israel making an adjustment in Iran’s thinking on nuclear weapons is a good reason for owning Gold. Ned W. Schmidt

-Monetary problems, monetary solutions & the role of gold. Capie and Wood, World Gold Council Study. In this study, Professors Forrest Capie and Geoffrey Wood of City University, London discuss some of the major monetary problems facing policy makers today and consider whether there are lessons to be drawn from the role of gold in the past. Read more here-

http://www.gold.org/assets/file/pub_archive/pdf/RoleofGold.pdf

-Will we see big gold sales to help try and stabilise the dollar? The prospect of new Central Bank sales of gold to try and contribute to dollar stabilisation is likely to be under consideration. Will this happen, and, if it does, what will be the likely effect on the gold market. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=56945&sn;=Detail

-Rare coins better than gold as inflation hedge. Coin and precious metals investment firm Blanchard & Company says Fed’s policies have dollar, economy locked into long-term negative cycle while inflation and producer prices will continue to drive tangible assets higher. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=56965&sn;=Detail

-Twelve month view on metals rankings. Aluminium seen as the likely star performer in comprehensive metals review. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=56971&sn;=Detail

-Fort Knox: Secrets Revealed. History Video-Doug Simmons’s brief account of his time in Fort Knox. Read more here-http://www.history.com/media.do?id=money_fortknox_irongrip_broadband&action;=clip

SILVER

-In fact, I am hard pressed to come up with a better current investment than silver, considering how poor the alternatives appear. To be sure, I must include gold in the insurance buying category. If ever there were a time to own gold, this would appear to be the right time. And investors seem to be moving to the safety of gold, judging by price changes and the increase in ETF holdings. At times like these, owning assets that are no one else’s liability are comforting to everyone looking to preserve hard earned savings against catastrophic and unexpected loss.

But if one decides to own an asset that is no one else’s liability for insurance purposes, then it makes sense to own the very best asset available. That would be silver, for the simple reason that there is much less of it available than gold and it is less than two percent of gold’s price. Plus, there are strong indications that silver may finally be in the long-awaited wholesale shortage, while logic dictates there will never be an industrial shortage of gold, simply because it is not industrially consumed.

It is the dual role of silver as an industrial commodity and investment asset that makes it so unique and attractive. Of the two roles, it is investment demand that holds the greatest potential for causing the price to rocket in a flash. And while it is impossible to predict and measure, nothing can impact investment demand more than an emotional flight to quality by those suddenly nervous about their alternative investments and deposits. The key, as always, is to position yourself before any potential panic into silver.

Remember, if silver improves relative to gold to just 3 percent of gold’s price from the current 2 percent, it will mean that silver will return 50 percent more than whatever gold returns. And that should be a very minimal expectation, in my opinion. Given the facts available, it is hard to imagine how silver’s price won’t improve relative to gold’s. More than ever, a switch to silver from gold for those underexposed to silver makes sense.

While price volatility goes hand in hand with these emotional and uncertain financial times, it is important to remain as grounded as possible. One way to do that is by owning assets you don’t have to worry about over the long term. That silver is the asset least to worry about in stormy times, makes it the best asset to own. Ted Butler-Read more here-

http://news.silverseek.com/TedButler/1216139643.php

-Gold/Silver Market Updates from Clive Maund. For those not already long, silver is rated a strong buy here. Read more here-http://www.321gold.com/editorials/maund/maund071408.html

-As can be seen above, within inflationary times, silver to gold relativity brings extremes closer to 15 than 50, which is where we are right now. Of course this is the opportunity, where if you do the math here, assuming gold goes up to its Consumer Price Index (CPI) adjusted 1980 price of approximately $2400, then at even just 20, silver would go to $120 before the party is over.

At 15 this would obviously be much better, with silver running all the way to $200. And if shadowstats.com is correct about inflation over the past 30 years, then gold should rise to $5000. We will let you do the math on that one in terms of where silver is going if gold runs all the way to $5,000. Did you do the math? Does this figure seem impossible to you? If so, keep in mind that markets like to do what the majority of participants think is not possible.

In this respect, right now the bullion banks believe it’s not possible for them to lose control of the silver market, which as we have been saying, is why silver will lead the next leg of the precious metals bull market when this occurs. What’s more, most market(s) participants still believe silver is a dead asset class, and that the stock market is still the place to be.

This is why in spite of the stock market breaking long-term support(s) yesterday, no panic exists as of yet, seen here in still low put-call ratios and VIX. This is of course why stocks will keep falling then, because of complacency towards the decline. Eventually the lights will come on for increasing numbers however, who will then switch from stocks to the newly perceived safety of precious metals, which will crash stock(s) to silver ratios. Read more here-http://news.goldseek.com/CaptainHook/1216053299.php

-Bar Graphs of Silver vs. Money. Read more here-http://news.silverseek.com/GoldIsMoney/1215755880.php

-Silver has been Exploding for 5 years now. Read more here-http://news.silverseek.com/GoldIsMoney/1215782763.php


-Silver Shorts Reported (And what to do about it) – Jason Hommel – http://www.silverstockreport.com/2008/shorts.html

-Marketing initiative launched by Silver Institute to boost sales. Former World Gold Council executive Michael Barlerin is helping to launch the Silver Marketing Initiative aimed at encouraging sterling silver jewelry sales. Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page32?oid=56899&sn;=Detail

DEFINITIONS-QUOTES-QUICK HITS

-Naked Shorting. The illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short. But due to various loopholes in the rules and discrepancies between paper and electronic trading systems, naked shorting continues to happen. While no exact system of measurement exists, most point to the level of trades that fail to deliver from the seller to the buyer within the mandatory three-day stock settlement period as evidence of naked shorting.

Naked shorts may represent a major portion of these failed trades. Naked shorting is illegal because it allows manipulators a chance to force stock prices down without regard for normal stock supply/demand patterns. In 2007, the Securities and Exchange Commission (SEC) amended Regulation SHO to further limit possibilities for naked shorting by removing loopholes that existed for some broker/dealers.

Reg SHO requires lists to be published that track stocks with unusually high trends in “fail to deliver” shares. Some analysts point to the fact that naked shorting, albeit inadvertently, may help markets stay in balance by allowing the negative sentiment to be reflected in certain stocks’ prices. Investopedia.com

-SEC to Limit Short Sales of Fannie, Freddie, Brokers-Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aEd6iHTmqiOY&refer;=home

-U.S. Exchanges May Seek Exemption to SEC “Naked Short Sale” Ban. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aWbkDUiKUgp4&refer;=home

-SEC to Probe Manipulation Through False Information. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ankVMKVBnc_Y&refer;=worldwide

-”These companies (Fannie Mae and Freddie Mac) were going to go bankrupt if they hadn’t stepped in to do something, and they should’ve gone bankrupt with all of the mistakes they’ve made,” Jim Rogers said. “What’s going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What’s going to happen three years from now when the situation’s much, much, much worse?” Bloomberg

-America’s Second Biggest Bank Failure. James Turk commentary-http://goldmoney.com/en/commentary.php

-Analysts say more U.S. banks will fail. As home prices continue to decline and loan defaults mount, U.S. regulators are bracing for dozens of American banks to fail over the next year.

But after a large mortgage lender in California collapsed late last Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next? Read more here-http://www.iht.com/articles/2008/07/14/business/14bank.php

-Bloomberg TV Interview of Nouriel Roubini. Worst Financial Crisis Since the Great Depression and Worst U.S. Recession in Decades. I was on Bloomberg TV this morning being interviewed about financial markets, the economy and the upcoming testimony by Bernanke. As I put it in the interview: “This is a systemic financial crisis, there is no end to it,” Nouriel Roubini, professor of economics and international business at New York University, told Bloomberg Television.

“It’s a vicious circle between a contracting economy and greater credit and financial losses feeding on the economy.” Regular readers of this blog are familiar with my views. But here is a summary and significant extended update of my views that this will turn out to be the worst financial crisis since the Great Depression and the worst US recession in decades. Watch video here-http://media2.bloomberg.com/cache/vrIG4cHtP.HQ.asf

-Louise Yamada was quoted on CNBC as predicting Gold at $5000 within 5 to 10 years. Jsmineset.com

-”Gold has been completely overwhelmed by monetary and speculative demand.” Frank McGhee, Integrated Brokerage Services

“Physical demand tends to provide a floor to prices, while investment demand tends to drive prices.” Suki Cooper, Barclays Capital

-”While the need for cash prompts some investor liquidation of gold in the short term, we expect the backdrop of geopolitical concerns and financial market jitters to limit price weakness, with the metal well-placed to challenge above $1,000 an ounce,” said James Moore, of TheBullionDesk.com. Kitco Daily Resource

-Gold and Oil for George Soros. Soros finally shorted oil at $137 a barrel and put on a long position in gold; he expects to see gold hold its ground even if oil continues to decline. In fact, the gold bug clique believes in a consistent 10-to-1 ratio for gold and oil. It holds that either gold will rise to 10 times a barrel of oil ($1,350 an ounce) or oil will fall to $96 a barrel one tenth the present market price of gold. Croesus was told Tuesday that statistics spanning many decades support, on average, this 10-to-1 ratio. Read more here-

http://www.forbes.com/opinions/2008/07/16/soros-gold-merrill-oped-cx_rl_0717croesus.html

-It’s no wonder that, “People are freaked out,” as Matt Zeman, a metals trader at LaSalle Futures Group in Chicago, said. “Gold is catching a flight-to-quality bid. People are looking for hard assets to put their money in.” And Zeman sees more of the same to come. “People weren’t as concerned about inflation in March, but that’s kind of changed now,” he said. “The credit-market losses are going to continue, you’re going to see more banks failing, and the dollar should continue to lose ground. You’ll see a more sustained run on gold.” Kitco Daily Resource

-While risk appetite has increased with equity markets having a renewed bout of misplaced exuberance, this is likely to be short lived as equity markets experience another dead cat bounce. Barclays reports overnight that their “sentiment-based equity risk indicator remains within extremely bearish territory, and suggests that equities may continue to sell-off aggressively.”

Poor returns and volatility in equity markets internationally is leading to safe haven diversification into gold. With the outlook for equities and bonds looking increasingly uncertain (especially in the light of the onward march of inflation in the U.S. and internationally), gold is set to continue to outperform other major asset classes for the foreseeable future. Gold.ie

-Gold is a safe haven asset and the only asset class that is not someone else’s liability and this is why it is thriving in the current environment and will likely reach it’s inflation adjusted high of $2,300 per ounce in the coming 3 to 5 years. All portfolios should have a minimum allocation of 10%. Given the extent of current macroeconomic and systemic risk, an increase in this allocation to at least 20% would be very prudent. Gold.ie

-Gold is the only finite currency as JP Morgan once testified to Congress, “Gold is money and nothing else”. Even more pertinently and more recently Alan Greenspan said “Gold still represents the ultimate form of payment in the world. Fiat money, in extremis, is accepted by nobody. Gold is always accepted” (Speech to Senate Banking Committee in May 1999). Gold.ie

-Dan Norcini, writing on jsmineset.com, commented that, “It was amusing reading the wire service commentary attempting to explain the drop in gold this morning. “One provider stated that gold declined because Bernanke said that inflation is too high and is a top priority for the US government.

Oh sure it is! And to show how serious it is, the Fed is going to immediately begin a rate hike cycle in which they will add 100 basis points before the end of the year is out. Of course, they will be sure to do just that while the feds bail out FRN and FRE and while the FDIC attempts to clean up the mess at Indy Mac.

Don’t forget Washington Mutual whose share price is trading closer to $4.00 than the $44 it was trading at a year ago. Yes indeed, that is just what the financial stocks ordered a hawkish Fed talkfest! Meanwhile they are forced to print Dollars like candy wrappers to hold things together! I am sure China and the rest of the sovereign wealth funds are thrilled.” Kitco Daily Resource

-U.S. Federal deficit grows to $268.7 billion. The new year-to-date deficit was the third-highest on record as the stimulus check program drained federal coffers. Read more here-

http://money.cnn.com/2008/07/11/news/economy/bc.federalbudget.ap/index.htm

-As the Bush administration proposes backstopping mortgage giants Fannie Mae and Freddie Mac with a $300 billion line of credit and Congress contemplates another economic stimulus, the question is who will bail out the government? “People seem to think the government has money,” said former U.S. Comptroller General David Walker. “The government doesn’t have any money.”

A rare consensus has developed across the political spectrum that the government’s own fiscal affairs are precarious, with an astonishing $53 trillion in long-term liabilities, according to the Government Accountability Office. To put that number in human terms, the debt has reached $455,000 per U.S. household. As that debt grows, the United States increasingly relies on foreigners, including China and Middle East oil producers, for financing. Read more here-http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/17/MN8Q11OT2M.DTL&tsp;=1

-Obama may produce US$1trillion deficit, Bill 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.” Read more here-http://www.financialpost.com/story.html?id=627477

-U.S. `Misery Index’ Climbs to 15-Year High on Prices. Misery hasn’t had this much company in more than 15 years. The jump in consumer prices reported today by the Labor Department means the so-called Misery Index, the sum of the unemployment and inflation rates, is the highest since President Bill Clinton took office in January 1993. The measure, created by Arthur Okun, an economics adviser to President Lyndon Johnson, rose to 10.5 in June from 9.7 in the prior month. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aHXJY.fS72Ss&refer;=home

-Mood’s still extremely gloomy: University of Michigan. Read more here-http://www.marketwatch.com/news/story/consumers-still-extremely-gloomy-univ-mich/story.aspx?guid={58B2ADE2-96D3-412A-810D-03D9DBC0F05D}&dist;=hplatest

RARE COLORED DIAMONDS

-Diamonds Attract Funds as Largest Gem Prices Surge 76% in Year. Diamonds, like art, are a commodity that is gaining attention as an alternative investment. Increases in the price of the rarest colorless and colored diamonds are attracting wealthy investors and structured funds as stock markets and real-estate values decline. The price of 5-carat gems with the potential to be sold at $1 million or more has risen 76.5 percent in the year to May 2008, according to Idexonline.com, the Web site of the International Diamond and Jewelry Exchange.

“There’s a group of very savvy, tremendously wealthy people who have put a small portion of their fortunes aside to invest in diamonds,” said Francois Graff, managing director of London- based Graff Diamonds International, in a telephone interview. “They’ve made incredible returns.” Five years ago, dealers were paying $70,000 per carat for colorless diamonds of 10 carats and more, said Graff. “Now we’re paying over $200,000 per carat,” he said. There are only about 200 highest-grade, D-flawless colorless diamonds of more than 5 carats discovered per year, according to Raymond Sancroft-Baker, Christie’s International’s European director of jewelry.

The annual yield of large-scale blue and pink stones is considerably smaller. “Diamonds are getting rarer. The earth just isn’t giving them up,” said Sancroft-Baker in a telephone interview. The commodity asset-management firm Diapason Commodities Management SA listed a specialist investment fund, Diamond Circle Capital Plc, on the London Stock Exchange on June 25. Diapason did not immediately respond to e-mailed requests for comment.

Public Listing-Diamond Circle Capital is the first publicly listed fund to invest in rare colored and colorless diamonds, according to International Diamond and Jewelry Exchange’s Web Site. The fund, which in June 2007 was due to have a $400 million start-up, raised $74.32 million through its initial public offering, said the Web site.

“Over the last 12 months, the best pink and blue diamonds have increased in price between 75 and 100 percent,” said the New York diamond dealer Alan Bronstein in an interview. Bronstein’s Aurora Collection of 296 colored diamonds is currently on loan to the Natural History Museum in London. “These are some of the rarest and most colorful things in the world,” said Bronstein, whose diamonds are specimen examples of less than 3 carats.

Rarity Value-”They used to be viewed as curiosities,” said Joanna Hardy, senior specialist at Sotheby’s jewelry department in London. “Now buyers are taking colored diamonds much more seriously. People want to have something different. And they value rarity.” In May, the Codium Fund, specializing in investing in colored diamonds of at least 1 carat, was to be launched in the Netherlands Antilles with a target investment of $100 million, Arab Times said on its Web site.

Over the last five years, managers of art-investment funds, which buy and sell a pool of works for a set management fee and a share of any profit made, have been keen to promote art as an alternative asset class. So far, the Fine Art Fund, started in 2004, is the only one of these vehicles that has remained conspicuously active in the West.

Individual Choice-”The diamond market, like the art market, is based on individual transactions,” said Graff, whose father Laurence is a bidder at many Sotheby’s and Christie’s contemporary-art auctions. “The wealthy don’t need to invest in funds. They can just pick up a telephone and buy the things for themselves.” Graff said that within the last three months he has sold a D-flawless, emerald-cut colorless diamond of 243.96 carats to an Asian buyer for in excess of 50 million pounds ($99.6 million).

“There were quite a few people ready to buy that stone,” said Graff, who has placed a similar price on a flawless 20-carat fancy deep-blue diamond. The record for any gemstone sold at auction is the $16.5 million with fees paid for the 100.1-carat “Star of the Season” pear-shaped colorless diamond at Sotheby’s, Geneva in May 1995, according to Sotheby’s. “When stock markets go down, it’s always good for us,” said Hardy.

“People with a lot of surplus cash turn to something more tangible.” Sotheby’s was selling diamonds to buyers from a record number of countries, Hardy said. “We’ve got a lot of customers from the Middle East, Russia and the Ukraine. And there are more buyers from Europe than America at the moment,” she said. Hardy does not expect prices for large-scale colored and colorless stones to fall within the next six months. “It’s not as if there are suddenly going to be more of them,” she said. Full story here-

http://www.bloomberg.com/apps/news?pid=20601093&sid;=aKVjxYejpss0&refer;=home

-Super-rich still pay dear for rare diamonds. The rapid rate of increase in wholesale prices of rare polished diamonds is unsustainable, but for now the growing number of super-rich are paying rising prices for top-tier diamond jewelry. Charles Wyndham, founder of PolishedPrices, a leading index of wholesale diamond prices, said on Friday prices of larger, rare, near-flawless gemstones had shot up by roughly 200 percent over the past 18 months. Read more here-http://www.reuters.com/article/newsOne/idUSL0416926920080705

-Demand for rarest diamonds outstrips supply. Read more here-http://www.reuters.com/article/reutersEdge/idUSL0646558820080606

-Five percent price hike for rough diamond prices by De Beers. De Beers has raised its rough diamond prices by 5% due to strong demand from Asian markets outstripping supply. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page37?oid=56605&sn;=Detail

-Global diamond company Gem Diamonds Ltd. said four of its yellow diamonds, totaling 15.7 carats, were sold on tender in Antwerp for an average price of $28,860 per carat. The sales included a 7.1 carat cushion-cut, vivid yellow diamond, which sold for $52,000 per carat and a 2.3 carat cushion-cut, vivid yellow diamond which sold for $19,000 per carat, the company said. CNBC.com

-Rio Tinto production down at argyle mine. Production of diamonds at Rio Tinto’s 100 percent-owned Argyle mine in Western Australia in the second quarter of 2008 improved from the previous quarter but was 32 percent below the corresponding quarter of 2007.

Some 2,992,000 carats were produced from 1,794,000 tons of ore processes from AK1. Access to the high grade areas of the pit, which had been restricted due to geotechnical issues and wet weather earlier in the year, was re-established midway through the quarter resulting in improved feed grade and higher throughput. Variability in feed grades and production rates will continue as the open pit approaches the end of its life and the mine transitions to an underground operation. Diamondintelligence.com

-Argyle Underground Pink Diamond Mine on Track as Costs Swell. Despite major blows to its budget, the world’s largest supplier of diamonds says it’s on track to move from open cut to underground mining, Australian Broadcasting Corporation (ABC) News reported. The transition of the Argyle diamond mine, in the Kimberley region of Western Australia, is now halfway to completion in 2011.

The projected costs of the project have doubled from $800 million to $1.6 billion, according to the report. But chief operating officer Kevin McLeish said that they are already finding more of the rare pink diamonds. “The great news is the pink diamonds are in the ore body from the top to the bottom,” he said. “We’re currently processing some development ore that we need to take out of the mine as we build it and there’s been pink diamonds in that.” Israelidiamond.co.il

OIL-GASOLINE

-With the price of a barrel of oil trading over $140, today’s chart provides some perspective by presenting the current trend of West Texas Intermediate crude. As today’s chart illustrates, crude oil traded within the confines of a relatively steep upward trend channel in 2007. As a result of several significant issues (i.e. ever increasing global demand, ongoing geopolitical tensions, etc.), the steepness of that upward trend has only increased in 2008. Chartoftheday.com

-Venezuela’s Chavez says oil could reach $300. Venezuelan President Hugo Chavez said on Sunday oil prices could hit $300 per barrel if U.S. oil company Exxon Mobil again freezes Venezuelan assets in a dispute over a nationalized oil project. Read more here-http://uk.reuters.com/article/rbssEnergyNews/idUKN1338614020080713

-OPEC’s empty toolkit. The leaders of OPEC says its members have plenty of oil to meet demand. So why aren’t they putting more on the market? Read more here-http://money.cnn.com/2008/07/15/news/economy/okeefe_oil.fortune/index.htm?postversion=2008071604

-Peak Oil Is A Done Deal. Read more here-http://321energy.com/editorials/cohen/cohen071708.html

-The National Iranian Oil Company (NIOC) and Russia’s giant gas company Gazprom have signed an agreement for the development of Iran’s oil and gas fields. Read more here-

http://www.tehrantimes.com/index_View.asp?code=173227

-Gas, diesel hit new records. Average price of unleaded gasoline and diesel fuel reach new highs. Read more here-http://money.cnn.com/2008/07/16/news/economy/gas/index.htm?cnn=yes

-Gas Lines Coming This Fall. Read more here-http://seekingalpha.com/article/84966-gas-lines-coming-this-fall

INFLATION

-Inflation: Price jump worst since ‘91. Record gas and higher costs prices spark a 5% annual jump in Consumer Price Index. Read more here-

http://money.cnn.com/2008/07/16/news/economy/cpi/index.htm

-Inflation grows at fastest pace in 27 years. June wholesale prices surge 1.8%, propelled by soaring gas and food costs; biggest monthly rise since November. Read more here-

http://money.cnn.com/2008/07/15/news/economy/prices_june.ap/index.htm

-U.K. Inflation Rate Jumps to 11-Year High, House Prices Fall. U.K. inflation accelerated to the fastest pace in at least 11 years and the housing slump worsened, making it harder for the Bank of England to stave off a recession by cutting interest rates. Consumer prices climbed 3.8 percent from a year earlier, exceeding the government’s 3 percent upper limit for a second month and the highest result since records began in 1997, the Office for National Statistics said today in London. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ayEBwCJC4S7k

Real U.K. rate of inflation could be 10 per cent, says John Major. The true annual rate of inflation is as much as 10 per cent, Sir John Major claimed as he warned that Britain was on the brink of recession. The former Conservative prime minister forecast more job losses and bankruptcies and accused the Government of under-stating the real impact of price rises.

He said changes to the way inflation is calculated had been “extremely misleading”, with increasing food prices and heating bills not reflected by the official statistics on the cost of living.

He told BBC1’s Andrew Marr Show: “I would say inflation is probably double the RPI [Retail Prices Index] figure, so we’re between 8 and 10 per cent.” Read more here-

http://www.independent.co.uk/news/uk/politics/real-rate-of-inflation-could-be-10-per-cent-says-john-major-866874.html

-India-Inflation shoots up to 11.9%. Read more here-http://economictimes.indiatimes.com/Inflation_shoots_up_to_1191/articleshow/3246282.cms

-New Zealand Inflation Accelerates to 18-Year-High. New Zealand’s consumer prices rose at the fastest pace in 18 years in the second quarter, fanned by fuel and food costs, adding to signs the economy is facing stagflation as it slips into recession.

The consumer prices index rose 1.6 percent from the first quarter, Statistics New Zealand said in Wellington today. The median estimate of 12 economists surveyed by Bloomberg was for 1.4 percent. From a year earlier, prices rose 4 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=awAYfYP0enro&refer;=home

-South Korea May Use Price Controls to Cool Inflation. South Korea’s government indicated it may implement price controls to cool decade-high inflation, a day after the central bank warned wage demands could ignite a “vicious cycle” of spiraling prices. Read more here-http://www.bloomberg.com/apps/news?pid=20601013&sid;=a.9i_ixgslIw&refer;=emergingmarkets

-Zimbabwe’s inflation rate a punishing 2.2 million per cent. Zimbabwe’s official inflation rate climbed to a record 2.2 million per cent, the country’s central bank announced Wednesday, meaning prices are doubling every 25 days. Read more here-http://www.cbc.ca/world/story/2008/07/16/zimbabwe.html

-Newell ups prices 22%, lowers outlook. Sharpie pen manufacturer, struggling with rising energy costs, will exit some products, raise prices on others. Read more here-

http://money.cnn.com/2008/07/15/news/companies/newell_outlook.ap/index.htm

INTEREST RATES

-Canada Keeps Rate at 3%; Says Price Risks `Balanced’. The Bank of Canada kept its key interest rate unchanged, saying risks are “balanced” between the slowest economic expansion since the country’s last recession and inflation twice as fast as the bank’s target.

Governor Mark Carney and his five deputies held the rate on overnight loans between commercial banks at 3 percent, the lowest since December 2005. All 28 economists in a Bloomberg survey predicted the decision, the second time policy makers have held borrowing costs after four reductions between December and April. Read more here-

http://www.bloomberg.com/apps/news?pid=20601082&sid;=an7NSuwjaxNk&refer;=canada

-Japan holds rates steady at 0.5%. Bank of Japan takes wait-and-see approach amidst slowdown, rising inflation; rates unchanged since February 2007. Read more here-

http://money.cnn.com/2008/07/15/news/international/japan_rates.ap/index.htm

-Fed debated need for rate hikes. Minutes from the central bank’s meeting in June showed that some Fed members believed interest rate increases were needed ‘very soon’ in order to curb inflation. Read more here-http://money.cnn.com/2008/07/16/news/economy/fed_minutes/index.htm

-Dr. Ron Paul takes on Federal Reserve chairman Ben Bernanke. Opening Statement and Q&A.; Read more here-http://news.goldseek.com/RonPaul/1216235654.php

CREDIT CRISIS

-Bank losses from credit crisis may run to $1,600bn, warns Bridgewater. Bridgewater Associates has issued an apocalyptic warning to clients that bank losses from the worldwide credit crisis may reach $1,600bn (£800bn), four times official estimates and enough to pose a grave risk to the financial system. The giant US hedge fund said that it doubted whether lenders would be able to shoulder the full losses, disguised until now by “mark-to-model” methods of valuing structured credit.

“We are facing an avalanche of bad assets. We have big doubts as to whether financial institutions will be able to obtain enough new capital to cover their losses. The credit crisis is going to get worse,” said the group in a confidential report, leaked to the Swiss newspaper SonntagsZeitung. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/08/cnbridge108.xml

-IMF sticks by $1 trillion U.S. subprime fallout. The International Monetary Fund is sticking to its estimate that losses on U.S. assets from the subprime crisis and its wider fallout would be about $1 trillion despite fresh U.S. banking problems recently, a senior IMF official said on Wednesday.

“Basically, we think this is a reasonable figure and we are not revising the figure every day,” Jaime Caruana, director of the IMF’s monetary and capital markets department, told reporters in Brussels. Earlier he told the European Parliament that the financial system, still suffering from a near year-long credit crisis, may have more difficulty in extending credit needed for the economy to grow. Reuters

-Merrill Lynch Posts Fourth Straight Quarterly Loss. Merrill Lynch & Co., the third- biggest U.S. securities firm, reported a fourth straight quarterly loss that was wider than analysts estimated as the company added to its credit-market writedowns.

The second-quarter net loss of $4.65 billion, or $4.97 a share, compared with earnings of $2.14 billion, or $2.24, a year earlier, Merrill said in a statement. Analysts’ estimates ranged from a loss of 93 cents to a loss of $4.21 a share, according to a survey by Bloomberg. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aWxkYTOAJ0Tw&refer;=home

BANKING CRISIS

-Who’s Next? List of Troubled Banks Worries Wall Street, DC. Banks in Colorado, Maryland, Georgia and California top privately-prepared lists of troubled banks being circulated on Wall Street and in Washington. Read more here-http://abcnews.go.com/Blotter/story?id=5374205&page;=1

-A new American reality: The government as provider. In a country that holds itself up as a citadel of free enterprise, Washington has morphed from being the lender of last resort into effectively the only resort for home loans for millions of Americans engaged in the largest transactions of their lives. Before, the government’s more modest mission was to make more loans available at lower rates. Now it is to make sure the loans that matter most to middle class Americans are made at all. Read more here-

http://www.iht.com/articles/2008/07/13/business/guarantee.php

-Banking regulators close IndyMac. The Office of Thrift Supervision shuts down mortgage lender IndyMac and transfers the operations to the Federal Deposit Insurance Corporation. Read more here-http://money.cnn.com/2008/07/11/news/companies/indymac_close.ap/index.htm or http://www.bloomberg.com/apps/news?pid=20601087&sid;=atyF3ydPUlk8&refer;=home

-IndyMac customers line up to withdraw money. Hundreds gathered Monday to pull savings; many fear losses as largest regulated thrift fails. Read more here-

http://money.cnn.com/2008/07/14/news/companies/indymac_withdraw.ap/index.htm?postversion=2008071414

-IndyMac Failure May Prompt Rush to Pull Bank Deposits. IndyMac Bancorp Inc.’s collapse may spur withdrawals from banks ranging from First BanCorp in Puerto Rico to Los Angeles-based Nara Bancorp Inc. as customers trim accounts below the $100,000 limit on deposit insurance, according to Sandler O’Neill & Partners LP.

“IndyMac’s failure has people worried about others,” Mark Fitzgibbon, a principal at Sandler O’Neill, said in an interview. Fitzgibbon told clients in a report this week that signs of weakness may prompt customers “to more actively move deposits to banks that are perceived to be healthier.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aAY7lu28X.t8

-FBI probes possible home-loan fraud at IndyMac. Read more here-http://www.breitbart.com/print.php?id=D91V68080&show;_article=1

-Making Sense of Problems at Fannie and Freddie. Read more here-http://www.nytimes.com/interactive/2008/07/11/business/20080711_FANNIE_GRAPHIC.html

-Fannie, Freddie Nationalization May Be an Option, Bernanke Says. Federal Reserve Chairman Ben S. Bernanke said nationalizing Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, is among a number of long-term options lawmakers can consider to reduce taxpayer risk. Read more here-

-Fannie, Freddie: Taxpayers on the hook. How big a burden taxpayers would bear if Uncle Sam lends a hand to the two mortgage finance giants depends on a lot of hard-to-estimate variables. Read more here-http://money.cnn.com/2008/07/16/news/economy/fannie_freddie_taxpayer_impact/index.htm

-Fannie, Freddie bailout would imperil budget, dollar. Read more here-http://www.reuters.com/article/idUSN1135284920080711

-Fannie Plan a `Disaster’ to Rogers; Goldman Says Sell. The U.S. Treasury Department’s plan to shore up Fannie Mae and Freddie Mac is an “unmitigated disaster” and the largest U.S. mortgage lenders are “basically insolvent,” according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson’s request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling.

“I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,” Rogers, 65, said in an interview from Singapore. “So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.”

The chairman of Rogers Holdings, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, also said the commodities bull market has a “long way to go” and advised buying agricultural commodities. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aSLF543SCO4A&refer;=home

-Japan mortgage exposure seen over $95 billion. Nikkei: combined total of private-sector financial firms topped Y10 trln. Japan’s private-sector financial institutions held slightly more than 10 trillion yen ($95 billion) in debt securities issued by U.S. mortgage lenders such as Fannie Mae and Freddie Mac as of the end of the fiscal year in March, according to a published report. Read more here-http://www.marketwatch.com/news/story/japan-private-firms-us-mortgage/story.aspx?guid={70653466-BF9E-4393-97B3-A8E989C04154}

U.S. GLOBAL FUNDING CRISIS

-US faces global funding crisis, warns Merrill Lynch. The US Treasury is running out of time before foreign patience. Merrill Lynch has warned that the United States could face a foreign “financing crisis” within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.

“Japan was able to cut its interest rates to zero,” said Alex Patelis, Merrill’s head of international economics. “It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies.” Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/16/ccusdebt116.xml

GLOBAL RECESSION

-The new new world order. Skyrocketing oil prices. Double-digit inflation. Is the great global economic boom finally coming to an end? Read more here-

http://money.cnn.com/2008/07/11/magazines/fortune/gimbel_global.fortune/index.htm

-This recession could easily tip into a depression. The experience of the 1930s makes me think that the present downturn will be relatively long and difficult. Read more here-

http://www.timesonline.co.uk/tol/comment/columnists/william_rees_mogg/article4326794.ece

-Kick-starting the U.S. economy while it’s down. Many economists have concluded that a second dose of government stimulus spending is required to prevent a broad economic unraveling in the United States – and to provide relief to millions of Americans grappling with joblessness, plunging home prices and tight credit.

Democratic leaders in the U.S. Congress are already fashioning a package of measures, even though President George W. Bush and the Federal Reserve chairman, Ben Bernanke, have pronounced such action premature. Read more here-http://www.iht.com/articles/2008/07/16/business/stimulus.php?WT.mc_id=newsalert

U.S. DOLLAR-FOREIGN CURRENCY

-Sovereign funds cut exposure to weak US dollar. Some of the world’s largest sovereign wealth funds are seeking to scale back their exposure to the US dollar in a sign of global concern about the currency. One big sovereign fund in the Gulf has cut its dollar-denominated holdings from more than 80 per cent a year ago to less than 60 per cent, while China’s State Administration of Foreign Exchange (SAFE) has been looking to strike deals with private equity firms in Europe as a part of a strategy to reduce its dollar holdings.

Sovereign wealth funds have played a leading role in helping to recapitalize faltering US banks, but have lost money so far on such investments. Continuing market turbulence has further shaken their faith in US policy and policymakers. Kenneth Shen, head of the strategic and private equity group at Qatar Investment Authority, another Middle Eastern fund looking to do more deals in Europe than the US, aired such concerns publicly at a conference in Hong Kong late last year. “The outlook for the US dollar is a significant issue for investors contemplating US-related investments,” Mr. Shen said. Read more here-http://www.ft.com/cms/s/0/fc250ac2-5361-11dd-8dd2-000077b07658.html?nclick_check=1

-Canada Dollar Equal to U.S. Currency for First Time in 6 Weeks. Canada’s dollar traded equal to its U.S. counterpart for the first time in six weeks on concern that widening credit-market losses will drag the U.S. economy into a recession. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aBIGbAjYwIgA&refer;=canada

-Euro races to record high $1.6038 on US woes. Read more here-http://www.breitbart.com/print.php?id=080715101632.yn3b8q4z&show;_article=1

-Gross Likes Dollar More Than Euro for 1st Time on EU. For three years euro bulls used the prospect of higher interest rates in Europe to justify the currency’s 32 percent rally against the dollar. No more. A growing number of the world’s biggest investors say a slowdown in the region’s economy may be more severe than in the U.S., forcing the European Central Bank to reverse this month’s rate increase.

By January, the euro will be lower against the dollar, yen and even the pound, according to the median estimate of strategists surveyed by Bloomberg. Bill Gross, manager of the world’s biggest bond fund, turned bearish on the euro for the first time since the currency’s inception in 1999.

“We might have hit a point where the euro doesn’t have a lot to stand on,” said Emanuele Ravano, co-head of European strategy in London for Gross’s Pacific Investment Management Co., which runs the $129 billion Pimco Total Return Fund. “The euro is ultimately very overvalued. It could be quite a bit lower at some point in time over the next couple of years.” Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=awbjHoEJmCAA&refer;=home

-China’s Currency Reserves Rise 36% to $1.81 Trillion. China’s foreign-exchange reserves climbed by more than a third to a record $1.81 trillion at the end of June, evidence that investors may be betting on further gains by the yuan.

Currency holdings rose 35.7 percent from a year earlier, the People’s Bank of China said today on its Web site. The assets grew $126.6 billion from the end of March, after a $153.9 billion gain, the biggest on record, in the first quarter. Read more here-http://www.bloomberg.com/apps/news?pid=20601013&sid;=aECcub3xCGlU&refer;=emergingmarkets

-Lack of bank note paper threatens Zimbabwe economy. It has come to this: Zimbabwe is about to run out of the paper to print money on. Fidelity Printers & Refiners, the state-owned company that tirelessly churns out bank notes for the Robert Mugabe regime, was thrown into a crisis early this month after a German company stopped supplying bank note paper because of concerns over Zimbabwe’s recent violent presidential election, widely seen as fraudulent by international observers. Read more here-

http://www.latimes.com/news/nationworld/world/la-fg-money14-2008jul14,0,3947241.story

GLOBAL MONEY SUPPLY

-Global Money Supply. This essay makes comparisons between the money supply of 25 selected economic areas and discusses the ratios between the values of official gold reserves to outstanding currency.

For the purposes of this essay, the Euro-Zone includes the thirteen countries that use the Euro currency: Austria, Belgium, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain. China includes Hong Kong. All other economic areas are individual countries. These 25 economic areas include 38 countries and make up 89.6% of the world’s GDP and 65.1% of the world’s population. Read more here-http://dollardaze.org/blog/?post_id=00412



STOCK MARKET

-What am I thinking about these bright summer days? I’m thinking, as usual, about a long list of things, but one item I’ve been zeroing in on is the 50% Principle as it applies to the current market. The 50% Principle works like this we have the Dow low of 7286 recorded in October 2002. And we have the record Dow high of 14164 recorded in October 2007. The 50% or halfway level between Dow 7286 and Dow 14164 comes in at 10725. As of today’s close, the Dow was just 375 points above the 10725 halfway level.

The 50% Principle tells us that if the Dow closes decisively below 10725, then there is a good chance the Dow will continue down to test the level from which the entire advance started that level is 7286. And I wonder to myself what would happen if the Dow breaks below 10725 and then declines to the 7286 area? My immediate thought is disaster. And probably a severe recession or even a depression. Remember, the Dow is only 375 points away from the halfway or 50% level. Richard Russell-Read more here-

http://www.321gold.com/editorials/russell/russell071408.html

-MSCI World Index May Drop 14% Before Bear Market Ends. The MSCI World Index, the global benchmark for stocks in developed nations that tumbled into a bear market last week, may not stop falling until it reaches a three-year low, if history is any guide.

The measure of 1,742 companies in 23 markets slid 1.1 percent to 1,345.47 on July 11, bringing the loss since its October record to 20 percent. A decline of another 14 percent would match the average slump of seven bear markets since calculations on the index began in 1969, data compiled by Birinyi Associates Inc. and Bloomberg show.

Shares around the world dropped for six straight weeks, the longest streak since October 2002, as losses and writedowns at banks exceeded $400 billion, oil prices rose to a record and growing concerns about the health of Fannie Mae and Freddie Mac caused their stocks to plunge more than 60 percent. Companies in the Standard & Poor’s 500 Index will report a 14 percent decline in second-quarter profits, according to estimates of analysts compiled by Bloomberg.

“It is unlikely we have seen the low point for equity markets,” said Tony Dolphin, director of strategy and economics at Henderson Global Investors in London, which oversees about $125 billion. “The next few months will see worse news on economic growth, profits and inflation, and worries about the financial sector are also likely to persist.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aC7dtlD5k7vM&refer;=home

-Avoid Financials as `Fires’ Continue, Birinyi Says. Investors should avoid most financial companies because their shares will probably keep declining, said Laszlo Birinyi, president of Birinyi Associates Inc.

“Stay away from these stocks and take a very low profile,” Birinyi, who oversees more than $350 million in Westport, Connecticut, said in an interview on Bloomberg Television. “There’s an awful lot of fires that need to be put out. I’m concerned about how we get them all out.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=alOnpCf1.cPM

REAL ESTATE

-U.K. June House-Price Drops Stay Close to 1978 Low. U.K. house-price declines in June stayed close to the most widespread since the Royal Institution of Chartered Surveyors started measuring the property market in 1978, pushing the country closer to a recession.

The number of residential property agents and surveyors saying prices fell exceeded those reporting gains by 88 percentage points, the London-based group said today. That compares with 92.2 percent the previous month, and 94.2 in April, the worst since the series began. The reading for London prices was minus 80. Property sales fell to the lowest on record, RICS said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=abxAzQeivsqg

-U.K. house prices could fall back a long way after their excessive rises. Read more here-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/14/ccom114.xml

-Credit crunch leaves U.K. homeowners with no easy way to bale out. Read more here-http://www.guardian.co.uk/business/2008/jul/08/housingmarket.creditcrunch

-Turns out U.K. sites predicting a property crash were clairvoyant. Read more here-http://blogs.iht.com/tribtalk/properties/roof/?p=455

-UK in denial on housing, says the prophet of fear. Read more here-http://www.thisislondon.co.uk/standard-business/article-23513270-details/UK+in+denial+on+housing,+says+the+prophet+of+fear/article.do

-Savills says London prices could fall 25 percent in the next year. Read more here-http://blogs.iht.com/tribtalk/properties/roof/?p=451

-In South Africa, agent’s memo predicting 40 percent drop in luxury home prices creates stir. Read more here-http://blogs.iht.com/tribtalk/properties/roof/?p=457

-Canadian house sales seen falling this year: Royal LePage. Read more here-http://www.cbc.ca/money/story/2008/07/17/houseprices.html

-San Diego County housing prices dropped a record 25.3 percent on a year-over-year basis last month to stand at $370,000, DataQuick Information Systems reported Tuesday. Read more here-http://www.signonsandiego.com/news/business/20080715-1250-bn15housing.html

-U.S. Economy: Single-Family Home Construction Hits 17-Year Low. Builders started work in June on the fewest single-family U.S. homes since 1991 and manufacturing in the Philadelphia region contracted for an eighth straight month, signaling the economic slowdown is worsening.

Construction starts fell to an annual pace of 647,000, the Commerce Department said today in Washington. A change in New York City building codes spurred total starts, which include condominiums and apartment buildings, to a four-month high.

The figures underscore the housing recession was already deepening before the financial turmoil this month at Fannie Mae and Freddie Mac threatened to further curb mortgage financing. Today’s drop in the Philadelphia Federal Reserve’s factory gauge showed manufacturers cut orders and employment in July as confidence in the economic outlook deteriorated.

“Hopes for a bottom” this year in home construction “are rapidly fading,” said David Resler, chief economist at Nomura Securities International Inc. in New York. The housing recession “has been spilling over to manufacturing for months,” contributing to “recessionary conditions,” he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aaYaMnGNn1Z0&refer;=home

-Homebuilder Confidence in U.S. Reached Record Low in July. Confidence among U.S. homebuilders dropped to a record low in July, signaling the housing recession will continue. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=am55kKPOiubg

-Hamptons House Prices Fall Amid Wall Street’s Decline. The Hamptons housing market is feeling the heat of Wall Street’s meltdown. Second-quarter sales volume dropped 29 percent and the median price fell 11 percent to $735,000 from a year earlier in the resort communities on the East End of New York’s Long Island, Suffolk Research Service Inc. said in a report today. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=afmt9iswmvIw&refer;=home

-Tennis star Andre Agassi’s resort project in Idaho double faults. Read more here-http://blogs.iht.com/tribtalk/properties/roof/?p=448

FORECLOSURES-MORTGAGES

-Foreclosures Are The Name Of The Game In California. Read more here-http://thehousingbubbleblog.com/?p=4751

-Tequila and sympathy: Bars offer foreclosure specials. Padre’s Modern Mexican is turning the downturn into a marketing opportunity: Bring in a foreclosure notice, get a free drink. Read more here-http://money.cnn.com/2008/07/02/smallbusiness/tequila_sympathy.fsb/index.htm

-Need a mortgage now? Bring lots of cash. Between higher fees and larger down payment requirements, buyers have to pony up more money than ever these days just to land a loan. Read more here-http://money.cnn.com/2008/07/15/real_estate/Need_mortgage_bring_money/index.htm?postversion=2008071616

-New 20% Down Payment Makes Savers From Profligate U.S. Spenders. The U.S. housing crisis may accomplish what years of parental hectoring couldn’t: Turn Americans from spenders into savers. Spending will fall because homeowners can no longer use rising real estate values to borrow cash $837.5 billion in 2006, according to a report by former Federal Reserve Chairman Alan Greenspan and James Kennedy.

With mortgage lenders requiring down payments of 20 percent, the average household, which puts away less than 1 percent of after-tax pay, will have to save 10 percent for 10 years to buy a home. The housing market shaved almost 1.6 percent off gross domestic product growth in the first quarter and cut in half the growth rate of consumer spending, which accounts for more than two-thirds of the economy, said Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania.

“The loss of housing wealth is the difference between a recessionary economy and a growing economy,” said Zandi, an adviser to presumptive Republican presidential nominee Senator John McCain. “Consumers have powered the global economy for the past 25 years. For the foreseeable future, maybe the next 25 years, the savings rate will move higher.”

The worst housing crisis in at least a quarter century still has a long way to go, Zandi said. It will take until 2015 for the median home price to return to its July 2006 peak of $230,200, while home sales and residential construction will never again reach the record highs of 2005 and 2006, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=a0nvmaoJLWEE&refer;=home

GEOPOLITICAL NEWS

-President George W Bush backs Israeli plan for strike on Iran. Read more here-http://www.timesonline.co.uk/tol/news/world/middle_east/article4322508.ece

-U.S. reverses course, will send envoy to talks with Iran. Read more here-http://www.cnn.com/2008/POLITICS/07/16/us.iran/index.html

Story Highlights

A senior U.S. diplomat will join a meeting with Iran negotiator this weekend

Meeting with Iranian is a break from previous U.S. position

William Burns is only ordered to listen to Iran and not negotiate

U.S. says Iran must suspend enrichment program before direct talks can occur

-Ex-PM Tony Blair called off a visit to Gaza yesterday after fanatics linked to al-Qaeda plotted to “kidnap and slaughter” him. Read more here-

http://www.thesun.co.uk/sol/homepage/news/article1427567.ece

-Pakistan sets limits on hunt for Osama bin Laden. Read more here-http://www.iht.com/articles/2008/07/13/asia/binladen.php

-Iraqis demand end to ‘occupation’. Read more here-http://www.thenational.ae/article/20080714/FOREIGN/48914182/1002/NEWS

-Iran Pours Cash Into Afghanistan, Seeking Leverage Against U.S. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNaIqaODpvrU&refer;=home

© 2012, Worldwide Precious Metals Canada Ltd.
www.wwpmc.com

The GoldBugg Report – July 22, 2008
Posted by Worldwide Precious Metals on Tuesday, July 22, 2008


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