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The GoldBugg Report – October 28, 2008

October 28, 2008

The GoldBugg Report October 28, 2008

-”When Inflation Erupts, Gold Will Take Off”

-The Silver Rush Is On. Theodore Butler and Israel Friedman

- Peter D. Schiff, an extreme bear who correctly foresaw the U.S. stock-market slide, the home mortgage meltdown and the credit crunch, still sees plenty of doom and gloom ahead. As president of Euro-Pacific Capital, a Connecticut-based brokerage, the 43-year old financial advisor has long been urging his clients to get their money out of U.S. stock and bond markets and look for safer investments outside of America or put their nest eggs into silver and gold.

GOLD

- Peter D. Schiff, an extreme bear who correctly foresaw the U.S. stock-market slide, the home mortgage meltdown and the credit crunch, still sees plenty of doom and gloom ahead. As president of Euro-Pacific Capital, a Connecticut-based brokerage, the 43-year old financial advisor has long been urging his clients to get their money out of U.S. stock and bond markets and look for safer investments outside of America or put their nest eggs into silver and gold. Read entire story here: http://www.financialpost.com/story.html?id=911549

-US Dollar Death Dance By Jim Willie CB  -http://www.kitco.com/ind/willie/oct242008.html

-Frank Holmes: “When Inflation Erupts, Gold Will Take Off”. Expect short-term hesitancy in the upward movement of the gold price until liquidity returns to the markets, says Frank Holmes, CEO and chief investment officer at U. S. Global Investors and co-author of the new book “The Goldwatcher: Demystifying Gold Investing”. In this exclusive interview with The Gold Report, he predicts gold will go to $1,000, even $2,000, over the next two years. Read more here-http://news.goldseek.com/GoldSeek/1224655500.php

-Metal keeps drying up as Comex pretends otherwise. “There’s an old saying: ‘Don’t fight City Hall.’ I have a new one: ‘Don’t fight the bandits on the Comex.’ “There’s no rational explanation for the incredible disconnection between gold’s physical demand and the paper trading of it on the Comex. Whatever doubt anyone had about GATA being right in its cause would be gone in my humble opinion if you watched Comex trading every day.

A very good friend of mine says he doesn’t mind losing in gold and his mining stocks, but when you can see criminals stealing it from you on the Comex, you just want to die. “I love GATA but I’m now wondering: Can we ever fully expose this den of thieves called the Comex? Peter Grandich-GATA-Read more here-http://www.gata.org/node/6798

-Will the IMF & Co. let gold crash? A personal viewpoint from a Swiss fund co-manager on the immediate and long term future for the gold price vis-à-vis Central Banks and the IMF in particular. Right now, I believe we are very close to a significant short and long term event happening in the gold market.

For the short term, in my view, there are two possibilities: one is very bullish for gold (such as the breakdown of the systematically applied suppressing schema followed by massive safe heaven buying and a huge spike in the price of gold) and the other is very bearish for gold (such as significant gold sales from supranational organizations like the IMF or the ECB). But the long term implications will nevertheless be on both ways bullish. Read more here-http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=71248&sn;=Detail

-Economist Mundell says China should buy all IMF gold. Mundell had a couple of notable things to say about gold. First, that China, with its huge dollar surplus, has a great interest in buying gold to hedge its dollar exposure but is unlikely to do anything disruptive to the world economic order.

Second, that if the International Monetary Fund really does sell its gold, as is occasionally proposed, China should purchase all of it. Since Mundell is officially an adviser to the Chinese government, presumably it already has heard this suggestion from him. If the IMF really does have any gold and China is prepared to buy it all, of course this would prevent that gold from depressing what passes for the gold “market.” GATA-Read more here-http://www.gata.org/node/6792

-Jim Sinclair: The bullion market vs. the paper gold market. Read more here-http://www.gata.org/node/6794

-Central bank gold sales and leasing of gold have artificially suppressed the price of gold in recent years but with lease rates surging and central banks concerned about financial, economic and systemic contagion, this source of supply is set to dwindle in the coming months. Indeed many South American, Middle Eastern, Asian and the Russian central bank have already stated their intentions to add to their gold reserves. The German Bundesbank has clearly stated how they view gold as an essential monetary asset.

“National gold reserves have a confidence and stability-building function for the single currency in a monetary union,” the Bundesbank said. However, rumours of central bank gold sales could continue to depress prices in the short term. After the sell off last Friday, UBS noted that “we have no explanation behind the sell-off in gold and silver seen late on Friday’s trading although. Some more fundamentally based traders may have been concerned by the talk of central bank selling that we heard earlier in the day.

One large central bank, not a signatory to the Central Bank Gold Agreement, was rumoured to have sold gold earlier in the day. UBS said that the rumours were without substance and said that “certainly we saw no signs of this and the rumoured central bank is considered unable to sell gold the story in itself may have been enough to trigger some profit taking.” Gold.ie

-Demise of Hedge Funds and Falling Commodity Indices Creates Short Term Weakness in Gold. Many hedge fund managers are under severe pressure to liquidate positions as banks request more collateral to back funds’ borrowing. Many hedge funds, including some of the largest, have gone to the wall in recent months and Credit Suisse estimates that 30% of roughly 8,000 hedge funds will close over the next few years.

Wealthy investors are turning their backs on high risk hedge funds as there is a reevaluation of the sensibility of massive leverage and banks are no longer willing to fund the hedge funds’ speculations. While COMEX futures gold prices have fallen, the real price for actual physical bullion continues to surge as there are little or no sellers and nearly all are buyers. Shortages of small and midsized bullion coins and bars appear to spreading to the large bar market with reports of London Good Delivery Bars becoming harder and harder to buy, get hold of and take delivery of (especially in New York).

Futures prices are falling while gold prices for physical bullion are increasing with a surge in price of premiums for all coin and bar products. Investors do not want promissory notes or futures contracts rather the safety of physical bullion. Barclays analysts note that “There has been a swing from investors investing in gold in any form to investors specifically choosing to invest in physical gold.” Gold.ie

-Reuters Wealth Management Summit Wealthy Favor Cash, Government Bonds and Gold. Gold has continued to tread water and not made expected gains as the process of massive deleveraging of the entire international financial system is resulting in unprecedented selling in nearly all markets including the huge commodity index funds.

These index funds such as the Goldman Sachs Commodities Index, Reuters/Jefferies CRB index, the Dow Jones Commodity Index and the Dow Jones-AIG Commodity Index have been the recipients of billions of dollars of funds in recent months often from massive corporate, state and national pension funds (such as the Irish National Pension Reserve Fund which invested in the Goldman Sachs Commodities Index).

The Reuters Wealth Management Summit heard that wealthy investors are seeking the safety of cash, government bonds and gold. World’s super-rich focus on safe investments. The credit crunch has scared even the world’s richest people into sticking their assets in safe havens. Private bankers and asset managers at the Reuters Wealth Management Summit said gold, cash and government bonds were again in favour.

Real tangible assets such as gold were in favour again as wealth accumulation is shunned for wealth preservation. As the deleveraging of the global financial system continues and government and central banks internationally adopt the ”inflate or die” motto, soon these investors will realize that cash and bonds are not the safe havens they thought they were and gold will become the asset class of choice as it was in the stagflation of the 1970s and the deflation of the 1930s. Gold.ie

-In a very interesting video about the gold market, Stephen Flood of Gold and Silver Investments is interviewed by Javier Blas of the Financial Times. In ‘Time for the Midas touch?’ the commodities correspondent of the FT, Javier Blas looks at the issues surrounding gold investments in the current economic climate. Javier Blas is right to warn that the party is normally over for an asset class when the retail investor arrives to the party.

Meaning that when an asset class is being invested in by the mainstream public in a very significant way as seen in the Nasdaq bubble and recent property bubbles internationally, it may be time to be wary and either sell or reduce weighting to that asset class. At the same time, it is important to remember that gold remains a fringe investment at best with a tiny, tiny fraction of the western investment public having invested in physical gold bullion.

We are a long way from mass mania and the mass participation associated with market tops (as seen in stock and property markets in recent months). Most investors do not know what gold bullion is or how to invest in gold. Gold is featured in the mainstream media extremely infrequently and even then it is often featured in a biased and sometimes inaccurate and unfair way.

When gold is featured on a daily and even weekly basis in the daily newspapers in a very positive light and there are supplements dedicated to investing in gold and precious metals and there is a mainstream opinion that “you cannot lose with gold” or “gold always goes up in the long term” then it will be time to sell or at least go underweight gold and silver.

Joe Kennedy’s shoe shine boy and the man in the street and most in the financial services industry itself are barely aware of the importance of diversifying into gold – when they are and we do have mass participation in the gold market it will be time to go underweight gold. Watch video here-http://www.ft.com/cms/93ece7c0-07af-11dd-a922-0000779fd2ac.html?_i_referralObject=893727079&fromSearch;=n

-Have you heard the following statements from your financial planner, mutual fund advisor, or stock broker? In the long term the market rises 8% per year. Investors cannot time the market. The best strategy for investing is to buy and hold for the long term. How many decades does the “buy and hold” investor have to wait to get their 8% per year return from the Dow Jones Industrial Average? This is what a chart of the Dow Jones looks like for nearly the past nine years.

In this chart we can see how much the Dow Jones has fallen in value relative to gold, and conversely how much gold has risen relative to the Dow Jones. In the year 2000 it took roughly 40 ounces of gold to buy one share of the Dow Jones industrial average. Today it takes roughly 10 ounces of gold to buy one share of the Dow Jones. In other words, relative to gold, the Dow Jones has lost roughly 75.5% of its value.

We are not suggesting that the average investor try to time the market on a day to day basis. Instead we are trying to illustrate why we attempt to time the “big picture” of large shifts of capital from overvalued asset classes to undervalued asset classes. We believe that timing these large, multi decade cycles may be the most important investing strategy an investor could follow. These long term “mega trends” are where significant profit is made as the rising tide of the bull market raises all boats.

A good example of these shifts of capital is seen from the 1960’s to 1980 when investors fled paper assets such as stocks and bonds in favor of hard assets such as gold and silver, but because markets are cyclical and not linear that same money flew out of hard assets and into paper assets from 1980 to 2000. In our opinion the large cyclical transfer from paper assets to hard assets started once again in 2000 until present.

We believe investors are losing faith in paper assets and are once again in the process of transferring their money into the security of hard assets. Markets are cyclical and one day the sun will shine brightly on financial stocks, technology stocks and the like again. But in our opinion this recent drop in the paper markets is not a simple pull back and “buying opportunity”. Instead we believe this “correction” is a full blown “crash” that will take many years to recover from.

Make no mistake that when the news of falling massive, financial corporation’s no longer shocks the average investor because it has become so common place, a significant consequence is likely hiding around the corner. It is during times like this that we look for assets the world “needs” instead of assets the world “wants”. Read more here-http://news.goldseek.com/GoldSeek/1224227160.php

-Why the fall in the gold price when physical gold remains in huge demand? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=70932&sn;=Detail or

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=71224&sn;=Detail

-Spending on gold nears $3bn as investors flee shares.Investors spent $2.8bn (£1.6bn) on gold on world stock exchanges in the third quarter this year, as individuals and companies fled volatile share markets. According to the World Gold Council (WGC), 145 tons of gold were bought on stock exchanges in the three months to September.

This meant that gold held by investors on the exchanges hit 1,000 tons for the first time since the metal was introduced on the US bourse in 2004. Natalie Dempster, the WGC’s head of investment, said: “The question we get from high net worth individuals and funds is no longer ‘why should we invest in gold?’, but ‘where can we go to buy it?’” Gold offers a product with a more stable price in the current market than company shares.

James Turk, founder of Gold Money, the Jersey-based company that stores precious metals for investors, said he had seen his customer base triple in September. He added that at the end of the third quarter, the company was looking after gold and silver deposits worth $400m, more than double the value a year earlier. Mr. Turk said: “Gold is seen as a natural safe haven given the uncertainty in the banking system and the volatility in the stock market.” Independent.co.uk

-The Big Picture: This vast vault of gold under the Bank of England should weather the credit crunch. Read more here-http://www.dailymail.co.uk/news/article-1079518/The-Big-Picture-This-vast-vault-gold-Bank-England-weather-credit-crunch.html

-Now is the best time to invest in yellow metal. Read more here-http://www.business24-7.ae/articles/2008/10/pages/10202008_bacfe3aa016e4b4c880b85d853d484f8.aspx

-Gold sales shine in dark economic times. Read more here-http://news.cnet.com/8301-13578_3-10069856-38.html?part=rss&subj;=news&tag;=2547-1_3-0-20

-Gold closed last week and made new record highs this week against the Australian dollar, Canadian dollar, Indian rupee, South African rand and British pound. Here are gold’s long-term charts against these currencies. James Turk-Read more here-http://goldmoney.com/en/commentary.php

-Richard Russell-Erratic action in gold. Read more here-http://www.321gold.com/editorials/russell/russell102108.html

-Even Mark Hulbert now admits possibility of gold manipulation. Read more here-http://www.gata.org/node/6790

-Naturally we believe that the beneficiary of this next bubble will be gold (and by extension silver and even platinum). Despite the recent 20 per cent plus drop in gold prices they remain above their recent lows and have generally outperformed the stock market. Silver and platinum prices, however, have been devastated, falling over well over 50 per cent from the highs. But we are reminded that silver has virtually no above ground supplies in storage despite production of over 600 million ounces annually.

Platinum is even more scarce then gold as all the platinum in the world would fill an average living room. All the gold ever produced would fill an average house. We also have a huge detachment between the official reported market and what we call the “black market” for gold and silver. First, on the official side we did have the report of a European gold sale recently, but even so that was within the realm of planned announced sales.

Secondly, the European central banks have ceased leasing and lease rates have soared. Many central banks including Russia and other Asian and Mid Eastern banks have stated their intentions to add to gold reserves. The Bundesbank has stated they view gold as an essential base of their reserves. The collapse we believe is largely paper-related as hedge funds and other commodity funds have been facing forced liquidation.

The “black market” for bullion coins has seen a huge surge in price premiums, with shortages developing. Mints are reporting shortages and an inability to keep up with demand. Even the commitment of traders (COT) rose to 29 per cent in the recent report, up from 28 per cent the previous week. This was down from the 38 per cent seen in early September. All this is telling us that we should soon see a rise in gold prices (and that will also take silver and platinum prices higher).

Silver has been particularly hard hit; it broke a trend line up from the 2005 lows and is currently testing a trend line up from the 2003 lows. We have for silver corrected just over 61.8 per cent of the entire move from the lows of 2001. If there is a danger to the downside it is the highs of 2004 (just over $8) that could be tested in a wash out panic.

Gold prices have been testing an uptrend line from the 2005 lows. They are well above the trend line from the 2001 lows. In inflation terms both gold and silver remain bargains. They are also holding their uptrend lines in inflation adjusted terms. David Chapman-Read more here-http://news.goldseek.com/UnionSecurities/1224482700.php

SILVER

-The Silver Rush Is On. Theodore Butler and Israel Friedman-Read more here-http://news.silverseek.com/TedButler/1224532979.php

-Silver and gold market update with Clive Maund. Read more here-http://www.321gold.com/editorials/maund/maund102008.html

-As the price of silver pulled back under $10 an ounce recently, I started loading up on the white metal. Or, I should say, I tried to load up. While I was easily able to buy silver coins with numismatic value, my first attempts to buy silver bullion coins met with frustration.

I think this says a lot about the silver market right now. On paper, it’s cheap. But in the real, physical market, silver is getting very precious indeed. In fact, if you can buy silver bullion for under $10 an ounce, I recommend you grab it and run! Sean Brodrick-Read more here-http://news.silverseek.com/SilverSeek/1224691707.php

-David Morgan silver commentary. Read more here-http://news.silverseek.com/SilverInvestor/1224247960.php

-High Silver Premiums Explained. Read more here-http://news.silverseek.com/GoldIsMoney/1224591832.php

-Indians scramble for silver as prices slump. Read more here-http://in.reuters.com/article/domesticNews/idINBOM36918620081020

-Indian brides replace gold jewellery with silver, brass as prices hit record. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a06hi8J26jak&refer;=home

-Silver could be pointing the way higher for gold? Speculators often take advantage of silver’s volatility to gear up their gold exposure when looking for a move in the sector. Is such a move underway again? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=71199&sn;=Detail

-Polymetal cuts 2008 silver forecast to between 16.5m and 17m ounces. The drop in silver prices has convinced Russia’s largest silver miner, Polymetal, to cut its production this year, along with revising its proposed capital expenditures for 2009.

Silver prices have dropped from above $20 an ounce in March to trade below $10 now. “If the price falls roughly below $8.50, with all other costs being equal, we will probably take out some high-cost parts of both the Lunnoye and Dukat underground projects from our mining plan,” Chief Executive Vitaly Nesis said.

“Then, our production (in 2008) would be closer to 14 million ounces,” he told a conference call. “In order to keep output at 20 million ounces, we will need (a silver price of) around $13.50 per ounce,” he added. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=71052&sn;=Detail

-Barclays predicts dollar to weaken, jewellery demand to improve in long run. In a recent Barclays Capital report, London-based precious metals analyst Suki Cooper writes to clients that supply of gold, silver and palladium again will outpace demand in 2009 while platinum will remain tight.

“Fundamentals are proving, as they always do, to be the best predictor of price dynamics in precious metals markets,” she notes. “Supply-side problems have characterized these metals markets in 2008 so far.” Indeed, production losses have been on a massive scale spanning several continents and have affected every metal. But, it’s also true that investment demand has played a role in the 2007-2008 spike in prices.

Now, heading into 2009, where purchases of these materials for investment and buying for fabrication are headed remains unclear. Purchasing recently interviewed Cooper about the 2009 outlook for the various major precious metals. Here’s an edited version of the question-and-answer session. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=23783

DEFINITIONS-QUOTES-QUICK HITS

-Deleverage. A company’s attempt to decrease its financial leverage. The best way for a company to delever is to immediately pay off any existing debt on its balance sheet. If it is unable to do this, the company will be in significant risk of defaulting. Companies will often take on excessive amounts of debt to initiate growth.

However, using leverage substantially increases the riskiness of the firm. If leverage does not further growth as planned, the risk can become too much for the company to bear. In these situations, all the firm can do is delever by paying off debt. Any sign of deleverage shown by a company is a red flag to investors who require growth in their companies. Investopedia.com

-Warren Buffett using Harold Seigel’s favorite quote! Warren Buffett knows his money and knows his hockey, too. When one of the richest men in the world was asked about the stock market, he said it was best to dive in now rather than try to time when the turnaround would be. He used Wayne Gretzky as an example.

“In waiting for the comfort of good news,” he wrote on MSN.com, “they’re ignoring Wayne Gretzky’s advice: ‘I skate to where the puck is going to be, not where it’s been.” Who knew he’d been a closet No. 99 fan all these years? Edmonton Journal

-The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery. Winston Churchill

-All that is necessary for evil to triumph is that good men do nothing. Edmund Burke

-Quote on stock market turmoil. “This is worse than a divorce. I’ve lost half my net worth and I still have my wife.” Anonymous

-”Funds who would like to keep their asset of last resort are being forced to sell,” said Peter Spina, president of GoldSeek.com. “There will be more victims of the fund collapse and more forced liquidations even if it requires you to sell your most desired assets such as precious metals,” he added. Casey Daily Resource

-Right now every asset on the planet is being sold except the U.S. dollar. To me this rally looks like the last gasp of a dying currency. Just like a toy rocket ship, once the dollar runs out of fuel it will crash back down to earth. Peter Schiff-Read more here-http://www.merkfund.com/money/authors/schiff/2009-09-12.html

-On BNN, Embry warns of failure of December gold contract. Sprott Asset Management’s chief investment strategist, John Embry, went on Business News Network in Canada this morning and, interviewed by Amanda Lang, discussed, among other things, the suppression of the gold price on the New York Commodities Exchange.

Embry speculated that long contract holders may call for delivery of enough December contracts as to prompt a claim of force majeure when the exchange cannot delivery enough real metal. The interview with Embry begins at the 11-minute mark and continues for about 6 1/2 minutes at the BNN Internet site here-http://watch.bnn.ca/tuesday/#clip104603

-Large investors and bullion dealers are now looking to take delivery of the December gold contract and there is likely to be a significant number of longs who stand for delivery leading to COMEX warehouses being depleted and the increasingly ridiculous COMEX price then surging in value.

The possible default of COMEX is even being considered by some astute observers. It is estimated that COMEX only have enough gold to deliver on some 10% of the outstanding contracts. October is not a delivery month so the December contract is being targeted. Some large money interests also realise the potential for sizeable profits from taking delivery of large gold and silver bars and melting them down into smaller bullion products for sale at far higher premiums.

The COMEX December Gold option expiry is November 20 and there may be fireworks in the gold market soon after the election on November 4th in anticipation of far higher prices due to the incredibly strong supply and demand fundamentals. Gold.ie

-COMEX gold’s recent sharp selloff has continued and even the most ardent gold bulls are getting nervous. Bearish sentiment is very prominent and the level of fear in the precious metal markets suggests that a low is likely in the coming days. Leveraged players in the futures market are dumping paper positions wholesale while astute contrarians are using this as an opportunity to buy physical bullion at firesale prices. Gold.ie

-Gold may jump to $1,000 an ounce as investors who have sold copper, platinum and other commodities seek a haven, Paul Walker, chief executive officer of London-based research company GFMS Ltd., said. Gold’s decline is ”collateral damage” as a drop other commodities prompted investors to sell holdings in indexes comprised partly of gold, he said.

“In the past three to four weeks, a decoupling of gold and commodities such as platinum, copper and others has been under way,” Walker said at a Gold Week seminar in Tokyo. ”In the next six to 18 months, volatility in gold markets will be very high and it may try $1,000.” Central banks have been selling less gold this year, Walker said. Net sales by central banks will probably plunge about 46 percent to 269 tons this year from 501 tons in 2007, he said.

Jake Klein, chief executive officer of Sino Gold Mining Ltd., also expects gold to climb above $1,000. “This environment is good for gold in the longer term,” he said in a television interview from Sydney. “On the supply side, you’re seeing a significant reduction of gold production globally.” Bloomberg

-John Reade of UBS in London suggests, “The lack of jewelry demand and ongoing deleveraging is likely to keep gold and other precious metals under pressure in the near term.” Far from turning him bearish, though, “Deleveraging may present some fantastic opportunities for long-term value investors that can live with negative short-term marks on their portfolio,” Reade wrote. Good for buyers, not so good for sellers, of course. Casey Daily Resource

-The dollar/gold tie is evident when one considers that against a weighted basket of six major currencies, the dollar is up 9.6% this year, while gold has dropped 8.4%. No mistaking how that plays out. “The dollar is in demand around the world,” said Leonard Kaplan, of Prospector Asset Management in Evanston, Illinois. “That means everything comes down, including gold.” Casey Daily Resource

-Frank Lesh, a trader at FuturePath Trading in Chicago, reminds us that, “Gold is about the only commodity that has held its value.” Whereas the Reuters/Jefferies CRB Index of 19 commodities has dropped 21% this year, gold is off only 6%. “Does that mean gold has more to come down, or that it has some inherent value?” Lesh asked. We’re inclined to the latter explanation, of course. Casey Daily Resource

-Mark O’Byrne, of Gold & Silver Investments, sees the recent selloff as misguided, writing that, “Gold was wrongly being treated as just another commodity akin to pork bellies or lead as the ‘dash for cash’ gathered pace.” In the longer view of things, “Many realize that the U.S. and global economy is on the verge of a sharp recession and thus realize the importance of staying diversified,” O’Byrne added. Casey Daily Resource

-Central banks and hedge funds have been continuing liquidations of gold, choosing to sell into upward rallies and therefore keeping the breaks on short term upswings in price. This is evidenced by a 120,000 oz Gold Sale by J.P. Morgan Chase Wednesday morning for one of its, undisclosed hedge fund accounts. The same is true for the remaining hedge funds relative to silver. Precious Metals International

-The driving force behind the downward price movement on all commodities is 1) massive de-leveraging, 2) withdrawal of credit facilities and 3) redemption requests relative to hedge funds and their mass exodus from their long futures contract positions. It is interesting to note relative to Gold and Silver, that the demand for Physical Product is approaching epic proportions.

What this really means is that as these products are put into the possession of private investors, it is unlikely that that physical product will be available to come back into the market for years to come. This will put even more upward price pressure on these products as the economic fundamentals of supply and demand and inflation will finally win over the current synthetic prices being created by the hedge funds.

We also believe that hedge funds, as we know them to-day, and which are closing their doors by the hundreds, will not re-open. Those few that manage to survive will be subjected to severe regulatory requirements and lower credit facilities which will inhibit the type of activity we have seen in the past and prevent them for attempting to control any market.

Precious Metals International

-For our Canadian friends, with your dollar at $1.20 against the US Dollar current prices for gold and silver are still very attractive. More simply put, your Canadian dollar at $1.20 buys more gold or silver today then it did ten months ago when your dollar was at par to the US Dollar. We therefore continue our long term bullish sentiment for gold and especially Silver and that current price levels appear very attractive for long term appreciation. Continue to be conservative, pro-active and do not overextend. Precious Metals International

-In gold news last Thursday, the following report came in from UBS which was “remarking that mindless liquidation characterized many commodity markets” to which they added the following comments on gold. “Safe haven buying of gold continues with our own sales desk reporting buy/sell ratios of about 85/15 Wednesday. Yet gold was sold aggressively on the electronic futures markets, with two clips of about 6,000 lots swept lower.

Gold sold off down from about $835 to $820 and then took another leg lower as the second load was dumped.” And lastly both the GLD and SLV were unchanged, Comex silver warehouse stocks were down 211,000 ounces and the Comex also raised the margin requirement on a silver contract by $540 now up to $8,640. Ed Steer-Casey Daily Resource Plus

-In tough times, consumers are looking to stretch their dollars further. Here are six simple ways to save thousands. Read more here-

http://money.cnn.com/galleries/2008/pf/0810/gallery.save_money/index.html

-Top Iran officials recommend pre-emptive strike against Israel. Read more here-http://www.haaretz.com/hasen/spages/1030279.html

RARE COLORED DIAMONDS

-Diamonds as an investment. Watch video here-http://www.executiveinterviews.com/3106-debe-bluk/

-Spain: Economic Crisis Improves Investment Demand for Diamonds. Spain’s economic crisis has spurred the demand for precious stones, especially large diamonds, gemologist Adolfo de Basilio said Friday. “The price of diamonds and gold is going up, probably because people are worried about the fluctuations of the stock market and prefer to invest in tangible goods,”

said de Basilio, who heads a new Gemological Institute in Madrid. People interested in investing in diamonds should find out their real rather than current market value, because “the losses can be enormous if you later try to sell” a diamond that had been bought above its value, he advised. Deutsche Presse-Agentur

-Diamonds Pay Dividends. As the economic picture continues to worsen, the results of a late-September auction of fine jewelry in Chicago begs the casual observer to conclude that collectors are turning to tangible goods as a store of wealth in these uncertain times.

The sale at Leslie Hindman Auctioneers in Chicago, which attracted buyers from Singapore, Hong Kong, Italy, Mexico, Hungary and Australia, saw multiple pieces of jewelry selling around the $100,000 mark. This yellow diamond ring and a blue sapphire ring were two of the glittering stars of the show. The yellow diamond ring was bought by a jewelry dealer from New York who had flown in especially for this auction and paid $144,400, four times the expected price.

The ring was sold by a Chicago-area family that had inherited the sparkler from their mother, who had worn it as her wedding ring. The 5.44-carat stone, described as an “intense yellow fancy diamond,” sits in an 18-karat white gold setting created in the 1960s. The family was aware of the ring’s value but didn’t expect the 12-person bidding war among buyers from Bulgaria, New York and Los Angeles.

Colored diamonds are becoming increasingly popular. To fill the growing demand, several yellow diamond rings have recently been offered, but none have surpassed the price for the Leslie Hindman ring. Two comparable rings sold comfortably above their pre-auction prices recently at Sotheby’s.

The appeal of colored diamonds isn’t limited to their striking shades; colored diamonds are exponentially more rare than colorless diamonds and thus more desirable. For every 100,000 carats of white or colorless diamonds mined, just one carat of colored diamonds are found. Therefore, these gems tend to rise more quickly in value. Some jewelry experts claim that premium-quality colored diamonds double in value roughly every three to five years.

At Sotheby’s September jewelry auction, the top-selling lots were a sapphire-and-diamond ring, made by Van Cleef & Arpels in Paris, which sold for $656,500–more than double its pre-sale estimate of $250,000 to $350,000; and a colorless diamond ring from Harry Winston, which easily fetched twice its pre-sale estimate of $200,000 to $250,000, when it sold for $470,500.

The all-time high auction price for a stone or piece of jewelry is $16.5 million, a record held by the Sotheby’s in Geneva for a 100.1-carat diamond sold in 1995. For perspective, the average price for a diamond engagement ring sold in the U.S. is around $3,000.

Despite the economic downturn, quality will win out, and the robust prices these pieces continue to fetch are a sign that the highest end of the jewelry market will remain healthy for the foreseeable future. Full story here-http://www.forbes.com/2008/10/10/collecting-auctions-jewelry-forbeslife-cx_nw_1010diamond_print.html

-How Rare is Rare? Colored diamonds are among the rarest and costliest of gems, but which are the rarest and why? Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=21152

-Argyle Pride. Each year, the Argyle Pink Diamond Tender is eagerly anticipated. Here’s a look at what goes on behind the scenes. Read more here-

http://www.diamonds.net/news/NewsItem.aspx?ArticleID=21151

PLATINUM-PALLADIUM

-”A complete collapse in platinum sector profitability.” Analysts at RBCCM slash front end platinum group metal forecasts, but maintain long term numbers. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=70892&sn;=Detail

-Mines and plants hurt by low prices, high costs. The global financial crisis and sharp falls in metals prices have forced several companies to abandon or put on hold their plans to bring new mines on-stream. Some existing producers have also shut down or curtailed their output at mines and plants as high costs and low prices bite. Below are details of the major projects and facilities which have been affected in recent months, as well as other related news. Read more here-http://www.reuters.com/article/idUSLF15379720081022

-Low metal prices force miners to cut hundreds of jobs. Junior mining companies are cutting hundreds of jobs in northern Ontario due to plunging metal prices, and analysts say some miners will go out of business before the global financial crisis is over. Read more here-http://www.resourceinvestor.com/pebble.asp?relid=47241

COMMODITIES-OIL-GAS

-In Times of ‘Zombie Banks,’ Buy Commodities: Jim Rogers. The fundamentals for commodities were not affected by government policies that are propagating inflation, Jim Rogers, CEO of Rogers Holdings, told CNBC Wednesday. Read more here-http://www.cnbc.com/id/27317048 Watch video here-http://www.youtube.com/watch?v=wI7ySujGqjk&eurl;=http://goldismoney.info/forums/showthread.php?t=315235

-BHP says fall in China demand ’short-lived’. ‘We remain confident that the ongoing industrialisation and urbanisation of China and other developing economies will continue to drive strong longer-term demand for our products,’ it said. Read more here-http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=455957∈_page_id=3

-Widespread commodity forecast cut, but healthy rebound expected post-recession. Read more here-http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/10/17/widespread-commodity-forecast-cut-but-healthy-rebound-expected-post-recession.aspx

-Standard Chartered Bank forecasts dark days for commodity demand. Standard Chartered Bank says the commodity demand picture looks bleak, but demand growth remains intact in the longer term. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=70975&sn;=Detail

-Russia may divert oil to affect price. One of the world’s largest oil producing countries is considering storing crude to gain more influence over global prices. Read more here-

http://money.cnn.com/2008/10/22/news/international/russian_oil_reserves.ap/index.htm

-Trouble with oil down the road. Read more here-http://321energy.com/editorials/cohen/cohen102208.html

-How to Survive and Thrive In A Post-Peak Oil World. Watch slide show here-http://www.321energy.com/editorials/simmons/simmons101808/simmons101808.html

-Mexican Senate Passes Bills to Reform Oil Industry. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a79wy49uikmg

-OPEC cartel for Iran, Russia, Qatar? Countries will seriously pursue an organization for gas exporting. Read more here-

http://money.cnn.com/2008/10/21/news/international/iranopec.ap/index.htm

FINANCIAL CRISIS-RECESSION

-U.N. agency says crisis to cost 20 million jobs. Read more here-http://news.yahoo.com/s/nm/20081020/bs_nm/us_financial_jobs_1

-Wachovia suffers nearly $24 billion loss. Massive loss driven by charge related to planned merger with Wells Fargo and ongoing issues related to credit. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a6lGfVSSPvbM or http://money.cnn.com/2008/10/22/news/companies/wachovia_results/index.htm

-U.S. Insurer of Pensions Has Lost $2 Billion. Read more here-http://www.nytimes.com/2008/10/23/business/23pension.html?partner=rssyahoo&emc;=rss&pagewanted;=print

-IMF: No U.S. growth ’til mid-2009. International Monetary Fund predicts close-to-zero growth for most advanced economies, Canada to fare slightly better. Read more here-

http://money.cnn.com/2008/10/22/news/economy/IMF_report/index.htm

-The winner of the 2008 Nobel Prize for economics said the U.S. is plunging into a “nasty recession” with a “lot of suffering” to come, even if policy makers succeed in unfreezing the credit markets. “That’s baked in,” Princeton University professor and New York Times columnist Paul Krugman said in an interview on “Night Talk” with Mike Schneider to be broadcast later today on Bloomberg Television. “There is a lot of downward momentum.”

He said a rise in the unemployment rate to 7 percent ‘’seems almost certain” and he put the odds of an increase to 8 percent at “better than even.” The jobless rate in September stood at a five-year high of 6.1 percent. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=anjzwBa0007g

-Turmoil may make Americans savers, worsening nasty recession. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=axsUMrc.liiE&refer;=home

-The European economy may be headed for a recession that could last two to three years, Finland’s Finance Minister Jyrki Katainen said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=aEBHCkmGqHt0&refer;=economy

-Monthly job losses cut across 41 states. More than 80% of states reported jobs disappearing in September, with Michigan suffering the highest losses, according to a government report. Read more here-http://money.cnn.com/2008/10/21/news/economy/state_unemployment/index.htm

-Mass layoffs highest since 9/11. Government report says job cuts of 50 or more up significantly last month. Read more here-

http://money.cnn.com/2008/10/22/news/economy/mass_layoffs/index.htm?postversion=2008102211

GREENSPAN FINALLY FINDS FLAW

-Former Federal Reserve Chairman Alan Greenspan said a “once-in-a-century credit tsunami” has engulfed financial markets and conceded that his free-market ideology shunning regulation was flawed. “Yes, I found a flaw,” Greenspan said in response to a grilling from the House Committee on Oversight and Government Reform.

“That is precisely the reason I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.” Greenspan said he was “partially” wrong in opposing regulation of derivatives and acknowledged that financial institutions didn’t protect shareholders and investments as well as he expected.

Forecasting is an inexact science, he said. “If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,” Greenspan said. ”Forecasting never gets to the point where it is 100 percent accurate.” In May 2005 speech, Greenspan said that ”private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ah5qh9Up4rIg&refer;=home

ARGENTINA NATIONALIZES $30 BILLION IN PRIVATE PENSIONS

-Argentina’s government said Tuesday that it would seek to nationalize nearly $30 billion in private pension funds to protect retirees from falling stock and bond prices as the global financial crisis continues. The measure, confirmed in a speech in Buenos Aires late Tuesday by Cristina Fernández de Kirchner, Argentina’s president, was criticized by political opponents and analysts as a move to shore up government coffers to try to head off a fiscal crisis in 2009, when Argentina might be struggling to make billions of dollars in debt payments. Read more here-http://www.nytimes.com/2008/10/22/business/worldbusiness/22argentina.html?_r=1&oref;=slogin&ref;=business&pagewanted;=print

-Argentine Lawmakers Plan Curbs on Use of Pensions. Argentine lawmakers will try to block the government’s use of $29 billion in nationalized pension assets to repay debt when they consider President Cristina Fernandez de Kirchner’s plan to seize the funds from private money managers.

Opposition deputies said the legislation is likely to pass and debate will focus on limiting how the government can use and invest the money. Adrian Perez, head of the opposition Civic Coalition party in the lower house, said Fernandez is trying to rush a vote on a bill that should be discussed into next year.

“There isn’t a serious country in the world that has spent less than seven or eight months or a year trying to reform its pension system,” Perez told reporters today in Buenos Aires. “Their hidden objective has to do with the financing needs of the government.”

Speculation that Fernandez intends to finance the government with the now-private funds has roiled Argentina’s markets. The benchmark bond is trading at 25 cents on the dollar while the Merval index remained near a four-year low on concern the takeover is a last-ditch attempt to avert the second default this decade.

“The government isn’t really thinking about the consequences of this, especially in terms of investment and its credibility,” former Economy Minister Roberto Lavagna said in an interview with Bloomberg Television. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aJgyaPspo8zQ

U.S.-U.K. DEFICIT

-Spending surge pushing deficit toward $1 trillion. Congressional leaders and both presidential candidates are proposing billions of dollars in tax breaks and other measures to stoke economic growth, a surge in spending that could send the federal deficit soaring toward $1 trillion this year, creating the deepest well of red ink since the end of World War II.

The government already has embarked on an unprecedented spending spree to halt the implosion of the U.S. financial system and is borrowing money at levels that some economists fear could undermine the nation’s economic security for years to come. Congress could consider additional spending as soon as next month, potentially digging the nation’s hole even deeper.

“We’re going to make Ronald Reagan look like a piker in terms of deficit creation, I think,” said Rudolph Penner, a senior fellow at the Urban Institute who served as director of the Congressional Budget Office during the Reagan administration. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2008/10/17/AR2008101703368_pf.html

-Deficit Rises, and Consensus Is to Let It Grow. Read more here-http://www.nytimes.com/2008/10/20/business/economy/20cost.html?_r=1&adxnnl;=1&partner;=rssyahoo&emc;=rss&pagewanted;=print&adxnnlx;=1224568966-nDGHRFJMPAfbzfh3zt9xhg&oref;=slogin

-Spend baby spend: U.S. budget deficit to soar again. Read more here-http://www.time.com/time/printout/0,8816,1851949,00.html

-$2 billion shortfall possible for N.C. Read more here-http://www.charlotteobserver.com/breaking/story/271619.html

-U.K. Public borrowing soars to highest level since 1946 after Darling pledges: ‘I’ll spend my way out of the recession’. Read more here-http://www.dailymail.co.uk/news/article-1078832/Will-5p-tax-rise-black-hole-Families-feel-pain-Darling-spends-way-recession.html

U.S. DOLLAR

-US dollar collapse, the next big leg down for the US dollar. It’s almost like something out of the Twilight Zone. The American economy is breaking down. But the US dollar is one of the strongest currencies in the world right now. U.S. investment vehicles are crashing. Retirement funds have lost trillions. America has significant unemployment and the Federal Reserve continues to inflate the US dollar.

Yet the greenback has outperformed almost every major world currency since the middle of summer. How can this be? The reeling finance and banking sectors currently has investors running and screaming from the speculative equity markets. Of the three major U.S. indices, the Dow Jones has performed the best, losing 21.8% since July 15th. The NASDAQ and S&P; 500 are down 26.5% and 25.3% respectively over the same period of time.

With such significant risk in the American economy we should expect investors to be dumping their U.S. dollars. But this just isn’t the case. And believe it or not: People are actually running toward the U.S. dollar for safety. These investors will eventually get burned and a U.S. dollar collapse is inevitable. Read more here-http://www.goldworld.com/articles/us-dollar-collapse/322

-ECB council member foresees ‘tri-polar’ currency system. European Central Bank council member Ewald Nowotny said a “tri-polar” global currency system is developing between Asia, Europe, and the United States and that he’s skeptical the U.S. dollar’s centrality can be revived. Read more here-http://www.gata.org/node/6796

INTEREST RATES

-Bernanke May Seek New Tactics as Fed Rate Nears 1%. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=a0dn5p1E9ilY&refer;=economy

-Bank of Canada Cuts Rate to 2.25%, Signals More Moves. The Bank of Canada reduced its main interest rate by a quarter of a point, less than economists predicted, saying it will probably need to act again to fend off the effects of a credit crisis and global recession. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a3FiXpkW8xJ0&refer;=home

-Sweden cut its key lending rate by a half-point for the second time in two weeks and forecast another similar reduction within six months to cushion the economic slowdown. It also lowered forecasts for growth and inflation. The Riksbank cut the repo rate to 3.75 percent, according to a statement today on its Web site in Stockholm. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=avn0v1KJtOYI&refer;=home

-New Zealand’s central bank cut its benchmark interest rate by a record 1 percentage point to 6.5 percent and foreshadowed further reductions to limit damage from the worldwide financial crisis and a slump in the global economy.

“Economic activity will be further constrained by these international developments,” Reserve Bank Governor Alan Bollard said in a statement in Wellington today. “Should the outlook for inflation evolve as projected, we would expect to lower the rate further.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aImskfxLGbss&refer;=home

-U.K. Financial crisis: Interest rates to hit lowest level since 1694. Interest rates may have to be slashed to the lowest level in more than 300 years, experts have warned. Read more here-http://www.telegraph.co.uk/finance/economics/interestrates/3211785/Financial-crisis-Interest-rates-to-hit-lowest-level-since-1694.html

HEDGE FUND PANIC

-Roubini Says ‘Panic’ May Force Market Shutdown. Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.

“We’ve reached a situation of sheer panic,” Roubini, who predicted the financial crisis in 2006, said at a conference in London today. “There will be massive dumping of assets,” and “hundreds of hedge funds are going to go bust,” he said.

Group of Seven policy makers have stopped short of market suspensions to stem the crisis after the U.S. pledged on Oct. 14 to invest about $125 billion in nine banks and the Federal Reserve led a global coordinated move to cut interest rates on Oct. 8. Emmanuel Roman, co-chief executive officer at GLG Partners Inc., said today that as many as 30 percent of hedge funds will close.

“Systemic risk has become bigger and bigger,” Roubini said at the Hedge 2008 conference. “We’re seeing the beginning of a run on a big chunk of the hedge funds,” and “don’t be surprised if policy makers need to close down markets for a week or two in coming days,” he said.

Roubini predicted in July 2006 that the U.S. would enter an economic recession. In February this year, he forecast a “catastrophic” financial meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a ‘’sharp drop” in equities. Read more here-

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

-Emmanuel Roman, the co-chief executive officer at GLG Partners Inc., said as many as 30 percent of hedge funds will close and the U.S. will regulate the $1.7 trillion industry. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=apJdFBGrv6FY&refer;=home

-Record declines in hedge funds. Industry report shows third quarter saw all-time highs in investor redemptions and asset shrinkage. Read more here-

http://money.cnn.com/2008/10/17/markets/hedge_funds/index.htm

-Andrew Lahde, the hedge-fund manager who quit after posting an 870 percent gain last year, said farewell to clients in a letter that thanks stupid traders for making him rich and ends with a plea to legalize marijuana. Lahde, head of Santa Monica, California-based Lahde Capital Management LLC, told investors last month he was returning their cash because the risk of using credit derivatives his means of betting on the falling value of bonds and loans, including subprime mortgages was too risky given the weakness of the banks he was trading with.

“I was in this game for money,” Lahde, 37, wrote in a two-page letter today in which he said he had come to hate the hedge-fund business. “The low-hanging fruit, i.e. idiots whose parents paid for prep school, Yale and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. “All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other sides of my trades.

God Bless America.” Lahde, who managed about $80 million, told clients he’ll be content to invest his own money, rather than taking cash from wealthy individuals and institutions and trying to amass a fortune worth hundreds of millions or even billions of dollars. “I do not understand the legacy thing,” he wrote. “Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aVUE96d.HKyw&refer;=home

STOCK MARKET-DOW 5700

-One can make a case that sometime in 2010 our stock markets will “bottom out”. In this scenario, the DOW will decline below 5700 and the NASDAQ will fall under 430, after 33 to 35 months of highly volatile trading. Read more here-http://www.321gold.com/editorials/cooke_r/cooke_r102008.html

-U.S. regulators are investigating whether investors manipulated end-of-day stock prices to avoid being forced by their brokers to sell holdings. These gaps, which caused the Dow Jones Industrial Average to swing as much as 104 points this month in the final minute of trading, suggest investment firms faced with client redemptions and plunging markets may be gaming

the closing-auction system. The discrepancies spurred the Financial Industry Regulatory Authority, which oversees 5,000 brokerages, to look for evidence that investors are improperly swaying prices. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=awNTCeBbW6wI

-Dividend payments by companies in the Standard & Poor’s 500 Index may plunge 10 percent this quarter, the biggest decline since 1958, as bank failures and slowing economic growth stifle payouts, S&P; said. The firm also cut its estimated 2008 dividend from all S&P; 500 companies to $28.05 from $28.85, representing the slowest annual growth since 2001, according to a statement. Financial companies in the index reduced their payouts 35 times in 2008, almost triple the past five years combined, said Howard Silverblatt, the senior index analyst at S&P.;

“We’re seeing an enormous amount of cuts,” New York-based Silverblatt said. “There is a lot of pressure on dividends, and a lot of people are concerned about their cash flow.” The S&P; 500 tumbled 35 percent this year as global mortgage- related losses topped $660 billion and central banks were forced to pump more than $2 trillion into rescuing financial markets from collapse. Bank of America Corp., Lennar Corp. and Principal Financial Group Inc. cut their dividends by 50 percent or more this month. Bloomberg

REAL ESTATE-MORTGAGES

-U.K. house prices posted the biggest annual decline in at least six years in October as the British economy stared “into the abyss,” Rightmove Plc said. The average asking price for a home fell 4.9 percent from a year earlier, the most since records began in 2002, to 229,691 pounds ($398,000), Britain’s most-used property Web site said today. In London, prices dropped 2 percent from a year ago. “Certainly from an economic point of view, we’ve stared into the abyss,” Miles Shipside, commercial director at Rightmove, said in a Bloomberg Television interview.

“With unemployment growing, we can see a lot of repossessions about to happen. The situation is going to get more severe.” Britain is in a recession and will contract for the next three quarters, according to a report published today by Ernst & Young’s ITEM Club, which uses the same forecasting model as the U.K. Treasury. The financial crisis forced the government to rescue banks and has left a dearth of loans for potential homebuyers.

The government last week announced an unprecedented 37 billion-pound bailout for Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group Plc. Bradford & Bingley Plc was seized last month, and Northern Rock Plc was nationalized earlier this year after the first U.K. bank run in more than century. The intervention in the banking sector is the biggest since the nationalization wave by the socialist government of Clement Attlee after World War II. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aMzcktRWjUuw

-London’s Housing Slump Discourages First-Time Buyers. Read more here-http://www.bloomberg.com/apps/news?pid=20601214&sid;=aGcKKdVWwR.Y&refer;=invest

-Self-employed forecaster tops big banks with U.S. housing call. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=ammB5sriS.A0&refer;=economy

-Housing starts hit another 17-year low. Home construction and building permits both fall sharply in September to levels not seen since January 1991. Read more here-

http://money.cnn.com/2008/10/17/real_estate/new_mortgage_fraud/index.htm

-U.S. home prices tumbled during the 12 months ended in August as foreclosures reduced property values and a global credit crisis cut lending. Home prices dropped 5.9 percent from a year earlier, the Federal Housing Finance Agency said today in a report. The one- month decline from July was a seasonally adjusted 0.6 percent, according to the Washington-based federal agency.

A surge of home foreclosures is reducing the value of U.S. neighborhoods because real estate prices are determined by so- called comparable sales, or similar properties nearby. Every foreclosure cuts the value of surrounding homes by about $220,000 as it stigmatizes the block and sells at a discounted price, according to the Federal Deposit Insurance Corp.

At the end of June, U.S. banks held $9.9 billion of foreclosed properties, up from $8.5 billion worth three months earlier, according to an FDIC report. Every three months, another 250,000 homes enter foreclosure, the report said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aEt_1UtHNP.g

-Long Island house prices fell the most in at least four years in the third quarter as the national housing slump extended its grip on New York City’s suburbs. The median price of a one- to three-family house dropped 6.9 percent to $427,388 from a year ago, New York-based appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today in a report. The median for all properties, including condominiums, dropped 6.2 percent to $415,000. The report excludes the Hamptons resort towns. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aQ3RHvhmmcxo&refer;=home

-Key to the Crisis: It’s the Housing Market, Stupid. Read more here-http://www.time.com/time/printout/0,8816,1852261,00.html

FORECLOSURES-MORTGAGES

-Foreclosure Filings Rose 71% in Third Quarter as Prices Fell. U.S. foreclosure filings increased 71 percent in the third quarter from a year earlier to the highest on record as home prices fell and stricter mortgage standards made it harder for homeowners to sell or refinance, RealtyTrac said.

A total of 765,558 U.S. properties got a default notice, were warned of a pending auction or were foreclosed on in the quarter, the most since records began in January 2005, the Irvine, California-based seller of default data said in a statement today. Filings rose 3 percent from the second quarter and fell 12 percent in September from August as state laws created to keep people in homes slowed the pace of defaults.

“I wouldn’t be surprised to see foreclosures increase as the economy slows down,” Rick Sharga, executive vice president for marketing at RealtyTrac, said in an interview. ”The people living paycheck to paycheck are at risk if they lose their jobs. It will cause more people to lose their homes.”

The worst U.S. housing slump since the 1930s is being compounded by a recession that began in the third quarter and may last a year or more, according to Jay Brinkmann, chief economist for the Mortgage Bankers Association. Home prices in 20 U.S. metropolitan areas fell in July at the fastest pace on record, and sales of previously owned homes in August were 32 percent below the peak reached in September 2005. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aR9OGpC4jjao&refer;=home

-U.K. home repossession must be last resort, Treasury warns banks, as Docklands development has 82 of 84 flats seized. Read more here-http://www.dailymail.co.uk/news/article-1078934/Home-repossession-resort-Treasury-warns-banks-Docklands-development-82-84-flats-seized.html

-Mortgage fraud: New and improved. Lenders have tightened standards, but scam artists have found new ways to beat the system. Read more here-

http://money.cnn.com/2008/10/17/real_estate/new_mortgage_fraud/index.htm

MAJOR SPORTS FEELING FINANCIAL CRUNCH

-Nascar Hits Wall as Financial Crisis Dents Sponsorships Demand. Sponsors of Nascar, the No. 2 sport on U.S. television after professional football, are slamming on the brakes because of the world’s financial crisis.

General Motors Corp., Chrysler Corp., Sears Holdings Corp. and Chevron Corp. will cut or drop sponsorships next season. Dario Franchitti, the 2007 Indianapolis 500 winner was forced out of the stock-car series by a lack of sponsors. Teams with family names revered in stock-car racing like Petty, Waltrip and Earnhardt may enter 2009 with unfunded cars. The circuit might even have trouble filling 43-car fields.

“There’s maybe 26 teams that have sponsorship for next year, and five or six that have partial,” said Michael Waltrip, an owner and driver who shored up his finances by selling a stake to Fortress Investment Group LLC founder Robert Kauffman a year ago. Waltrip, 45, faces 2009 with only one of three cars fully sponsored. He said he might have to shut down one team.

Waltrip, two-time winner of the Daytona 500, isn’t alone. Dale Earnhardt Inc., founded by the seven-time Nascar champion and now run by his widow, has secured a backer next season for only one of four cars. Financial, automotive and consumer goods companies are balking at paying as much as $25 million to support a top team amid job cuts, seized credit markets and slow spending. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aAivN03d0_mk

-Baseball is counting pennies on everything from seats to sponsorships as it prepares to play next season in an economic slowdown. Read more here-

http://www.bloomberg.com/apps/news?pid=20601079&sid;=aYHWv9mueaA4&refer;=home

-Season Ticket Wait Lists Tell NFL Owners ‘We Could Charge More’. Read more here-http://www.bloomberg.com/apps/news?pid=20601079&sid;=aj_h7u5um9us&refer;=amsports

© 2010, Worldwide Precious Metals.
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The GoldBugg Report – October 28, 2008
Posted by Worldwide Precious Metals on Tuesday, October 28, 2008

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