Newsroom

The GoldBugg Report – December 30, 2008

December 30, 2008

WORLD FINANCIAL REPORT ON RADIO DEC 24 2008 SHOW

-Clive Maund gold and silver updates. See the charts.

-I still think that we could hit $2,000 an ounce next year in the price of gold. Peter Schiff

-Citigroup Bullish on Gold and Now Silver which is Likely to Outperform.

GOLD

-Gold: The Antidote To Our Problems. Gold is unique. It does not represent a liability of any institution and is not backed by debt. It is real money. It is a defacto currency. During the Depression, the loss of confidence in institutions and currencies pushed investors to seek refuge in gold as a store of value.

In Japan, gold protected investors from the depreciating yen in the Nineties. To be sure, the move to zero interest rates and trillion bailouts will set off an inflationary surge devaluing the dollar further. Gold has tripled in value over the last seven years, outperforming fiat currencies and fiat markets. It cannot be created except by an expensive mining process.

It is an asset that is both liquid and a currency. For that reason, gold will reach $2,000 per ounce next year once investors realize, as Bernanke realized eight years ago, that gold is the antidote to our financial problems. John Ing-Read more here-http://www.gold-eagle.com/editorials_08/ing121908.html

-2009 Likely Vintage Year for Gold. Read more here-http://www.321gold.com/editorials/browne/browne122208.html

-Clive Maund gold update. Read more here-http://news.goldseek.com/CliveMaund/1230041434.php

-GoldDrivers 2009 Extraordinary Bullish Outlook for Gold. There is a growing consensus that the only way to get out of this debt nightmare is to revalue the dollar against gold. There are many ways to calculate a hypothetical gold price which would counter balance most of world’s debt. In the 70’s for example Jim Sinclair predicted that gold would seek a price high enough to offset the public debt held in foreign hands.

He proved out to be right. A similar approach these days would require gold prices exceeding the $10,000 mark. Now $10,000 gold seems a lot but from an historical perspective it seems a reasonable target. When the gold price peaked at $850 in January 1980 the DOW was trading in that range as well. The DOW/GOLD ratio bottomed out at one. When the markets peaked in March 2000 the DOW/GOLD ratio peaked at 44 and has been in decline ever since.

In order to hit a DOW/GOLD ratio again of ‘one’ gold should appreciate above the $10,000 mark indeed with current DOW levels. I don’t see the DOW plunging much further from here. Compare it with the 1968 -1982 period were the DOW hovered around the 1000 mark for 14 years. Same is happening now, the DOW peaked in March 2000 (inflation adjusted) and it could take very well another couple of years before the DOW manages to leave the 10,000 mark for good.

I mean, there’s no economic justification now for the DOW to rise much further while a surge in inflation will cushion the DOW to the down-side. A DOW struggling around the 10,000 mark from 2000 to 2012-2015 is not unthinkable and neither is $10,000 gold somewhere in 2012-2015. Eric Hommelberg-Read more here-http://news.goldseek.com/EricHommelberg/1230042476.php

-Richard Benson: U.S. govt. may grab your gold if you’re not careful. My nature is not to be an alarmist and I honestly don’t know for sure when and if the US will grab the ETF gold. However, over the next two years the federal deficit, funded by selling new Treasury securities, is certain to be over 10 percent of GDP.

Holders of the dollar will want out and all that gold sitting in vaults makes it too easy for our federal government to come in and rob you of it in order to save the dollar and pay for socialism. I understand the morality here: Inflation is good so robbing savers (for the sake of government) is viewed as good! Therefore, robbing savers of their gold is even better! So, buying gold, silver, and precious metals is truly one of the few ways you can immunize yourself from the coming inflationary confiscation of wealth.

Owning physical gold and silver and keeping it safely in your possession is a good idea! If you can’t get gold, buy silver, platinum, palladium, etc., all in physical form. While you still can, think about moving into physical form any gold in ETFs you have; you won’t be sorry you did! Read more here-http://news.goldseek.com/SFG/1229625795.php

-I still think that we could hit $2,000 an ounce next year in the price of gold. Peter Schiff: Outlook for the Gold Market-Read more here-

http://seekingalpha.com/article/111857-peter-schiff-outlook-for-the-gold-market?source=feed

-Dollar weakness and US deficit will underpin gold price. Potash, oil and uranium also positive Scotiabank. Scotiabank economist Patricia Mohr forecasts that commodity prices will decline further this month, but also suggests a number of commodities should outperform. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=75673&sn;=Detail

-Phenomenal demand for gold coins continues. The SA Gold Coin Exchange says demand for gold coins has picked up as investors wish to take charge of their own affairs. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=75582&sn;=Detail

-GATA Chairman Murphy reports on meeting with CFTC. Read more here-http://www.gata.org/node/7019

SILVER

-Citigroup Bullish on Gold and Now Silver which is Likely to Outperform. Citigroup’s technical strategists issued a note today saying that silver may rise to a four-month high of more than $14 an ounce. Bloomberg’s Nicholas Larkin reports that Citigroup’s London based Shyam Devani noted that “silver could test the 200-day moving average currently at $14.49.” Citigroup’s Tom Fitzpatrick said in an e-mail “while the outlook for both gold and silver is bullish, we would not be surprised to see silver outperform in the short term.”

Citigroup recently warned that the damage caused by the financial excesses of the last quarter century was forcing the world’s authorities to take steps that had never been tried before. This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.

“They are throwing the kitchen sink at this,” said Tom Fitzpatrick, the bank’s chief technical strategist. “The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed through into an inflation shock.”

If they are unsuccessful, Fitzpatrick warns of a deflationary meltdown, civil unrest and massive political instability internationally. Gold and Silver Investments continue to believe that silver will likely reach its 1980 non inflation adjusted nominal high of $50/oz in the coming years due to the extremely favourable fundamentals. Silver remains an essential diversification in all portfolios. Gold.ie

-Silver to Continue to Outperform Gold and Other Assets in 2009. Silver has fallen sharply in recent months but will still outperform all major equity indices in 2008. This is quite an achievement especially given the fact that silver has surged in value in recent years and particularly in late 2007 and the start of the financial and economic crisis. While silver is some 50% lower than its record high at $20.86 an ounce, hit last March, it is important to state that silver is one of the few asset classes up for the year.

Silver is down 24% in USD terms, 22% in EUR terms but is up 0.5% in sterling terms, clearly showing it’s safe haven credentials. Silver did fall from a record nominal high of $20.86/oz, but it is important to remember that it is down some 50% after surging 83% in the previous 7 months. In the seven months from the start of the credit crunch and the collapse of Bear Stearns, silver had surged by 83%.

Thus after an 83% surge in just 7 months, silver had become overvalued and was due a correction. This is exactly what has happened and despite carnage in equity, commodity and property markets internationally silver has outperformed nearly all commodities, all indices and most asset classes in 2008 in all major currencies including the strongest currency in the world the US dollar.

Silver has risen sharply in recent years and had risen from some $6.70 in August 2005 to a nominal high of $20.86 in August 2007 or over 200% in just 2 years. Clearly despite very strong fundamentals irrational exuberance had entered the silver market and a sharp correction and consolidation was necessary. This is what has happened and today silver looks extremely good both from a fundamental and technical perspective. Gold.ie

-Clive Maund silver update. This minor pullback is offering prospective silver investors one of the greatest opportunities of our time. Read more here-http://news.silverseek.com/CliveMaund/1230041691.php

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1229965248.php

-Silver institute 4^th quarter newsletter. Read more here-http://www.silverinstitute.org/images/pdfs/4q08.pdf

-Silver’s back and so is its marketing apparatus. Read more here-http://www.nationaljewelernetwork.com/njn/content_display/fashion/jewelry-fashion-reports/e3id8413b8aaa2633217c6a4ea56504d94d

DEFINITIONS-QUOTES-QUICK HITS

-What Does Securities And Exchange Commission-SEC Mean? A government commission created by Congress to regulate the securities markets and protect investors. In addition to regulation and protection, it also monitors the corporate takeovers in the U.S. The SEC is composed of five commissioners appointed by the U.S. President and approved by the Senate.

The statutes administered by the SEC are designed to promote full public disclosure and to protect the investing public against fraudulent and manipulative practices in the securities markets. Generally, most issues of securities offered in interstate commerce, through the mail or on the internet must be registered with the SEC. Investopedia.com

-”You are dealing with a commission whose effectiveness in fraud deterrence is open to serious question,” said Professor Joel Seligman, an expert on the subject. Open to question? We would say the question is settled. The SEC does not fight fraud; it aids and abets it. One thing is sure; we’d get along fine without the SEC on the job. It does more harm than good. It merely helps perpetrate a fraud misleading investors into believing that their money is safe on Wall Street. As we’ve seen, donuts were safer on a fat farm. Bill Bonner-The Daily Reckoning

-As we know there are two sets of rules in banking and on Wall Street, one for the anointed and one for everyone else. The anointed never go to jail for their crimes. Bob Chapman

-”We can put light where there’s darkness, and hope where there’s despondency in this country. And part of it is working together as a nation to encourage folks to own their own home.” President George W. Bush, Oct. 15, 2002-White House philosophy stoked mortgage bonfire-Read more here-http://www.iht.com/articles/2008/12/21/business/21admin.php

-The dollar is a terribly flawed currency. I hate to say it, but my goodness, they’ve messed up the dollar badly. So, I don’t like to do it, but I’m going to sell all the rest of my dollars sometime in the next few days, weeks, or months. Again, I don’t like saying it, but I’m afraid the dollar is going to go the way the pound sterling went. Jim Rogers-Pound sterling info here-

http://en.wikipedia.org/wiki/Pound_sterling

-”When people worry about where they have their money, they will want to own gold and silver.” Eric Sprott

-Eric Sprott said he’s betting against Canadian bank shares because he expects loan losses to soar as the global economy heads into a depression. “There are so many job cuts and output cutbacks it’s shocking,” Sprott said in an interview. “That’s not a recession, that’s a depression. I look at the data points and they just scream at me that we are off the cliff.” Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=ae26IkuOvck8&refer;=canada

-Charles Oliver of Sprott Asset Management is calling for $2,000 gold in the next 2-4 years. Watch video here-

http://watch.bnn.ca/the-close/december-2008/the-close-december-22-2008/#clip123729

-Since the summer we have experienced a sharp rise in demand for certain gold products. The one-kilo bar has become very popular. People used to buy certificates now they want physical gold. Fiorenzo Arbini, Pamp Refiners-Reuters

-Why anyone would keep a nickel of their assets in any kind of paper is beyond me. The equity markets are toast. The dollar’s current decline looks terminal and the bond market is another big bubble in search of a pin. The world’s financial system is in desperate straits and the “Inflate or Die” Syndrome has been unleashed over the entire globe. The quote above says it all. “People used to buy certificates now they want physical gold.” He obviously means “physical gold in hand” not in some paper form which is, once again, someone else’s promise to pay. Ed Steer

-James Turk, the founder of GoldMoney.com, says that, “The Fed made clear that there is no limit as to how much money they are going to print, they are debasing the dollar. That’s bullish for gold.” Casey Daily Resource

-”The Federal Reserve has embraced ‘Helicopter Bernanke’s’ inflate or die massive reserve and money creation academic theories in an attempt to prevent deflation,” wrote Mark O’Byrne, executive director at Gold and Silver Investments Ltd. “Markets realize that this will lead to a lower dollar and higher gold prices in the medium and long term,” O’Byrne said. Casey Daily Resource

-Even the most optimistic commentators are realizing that the financial and economic crisis looks set to deepen in the first few months of 2009 which should see a continuation of the weakness in stock markets and gold remaining firm, as seen in recent months.

Unprecedented zero interest policies, massive fiscal stimulus packages, massive money printing and competitive currency devaluations on an international scale will see gold again become the go to investment in 2009. Gold.ie

-The sharp decline seen in the dollar in the last month is leading to concerns of a disorderly run on the dollar as the creditors of the world’s largest debtor nation get worried about their US dollar denominated assets and need their own currency reserves to help protect and stimulate their own struggling economies. A prime distinction between the 1930’s deflation and Great Depression was that the US was the world’s largest creditor nation and the dollar was backed by gold.

Thus the US dollar strengthened in value as everything deflated in value versus it. Gold was even stronger as Roosevelt devalued the dollar by 60% and revalued gold by 60% from $22/oz to $35/oz in 1933. Today, the US is the largest debtor nation the world has ever seen and the levels of debt are increasing dramatically. And the US dollar is now a fiat paper currency, only backed by the “good faith and credit” of the US government.

It would not require significant selling by the Chinese, Japanese, Russian or OPEC nations to create a run on the dollar and sharp move upwards in long term interest rates (as US government bonds are sold) rather only a sharp reduction in their purchases of US debt instruments. This possibility is looking more probable and could see President elect Obama facing a monetary crisis in his first term.

Especially as the economic meltdown is leading to the US’ creditor nations having their own domestic financial and economic crisis to deal with. A sharp decline in the dollar will likely see other nations devaluing their currencies in competitive currency devaluations which would see the value of all currencies decline relative to gold. Competitive currency devaluations are already taking place in many countries internationally including in Japan (just last week Japanese Finance Minister Shoichi Nakagawa signalled Japan is ready to sell yen in order to artificially manipulate a weaker currency), Russia and China. Gold.ie

-Zachary Oxman, of Wisdom Financial, said that, “The dollar is again spiralling downward and in this deflationary environment, people are looking for safety and a store of value.” Oxman believes that “gold will continue to appreciate in the near term and probably slow after the first of the year.” He designated the $910 to $920 level as the key resistance area. Casey Daily Resource

-Buyers are likely to return to the gold market shortly, though. “The Fed’s actions show just how dire the credit crisis is and how desperate they are,” said Ralph Prestonof Heritage West Futures in San Diego. “The metals smell the fear. Market psychology is beginning to view gold as a safe haven.”

And Barclays Capital analysts said gold may average $820 next year. “In the near term, prices are likely to remain torn between two camps,” they wrote. “A pick-up in physical demand and additional safe-haven buying will support prices, but the need to liquidate positions to meet margin calls elsewhere will cap gold’s upside potential.” Casey Daily Resource

-Gold’s trading off the dollar,” wrote Frank Lesh of FuturePath Trading. “A weak economy and all-time low interest rates don’t call for a strong dollar.” Gold saw further support from investors looking for a safe haven during these troubled economic times. “We’re not going to get any revelations on the economy soon,” Lesh continued. “Those who want to hold gold are still looking at a shaky equity market worldwide.” Casey Daily Resource

-Versus gold every currency will fall. The chickens are coming home to roost. No matter what governments following Keynesianism say, every government will have to revert to a gold standard and God help those that do not have gold reserves. They will have to buy reserves back and that, of course, will send gold soaring.

Yes, inflation drives up gold and silver and deflation does as well as it becomes a flight to quality. When nations currencies are not worth the paper they are written on gold becomes the standard. We do not know for sure where gold is going.

Official inflation since 1980 would put it close to $3,000 and unofficial inflation over $6,000. If we return to a gold standard we could be looking at $9,000 to $10,000 an ounce, who knows. All we know is that is where all this is headed. We have seen one report that was looking for more than $50,000 an ounce. Bob Chapman

-Money market funds, an increasingly popular place to park cash, will need to raise fees or close to new money to remain profitable as yields hover at near-zero, according to industry managers. The funds, which manage $3,800bn and have seen big cash inflows, are reeling from frozen credit markets, subprime exposure and a crisis of confidence triggered by one fund “breaking the buck”, or returning investors less than they paid in.

The US Federal Reserve last week cut its target interest rate to between zero and 0.25 per cent, from one per cent. Jim McDonald, who runs taxable money market funds for T Rowe Price, said: “You can’t make money in this situation. If short-term interest rates stay where they are, it’s virtually impossible to run a government [bond] fund and make any money.

You can close the fund, that’s one option.” Vanguard last week closed two of its money market funds to institutional investors, while Credit Suisse said it would quit managing money market funds in the US and liquidate $8bn in assets across its three funds. Read more here-http://www.ft.com/cms/s/0/813bd074-cf8b-11dd-abf9-000077b07658.html?nclick_check=1 or http://www.gata.org/node/7030

-China says lending to US will not go on forever. China warned Wednesday it would not keep lending money to the US economy indefinitely, even as new data showed it had consolidated its position as the top buyer of American government bonds. “China’s increased purchase of US Treasury securities should not be interpreted as an endorsement of the assumption that the US can borrow its way out of the current financial crisis,” the China Daily said in an editorial.

The warning from the state-run newspaper, an English-language daily that mainly addresses a foreign audience, came after the US Treasury Department reported a steep increase in Chinese holding of US Treasury bonds. China held 652.9 billion dollars of US Treasury bonds at the end of October, up 11.2 percent from 587 billion dollars a month earlier, when China became the largest creditor ahead of Japan, according to the data released Tuesday.

Japan remained in second place, with total holdings of 585.5 billion dollars at the end of October. The China Daily said that, given the global economic crisis, the consequences would be serious if China and other nations stopped channeling money into the US economy. “Interest rates in the US would rise to undermine that government’s efforts to bailout distressed financial institutions and companies,” it said. China was also constrained by a lack of other places to put its money, according to the paper. Read more here-

http://sg.biz.yahoo.com/081217/1/4kvnw.html

RARE COLORED DIAMONDS

-The Rare Colored Diamonds Historical Value Tracker is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalValueTracker.html

-Rio Tinto Claims Record Price for Argyle Diamond. Rio Tinto Diamonds said Monday it has received a record price for a pink diamond mined at its Argyle mine in Western Australia. The company did not disclose who bought the diamond or the price the stone fetched saying only that it sold above the reserve price.

The stone, named “Aphrodite” after the Greek Goddess of Love and Passion, is a 1.01 carat round, purplish red diamond, Rio Tinto explained. It was sold as part of this year’s Argyle Pink Diamond Tender which ran from August to November.

“In spite of the difficult economic outlook, this truly top end of the luxury market continues to defy gravity,” said Josephine Archer, sales and marketing manager of Argyle Pink Diamonds. “In the rarified world of Argyle Pink Diamonds we have seen and continue to see, sustained demand and very strong prices.”

The Argyle mine is the only known source of rare pink diamonds. Rio Tinto reported demand for its stones has increased due to the growing scarcity of the product. Production at Argyle is expected to decline as the mine transitions to an underground operation before it eventually closes within the next 10 years. Diamonds.net

-If your Christmas stockings are as deflated as your current stock portfolio, now is the time to consider giving the gift of natural fancy colored diamonds an extremely rare gift that keeps on giving. Investors with stock in most sectors have been on a financial roller coaster over the last year and face an uncertain future. If you held stock in Research in Motion (RIM) you would have seen it go from more than $118 USD per share in December 2007 to 38 $USD per share in December 2008.

Or, if you held stock in General Motors you would have seen it go from over $28 USD per share in December 2007 to $4 USD per share in December 2008. Comparatively, prices of natural fancy colored diamonds from the exclusive Argyle mine have increased 37 percent over the last year with the rarest gems doubling in value. Natural colored diamonds have intrinsic value and produce high financial returns. Unlike traditional or ‘white’ diamonds, natural coloured diamonds are rapidly increasing in rarity and value, as mines producing them near depletion.

For every 100,000 carats of flawless white diamonds, only one carat of gem-quality colored diamond is found. On average, natural fancy colored diamonds have increased in value by 10 to 15 percent annually since price monitoring began in the 1970s, with the greatest increase coming over this last year. Natural Fancy Coloured Diamonds even retain their value during recessions. “Sotheby’s and Christie’s auction houses have been setting records on the back of Natural Fancy Coloured Diamonds. NCDIA.com

-”I think diamonds could end up being thought of like they once were an emergency escape mechanism. The Jews sewed them into their hems and used them for safe passage. We’re all worried about the Banks and how we would ‘get out of Dodge’ if we had to.” Trend expert Faith Popcorn

-Bear Stearns and Lehman Brothers have disappeared and the Big Three and Citigroup hover on the edge of vanishing a diamond is forever. From Adam Hanft article De Beers: Diamonds Are a Recession’s Best Friend

-If more people bought diamonds instead of credit-default swaps, we’d be just fine now. From Adam Hanft article De Beers: Diamonds Are a Recession’s Best Friend

WORLD FINANCIAL CRISIS

-The governor of the Bank of Spain on Sunday issued a bleak assessment of the economic crisis, warning that the world faced a “total” financial meltdown unseen since the Great Depression.

“The lack of confidence is total,” Miguel Angel Fernandez Ordonez said in an interview with Spain’s El Pais daily. “The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.

“There is an almost total paralysis from which no-one is escaping,” he said, adding that any recovery penciled in by optimists for the end of 2009 and the start of 2010 could be delayed if confidence is not restored. Read more here-http://www.breitbart.com/article.php?id=081221154025.lrwl34xi&show;_article=1

-The head of the International Monetary Fund (IMF) warned on Sunday that the economic situation could get even worse in 2009 if governments fail to take firm enough action. “Our forecasts are already very dark but they will be even darker if not enough fiscal stimulus is implemented,” Dominique Strauss-Kahn told BBC radio.

“We see 2009 as really being a bad year, with recession for most advanced economies and growth decreasing for emerging economies.” Read more here-http://www.breitbart.com/article.php?id=081221160957.e5z1c9vr&show;_article=1

-Russia would come under crippling financial pressure and may need to raise money externally if oil languishes at an average of $30 a barrel over the next two years, the World Bank predicted Friday. The bleak scenario would mark a rapid unraveling of Russia’s oil-fueled economic gains over the past eight years, during which time the government has paid down most of its foreign debt and built up a vast stockpile of international reserves.

“If oil prices in 2009 and 2010 average $30 a barrel, that would be a nightmare scenario for a global economy,” Zeljko Bogetic, the World Bank’s chief economist in Russia told investors on Friday.

“The pressures on the current account and public finances in Russia would quickly rise to a point where the financing constraint would become so sharp that it’s possible even to envisage Russia’s return from a creditor to international organizations to (that of) a borrower.” At $50 a barrel, Russia could drain much of its reserve funds and run budgetary deficits, but would not face a “meltdown” scenario, said Bogetic. Read more here-http://www.breitbart.com/article.php?id=D955PMC80&show;_article=1

-Where did the bailout money go? Banks keep it secret. It’s something any bank would demand to know before handing out a loan: Where’s the money going? But after receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending the money or they simply refuse to discuss it.

“We’ve lent some of it. We’ve not lent some of it. We’ve not given any accounting of, ‘Here’s how we’re doing it,’” said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. “We have not disclosed that to the public. We’re declining to.”

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest? None of the banks provided specific answers. Read more here-http://www.gata.org/node/7029

-AP finds $1.6 billion went to execs of bailed-out banks. Banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year, an Associated Press analysis reveals.

The rewards came even at banks where poor results last year foretold the economic crisis that sent them to Washington for a government rescue. Some trimmed their executive compensation due to lagging bank performance, but still forked over multimillion-dollar executive pay packages.

Benefits included cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, the AP review of federal securities documents found. The total amount given to nearly 600 executives would cover bailout costs for many of the 116 banks that have so far accepted tax dollars to boost their bottom lines. Read more here-http://www.gata.org/node/7028

-Discover Financial Services Inc. and Capital One Financial Corp. are closing accounts of customers who haven’t used their cards for lengthy periods as part of efforts to reduce risk of defaults.

Discover, the fourth-largest credit-card network, has closed 3 million “inactive” accounts and plans to cut up to 2 million more, Chief Executive Officer David Nelms said in an interview yesterday. “Most of the accounts haven’t been used for years,” he said. “We think it’s a responsible move.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aQT7YZF4Xgxc&refer;=home

-Hedge fund graveyard: 693 and counting. A research group says 344 hedge funds were liquidated in the third quarter a significant increase that represents 7% of all hedge funds. Read more here-http://money.cnn.com/2008/12/18/news/economy/hedge_fund_liquidations/index.htm

CALIFORNIA BROKE IN TWO MONTHS-CITIES IN TROUBLE

-A California official is warning that the state will run out of money in about two months unless a budget deal is struck. State Controller John Chiang said Monday that his office could be forced to defer billions of dollars in payments or issue IOUs. He says the instability of the banking industry has made borrowing money to bridge the gap an uncertain possibility.

Gov. Arnold Schwarzenegger is raising hopes of a budget deal this week. He says he wants to work with Democratic leaders to close a $42 billion shortfall projected through mid-2010.

Schwarzenegger says he and lawmakers are making progress on an $18 billion proposal that was passed without Republican support. Breitbart.com

-Moorlach Sees Up to 10 Municipal Bankruptcies in Coming Year. The accountant who predicted the nation’s largest municipal bankruptcy says as many as 10 insolvencies will roil the $2.7 trillion U.S. market for state, county and city debt next year as public finances worsen amid calls for federal aid to state and local governments. John Moorlach said in 1994 that Orange County, California’s leveraged investing strategy could wreck its finances.

The county went bankrupt about six months later after losing $1.6 billion. As many as four cities in the Golden State and six others nationwide may seek court protection from creditors next year under Chapter 9 of the bankruptcy code, the section devoted to municipal governments, Moorlach said in an interview. “The total could be higher,” said Moorlach, 53, now chairman of the Orange County Board of Supervisors.

He didn’t name any cities outside California, which has seen the cost of insuring state debt against default more than quadruple since September. He said his estimate was based on general economic conditions. States project a $97 billion shortfall over the next two years, according to the National Conference of State Legislatures.

This mounting pressure on public finances gives President-elect Barack Obama’s administration “strong incentives” to provide federal aid, wrote George Friedlander, a municipal strategist at Citigroup Inc., the largest U.S. underwriter for tax-exempt bonds, in the firm’s Dec. 12 Municipal Market Comment. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=adSvg08A04KI&refer;=home

FROZEN PORTS MEANS BLEAK 2010

-Frozen Ports in Long Beach, Singapore Mean Bleak 2010. Chris Lytle, chief operating officer of the port of Long Beach, California, took in a panorama of the slumping world economy from his rooftop observation deck one day this month. Shipping cranes stood still, truck traffic trickled and a cargo vessel sat idle, moored to a pier. “You never see that,” Lytle said. “It’s quiet, too quiet.”

Port traffic has slowed from North America to Europe and Asia as a recession erodes consumer demand and the credit crisis chokes off loans to export-dependent companies. International trade is set to fall by more than 2 percent next year, the most since the World Bank began measuring it in 1971. Idle ports around the globe are showing how quickly a collapse in trade can spread, undermining growth in each country it reaches. September and October are typically Long Beach’s busiest months as U.S. retailers take deliveries for holiday sales.

This year, imports fell 15.8 percent from a year earlier in September, 9.5 percent in October and 13.6 percent in November. “Everybody expects 2009 to be a bleak year,” said Jim McKenna, chief executive officer of the Pacific Maritime Association, a San Francisco-based group representing dock employers at U.S. West Coast ports. “Now, it looks like 2010 is going to be just as bleak.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=avcTZKlpHRqw&refer;=exclusive

SCAM OF THE CENTURY-BERNIE MADOFF

-Scam of the century. Bernie Madoff and the $50 billion heist. Watch the CNBC show here-http://www.cnbc.com/id/28256310

-U.S. regulators, trying to unravel the breadth of Bernard Madoff’s alleged $50 billion fraud, have found evidence of misconduct stretching back to at least the 1970s, two people familiar with the inquiry said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=ayNDQW6owsBs

-Pawnbroker Levi Touger tells reporters who want to see the Lamborghini that a Bernie Madoff victim hawked for quick cash that they needn’t bother stopping by. He doesn’t have it. And, by the way, it was a Ferrari. Touger’s Royal Pawn & Jewelry has made loans to some of the well-heeled Palm Beach investors caught in Madoff’s alleged $50 billion scam, turning his

business into a bit of a media sensation as television crews inquire about filming the big-ticket booty.

He says reports have overstated the items people were pawning, but not the income bracket of some of his more recent clients. “People call me and say, ‘Levi, if I need you, what could I get?’” he said. Read more here-http://www.boston.com/business/articles/2008/12/18/palm_beach_pawnshops_business_up_thanks_to_madoff/

-Madoff scandal hits Aspen. Dozens of families in this wealthy resort community fell victim to the massive Ponzi scheme. Losses in this small town alone could reach $1 billion. One very wealthy couple has already put their house on the market and moved in with their grown kids.

Then there’s the guy who smelled the recession coming, sold his expensive home here at the height of the market frenzy and, yes, invested it all with Madoff. Today no home, no money. Others speak with great pity of the widow who invested her husband’s life insurance money with Madoff only to find herself left without a penny. Read more here-http://money.cnn.com/2008/12/22/news/companies/madoff_aspen.fortune/index.htm

REAL ESTATE

-Sales of single-family houses in the U.S. dropped in November by the most in two decades and resale prices collapsed at a pace reminiscent of the Great Depression, dashing speculation the market was close to a bottom. Purchases of both new and existing houses dropped 7.6 percent, the biggest decline since January 1989, to an annual rate of 4.43 million, government and industry figures showed today.

A 13 percent drop in the median resale price was the most since records began in 1968 and was likely the largest since the 1930s, the National Association of Realtors said. “Housing is still in a freefall,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=aQ7HBEgYCzUE

-Sales of new homes in the U.S. fell in November to a 17-year low as credit dried up and consumer confidence sank. Purchases dropped 2.9 percent to an annual pace of 407,000, lower than forecast, according to figures from the Commerce Department today in Washington. The median sales price declined 11.5 percent from a year earlier. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=abyzcV_k5uT4&refer;=home

-Sales prices for existing U.S. homes fell the most on record in November, tearing a deeper hole into households’ already tattered finances. The median resale price fell 13 percent from a year before, to $181,300, “probably the largest price decline since the Great Depression,” National Association of Realtors Chief Economist Lawrence Yun said in Washington. Sales slid to an annual rate of 4.49 million, lower than forecast.

Sliding property values mean more Americans will be under water on their mortgages, likely leading to a further increase in already record foreclosure rates. Along with the wealth destruction from slumping stock portfolios, they also undermine consumers’ purchasing power. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=av.sqUTa2.T0

-10 worst U.S. real-estate markets for 2009. The housing market hasn’t bottomed out yet. For the third quarter, the closely-watched S&P; Case-Shiller national home-price index fell 16.6%, and experts are predicting further declines. Of the top 100 markets, here are 10 with the worst forecasts. Read more here-http://money.cnn.com/galleries/2008/fortune/0812/gallery.worst_markets.fortune/index.html

-U.S. commercial properties at risk of default could triple if rental income from office, retail and apartment buildings drops by even 5 percent, a likely possibility given the recession, according to research by New York-based real estate analysts at Reis Inc.

Lenders that used optimistic rent estimates to grant mortgages beginning in 2005 stand to lose as much as $23.1 billion, or 7.02 percent, of total unpaid balances if landlords lose 5 percent of net operating income, according to Reis. Analysts examined data on 22,890 properties that together may account for unpaid loans of about $329 billion in 2009, said Victor Calanog, director of research.

Banks are at risk as office vacancies are forecast to rise to 15.6 percent next year from an estimated 14.6 percent at the end of 2008. Lenders who sold commercial mortgage-backed securities to pension funds, investment banks and foreign governments have been hit by more than $1 trillion in losses and asset writedowns connected to bad residential loans.

“A large decline in net operating income isn’t necessary to shift a lot of properties underlying CMBS loans into debt- service coverage ratios that would be worrisome,” Calanog said in an interview. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ajBUTKShXZ7s&refer;=home

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

The GoldBugg Report – December 30, 2008
Posted by Worldwide Precious Metals on Tuesday, December 30, 2008

Subscribe to
receive timely
information on
precious metals.

• Home
• About Us
• Info Request
• Open An Account
• Bullion
• Newsroom
• Testimonials
• Contact Us
• Client Login
• Sitemap