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The GoldBugg Report – February 17, 2009

February 17, 2009

WORLD FINANCIAL REPORT ON RADIO Feb 13 2009 SHOW

February 16^th, 2009

Memo to All Retail Dealers

This past week saw the following action (Friday to Friday Close)

	Feb.6^th 2009	Feb. 13^th 2009	Net Change
Gold	$915.00	$942.00	+ $27.00 (+2.95%)
Silver	$13.18	$13.65	+ 47¢ (+3.57%)
Platinum	$1,000.00	$1,070.00	+ $70.00 (+7%)
Palladium	$212.00	$218.00	+ $6.00 (+2.83%)
Net Change Near to Date
	Jan. 2^nd 2009	Feb. 13^th 2009	Net Change
Gold	$874.50	$942.00	+ $67.50 (+7.72%)
Silver	$11.14	$13.65	+ $2.51 (+22.54%)
Platinum	$935.00	$1,070.00	+$135.00 (+14.44%)
Palladium	$188.00	$218.00	+$30.00 (+15.96%)

Clearly this past 42 Days has been very positive for Precious Metals. This price activity has

taken place while the Dow Jones continues to loose ground and more importantly while the US Dollar has continued to

remain strong against other foreign currencies. As we have stated in the past, to us, this is indicative of

continued expansion of “Flight to Quality” as concerned private investors are turning to Precious Metals,

specifically Gold and Silver in Physical Product Accumulation.

President Obama’s Economic Stimulus Plan finally passed at $787 Billion. So hear we go. Spend,

Spend, Spend and it won’t be enough. What does this equate to?? – Long Term Inflation!! and that should be extremely

positive for Precious Metals.

Here are your short term support and resistance levels:

	Gold	Silver
Support	928/883/845	13.40/13.28/12.78
Resistance	943/955/980	13.64/13.93/14.22
	Platinum	Palladium
Support	1047/1011/1069	212/207/198
Resistance	1072/1122/1145	225/238/287

As we can see all products tested the first support levels discussed in our Memo of Feb.

7^th in Monday’s trading last week, and then rallied throughout the week to take out the next 2 resistance

levels.

As we stated in that memo “It looks quite possible, although we make no guarantees, that the

pattern we are seeing is reminiscent of typical 1^st quarter upside activity, such as we have seen almost

every year since early 2002.”

With the Us Markets closed to-day, we are left with Electronic Trading which is almost always

“Thin” (light volume). Therefore to-days price activity should be relatively narrow and of little importance over

the long term.

The long term picture for the economy, Equity Markets and Financials has never looked worse,

while for Precious Metals, specifically Gold & Silver it has never looked better.

We do not expect these current prices for Precious Metals to be available for much longer and

once prices move higher, we may never see them again.

The key is accumulation within one’s financial ability and not allowing over exposure of one’s

financial capabilities.

Trading Department – Precious Metals International

GOLD

-A rise in the gold price to $2 300/oz “would not be surprising”, US Global Investors portfolio manager Ralph

Aidis said on Wednesday. Aidis said, that it was not commodity demand that had fallen but rather the inability of

shippers to secure credit from stricken banks to finance the deliveries of the commodities.

“The dramatic correction has delayed but not destroyed the 20-year commodity cycle,” Aidis said. The world had

many economic stimulus coming through in addition to seasonal cycles, with gold demand building from August. “If you

plotted gold, the gold price went to its biggest extreme in 15 years inverse to the dollar and prompted people to

get some gold in their portfolio,” he added.

There were strong signals that gold should be added to investment portfolios. While in the short term the gold

price could pull back, gold was still a fairly safe investment in the longer term. “It would not surprise me”, Aidis

said, if the gold price rose to $2 300/oz. Read more here-http:/

/www.miningweekly.com/article/gold-price-of-2-300oz-would-not-be-surprising-us-global-2009-02-11

-Russia Sberbank gold sales jump during crisis. Russia’s biggest lender, Sberbank saw retail precious metal

accounts double in 2008 as people rushed to protect their savings in a time of financial and economic crisis, a bank

official said on Wednesday.

Russians opened 170,000 new accounts which track the price of precious metals last year, taking the total number

of such deposits at the state-controlled bank to around 300,000, said Vladimir Tarankov, the director of Sberbank’s

currency and non-trade operations department.

“We have clients who bought 200-300 kilograms of gold and a 10 kilogram gold coin only spent two days in our

safe,” he said. The instability of Russia’s 1000-plus banking system, a 30 percent depreciation of the ruble against

the dollar since August 2008 and double-digit inflation have left Russians seeking lasting value for their

investments. Read more here-

http://uk.reuters.c

om/article/rbssFinancialServicesAndRealEstateNews/idUKLB69916720090211

-John Embry February gold commentary. Read more here-http://www.sprott.com/pdf/investorsdigest/digest.pdf

-Let’s go back to a gold standard. Capitalism Needs a Sound-Money Foundation. Let’s give the Fed some

competition. Abolish legal tender laws and see whose money people trust. Read more here-http://online.wsj.com/article/SB12

3440593696275773.html?mod=googlenews_wsj

-Investors Boost Bets Gold to Reach $1,000 on Turmoil. Read more here-http://www.bloomberg.com/

apps/news?pid=20601213&sid;=a0z94R5G5qJc&refer;=home

-Gold poised. Experts predict $1000 plus. Many analysts and bankers now expect gold to break through $1,000 in

the near term and probably go higher on financial instability and potential US dollar weakness. Read more

here-http://www.mineweb.com/mineweb/

view/mineweb/en/page33?oid=78149&sn;=Detail

-Investors buy gold during recession. Read more here-http://www.timesonline.co.uk/tol/money/i

nvestment/article5682539.ece

-’A Perfect Storm Brewing for Gold’ BMO. BMO Global Commodity Strategist Bart Melek says gold will easily top

$1,000/oz next year, averaging $925/oz. Read more here-

http://www.mineweb.com/mineweb/

view/mineweb/en/page33?oid=78267&sn;=Detail

-GFMS’ Paul Walker says gold’s good performance in the short-term plants the seed for a price correction going

forward. Read more here-

http://www.mineweb.com/mineweb/

view/mineweb/en/page33?oid=78173&sn;=Detail

-Bullion sales hit record in rush to safety. Read more here-http://www.ft.com/cms/s/0/359da604-f6d4-1

1dd-8a1f-0000779fd2ac.html

-Japan investors turn to gold. Online traders are turning to commodities from FX, stocks and gold is the most

popular commodity product for online retailers. Read more here-

http://www.mineweb.com/mineweb/

view/mineweb/en/page34?oid=78231&sn;=Detail

-GoldDrivers 2009 Extraordinary Bullish Outlook for Gold. Read more here-http://news.goldseek.com/EricHommelberg/1233939600.php

-Gold Disconnects From USDollar. Read more here-http://www.321gold.com/editorials/willie/willie020

609.html

-Gold fund manager expects Comex to default. Read more here-http://www.commodity

online.com/news/Paper-gold-market-will-crash-at-Comex-14981-2-1.html

-Big U.S. banks dominate COMEX gold, silver: Got Gold Report. Read more here-http:

//www.stockhouse.com/Columnists/2009/February/9/Big-U-S–banks-dominate-COMEX-gold,-silver–Got-Go

-IMF May Not Need to Sell Gold as Loan Demand Rises. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601012&sid;=aUVvmRQmM9c8 or http://www.gata.org/node/7160

-IMF confirms plan to sell 403 tonnes gold. Read more here-http://www.gata.org/node/7164

SILVER

Gold to silver ratio at 80 to 1 with gold at $5,000 the silver price would be $62.50
Gold to silver ratio at

70 to 1 with gold at $5,000 the silver price would be $71.43
Gold to silver ratio at 60 to 1 with gold at

$5,000 the silver price would be $83.33
Gold to silver ratio at 50 to 1 with gold at $5,000 the silver price

would be $100.00
Gold to silver ratio at 15 to 1 with gold at $5,000 the silver price would be $333.33

-Silver-Gold Ratio Reversion. Read more here-http://www.321gold.com/editorials/hamilton/ham

ilton020609.html

-The gold/silver ratio has fallen to around 70 ($950oz/$13.50/oz =70.37) today from around 80 in mid January. The

long term historical average is 15:1 and this is because it is estimated that geologically there are some 15 parts

of silver in the ground for every one part of gold.

It is important to note that silver, unlike gold, besides being a safe haven investment is also used in industry

and it is believed that since the dawn of the industrial revolution some 95% of the world’s silver has been used up

in industrial applications. Because of gold’s much higher value, it gets recycled and all the gold mined in the

world ever is still with us but photography and other industrial uses makes silver like oil when used it is gone

forever.

The 1970s saw an average gold to silver ratio of around 25:1 and fell below 20:1 when silver rose to over $45/oz

nominally. Thus it seems very likely that in the coming years, silver may well return to its long term historical

average of closer to 15:1. This means that silver is likely to continue to outperform even gold in the coming weeks

and months. Silver may return to its recent highs of over $20/oz in 2009 due to very strong supply demand

fundamentals.

It is also important to note that the CFTC investigation into artificial manipulation and suppression of the

silver market could potentially lead to a massive short squeeze. All investors should diversify within the precious

metals allocation in their portfolio and own silver as well as gold. Gold remains the ultimate safe haven while

silver is a safe haven but has the potential for very significant returns and growing wealth in the coming months.

Gold.ie

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1234207643.php

-Mexico strike hits Penoles silver, gold refining. Read more here-http://www.reuters.com/article/market

sNews/idUKN0953875920090209?rpc=44

PLATINUM-PALLADIUM

-Shortage of platinum after Japan buying spree. Families are rushing to invest in the metal as faith in the

Government’s ability to handle the economic crisis dwindles. Tokyo bullion dealers are reporting an unprecedented

drought of platinum ingots and coins, blaming the economic downturn and dwindling faith in the Government for a rush

by middle-class Japanese families to buy precious metal.

With dealers turning away would-be platinum customers for lack of stock, retail investment interest is turning

towards the even rarer Canadian Maple Leaf palladium coin. Some dealers are predicting volatile palladium prices as

Japanese investors compete with the car industry, palladium’s main industrial buyer. Read more here-http://b

usiness.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article5704941.ece

-Is FT’s Lex Right to Favour Platinum Over Gold? Read more here-http://news.goldseek.com/GoldSeek/1234283124.php<

/p>

-Base metals, industrial metals, platinum are good value UBS. Utilizing industry cost curves and current spot

prices to derive an implied contraction in demand, UBS analysts say their methodology could shed light on emerging

metals values. Read more here-http://www.mineweb.com/mineweb/

view/mineweb/en/page67?oid=78148&sn;=Detail

-”We’re still in a commodities bull market” Barclays Capital. Director of commodities research at Barclays

Capital Kevin Norrish says the current difficult phase for commodities will pass. He sheds some light on industrial

metals’ recovery. Read more here-http://www.mineweb.com/mineweb/

view/mineweb/en/page67?oid=78218&sn;=Detail

HOW THE FINANCIAL WORLD ALMOST CAME TO AN END AT 2PM ON SEPT

18^TH 2008

-Youtube has caught a scary moment of previously undisclosed insight by Paul Kanjorski where he reveals some

facts that have not been captured by the media previously. At 2 minutes and 20 seconds in the video below,

Democratic Representative Kanjorski explains how the Federal Reserve told Congress members about a “tremendous

draw-down of money market accounts in the United States, to the tune of $550 billion dollars.” According to

Kanjorski, this electronic transfer occurred over the period of an hour or two. And it gets worse. Kanjorski

paraphrases the following disclosure by Bernanke and Paulson:

On Thursday (Sept 18), at 11am the Federal Reserve noticed a tremendous draw-down of money market accounts in the

U.S., to the tune of $550 billion was being drawn out in the matter of an hour or two. The Treasury opened up its

window to help and pumped a $105 billion in the system and quickly realized that they could not stem the tide. We

were having an electronic run on the banks. They decided to close the operation, close down the money accounts and

announce a guarantee of $250,000 per account so there wouldn’t be further panic out there.

If they had not done that, their estimation is that by 2pm that afternoon, $5.5 trillion would have been drawn

out of the money market system of the U.S., would have collapsed the entire economy of the U.S., and within 24 hours

the world economy would have collapsed. It would have been the end of our economic system and our political system

as we know it. We are no better off today than we were 3 months ago because we have a decrease in the equity

positions of banks because other assets are going sour by the moment. Watch video here-http://zerohedge.blogspot.c

om/2009/02/how-world-almost-came-to-end-at-2pm-on.html or http://www.info

wars.com/rep-kanjorski-550-billion-disappeared-in-electronic-run-on-the-banks/

or http://www.youtube.com/watch?v=pD8viQ_DhS4

REVEALED-THE DAY U.K. BANKS WERE JUST THREE HOURS FROM

COLLAPSE

-Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon

Brown’s Ministers has revealed. City Minister Paul Myners disclosed that on Friday, October 10, the country was

‘very close’ to a complete banking collapse after ‘major depositors’ attempted to withdraw their money en masse.

The Mail on Sunday has been told that the Treasury was preparing for the banks to shut their doors to all

customers, terminate electronic transfers and even block hole-in-the-wall cash withdrawals. Only frantic

behind-the-scenes efforts averted financial meltdown.

If the moves had failed, Mr. Brown would have been forced to announce that the Government was nationalizing the

entire financial system and guaranteeing all deposits. But 60-year-old Lord Myners was accused last night of being

‘completely irresponsible’ for admitting the scale of the crisis while the recession was still deepening and major

institutions such as Barclays remain under intense pressure. Read more here-http://www.dailym

ail.co.uk/news/article-1127278/Revealed-Day-banks-just-hours-collapse.html

DEFINITIONS-QUOTES-QUICK HITS

-Keynesian economics is based on the ideas of twentieth-century British economist John Maynard Keynes. According

to Keynesian economics the state should stimulate economic growth and improve stability in the private sector

through, for example, adjusting interest rates and taxation and funding public projects. The theories forming the

basis of Keynesian economics were first presented in The General Theory of Employment, Interest and Money, published

in 1936. Read more here-http://en.wikipedia.org/wiki/Keynesian_economics<

/p>

-Keynesian economics, and socialist central planning, have trapped the Western economies into a slow death.

Wayne N. Krautkramer

-Gold will likely rise to levels in the coming years that seem unfathomable today. Gold.ie

-I want to be like hockey great Wayne Gretzky, who said: “I skate to where the puck is going to be, not where it

has been.” Warren Buffett

-”It’s not a matter of being pessimistic, but lucid and prudent, and to act accordingly. If we are lucky and the

crisis is shorter than what we were braced for, then we will get out of it that much better.” André

Desmarais President and co-chief executive officer of Power Corp-Read more here-http://www.globeinvestor.com

/servlet/story/RTGAM.20090210.wrdesmarais10/GIStory/

-What strange madness is this? Why would anyone think the economy will be made better off by squandering money

now on projects that were deemed unworthy or unaffordable only a few months ago? The country got into trouble

because people squandered too much money; now they think they will get out of trouble by letting the government

squander money. – Bill Bonner, The Daily Reckoning, February 10, 2009

-The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the

financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages. The

Federal Reserve, Treasury Department and Federal Deposit Insurance Corporation have lent or spent almost $3 trillion

over the past two years and pledged up to $5.7 trillion more. Bloomberg

-U.S. citizens must retrench, stop borrowing, and save their way back to prosperity. Read more here-http://www.torontosun.

com/comment/columnists/eric_margolis/2009/02/08/8308201-sun.html

-Why saving is killing the economy. Saving more and cutting debt might sound like a good plan to deal with the

recession. But if everyone does that, it’ll only make matters worse. Read more here-http://money.cnn.com/2009/02/12/news/econ

omy/savings_rate/index.htm

-Gold will appreciate to $1224 and then to $1650. All this will be history by January 14th 2011. Jim Sinclair

Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
Major TWO down from $1015 to $699, say

$700 (a decline of 31%);
Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
Major

FOUR down from $3,500 to $2,500 (a 29% decline);
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase,

same as ONE) Alf Fields

-McEwen, Goldcorp Founder, Bets Crisis Will Drive Gold to $5,000. Goldcorp Inc. founder Rob McEwen, who has more

than $100 million in gold investments, said he expects the metal to top $5,000 an ounce as governments increase the

money supply to combat recession. Bullion will more than double to $2,000 an ounce by the end of next year before

rising to McEwen’s target by the end of the cycle, which could take an additional four years, the investor said.

“Politicians around the world are listening to cries from their electorates and they’re giving money to all

callers,” McEwen said yesterday in a telephone interview from Toronto.

McEwen, who founded what is now the world’s second-largest gold producer by market value, owns stakes in three

Canadian precious-metal explorers worth more than $100 million. He said he also has a “big, big” holding in bullion.

Gold gained for the eighth straight year in 2008 amid investor concern the economy would collapse and government

efforts to prevent that would increase inflation.

McEwen said he started buying bullion in August 2007, at the beginning of the subprime mortgage crisis. Gold has

jumped 40 percent since Aug. 1 of that year, touching a high of $948.20 today, while the Standard & Poor’s 500

Index has dropped 43 percent. “I realized we had reached an inflection point regarding money,” McEwen said. “It was

all about protecting money, and gold served that purpose.” Read more here-http://www.bloomberg.co

m/apps/news?pid=20601082&sid;=adHg7t8BL5Bg&refer;=canada

-Murenbeeld reckons gold will reach $2,300. The gold price should average $945/oz during 2009 but rise to $995/oz

by the end of the year and average $1,050/oz during 2010.

Those are the latest predictions made by gold “guru” Martin Murenbeeld, chief economist for Dundee Wealth

Economics, speaking at the Mining Indaba being held in Cape Town.

But Murenbeeld added he believed gold would eventually reach $2,300/oz although he did not put a timeframe on

this prediction. The price level of $2,300/oz holds considerable significance for gold investors and analysts

because it represents the current, inflation-adjusted value of the price of $850/oz that gold reached early in

1980.

Interviewed after his presentation Murenbeeld said, “Over the long cycle gold will take out $2,300/oz but that

could take up to five years before it happens.” Read more here-

http://www.miningmx.

com/events/indaba_2009/murenbeeld-reckons-gold-will-reach-$2,300.htm

-Eric Sprott, the Canadian money manager who last year predicted banking stocks would collapse, said the U.S. is

at the beginning of an economic depression that will help gold prices more than double. Bullion may top $2,000 an

ounce in coming years amid a series of financial catastrophes, the chairman and founder of Toronto-based Sprott

Asset Management Inc. said yesterday in an interview. Banks will battle to replenish capital, Treasury auctions

stand the risk of failing and the moribund economy will create a dire operating outlook for many companies, he said.

“The trend is down, and there’s not one signpost that says it’s changing yet,” Sprott said yesterday from

Toronto. “We’ll stand by to wait to see those, and until it does, you have to assume it gets worse.” Sprott, who

manages $4.5 billion, said in March that the world was in a “systemic financial meltdown,” a call that presaged the

collapse of financial institutions including Bear Stearns & Co. and Lehman Brothers Holdings Inc. Since then,

the U.S. has entered the worst economic slowdown since the Great Depression, credit markets have tightened and asset

prices have dropped as companies and funds sell portfolios to raise cash.

The 81-company Standard & Poor’s 500 Financials Index has dropped 62 percent since Sprott said on March 6 he

was buying bullion and gold-producers’ shares, while shorting financial- sector stocks. Gold slipped 6.3 percent

during the same period. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=ao7hCvQA9QZ0

-”Safe-haven buying interest is prevalent,” says Peter Grant, senior metals analyst at USAGold. With central

banks around the world cutting interest rates, it “seems like the world will soon be awash in paper money, and that

is very bullish for gold.” Casey Daily Resource

-As the ever-astute Peter Spina, of Goldforecaster.com, summarized: “Gold continues to benefit from destructive

monetary policies which are being pursued globally. As capital seeks to preserve its purchasing power, currencies

once deemed more powerful than gold are now being questioned. The relative size of the gold market compared to

global monetary system reveals that only small fractions of this capital looking for safety will significantly boost

its value.

Gold is returning as the king currency and its scarcity will propel prices significantly higher. Currently record

highs from 2008 are back in focus, exceeding these levels will likely ignite another influx of demand which could

bring about $1,100 to $1,200 over the coming several months, if not sooner. We will continue to see strong bids on

pullbacks.” Casey Daily Resource

-”There’s a lot of investor anxiety out there and people are turning to gold for its perceived safety. With all

the money the government is planning to spend or print, at some point in the future, we’re going to hit the

inflationary wall.” Matt Zeman, of LaSalle Futures Group in Chicago-Casey Daily Resource

-With Treasury Secretary Geithner ducking questions on toxic debt, illiquid assets and home prices as he rolled

out his bailout plan on Tuesday, the “uncertainty increased risk aversion and continued a flight to a safe haven of

gold and platinum investments,” said Bayram Dincer, a commodity analyst at Dresdner Bank in Zurich. Casey Daily

Resource

-Many technical analysts had been predicting stiff resistance at the $925 level for gold, but the metal blew by

that with ease. After breaching the $940 mark, it could rise to as high as $950 an ounce in the short term, said

Ashraf Laidi, of London-based CMC Markets. Casey Daily Resource

-The fall of Boaz Weinstein, once one of Wall Street’s hottest traders, speaks volumes about why financial firms

still are reeling from the shattered global markets. As a chess master, poker and blackjack devotee and top trader

at Deutsche Bank AG, Mr. Weinstein made big bets using complex financial instruments, generating large returns for

the bank and about $40 million in annual pay for himself. But in 2008 the group he ran saddled the bank with $1.8

billion in losses, erasing more than two years of trading gains.

-Rep. Michael E. Capuano (D-Mass) does a masterful job “raking over the coals” the CEOs of the major US banks.

Watch video here-http://www.youtube.com/watch?v=wN0TJ7qJ238

-IMF may run out of cash to fight crisis in six months, Strauss-Khan warns. The International Monetary Fund could

run out of cash to firefight the economic crisis in as little as six months, its managing director has warned. Read

more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4560897/I

MF-may-run-out-of-cash-to-fight-crisis-in-six-months-Strauss-Khan-warns.html

-China should seek guarantees that its $682 billion holdings of U.S. government debt won’t be eroded by “reckless

policies,” said Yu Yongding, a former adviser to the central bank. The U.S. “should make the Chinese feel confident

that the value of the assets at least will not be eroded in a significant way,” Yu, who now heads the World

Economics and Politics Institute at

the Chinese Academy of Social Sciences, said in response to e-mailed questions yesterday from Beijing. He

declined to elaborate on the assurances needed by China, the biggest foreign holder of U.S. government debt. Read

more here-http://www.bloomberg.com/apps/news?pid=2

0601087&sid;=aXWQEydhsoUI

-China will continue to buy US Treasury bonds even though it knows the dollar will depreciate because such

investments remain its “only option” in a perilous world, a senior Chinese banking regulator said on Wednesday.

Read more here-http://www.gata.org/node/7166

-S&P; 500 Dividends May Decrease 13.3%, Most Since 1942. Read more here-http://www.bloomberg.com/

apps/news?pid=20601213&sid;=aeStJwRNjrjc&refer;=home

-Las Vegas Strip casino gambling revenue tumbled 23 percent in December, capping the worst annual decline on

record, as the city enters the second year of the U.S. recession with thousands more hotel rooms and fewer visitors

to fill them.

Gambling proceeds in the biggest U.S. gaming center slumped 10.6 percent to $6.12 billion last year, the steepest

decline since data started being compiled in the mid-1980s. Last year was bleaker than 2001, when the Sept. 11

terrorist attacks frightened travelers and led to a 2.1 percent drop, said Frank Streshley, an analyst at Nevada’s

Gaming Control Board. Read more here-http://www.bloomberg.com/apps

/news?pid=20601110&refer;=&sid;=aJ.QlbFmQMZs

-US could cut its gasoline 1/3 with ethanol study. Read more here-http://uk.reuters.com/article/oilRpt/idUKN10285040

20090210

-Florida gun dealers experiencing shortages of bullets. Read more here-http://www.orlandosentin

el.com/news/local/orl-bullets1009feb10,0,4930381,print.story

-China’s Vehicle Sales Top U.S. Tally for First Time. Read more here-http://www.bloomberg.com/apps/news?pi

d=newsarchive&sid;=aO6D7VAni3ME

-A Bugatti sports car that was found after 50 years gathering dust in a garage in England sold last night in

Paris for 3.5 million euros ($4.53 million). The two-seat 1937 Bugatti Atalante 57S coupe was one of 17 vehicles of

its type produced by the Italian-based racing-car manufacturer.

It had been estimated to fetch between 2.75 million euros and 4 million euros at the Retromobile sale held by

London- based auction house Bonhams. The price included sale fees. “This was the creme-de-la-creme of late 1930s

sports cars,” said Simon Kidston, a Geneva-based classic car adviser, who attended the auction. “Of the examples

that have come on the market, this had by far the best history, prettiest body style and no one has seen it for 50

years.

Nothing drives collectors more crazy than a car they haven’t been able to buy.” Bonhams described it as “one of

the last great barn discoveries” in an e-mailed statement before the sale. Read more here-http://www.bloomberg.com/

apps/news?pid=20601088&sid;=aNLnZAT0n4Gs&refer;=home

-Muzak, Elevator Music Provider, Files for Bankruptcy. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=a7CiLt41ZK.w

RARE COLORED DIAMONDS

-The Rare Colored Diamonds Historical Value Tracker system 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/HistoricalV

alueTracker.html

-”People want to buy rarity. They want diamonds and color diamonds that are not easy to replace.” Rahul Kadakia,

Christie’s November 20, 2008 Reuters

-Gold move over introducing diamonds as a store of value. Although demand for white diamonds has decreased

Stephen Lussier, executive director of De Beers, expressed confidence in diamonds as a store of wealth long

term.

The economic crisis presents challenges for the luxury goods category as a whole, diamonds however are uniquely

positioned to withstand and emerge from the short-term uncertainty. Stephen Lussier, Executive Director of De Beers,

said at the Mining Indaba on Tuesday stating that diamonds will prove to be a store of value.

Lussier said that diamonds are a rare and finite treasure and, with future demand growth in emerging markets;

demand is likely to significantly outpace what is forecast to be lower levels of diamond supply for many years to

come.

“As the hardest material on Earth, diamonds represent a reliable asset for people migrating away from debt, risk

and the complexity of the stock exchange,” said Lussier. Historically, there has been incremental growth and low

volatility in the prices of diamonds, making them attractive in the long term.

Diamonds are timeless, people still get engaged and married and diamonds are linked to the marriage tradition in

the US and emerging economies. There are only two things in life that last longer than time, love and diamonds.

Read more here-http://www.mineweb.co.za/mine

web/view/mineweb/en/page37?oid=78236&sn;=Detail

-Earnings from the Argyle mine were down 67 percent to $29 million due to higher costs and lower production

volumes as the mine transitions to an underground operation. Rio Tinto reported in January that it would slow the

Argyle underground mining project to only critical development activities because of the weak economic environment.

The company added that its diamond processing facilities at Argyle would undergo an extended maintenance closure of

up to three months beginning in March. Read more here-

http://www.diamonds.net/news/NewsItem.aspx?Article

ID=25278

EUROPEAN BANKS SITTING ON $24 TRILLION OF TOXIC ASSETS

-European bank bail-out could push EU into crisis. A bail-out of the toxic assets held by European banks’ could

plunge the European Union into crisis, according to a confidential Brussels document. “Estimates of total expected

asset write-downs suggest that the budgetary costs actual and contingent of asset relief could be very large both in

absolute terms and relative to GDP in member states,” the EC document, seen by The Daily Telegraph, cautioned.

“It is essential that government support through asset relief should not be on a scale that raises concern about

over-indebtedness or financing problems.” The secret 17-page paper was discussed by finance ministers, including the

Chancellor Alistair Darling on Tuesday.

National leaders and EU officials share fears that a second bank bail-out in Europe will raise government

borrowing at a time when investors particularly those who lend money to European governments have growing doubts

over the ability of countries such as Spain, Greece, Portugal, Ireland, Italy and Britain to pay it back.

The Commission figure is significant because of the role EU officials will play in devising rules to evaluate

“toxic” bank assets later this month. New moves to bail out banks will be discussed at an emergency EU summit at the

end of February. The EU is deeply worried at widening spreads on bonds sold by different European countries. Read

more here-

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4590512/European-

banks-may-need-16.3-trillion-bail-out-EC-dcoument-warns.html

PIMCO-WORLD ECONOMIC CRISIS FACES SECOND WAVE

-Pacific Investment Management Co., which runs the world’s biggest bond fund, said the global economy faces a

“second wave” of turmoil unless governments adopt larger spending plans. “The economic setback is still in its early

stages,” Koyo Ozeki, head of Asia-Pacific credit research at Pimco’s Tokyo office, wrote in a report published today

on the company’s Web site.

“Any further decline in housing prices could accelerate the downturn, intensifying the pernicious feedback loop

and possibly leading to a second wave in the financial crisis in the next six to 12 months.” The lack of specifics

in U.S. Treasury Secretary Timothy Geithner’s financial-system rescue plan triggered a 4.9 percent slide in the

Standard & Poor’s 500 Index yesterday, the steepest since President Barack Obama’s inauguration. Advanced

economies are in a “depression” that may get worse, Dominique Strauss- Kahn, Managing Director of the International

Monetary Fund, said on Feb. 7. Ozeki this month said investors may want to hold off buying Japanese corporate debt

until yields rise to reflect the full extent of the slump.

Pimco is also avoiding longer-maturity bonds elsewhere in Asia as governments increase spending, Douglas Hodge,

managing director for the region, said in an interview yesterday. Bill Gross, Pimco’s co-chief investment officer,

said on Feb. 5 the Federal Reserve will have to buy Treasuries to curb yields as debt sales increase. Read more

here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=aPdNhE2gob7g&refer;=home

MARC FABER-U.S. INFLATION COULD HIT 200%

-The US risks being hit by Zimbabwe-style hyperinflation and there are signs that the world’s biggest economy

risks turning into a banana republic, Marc Faber, author of the Gloom, Doom & Boom report, told CNBC’s “Asia

Squawk Box.”

“In the US, we have a totally new school, and it’s called the Zimbabwe school,” Faber said. “And it’s founded by

one of the great leaders of this world, Mr. Robert Mugabe, that has managed to totally impoverish his own country.

And that is the monetary policy the US is pursuing.”

The government’s increased intervention in the economy is likely to slow down economic growth because history

shows that every time the private sector shrinks to make way for the government sector, the economy suffers, he

said.

Asked whether the US risked being faced with 200 percent inflation, Faber answered: “Well, not yet. Not yet. But

I think eventually. If I look at government debt in the U.S., and debt in general, I think the only way they will

not default physically on their debt is to inflate.” Read and watch more here-http://www.cnbc.com/id/29047443 or http://www.youtube.com/watch?v=loa92ZG1KV8&eurl;=http://economicrot.blogspot.com/2009/

02/marc-faber-u-s-will-default-on-debt-or.html

U.S. BANK FAILURES-BAILOUT

-Three banks, two in California and one in Georgia, were seized by regulators, bringing this year’s tally of

closings to nine as a recession and record foreclosures extend the biggest financial crisis in more than 70 years.

County Bank of Merced, California, with deposits of $1.3 billion and assets of $1.7 billion, was shut yesterday

by the state’s Department of Financial Institutions, according to an e-mailed statement from the Federal Deposit

Insurance Corp. Westamerica Bancorporation, holding company for Westamerica Bank, acquired all the assets and

deposits.

The Georgia Department of Banking and Finance closed McDonough-based FirstBank Financial Services Inc., which had

$337 million in assets and $279 million in deposits as of Dec. 31, the FDIC said in a statement. The California

Department of Financial Institutions shut Culver City-based Alliance Bank, with assets of $1.14 billion and $951

million in deposits.

The FDIC was named receiver of the institutions, which will resume business as branches of the acquiring banks.

Regulators seized six banks in January, the largest monthly toll since 1993, including Salt Lake City-based

MagnetBank, which the FDIC closed Jan. 30 after being unable to find a buyer. The FDIC shuttered 25 banks last year,

matching the total for 2001 through 2007. Read more here-http://www.bloomberg.com/apps/news?pi

d=newsarchive&sid;=aaLkBFzdzwmM

-As many as 1,000 U.S. banks may fail in the next three to five years, almost double the one-year tally at the

height of the saving-and-loan collapse, as losses mount on commercial real-estate loans, RBC Capital Markets

analysts said. Most of the failures will probably occur at banks with less than $2 billion in assets as their

commercial customers default, said Gerard Cassidy, an analyst at RBC, in an interview today.

“There are billions of dollars of losses embedded in the system, and the system has to flush them out,” Cassidy

said. “The people that are going to take the losses are the taxpayers and bank stockholders, and if regulators say

there won’t be much loss to taxpayers, they will be lying.”

Regulators are taking steps to help lenders avoid losses as President Barack Obama’s administration readies a

rescue package that may include guarantees for toxic assets, according to people familiar with the plan. The Federal

Deposit Insurance Corp. closed nine banks so far this year after shutting 25 in 2008 and identified 171 “problem”

institutions as of the third quarter.

The FDIC has already raised the estimate for the cost of U.S. bank failures through 2013 after fourth-quarter

financial reports from banks signaled possible additional losses to the deposit insurance fund. The agency said

failures through 2013 may cost more than the $40 billion estimated in October. The U.S. seized 534 lenders in 1989,

including 327 saving- and-loan associations, during the peak of a crisis among thrift institutions, FDIC data

showed. Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=a65LKxYZk4vw&refer;=home

-Peter Schiff: Stimulus Bill Will Lead to “Unmitigated Disaster.” Read more here-http://finance.yahoo.com/tech-ticker/article/169781/Peter-Schiff:-Stimulus-Bill-Will-Lead-to-%22Unmitigat

ed-Disaster%22

-Peter Schiff: Why I’m Right and My Critics Are All Wrong. Read more here-http://finance.yahoo.com/tech-ticker/article/169961/Peter-Schiff-Why-I%

27m-Right-and-My-Critics-Are-All-Wrong?tickers=^dji,^gspc,QQQQ,SPY,DIA,SHV,UDN

-Jim Rogers says Tim Geithner has been dead wrong about everything for 15 years in a row. He caused crisis, must

let banks fail. Read and watch more here-http://www.dailypaul.com/node/82373 or http://www.youtube.com/watch?v=q6sMOQCycpk

-U.S. Congressman Ron Paul Confronts Ben Bernanke, We’re Doing Exactly The Opposite Of What We Should Do. Watch

more here-http://www.youtube.com/watch?v=-5jZ7Y14cXA

-Why Obama’s new Tarp will fail to rescue the banks. Read more here-http://www.ft.com/cms/s/0/

9ebea1b8-f794-11dd-81f7-000077b07658.html?nclick_check=1

RECESSION-DEPRESSION

-Advanced economies are already in a “depression” and the financial crisis may deepen unless the banking system

is fixed, International Monetary Fund Managing Director Dominique Strauss-Kahn said. “The worst cannot be ruled

out,” Strauss-Kahn said in Kuala Lumpur, where he was attending a gathering of central bankers from Southeast Asia.

“There’s a lot of downside risk.”

Ten days ago, the IMF cut its world-growth estimate for this year to 0.5 percent, the weakest pace since World

War II. Stimulus packages alone won’t succeed in dragging the global economy out of recession unless confidence is

restored in the banking system, Strauss-Kahn said today. “All this will work if, and only if, the different

countries are likely to do what they have to do in terms of restructuring the banking sector,” he said. “And today

it’s not done.”

The U.S. economy has lost 3.57 million jobs since a recession started in December 2007, its biggest employment

slump of any economic contraction in the postwar period as companies from Macy’s Inc. to Caterpillar Inc. cut costs.

The U.K. economy will shrink this year by the most since 1946, the IMF forecasts.

“There is hope that the fiscal and monetary stimulus measures being implemented around the world can help turn

things around,” said David Cohen, Singapore-based director of Asian economic forecasting at Action Economics. “But

there is still the risk it can be short-circuited by further financial turmoil.” Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=a6aaWZ8ab8yU&refer;=home

-The current global recession is “the most serious for over 100 years”, U.K. cabinet minister Ed Balls has said.

Mr. Balls, a former economic adviser to Gordon Brown, said it was “more extreme and more serious than that of the

1930s”, the Yorkshire Post reported.

He told a Labour conference that these were “seismic events that are going to change the political landscape”.

Shadow Treasury minister Phillip Hammond said the remarks were “staggering and very worrying”. Read more here-http://news.bbc.co.uk/2/hi/uk_news/politics/7880189.s

tm or htt

p://www.independent.co.uk/news/uk/politics/this-is-the-worst-recession-for-over-100-years-1605367.html

-Bank of England Governor Mervyn King said the U.K. is in a “deep recession” that may force policy makers to

create money and pump it into the economy after cutting interest rates to a record low.

“Further easing in monetary policy may well be required,” said King at a press conference in London after

presenting the central bank’s revised quarterly forecasts today. “That is likely to include actions aimed at

increasing the supply of money in order to stimulate nominal spending.” Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=aMxgEGM0k8co

-Recession? No, it’s a D-process, and It Will Be Long. Read more here-http://online.barron

s.com/article_print/SB123396545910358867.html?mod=googlenews_barrons

U.S. FISCAL-TRADE DEBT

-The U.S. budget deficit widened more than economists forecast last month as spending soared and corporate tax

receipts shrank, putting the Treasury on course for a record annual shortfall of more than $1 trillion.

The excess of spending over revenue in January rose to $83.8 billion, compared with a $17.8 billion surplus in

the same month a year earlier. Spending gained 30.6 percent, while revenue dropped 11.4 percent. Corporate tax

revenue in the past four months is down 44.3 percent from a year earlier.

The deficit four months into the 2009 fiscal year already is higher than the record for all of the previous year.

A recession now in its second year, rising foreclosures and 13 straight months of job losses are cutting tax

receipts. At the same time, the government is pledging hundreds of billions of dollars of taxpayer funds to arrest

the financial crisis. Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=atwQ4pUtn6Y0&refer;=home or http://money.cnn.com/200

9/02/11/news/economy/treasury_budget_deficit_Jan09/index.htm

-The U.S. trade deficit narrowed less than anticipated in December to the smallest in almost six years as the

recession pushed oil prices and consumer spending lower, reducing imports.

The gap between imports and exports shrank 4 percent to $39.9 billion, the lowest since February 2003, from a

revised $41.6 billion deficit in November that was wider than previously estimated, the Commerce Department said

today in Washington. Imports fell to the lowest since 2005. Read more here-

http://www.bloomberg.com/

apps/news?pid=20601087&sid;=a_c6JKzOACyQ&refer;=home

CANADIAN DOLLAR

-Canada’s currency will return to par with its U.S. counterpart in as little as six months as commodity prices

rebound, pessimism peaks and the nation’s political turmoil abates, according to Dennis Gartman. “I can feel myself

getting ready to be quite bullish on the Canadian dollar,” said Gartman, an economist and the editor of the Gartman

Letter, who correctly predicted the currency’s most recent run to parity in 2007. “I have the sense that this might

be a move back towards par and beyond.”

The Canadian dollar reached equal value to the U.S. dollar in September 2007 for the first time in three decades

as prices soared for commodities such as crude oil, copper and aluminum, which account for about half the country’s

export revenue. It plummeted 18 percent last year, the most ever, as a global recession curbed demand for the same

commodities. The currency is down 1.6 percent this year. Read more here-http://www.bloomberg.co

m/apps/news?pid=20601082&sid;=aQqU07AMztnI&refer;=canada

REAL ESTATE-FORECLOSURES

-Home Prices in U.S. Slid 12% in Fourth Quarter, Most on Record. Home Prices Tumble in 88% of U.S. Cities. Home

prices fell in almost nine out of every 10 U.S. cities in the fourth quarter as foreclosure sales drove down prices.

The median price of a U.S. home declined 12 percent from a year earlier and sales of properties with mortgages in

default accounted for 45 percent of all transactions, the Chicago-based National Association of Realtors said today.

Prices fell in 134 U.S. metropolitan areas, rose in 18 and were unchanged in one, the biggest share of declines

in data going back to 1979. The worst U.S. housing slump since the Great Depression is deepening as foreclosures

drain value from neighboring homes and the economic recession worsens. Read more here-http://www.bloomberg.com/

apps/news?pid=20601087&sid;=axwYlbjBDoqQ&refer;=home

-U.S. Homeowners Will Lose Up to $10 Trillion, Talbott Estimates. Read more here-http://www.bloomberg.com/

apps/news?pid=20601088&sid;=ahOc6ZN_3HE0&refer;=home

-U.S. home prices will reach bottom by the end of the year, concluding a slide that will have cut values 36

percent, Moody’s Economy.com said today. “Notwithstanding the intensifying economic gloom, the bottom of the housing

downturn is within sight,” chief economist Mark Zandi said in a statement today. “Presuming we see strong action by

policymakers to help support the economy and the housing market, prices will begin to recover by the end of this

year.” Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=a5.ODjRGkehQ

-U.S. MBA’s Mortgage Applications Index Slid 24.5% Last Week. Read more here-http://www.bloomberg.com/ap

ps/news?pid=20601103&sid;=aUmOmm2Ag0SY&refer;=us

-Toll Brothers Inc., the largest U.S. luxury homebuilder, said first-quarter revenue plunged 51 percent as the

recession worsened the housing crisis. Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=aCUNOs9JcGTU

-Toll Brothers Inc., the largest U.S. luxury homebuilder, is slashing prices on its Brooklyn condominiums by as

much as 37 percent to spur sales after its unsold inventory spent two years on the market. Prices at the eastern

tower of the waterfront Northside Piers project in Williamsburg were reduced starting Feb. 3 for all types of

apartments, said Florence Clutch, the sales manager. Read more here-http://www.bloomberg.com/apps/news?pi

d=newsarchive&sid;=ax0W80IYHJtE

-Boston Properties Inc., the biggest U.S. office landlord, plans to suspend construction on a $980 million

midtown Manhattan skyscraper after a law firm abandoned plans to lease space there. Read more here-http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=ar4_CtuX9SZY

-U.K. housing sales dropped to the lowest level since at least 1978 in the quarter through January as property

prices dropped further and Britain’s recession deepened, the Royal Institution of Chartered Surveyors said.

The average number of transactions in a survey of real- estate agents and surveyors dropped to 9.9 per

respondent, the lowest since the data began three decades ago, the group said today in London. A separate report

showed the slowest total retail sales annual increase since 1995 in January. Read more here-

http://www.bloomberg.com/apps/news?pid=2

0601110&sid;=agE3eG0M1G2k

-The Downside for Condos in a Downturn. Read more here-http://www.nytimes.com/2009/02/08/re

alestate/08COV.html?pagewanted=print

-More families move in together during housing crisis. Read more here-http://www.usatoday.com/money/economy/housing/2009-02-02-housing-crisis-families-living-together_N.htm?csp=34

-U.S. Foreclosures Top Quarter-Million for 10th Straight Month. U.S. foreclosure filings exceeded 250,000 for the

10th straight month in January as falling prices trapped owners in homes worth less than the mortgage, RealtyTrac

Inc. said. A total of 274,399 properties got a default or auction notice or were seized by banks, the Irvine,

California-based seller of default data said in a statement today. It was the 37th straight year-on-year increase in

filings.

“This is tough to fix, because so many people are underwater,” Bruce Norris, president of the Norris Group, a

Riverside, California-based investment firm specializing in foreclosed properties, said in an interview. “Until debt

goes down or prices go up, this is going to be a mess.” The housing market lost an estimated $3.3 trillion in value

last year and almost one in six owners owed more than their homes were worth, online data provider Zillow.com said

last week.

The U.S. economy shrank 3.8 percent in the fourth quarter, the most since 1982, and payrolls plunged by 598,000

in January, pushing the jobless rate to the highest level since 1992. Home prices have fallen every month since

January 2007 and tumbled 18.2 percent in November, according to the S&P;/Case-Shiller index of 20 U.S. cities.

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