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The GoldBugg Report – February 3, 2009

February 3, 2009

WORLD FINANCIAL REPORT ON RADIO JAN 30 2009 SHOW

GOLD

-Gold continues to be maligned by many and the world’s exposure to it remains very low. The conditions that we are seeing develop have never been more bullish for gold. Sprott Asset Management said in their December letter that “we have never been more bullish” on gold. It may be the only place left to hide as we go into 2009.

The conditions are deteriorating even faster than we expected. What started as a potentially bad recession is now showing signs of turning into a full-blown depression. But the massive monetary and fiscal stimulus being created by the authorities almost guarantees that going forward Gold and bullion will be the key place to be.

Investors should now have at least 25 per cent of their portfolios invested in Gold and Bullion. The evidence is mounting that the economic downturn will be severe. We are only awaiting the numbers to show that indeed we might be able to say “It’s a Depression”. Not a pretty thought. David Chapman-Read more here-http://news.goldseek.com/UnionSecurities/1232742134.php


-Gold Breaks above $850. James Turk-Read more here-http://goldmoney.com/en/commentary.php#current




-Gene Arensberg: Gold price thrusts through resistance. Read more here-http://www.stockhouse.com/Columnists/2009/Jan-1/26/Gold-price-thrusts-through-resistance–Got-Gold-Re

or http://www.gata.org/node/7124

-Getting a Grip on Gold’s Price. Read more here-http://online.wsj.com/article/SB123308288034720495.html

-Global Currency and Gold. Read more here-http://news.goldseek.com/GoldSeek/1233083811.php

-Forecasting the gold price expert panel predicts $1074 high, Mineweb readers $1305. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=77325&sn;=Detail

-The Economy the Titanic & The Life Rafts of Gold & Silver. Read more here-http://www.321gold.com/editorials/schoon/schoon012809.html

-Bond markets have risen to all time record highs in recent weeks and there is a concern that there may be a bubble in some government debt markets. Especially as governments are engaged in an unprecedented bailout of much of the western financial system and there are increasing fears that much of the western banking system will be partially nationalized.

Bernanke’s and others’ proposals to print money to buy their own bonds shows they believe that government bonds are overvalued and will likely come under serious selling pressure at some stage in the coming months.  It shows how most government bonds (particularly long dated bonds) are not a safe haven. As this realization sinks in, gold’s safe haven qualities will be more greatly appreciated in the coming months and should see gold rise above $1,000/oz sooner than most expect in 2009.

Fears of a sharp selloff in bond markets is what has led to Ben Bernanke and others to suggest printing money to buy their own government bonds as it is hoped that this intervention or market manipulation would artificially keep bond prices high and yields low. Most astute observers see it as another shortsighted panacea that may be effective in the short term but is likely to lead to a far more serious problem down the road the likely downgrading of the US government debt, a possible default and likely double digit inflation and interest rates. Stagflation or virulent 1970s style macroeconomic conditions would again see gold’s safe haven qualities come centre stage. Gold.ie

-The bottom line is inflation and deflation are and always have been purely monetary in nature. Supply and demand can drive prices all over the place, but it is only a changing money supply that can truly spawn inflation or deflation. And the money-supply data is crystal clear. The Fed is growing the fiat-dollar supply by frightening rates, all the way from double-digit broad-money growth down to a scary doubling of the monetary base!

This means big inflation is coming, it’s already baked into the pipeline. Too distracted by deflationists who have no dictionaries and hence don’t even know what the word “deflation” really means, Wall Street hasn’t realized the real threat is inflation yet. But when it does, capital should rapidly flood into investments that thrive in inflationary times. Of these, gold remains the king. Its bullish potential in the years ahead is vast. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton012309.html


-Rare gold coin sells for £20,000. Read more here-http://news.bbc.co.uk/2/hi/uk_news/england/7851238.stm

SILVER

-Potential silver prices based on the gold to silver ratio.

Gold to silver ratio at 80 to 1 with gold at $1000 the silver price would be $12.50
Gold to silver ratio at 70 to 1 with gold at $1000 the silver price would be $14.29
Gold to silver ratio at 60 to 1 with gold at $1000 the silver price would be $16.67
Gold to silver ratio at 50 to 1 with gold at $1000 the silver price would be $20.00
Gold to silver ratio at 16 to 1 with gold at $1000 the silver price would be $62.50

-Why do I still recommend silver, given its poor performance compared to gold since summer? Silver is still down 45% from its highs, while gold is only down 10%. Silver has rebounded over 35% from its lows, while gold is up about 28%. Typically, when gold goes up, silver goes up by a larger percentage. I think that will be the case again this year as investors focus less on silver’s industrial demand and focus more on its investment potential and lower cost to gold.

Another factor is that about 80% of silver is mined as a byproduct of other metals mining. Many mines are being shut down or production curtailed for tin, copper, zinc, etc. I expect this will reduce the supply of newly mined silver in 2009. That should be enough to offset the reduction in industrial demand. Timothy Silvers-Read more here-http://www.silverbrothers.com/012409.html

-Think Gold Premiums Are High? Wait Till You See Silver! Read more here-http://news.silverseek.com/SilverSeek/1233069588.php

-Gold/Silver Market Updates from Clive Maund. Read more here-http://www.321gold.com/editorials/maund/maund012609.html

-Aden sister’s commentary on silver and gold. Read more here-http://www.kitco.com/ind/Aden/aden_jan262009.html

-Silver and the Chinese. Bloomberg put out some interesting news regarding the silver market stating that refined silver output in China has peaked and it could stop growing because less will be produced as a result of halting of mine expansions, higher costs for production and lower prices received for the metal itself. Read more here-

http://news.silverseek.com/SilverInvestor/1232693400.php

-Relax: There Will Be No Depression gold and silver will outperform. LA-based gold commentator Kenneth J. Gerbino tells us why he feels there won’t be a depression but we will be faced with inflation, and markets in general, and bonds in particular, will prove to be bad buys, while gold and silver will perform best of all. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=77453&sn;=Detail or http://www.321gold.com/editorials/gerbino/gerbino012609.html

-Ted Butler silver commentary-Read more here-http://news.silverseek.com/TedButler/1232994713.php

-New Inventory High at the Silver ETF. Read more here-http://news.silverseek.com/SilverSeek/1233078852.php or http://uk.reuters.com/article/allBreakingNews/idUKLS63875420090128?rpc=401

-Silver investigation: Stakes are enormous. Read more here-http://www.gata.org/node/7118 or http://www.investegate.co.uk/invarticle.aspx?id=66609

PLATINUM-PALLADIUM


DEFINITIONS-QUOTES-QUICK HITS

-Collateralized Debt Obligation-CDO. An investment-grade security backed by a pool of bonds, loans and other assets. CDOs do not specialize in one type of debt but are often non-mortgage loans or bonds.

Similar in structure to a collateralized mortgage obligation (CMO) or collateralized bond obligation (CBO), CDOs are unique in that they represent different types of debt and credit risk. In the case of CDOs, these different types of debt are often referred to as ‘tranches’ or ’slices’. Each slice has a different maturity and risk associated with it.

The higher the risk, the more the CDO pays. Investopedia.com-Read more here-http://en.wikipedia.org/wiki/Collateralized_debt_obligation or Everything You Wanted to Know about Credit Default Swaps but Were Never Told-Read more here-http://www.rgemonitor.com/globalmacro-monitor/255257/everything_you_wanted_to_know_about_credit_default_swaps–but_were_never_told

-When people fear their government, there is tyranny. When governments fear the people, there is liberty. Thomas Jefferson

-We were poor when I was young, but the difference then was that the government didn’t come around telling you were poor. Ronald Reagan

-”Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria” John Templeton

-Mike Milken back in the 80’s said the banks were levered four times and he could not sleep at night. Lehman, Merrill, Bear Stearns, they were levered 24 times.” Frank Holmes, chairman of U.S. Funds

-”Manipulation of markets is about the fight between limited government and unlimited government.” Chris Powell, secretary of 10-year-old Gold Anti Trust Action Committee

-”Hope is a wonderful thing to have spiritually. It is a terrible thing to have for investments.” Peter Grandich of Grandich Letter

-”Wall Street is a bunch of sociopaths. You can’t grow a conscience if you don’t have one.” Trace Mayer of RunToGold.com

-”I am not relishing the prospect of a world with $3,000 gold. But I am prepared for that day.” Thom Calandra of Stockhouse.com

-A vital function of the free market is to penalize inefficiency and misjudgment and to reward efficiency and good judgment. By distorting economic calculations and creating illusory profits, inflation will destroy this function. Henry Hazlitt-Read more here-http://en.wikipedia.org/wiki/Henry_Hazlitt

-”Investors are looking to shelter their wealth and gold is one of the few choices they have in these unstable markets. Wealth preservation is 2009’s theme.” Peter Spina, of GoldSeek.com

-The next two magnets for Gold above $887.50 are the following: 1-$1060 2-$1245. Jim Sinclair

-At present governments are printing money like fury and little is happening to their economies because banks, companies and individuals are hoarding cash. But eventually pulling on this string will work, and money will flood into the economy in an uncontrollable way. It is at this point that gold prices will go ballistic. That should not be more than nine months to a year away based on past precedent. Peter Cooper-Read more here-http://news.goldseek.com/PeterCooper/1233239604.php

-Greenlight Capital Inc. founder David Einhorn, 40, is finally taking his grandfather’s advice. The $5.1 billion hedge fund is buying gold for the first time amid the threat of inflation from increased government spending.

Since Einhorn was 10 years old, his grandfather has warned him that investing in bullion and gold-mining stocks was the only “sensible” thing to do given the threat of inflation and the risks of so-called fiat currencies, New York-based Greenlight said in a Jan. 20 letter to clients. The firm had never before considered buying bullion or shares of miners.

“To everyone’s dismay, we believe some of Grandpa Ben’s predictions are playing out,” Greenlight said in the letter, a copy of which was obtained by Bloomberg News. “The size of the Fed’s balance sheet is exploding, and the currency is being debased.”

Greenlight is turning to the centuries-old currency to mitigate the effects of the economic collapse and government efforts to end it. Bullion gained for the eighth straight year in 2008 as governments in Europe and the U.S. rescued banks from collapse. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aqvwUIqllyRc

-I think gold is rising because of fiscal deterioration and the prospect that the U.S. may be downgraded,”said Tom Sowanick, chief investment officer for $22 billion in assets at Clearbrook Financial LLC in Princeton, New Jersey. Sowanick believes gold can move up to around $1700 per ounce. Gold hit an all-time high of $1030.80 on March 17, 2008, following the collapse of Bear Stearns. Reuters-Gold attracts more flows amid recession-Read more here-http://uk.reuters.com/article/personalFinanceNews/idUKLNE50R00P20090128?sp=true

-Barrick Gold Corp. Chairman Peter Munk said gold prices will top $1,000 an ounce as investors buy the metal to guard against “uncertainty” from financial-market turmoil. “Do I personally believe gold will break through $1,000?” Munk said. “It’s not a question of if, it’s a question of how soon.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601082&sid;=aXnrEDX4tvtU&refer;=canada

-Barrick chairman speculates China will dump dollars for gold. Read more here-http://www.gata.org/node/7134

-”They are printing trillions of dollars worth of currencies, and there is no real asset behind it. So every single dollar in my pocket is going to be worth less and less every day,” said Robert Lutts, chief investment officer of $400 million Cabot Money Management in Salem, Massachusetts. Reuters

-”It’s a flight from all cash to gold in any currencies right now, because it becomes obvious that everybody wants to inflate out of this problem,” said Axel Merk, portfolio manager of the $310 million Merk Hard Currency and Asian Currency Funds in Palo Alto, California.

Merk said investors recently allocated more weight into gold because it has no counterparty risk, unlike traditional asset classes. Gold, which produces zero interest yield, also became more attractive as governments in the industrial world slashed interest rates to the bone, Merk said.

-”You will have people buying gold with the gut feeling that there is still a lot of tough times ahead. All the money that went into notes and bonds is now going into gold and other hard assets because yields are ridiculously low.” Matt Zeman, of LaSalle Futures Group in Chicago

-The next threshold for gold is the $930 mark, in the opinion of Mark O’Byrne, of Gold & Silver Investments. “A daily or weekly close above that level would likely lead to gold retesting the psychologically important mark of $1,000 an ounce again.” Casey Daily Resource

-”Massive injections of liquidity into the global banking system will serve to drive gold prices higher.” Dennis Gartman, editor of the Gartman Letter

-”Widespread global economic gloom and ultra-low global interest rates. As the price of money [interest rates] is held down by central banks, the price of its competitor [gold] pushes higher on the lack of yield reward in monetary alternatives.” Ashraf Laidi, of CMC Markets in London

-”Investors are starting to see that the yellow metal is one of the few havens for protection from what is an inevitable wave of inflation.” “Technically, gold is surging through some key levels, along with silver, and we are starting to see investors dip their toes back in the market. Kevin Kerr, editor of Global Commodities Alert

-Julian Phillips, of Goldforecaster.com, has lost none of his enthusiasm for gold as he asks, “can we say the $:Gold link is breaking? It looks to be so! Gold was consolidating as the $ fell but rose previously as the $ rose. Gold is looking more like the place to be both in deflation and uncertainty and in inflation. Long-term investors have been buying well over 50 tonnes of gold in the last three weeks, confirming this. This amount of buying is certainly swamping central banks gold sales and is showing investors the way forward.” Casey Daily Resource

-Germany, the world’s second-largest holder of gold after the U.S., has denied rumors that it is selling gold from its vaults to make up for its growing deficit. The rumor had been circulating that the Bundesbank was selling gold, possibly to help fund a second fiscal stimulus worth about €50 billion.

The ruling Christian Democratic Union party had earlier advanced the proposition that the Bundesbank should sell some of its gold reserves, which amount to about 3,400 tons, to help reduce debt. But Finance Minister Peer Steinbrueck rejected that proposal in Wednesday’s Berliner Zeitung newspaper, and Bundesbank spokeswoman Madleen Petschmann reiterated that the rumors were unfounded. Casey Daily Resource

-This prompts the question: which of the major markets are presently in long-term upward trends relative to gold? The answer is: none of them. Over the past decade there were multi-year periods during which various markets trended higher in gold terms, but the relative gains achieved by these markets rapidly evaporated last year.

To put it another way, a good case can be made that gold is the only long-term bull market ‘on the go’ at this time. Moreover, based on the information presently at hand we suspect that this will remain the case over the coming decade or until there’s an upside blow-off in the gold price. Steve Saville-Read more here-http://www.321gold.com/editorials/saville/saville012709.html

-My absolute favourite saying is, “Put 10% of your entire net worth into precious metals and pray that they go to zero.” Does anyone ever purchase fire insurance and then get upset if their house does not burn down? Precious metals are financial insurance. If your precious metals lose value it normally means that the other six classes (or the other 90% of your wealth) are smoking hot and doing quite well.

However, when the other 90% of your investments are in the toilet it is that little 10% invested in precious metals that will save you and allow you to start over. Do not skimp and buy a cheap lifeboat with a storm on the horizon. If you feel the risk of financial strife is great right now move up to a 15 or 20% allocation in precious metals until the storm passes.

Investing without a portion of your wealth in precious metals is simply investing without a net. Remember to invest a portion in all seven classes to one degree or another. King Solomon was indeed both wealthy and wise. Larry LaBorde-Read more here-http://www.321gold.com/editorials/laborde/laborde012609.html

-If you are among the newly unemployed and you want to see just how soon Obama’s bailout and recovery program is going to succeed, take a pail down to the ocean and start bailing. When you have stopped the tide, that’s when the government will have fixed the problem. Bob Moriarty-321gold.com-Read more here-

http://www.321gold.com/editorials/moriarty/moriarty012609.html

-Merrill Lynch chief economist David Rosenberg fired out a note Monday after a marketing visit to European institutions and opened with the observation: “Portfolio managers seem to think they are taking a bigger risk with their careers by missing the rallies than by missing the selloffs. I can tell you that this is not a condition from a sentiment standpoint that terminates bear markets.”

Mr. Rosenberg is no fan of portfolio managers being fully invested. The Merrill Lynch economist is calling for a 20 per cent decline in the S&P; 500, and a further 15 per cent fall on U.S. home prices. That’s a huge hit to household worth a loss of $20-trillion (U.S.) that’s “proportionally on par with the 1930s experience.” Read more here-

http://www.theglobeandmail.com/servlet/story/RTGAM.20090126.WBstreetwise20090126134251/WBStory/WBstreetwise/

-The global economy will slow close to a halt this year as more than $2 trillion of bad assets from the U.S. help sink economies from Russia to the U.K., the International Monetary Fund said. Bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion, the IMF said in a report released today, more than the $1.4 trillion that the fund predicted in October. World growth will be 0.5 percent this year, the weakest postwar pace, the fund said in a separate report. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=aVCWqf3qtdpc&refer;=home

-Confidence among U.S. consumers unexpectedly fell in January to a record low as job prospects remained dim. The Conference Board’s index of consumer confidence fell to 37.7, from a revised 38.6 in December, the New York-based private research group said today. Records began in 1967. Measures related to Americans’ views on incomes deteriorated. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aw.LoDkJtM.I

-Government regulators aided IndyMac coverup maybe others. Read more here-http://www.gata.org/node/7120

-Money-Fund Returns Drop to Record Low, Follow Treasury Yields. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=arXbpqJmXbws&refer;=home

-SocGen’s Montier Sees 42 Stocks That May Cause ‘Permanent’ Loss. See list here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ass9Orylzl.A

-Ford Motor Co., insisting it can survive without federal loans, said it burned $5.5 billion in cash in the fourth quarter and will tap a revolving credit line after the worst annual performance in its 105-year history.

The second-biggest U.S. automaker also pared first-quarter North American output and won concessions from the United Auto Workers. While Ford pruned its projection for 2009 domestic industrywide sales to as few as 11.5 million vehicles, that figure is about 1 million more than other estimates.

“Their forecast is still too rosy,” John Wolkonowicz, an analyst at IHS Global Insight in Lexington, Massachusetts, said today in an interview. “They’ll need money from the government by midyear.” Ford posted a quarterly net loss of $5.9 billion, or $2.46 a share. Excluding costs Ford considers one-time expenses, the loss was $1.37 a share. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&refer;=home&sid;=afkU3HbQIUEY

-Nations turn to barter deals to secure food. Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars. Read more here-http://www.ft.com/cms/s/0/3e5c633c-ebdc-11dd-8838-0000779fd2ac.html

-Britain is facing return of three-day week. The prospect of the three-day week returned to haunt Britain yesterday as it emerged that ministers are considering paying firms to cut hours in order to survive the recession.

Tens of thousands of businesses are already planning to scale back working hours this year in an effort to stay afloat. But as the country comes to terms with the reality of a recession, it emerged that the Government is looking at compensating employees, through their firms thereby drawing comparisons with the shutdowns of the 1970s. Read more here-

http://www.independent.co.uk/news/uk/politics/britain-is-facing-return-of-threeday-week-1515307.html

-Peter Schiff: Oh, he saw it coming. ‘Dr. Doom’ became a star by predicting last year’s market meltdown. And now his 2009 forecast is even scarier.

http://money.cnn.com/2009/01/20/magazines/fortune/okeefe_schiff.fortune/index.htm

-’Uranium For Iran Nuke In 2009′. Read more here-http://news.sky.com/skynews/Home/World-News/Nuclear-Weapon-From-Iran-Within-A-Year-Expert-Says-Country-Will-Have-Enough-Uranium-For-Warhead/Article/200901415211260

-Ahmadinejad Urges Obama to Apologize for ‘Crimes’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_nJyasKjye4

-Holocaust a ‘big lie’: Iran govt spokesman. Read more here-http://www.breitbart.com/article.php?id=CNG.dcc1dae7280236f3833645ed9fa891cb.5e1&show;_article=1

-Israeli election front-runner Benjamin Netanyahu told a session of the World Economic Forum on Thursday that preventing Iran from obtaining nuclear weapons ranks far above the global economy among the challenges facing leaders of the 21st century. Read more here-http://news.yahoo.com/s/ap/20090129/ap_on_re_eu/davos_forum_netanyahu

-To Combat Obama, Al-Qaeda Hurls Insults. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/01/24/AR2009012401703_pf.html

-Madoff’s Tactics Date to 1960s When Father-in-Law Was Recruiter. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=at1ierlaVQyg&refer;=home

-Madoff ‘Red Flags’ Could Have Been Raised by Software. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aSgLL64U0Lxc&refer;=home

-Madoff’s ‘Dull’ Returns, Investigation Didn’t Alarm Notz Stucki. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aTin2dVRnU.k&refer;=home

-A parade of Ponzis. The boom years were the perfect time for Ponzi schemers, and now the time is ripe for them to blow up. Read more here-

http://money.cnn.com/2009/01/28/news/newsmakers/ponzis.fortune/index.htm

-Troubled Times Bring Mini-Madoffs to Light. Read more here-http://www.nytimes.com/2009/01/28/business/28ponzi.html?pagewanted=print

-For American Jews, the Bernard Madoff scandal has not just caused deep financial pain. It also has been deeply personal. The accused swindler managed money for numerous Jewish charities and wealthy Jews who are reeling from their monetary losses as well as a sense of betrayal that a fellow Jew could have harmed so many people. Read more here-

http://www.reuters.com/article/newsOne/idUSTRE50K6BO20090122

-Ebola may have passed from a pig to a human. Read more here-http://www.iht.com/articles/2009/01/23/healthscience/24ebola.php

-China reports 6th human bird flu case this year. Read more here-http://uk.reuters.com/article/worldNews/idUKTRE50O0K220090125

-Bird flu scare hits northeast India. Read more here-http://www.cnn.com/2009/WORLD/asiapcf/01/22/india.bird.flu/index.html?iref=newssearch

-Study finds troubling pattern of Southern California quakes. The southern stretch of the San Andreas fault has had a major temblor about every 137 years, according to new research. The latest looks to be overdue. Read more here-http://www.latimes.com/news/local/la-me-fault-quakes24-2009jan24,0,7734479.story

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’s iconic Argyle pink diamonds were the focus of much red carpet activity at the finale of the 2009 G’Day USA Australia Week events in New York. Commenting on the presence of Argyle Pink Diamonds at the Gala Dinner, Jean-Marc Lieberherr, General Manager of Rio Tinto’s Diamonds Sales and Marketing notes, “Argyle Pink Diamonds are both symbolic culturally and highly prized globally. We are delighted to be here to tell the remarkable story of the world’s rarest diamonds and to display these fine examples of truly master craftsmanship.” Read more here-http://www.pitchengine.com/riotinto/red-carpet-provides-unique-opportunity-to-showcase-rare-argyle-pink-diamonds-/3700/

-Champagne diamonds from Rio Tinto’s Argyle Diamond Mine have been the inspiration for unique pieces of jewellery and objects d’art on display in New York this week. Read more here-http://www.pitchengine.com/riotinto/champagne-diamonds-inspire-jewelry-designers/3693/

-Rio Tinto Group, the world’s third- largest mining company, may sell shares to help cut debt by $10 billion after failing to meet asset-sale targets. Rio doesn’t “rule out the potential to issue equity as one of the options it has available,” the London-based company said in a statement. No decision has been made yet, it said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601081&sid;=aN7wHl._Ba0c&refer;=australia

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

ROUBINI-BANKING SYSTEM IS EFFECTIVELY INSOLVENT

-U.S. financial losses from the credit crisis may reach $3.6 trillion, suggesting the banking system is “effectively insolvent,” said New York University Professor Nouriel Roubini, who predicted last year’s economic crisis. “I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion. This is a systemic banking crisis.”

Losses and writedowns at financial companies worldwide have risen to more than $1 trillion since the U.S. subprime mortgage market collapsed in 2007, according to data compiled by Bloomberg. President Barack Obama will have to use as much as $1 trillion of public funds to shore up the capitalization of the banking sector, following the $350 billion injection by the Bush administration, Roubini told Bloomberg News.

Congress last year approved a $700 billion rescue fund, of which half remains to be disbursed. Bank of America Corp., the largest U.S. bank by assets, posted a quarterly loss of $1.79 billion last week, its first since 1991, and received $138 billion in emergency government funds.

Citigroup Inc. posted an $8.29 billion fourth-quarter loss, completing its worst year, and plans to split in two under Chief Executive Officer Vikram Pandit’s plan to rebuild a capital base eroded by the credit crisis. “The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aS0yBnMR3USk

CALIFORNIA BANK SHUT DOWN

-First Centennial Bank of Redlands, California, was seized by a state regulator, the third U.S. bank to fail this year, as the recession deepens and the slump in the housing industry sends home foreclosures to records.

First Centennial, with $803.3 million in assets and $676.9 million in deposits, was shut by the California Department of Financial Institutions and the Federal Deposit Insurance Corp. was named receiver. First California Bank, based in Westlake Village, will assume deposits and open the failed bank’s 6 offices near Los Angeles and San Diego on Jan. 26 as branches, the FDIC said.

“Depositors of the failed bank will automatically become depositors of First California,” the FDIC said in an e-mailed statement. “There is no need for customers to change their banking relationship to retain their deposit insurance coverage.”

Regulators closed 25 banks last year, the most since 1993, draining money from the FDIC deposit insurance fund, which had $34.6 billion as of Sept. 30. National Bank of Commerce in Berkeley, Illinois, and Bank of Clark County in Vancouver, Washington, were shuttered by regulators on Jan. 16.

First California will buy $293 million in assets and pay a premium of 5.3 percent to assume the failed bank’s insured deposits, the FDIC said. The cost to the deposit insurance fund, supported by fees on insured banks, will be an estimated $227 million, the agency said. First Centennial had about $12.8 million in deposits that exceeded insured limits, the FDIC said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aIFeOX9TTZbE&refer;=worldwide

ROUBINI-NOWHERE TO HIDE FROM GLOBAL SLOWDOWN

-Global stock market declines are increasingly correlated and emerging economies will follow developed nations into a “severe recession,” according to New York University Professor Nouriel Roubini. Roubini said economic growth in China will slow to less than 5 percent and the U.S. will lose 6 million jobs. The American economy will expand 1 percent at most in 2010 as private spending falls and unemployment climbs to at least 9 percent, he added.

“There is nowhere to hide,” Roubini, an economics professor at NYU’s Stern School of Business who predicted the financial crisis, said from Zurich in an interview with Bloomberg Television. “We have for the first time in decades a global synchronized recession. Markets have become perfectly correlated and economies are also becoming perfectly correlated. This is not your kind of traditional minor recession.”

Roubini said the U.S. government should nationalize the biggest banks because losses will exceed assets, threatening to push them into bankruptcy. The banks could be privatized again in two or three years, Roubini said. The professor reiterated his prediction that U.S. financial losses will more than triple to $3.6 trillion and that global equities will fall 20 percent this year from current levels. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aryXdRCs.Tow&refer;=home

U.S. FINANCIAL BAILOUT

-Bank bailout could cost $4 trillion. Banks don’t have enough capital to fix their problems, which means the Obama administration may need a lot more money to clean up the financial mess. Read more here-http://money.cnn.com/2009/01/27/news/bigger.bailout.fortune/index.htm

-Nationalization of U.S. banks gets a new, serious look. Read more here-http://www.iht.com/articles/2009/01/26/business/26banks.php

-How a ‘perfect storm’ led to the economic crisis. Read more here-http://www.cnn.com/2009/US/01/29/economic.crisis.explainer/index.html

U.S. DEBT PROBLEMS

-The World Won’t Buy Unlimited U.S. Debt. Read more here-http://online.wsj.com/article/SB123266988914308217.html

-Six years ago, Peter Orszag, President Obama’s new budget director, co-authored a Brookings Institution study that concluded: “Balancing the budget would require a 41% cut in spending on Social Security and Medicare, a 47% cut in discretionary spending, or a 17% cut in all non-interest spending.” It’s getting worse: Today entitlements eat up 40% of the federal budget and are growing. Read more here-http://www.marketwatch.com/news/story/five-reasons-population-boom-biggest/story.aspx?guid={66A7D394-5E73-4D74-8C22-4E1BC7BFB98B}&dist;=TNMostRead

INTEREST RATES

-Fed Keeps Rate Near Zero, Prepared to Buy Treasuries. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNh1RmFyX20E&refer;=home

-Trichet Says Next Important Rate Meeting Is in March. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aDsBljqDWzw4

-New Zealand Cuts Interest Rate to 3.5% as Recession Deepens. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=akOnc7bel_VY

MASS LAYOFFS IN U.S.

-The number of Americans receiving unemployment benefits soared to a record, as companies slash jobs to lower costs in a deepening recession. Read more here-

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

-Mass layoffs hit seven-year high. Sweeping layoffs hit manufacturing and Midwest in 2008: government. Read more here-http://money.cnn.com/2009/01/28/news/economy/mass_layoffs/index.htm

-Bloody Monday: Over 71,400 jobs lost. Seven companies announce massive job cuts in a scary start to the week. Read more here-http://money.cnn.com/2009/01/26/news/economy/job_cuts/index.htm?postversion=2009012617

-Employers cut 14,100 more jobs. Labour hits keep on coming as several large companies push workforce reductions. Read more here-

http://money.cnn.com/2009/01/28/news/economy/Boeing_job_cuts/index.htm?postversion=2009012818

-Starbucks Corp., the world’s largest chain of coffee shops, said it will cut 6,700 jobs and close 300 more stores after reporting first-quarter profit that fell more than analysts estimated.

The company plans to close 200 locations in the U.S. and 100 overseas, in addition to the 600 Starbucks said it would close last year. The workforce reduction will eliminate 6,000 café positions and 700 corporate jobs, the Seattle-based chain said today in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=awnHShCwkA8I

REAL ESTATE-FORECLOSURES

-Home prices fell in 34 U.S. states in 2008 as it became harder to get a mortgage and foreclosures hammered property values, First American CoreLogic said. Prices for single-family detached houses fell a record 10.6 percent nationally, the biggest annual decline in data that goes back to 1976, Santa Ana, California-based First American said today in its year-end report.

“The geographic breadth of the decline expanded in 2008,” Mark Fleming, First American’s chief economist, said in an interview. Even markets with few foreclosures ”are being drawn in by fundamental economic conditions.” The U.S. economy is ”deteriorating rapidly” after 2.6 million job losses in 2008, Christina Romer, President Barack Obama’s pick to head the Council of Economic Advisors, said Jan. 15. First American, which sells mortgage data, reported defaults or foreclosures on 3.4 million properties in 2008, up 76 percent from 2007.

U.S. home prices have dropped 18.5 percent from their peak in July 2006 and are now at May 2004 levels, First American said. California led last year’s decline with a 27 percent drop, followed by Nevada at 23 percent, Arizona at 19 percent and Florida at 18 percent, First American said. Prices tumbled 14 percent in Rhode Island, 10 percent in Minnesota, 9 percent in Wyoming, New Hampshire and Maryland and 8 percent in New York. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aUGiC5MPmXZA&refer;=home

-Home prices in 20 U.S. cities declined 18.2 percent in November from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank. The decrease in the S&P;/Case-Shiller index was in line with forecasts and followed an 18.1 percent drop in October. The gauge started falling in January 2007, and year-over-year records began in 2001.

Record foreclosures have contributed to more than $1 trillion in losses worldwide that have prompted banks to shut off access to credit. While plunging values have made homes more affordable, they have also hurt household wealth, contributing to a slump in spending that’s likely to continue for the first half of the year.

“The housing market has not yet reached its bottom,” Neal Soss, chief economist at Credit Suisse Holdings in New York, said in an interview on Bloomberg Television. “People have to be in a position where they are not afraid of their most significant asset.”

Economists forecast the 20-city index would fall 18.4 percent from a year earlier, according to the median of 27 estimates in a Bloomberg News survey. Projections ranged from declines of 17.4 percent to 20 percent. Compared with a year earlier, all areas in the 20-city survey showed a decrease in prices in November, led by a 33 percent drop in Phoenix and a 32 percent decline in Las Vegas. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aGkgDqBf769g&refer;=home

-California home prices plunged 42 percent in December from a year earlier as the U.S. housing slump deepened and foreclosures hit record levels. The median price for a single-family home in the most populous U.S. state dropped to $281,100 from $480,820 a year earlier, the Los Angeles-based California Association of Realtors said in a statement. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_GHuixiR3Pk

-Sales of new homes in the U.S. fell in December to the lowest level on record after banks tightened lending and job losses mounted. Purchases dropped a more-than-forecast 15 percent to an annual pace of 331,000, the lowest level since at least 1963, according to a report from the Commerce Department today in Washington.

Other reports showed orders for durable goods slumped for a fifth month and a record number of Americans were collecting jobless benefits. The drop in home purchases indicates the housing slump at the center of the global credit crisis and economic downturn will persist well into 2009. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=alipKvn3NBxg&refer;=home

-Sales of previously owned homes in the U.S. unexpectedly rose from a record low, propelled by the biggest slump in prices since the Great Depression as foreclosures surged. Purchases rose 6.5 percent to an annual rate of 4.74 million from 4.45 million in November that was less than previously estimated, the National Association of Realtors said today in Washington.

The median price dropped 15 percent from a year ago, the biggest decline since records began in 1968 and probably the biggest in seven decades, according to the group. “You have to put it in the context of an even steeper decline for the previous month,” said David Sloan, a senior economist at 4Cast Inc. in New York, who had the highest projection in the Bloomberg News survey.

“The net trend is still negative. It does seem that some cheap prices are attracting buyers. I don’t think it’s a clear sign of a revival in the housing market. The housing market is very weak.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a9w6qyDggjL0&refer;=home

-Maul Market: Cincinnati Mall Sells on the Cheap. Read more here-http://online.wsj.com/article/SB123308296078020497.html

-Home prices in the Hamptons, New York’s oceanside resort favored by financiers and celebrities, fell 14 percent in the fourth quarter as Wall Street cut jobs and the U.S. recession spurred sales to plunge.

The median price in Long Island’s Hamptons and the North Fork slid to $690,000 from $800,000 a year earlier, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said in a report today. The number of sales dropped 41 percent and the inventory of properties rose 19 percent.

“The market is in stagnation,” said Paul Brennan, regional director for the Hamptons at Elliman. “If you sell in this market, it’s usually one of the three D’s: death, divorce or debt.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8PWXxTZCdIU

-U.K. house prices had the biggest annual decline since at least 2001 in January as the recession worsened and banks curtailed lending, Hometrack Ltd. said. The average cost of a home in England and Wales fell 9.4 percent from a year earlier to 158,300 pounds ($216,000), the London-based property researcher said in a report today. The monthly decline of 1 percent was led by London, where prices slid 1.1 percent from December. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=arsPbNYBTFF8&refer;=home

-Flood of foreclosures: It’s worse than you think. Banks are moving slowly to list repossessed homes for sale, which could mean that housing inventory is even more bloated than current statistics indicate. Read more here-http://money.cnn.com/2009/01/21/real_estate/ghost_inventory/index.htm?cnn=yes

-Fannie Mae, the largest source of home-loan money in the U.S., said it will need to tap as much as $16 billion in emergency funds from the U.S. Treasury Department to stay afloat as deterioration in the housing market persists.

Fannie’s planned request, announced today, follows Freddie Mac, which said Jan. 23 that it will need as much as $35 billion more in federal aid. Unprecedented mortgage losses drove the net worth of both companies below zero last quarter, they said in separate securities filings. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aS99YT_58YqY&refer;=home

-Fannie Mae Foreclosure Sale at 50 Cents on $1 Shows Price Reset. With a sharp nod, Robert Parkin bids $500,000 at the auction of a brick colonial house in Upper Marlboro, Maryland, that the builder once valued at $1.1 million. Seconds later, a competitor counters at $510,000, and Parkin must decide whether to raise his limit on the unfinished, 4,878- square-foot property with a stop-work order taped to the window.

This auction, 19 miles (30.6 kilometers) southeast of Washington, is one of hundreds a day carried out on front lawns and in hotel ballrooms nationwide by liquidators such as Williams & Williams Marketing Services Inc. of Tulsa, Oklahoma. With 2.3 million residences in foreclosure, the sales are pushing down prices to early 2004 levels in the hunt for new buyers.

“If you’re looking for expediency to get people back in homes, un-board neighborhoods, clean up the rats, this is it,” says Pamela McKissick, 62, the president of closely held Williams & Williams. Banks, brokerages and government-sponsored mortgage finance companies such as Fannie Mae hire the company to sell houses one at a time or to liquidate entire portfolios.

Auctions are resetting real estate values at the neighborhood level, while President Barack Obama tries to find a way to limit foreclosures and revitalize the worst housing market since the Great Depression. Bargain hunters such as Parkin, a 50- year-old aerospace engineer who is shopping for a personal residence, and mom-and-pop investors on the prowl for rental properties, aren’t waiting for federal aid.

They are buying foreclosed properties for as little as 10 cents on the dollar. Lenders seized 9,787 houses a day in December, or almost seven a minute. Even after the 26 percent drop in residential prices since June 2007, there are enough unsold homes to last 9.3 months at the current sales rate. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aOBlBuWQf9ko&refer;=home

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

The GoldBugg Report – February 3, 2009
Posted by Worldwide Precious Metals on Tuesday, February 3, 2009


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