Newsroom

The GoldBugg Report – April 15 , 2009

April 15, 2009

WORLD FINANCIAL REPORT ON RADIO APRIL 9 2009 SHOW

The Week in Review

 

Earnings season is upon us and the Dow had a bit of a rollercoaster week but continued its Bear Market Rally on rumors of the bank “Stress Test” results. The effects of these rumors should wear off next week since the Fed has told the banks to keep their mouths shut about the results. The ensuing flurry of “anonymous official” comments from some banks should lead to additional speculation that things aren’t as rosy in the banking world as some had hoped.

As we mentioned in our April 3^rd memo, oil continued its push up to and over $52 on Thursday.

The US Dollar weakened against the Yen and other currencies this week and the Fed lowered its outlook on the US economy, seeing no recovery in sight until next year according to minutes of a central bank meeting released on Wednesday.

While the number of people filing for initial unemployment benefits fell this past week, the number of people filing continuing claims is higher again for the eleventh straight week and is, in fact, at an all time record high.

On the inflation front, the Bank of England kept interest rates unchanged on Thursday and said it will continue to purchase $100 billion of assets to “bolster the economy”. On the US side, JP Morgan raised its forecast for both Silver and Gold citing that government spending “may accelerate inflation and devalue the dollar”. These moves could boost prices as investors seek to hedge against inflation with Physical Precious Metals.

The ever outspoken US Congressman Ron Paul stated in his weekly column “Certainly, no country has ever prospered when their public sector spent half or all of the nation’s GDP. Yet we are saddled with leadership that seems unwaveringly convinced that the key to prosperity is public spending. This will be exposed for the lie that it is when our creditors wake up and call in our debt. The temptation at that time will be for the government to simply print up dollars in the amount needed. This type of debt repudiation could signal the end of the dollar as its value sinks to zero. We are seeing all the signs that this could happen.”

Obama’s push for energy independence is also hitting further snags as more and more Ethanol makers file for and approach bankruptcy.

Here are your Short Term Support and Resistance Levels for the upcoming week.

Volatility should still be expected to continue in all Markets as further earnings data is released. Keeping the “long term” approach to owning Precious Metals in mind, price pull backs can be viewed as an opportunity to purchase Precious Metals Bullion (either adding to an existing portfolio or starting a new one) prior to prices moving even higher. Just remember, the key to achieving the potential of long term profitability is never to over-extend oneself so that one can own and hold for the long term.

Trading Department – Precious Metals International, Ltd.

GOLD

-Gold prices will “blow through” a record high this year as inflation accelerates amid a surge in government spending. “This will be a positive year for gold,” Mark Johnson, manager of the USAA Precious Metals and Minerals Fund, said. “With all the liquidity that has been pumped into the system, there’s definitely going to be inflation. For us, it’s not a question of if gold will rise, but when.”

The US Government and the Federal Reserve have spent, lent or committed $US12.8 trillion to help stem the longest recession since the 1930s. “The Fed has promised liquidity on the assumption that they will be able to turn on a dime and drain it back out of the system,” Mr. Johnson said. “It’s going to be harder than that. They will want to be sure that the economy is well-established before they drain the liquidity. It’s going to be inflationary. Gold will blow through that record before the year is out.”

The price of gold has been capped as investors sold the metal to raise cash and the “recession causes a deflationary environment.” said Mr. Johnson, who has managed the San Antonio-based USAA fund for 15 years. “We are going to be moving out of deflation and into inflation soon,” Mr. Johnson said. Read more here-

http://business.theage.com.au/business/markets/gold-tipped-for-record-high-20090404-9s7h.html

-Gold investment seen rising sharply in 2009-GFMS. GFMS said gold could break through $1,100 an ounce, beating its current record high of $1,030.80 reached in March 2008.

“Conditions are very propitious for gold investments,” said Klapwijk. “We are going to see, after a bit of a lull, investment demand come back with a vengeance.”

He said a dip to below $850 in the coming months was “very probable, based on the short term improvement in sentiment towards mainstream assets and to some extent the market almost pausing for breath.” However, the dip is likely to be temporary.

A broader range of investors are likely to be attracted to gold by rising inflation, a weaker dollar and prolonged instability in the financial sector. “Most institutional investors are not participating in this market yet it tends to be commodity-focused funds, hedge funds, gold funds and the like,” Klapwijk said. “Mainstream funds don’t, generally speaking, hold gold. I think that is a market that will start to be tapped into.”

Demand for physical gold and gold-backed exchange-traded funds has been strong as the financial crisis knocked faith in paper assets. This is likely to continue in 2009, Klapwijk said.

“The drive shifted a bit away from speculative interest towards wealth preservation in the course of last year, and that has tended the be the case again this year,” he said. “Wealth preservation is the number one objective, rather than capital gain.” He said this was demonstrated by the interest in physical gold and ETFs.

“Sentiment towards gold has changed in last few years in the official sector, certainly compared to the quite negative views held maybe 10 years ago,” said Klapwijk. “It is not just that gold is viewed as better-perfoming asset but that people are rather less enamored with alternatives,” he added. “They are particularly concerned about U.S. dollar.” “Gold is seen as rather better form of portfolio diversification than perhaps it was in the past.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=81538&sn;=Detail or

http://in.reuters.com/article/domesticNews/idINL747837520090407?rpc=401&pageNumber;=1&virtualBrandChannel;=0 or http://www.bloomberg.com/apps/news?pid=20601081&sid;=ajHhXoCyoaOk&refer;=australia

-Going for gold: How the world’s mints are coining it. The world’s mints are coining it as unprecedented numbers of savers search for safer investments. Read more here-

http://www.independent.co.uk/news/world/europe/going-for-gold-1662955.html

-Gold investment to prevail as financial crisis turns to inflationary fears GFMS. Fiscal deficits are the looming threat and they will be with us for too long. Gold “fits the bill perfectly” for cash-rich investors looking for a secure inflation hedge and last year’s investment flows into gold could be dwarfed by this year’s. The outlook for jewellery is much less encouraging. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=81538&sn;=Detail

-Gold outperformed cash ISAs, property and shares over last 10 years. Gold has outperformed cash ISAs, property and the FTSE since 1999 when hit a low just above $250. Gold has averaged an annual gain of 15% since the start of 2000 but has accelerated since the collapse of Northern Rock, jumping by 81% amid increasing investor nervousness.

This compares with an annual average gain of 9.1% for Property, 4.75% for Cash ISAs and a 3.09% fall on the FTSE 100 over the same period, said BullionVault, which provides an online service for gold bullion investment and ownership.

‘We live in a time where almost every asset class is under assault and confidence in the financial markets around the world has suffered. It is certainly not surprising that gold is again front of mind for private investors,’ said Adrian Ash, head of research at BullionVault.

Investors have sought a store of value as the combination of increased money supply and the implications of governmental fiscal stimulus packages resurrect the spectre of inflation around the world. There is now widespread fear regarding the debasement of currencies beyond the US dollar weakness, and gold has a long and proven history as an efficient currency hedge, Ash added. Read more here-http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=335559

-”Gold behaving beautifully” and good reason for optimism in base metals says Leonard Melman. Leonard Melman, a leading authority in the metals and mining arenas, sees opportunity for some “really good moves” and “fabulous returns” on the horizon, and considers the price of the base metals as a real key to the future of the economy. On the other hand, he shares some serious concerns about the economy. Interview with The Gold Report. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page67?oid=81406&sn;=Detail

-Unwarranted post G20 euphoria drives gold downwards, but perhaps not for long. The plethora of misleading positive spin coming out of the G20 has misled the investment community into believing the worst may be over, but there could be some more mega shocks yet to come. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=81502&sn;=Detail or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=81561&sn;=Detail

-New gold rush sweeps across America. Gold fever is gripping America again with record numbers of people taking to the hills and streams of California and other states hoping to strike it rich. Membership of the Gold Prospectors of America Association has risen 20% in the past year, said general manager Ken Rucker. Read more here-

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6036269.ece

-George Soros likes gold. Watch interview here-http://finance.yahoo.com/tech-ticker/article/226767/Soros-Says-Fed-in-a-Bind-Beware-Stagflation-Bursting-of-Bond-Bubble?tickers=dia,spy,GDX,GLD,TLT,TLB,TIP?sec=topStories&pos;=5&asset;=TBD&ccode;=TBD

-Martin Armstrong’s Most Recent Thoughts on Gold and General Equities. Read more here-http://jsmineset.com/index.php/2009/04/06/martin-armstrongs-most-recent-thoughts-on-gold-and-general-equities/

-Ian Gordon on the world economy and gold. Read more here-http://www.gata.org/node/7340

-Gold guru Jim Sinclair profiled by weekly Connecticut paper. Read more here-http://www.gata.org/node/7336

-The Great (Used) Gold Rush of 2009. Economically battered Americans at all income levels are rooting through their drawers to sell off their gold and jewelry for extra cash. Read more here-http://www.businessweek.com/print/lifestyle/content/apr2009/bw2009046_031149.htm or http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6055045.ece

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,600 the silver price would be $20.00

Gold to silver ratio at 70 to 1 with gold at $1,600 the silver price would be $22.86
Gold to silver ratio at 60 to 1 with gold at $1,600 the silver price would be $26.67

Gold to silver ratio at 50 to 1 with gold at $1,600 the silver price would be $32.00
Gold to silver ratio at 15 to 1 with gold at $1,600 the silver price would be $106.67

-Ted Butler commentary 10 reasons to buy silver now. Amid all the recent attention I’ve placed on the continued manipulation in silver, some may mistakenly assume that diminishes the case for silver. Nothing could be further from the truth. I’m convinced that silver is a better buy than ever before. Here are detailed reasons why I believe that is the case.

One, the near-term emotional temperature of the market is low. There is no bullish “fever” where uniformed investors are driven to buy silver because of a sharply rising price. That will happen, but it’s not true now. While silver is still above the price lows of last fall and higher than year-end prices, the recent price action is nothing to write home about.

The price has been below most of the important moving averages, causing silver to be “oversold.” This is a much better time to buy than when prices have already climbed and many are buying just because prices are rising. At those times the risk of a sharp sell-off is high. Now the risk of a prolonged price decline is much lower. Now is the time to buy low. Read more here-http://news.silverseek.com/TedButler/1239126351.php

-Prospects brighten for silver. For many years consumers and investors have favored gold, but persistently high prices mean the time has come for silver to reassert its credentials as a jewellery material and a store of value. Signs that the economic downturn may at last be reaching a floor are also expected to help silver used in industry to pick up the momentum it needs to outperform gold. “Silver over the last 30 years has been the poor cousin.

In the first half of the last century gold and silver were on a similar footing in terms of monetary value and their roles as safe havens,” Eugen Weinberg, an analyst at Commerzbank, said. A measure of value is the ratio of gold to silver prices, which in the last century fell as low as 14 and compares with levels around 70 now suggesting gold is overvalued. “The ratio could drop to between 40 and 50 in the medium term,” Weinberg said.

“People who cannot afford to buy gold for jewellery will buy silver.” Since the early 1980s the ratio has averaged about 65 and mostly ranged between 30 and 100. Figures around 100 were last seen in early 1991 after Iraq’s invasion of Kuwait fuelled security concerns and a surge in oil prices raised the spectre of rampant inflation, boosting gold’s allure as a hedge against financial uncertainty.

Worries about price pressures in the pipeline because of the large amounts of money being pumped into the economy by central banks and governments are expected to support prices of both metals over the next few years. David Thurtell, an analyst at Citigroup says “we would suggest that the gold/silver ratio will push down towards the 50-55 level by the end of third quarter.” Read more here-http://uk.reuters.com/article/personalFinanceNews/idUKLNE53604P20090407?rpc=401

-Howard Ruff was interview on CNBC’s Squawk Box March 4 2009 and said that he preferred silver, here’s why.

1) I am bullish on gold. I can enthusiastically endorse all the bullish arguments. I am not negative on gold; far from it. It’s a question of better or best.

2) At these prices, gold is not a greatly in-demand industrial metal. It has industrial uses, but many of these uses are too expensive for gold. Gold is a monetary and jewelry metal. It also is enthroned in human consciousness as a store of value. I expect gold to continue to rise if Barack Obama continues to create so much currency.

3) Silver is also a jewelry and monetary metal, but it is also a very important industrial metal. It has over 2,000 industrial uses. Back in the ’70s when I liked silver over gold, there was ten times as much silver above ground as there was gold. Despite that, we made two to three times as much money on silver as we did on gold.

Now the ratio has changed. Industrial use has so depleted our silver inventory that government now owns none and there is six times more gold above ground than silver, which is by far the scarcer of the two metals.

So why is gold many times more expensive than silver? Because 99.9 percent of the people in the world think gold is much rarer than silver. But they are wrong dead wrong and sooner or later the supply/demand equation will favor silver and narrow the pricing gap between the two metals.

Most of silver is as a byproduct of mining base metals, like copper and zinc. In this economic collapse, we will mine a lot less copper and zinc, and produce a lot less silver. Silver supplies will become tighter and tighter, which means higher prices.

It is a very simple fundamental: if something is scarcer than something else, the way to place your bet is with the scarcer of the two commodities, as long as they are both in demand. They will both continue to be in demand.

But, Howard, I hear you say, if silver goes as high as you think it will and the gap is narrowed, won’t that hurt industrial usage of the metal when it becomes too expensive and people start using cheaper alternatives?

Yes! But do you hear what you’re saying? That can only happen when silver prices are a lot higher than they are now. The answer is self limiting. Silver is by far the better bet of the two. Two or three years from now the price gap between gold and silver will be far narrower. Read more here-http://www.321gold.com/editorials/ruff/ruff040609.html

-Interview: David Morgan talks about the current state of silver. silverinfo: Where do you see the price of silver in, let’s say, two years?

D. Morgan: In two years, above $20, possibly in the $35 to $40 range, but this is so hard to forecast because all long-term resistance goes away after the $25 level or so and at that point anyone who owns silver (with very few exceptions) is holding at a profit. When this takes place, markets tend to really move rapidly to the upside, because all current investors are holding tightly because no one knows how high is high? In other words, how high will the market get? Read more here-http://www.resourceinvestor.com/pebble.asp?relid=49325

-Silver to outperform gold. Silver looks set to outperform gold in the second half of the year as strong investment demand compensates for a slump in industrial demand, says Eugen Weinberg, commodities strategist at Commerzbank.

“Silver weakened in the second half of 2008 not only in absolute terms, but also relatively to gold as a result of its more widespread industrial use – but has recovered noticeably since the beginning of the year,” he said. “The price of silver is currently about 9.5 per cent higher than at the start of 2008.” By contrast, gold is slightly lower.

Mr. Weinberg notes that a sharp rise in investment demand for silver has largely gone unnoticed. “The largest silver exchange-traded fund, iShare, now has a stock of just under 8,300 tonnes. Overall, silver inventories at exchange traded funds total around 10,000 tonnes.” He also says interest in silver coins is remarkable. “The high demand for the American Silver Eagle is probably due to it being a more affordable purchase for the general public than its gold counterpart.”

Mr. Weinberg says a tight market is also being caused by the supply side, because mining production, which accounts for about three-quarters of total silver supply, will at best stagnate and possibly even decline. “After a weaker second quarter we expect silver prices to rise to $16 an ounce, from current levels of around $12. We also see more scope for the price to rise than to fall.” Read more here-http://www.ft.com/cms/s/0/734d5664-22be-11de-9c99-00144feabdc0.html?nclick_check=1

-Once world’s richest man, silver tycoon Hunt has ‘no regrets.’ Bunker Hunt once was considered the world’s richest private individual. The son of legendary oilman H.L. Hunt, he reigned as an embodiment of the Texas tycoon stereotype: ample girth, a gambler’s disposition, far-right politics and a certain swashbuckling approach to capitalism.

That peaked with a famous effort by him and his brothers to buy up much of the world’s silver an attempt, many alleged, to corner the market. Hunt didn’t have much else to say about the current economic situation, except that he owns few stocks. However, one recent item in the financial pages caught his attention: the price of silver. “It was close to 13 bucks an ounce,” he said. “That was considered a pretty good price 15 or 20 years ago, and it’s still a pretty good price.” Read more here-

http://www.bostonherald.com/business/general/view.bg?articleid=1163846&format;=text

DEFINITIONS-QUOTES-QUICK HITS

-SDRs are defined in terms of a basket of major currencies used in international trade and finance. At present, the currencies in the basket are, by weight, the United States dollar, the euro, the Japanese yen, and the pound sterling. Before the introduction of the euro in 1999, the Deutsche Mark and the French franc were included in the basket. The amounts of each currency making up one SDR are chosen in accordance with the relative importance of the currency in international trade and finance.

The determination of the currencies in the SDR basket and their amounts is made by the IMF Executive Board every five years. The exact amounts of each currency in the basket, and their approximate relative contributions to the value of an SDR, in the past were and currently are below. Read more here-http://en.wikipedia.org/wiki/Special_Drawing_Rights

-SDR vs. the Dollar: China and Russia want SDRs. Read more here-http://www.euromoney.com/Article/2172502/CurrentIssue/71519/SDR-vs-the-Dollar-China-and-Russia-want-SDRs.html

-The G20 moves the world a step closer to a global currency. The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5096524/The-G20-moves-the-world-a-step-closer-to-a-global-currency.html

-China positioning its currency for a run at world supremacy. Read more here-http://www.latimes.com/business/la-fi-yuan3-2009apr03,1,1808437.story

-China Takes a Small Step Away from the Dollar. Read more here-http://www.time.com/time/printout/0,8816,1889587,00.html

-Is the Almighty Dollar Doomed? Read more here-http://www.time.com/time/printout/0,8816,1889588,00.html

-International Monetary Fund says EU’s Eastern European members should join euro. The International Monetary Fund says European Union members in debt-laden eastern and central European countries should consider scrapping their domestic currencies in favor of the euro to restore economic order, the Financial Times reports. Read more here-

http://www.telegraph.co.uk/finance/economics/5112694/International-Monetary-Fund-says-EUs-Eastern-European-members-should-join-euro.html

-President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days. August 3 1930, Washington Dispatch

-The market can stay irrational longer than you can stay solvent. John Maynard Keynes

-The depression has ended. Dr. Julius Klein, Assistant Secretary of Commerce, 06 September 1931

-There will be no interruption of our permanent prosperity. Myron Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

-Hussein Allidina, an analyst at Morgan Stanley, said that he sees “any weakness in price of gold as a buying opportunity as the feared IMF sale would occur over years and be under the CBGA limit.” Casey Daily Resource

-”Gold and silver are not just to make money, although they will do that, but also to preserve the value of all your assets. Liquidate as much of your assets as possible and buy gold and silver at these depressed and even manipulated low prices.” Howard Ruff-Read more here-http://www.marketwatch.com/news/story/ruff-rubbishes-rally/story.aspx?guid={4BE4B5E3-4E43-44C5-8190-E69DAF93F17B}&dist;=TNMostRead&print;=true&dist;=printMidSection

-Author who predicted crisis sees inflation ahead. Kevin Phillips, author of “Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism,” who saw the global financial crisis coming fears the next bubble will come in the form of inflation and has little confidence U.S. President Barack Obama’s team is up to the challenge ahead.

“My theory is that if we are in a commodities cycle, what you will get will be more like 1973-74-75 where as soon as the recovery begins you get rising inflation because you’re going to play havoc with all money supply and liquidity that’s been unleashed ” he added. Meanwhile, the taxpayer and small investor have little defense. “The average person is going to be on the periphery of concern and I think that’s rotten,” Phillips said. Read more here-http://www.reuters.com/article/newsOne/idUSTRE53790N20090408

-At the very least we face a severe global recession and the likelihood of severe inflation and stagflation in the coming years (once deflation abates). George Soros warned of this and talked positively about gold which would do well in such a scenario.

Soros said “that’s the fear that drives people into gold.” Soros wouldn’t say whether he’s investing in or owns gold but certainly implied that gold is a safer and good bet. More explicitly, he agreed with the view there’s a bubble in Treasuries that’s likely to burst sooner rather than later. If even a very small amount of the capital in the Treasury and bond markets flow into the very small gold market, gold will rise very significantly in the coming months. Gold.ie

-In the current massively uncertain financial and economic climate, the smart money continues to accumulate gold (physical bullion) while what is patronizingly called the “dumb money” continues to sell gold as seen in Joe and Jane Public’s mad dash to sell their gold jewellery at “gold parties” and to pawnbrokers internationally. They clearly believe that gold is at record highs and they are getting good value for their gold.

Gold is at record highs nominally but is only at the nominal price it was in 1980 and if one adjusts for inflation gold is less than half the price it was in 1980. Gold is likely to reach its inflation adjusted high of over $2,400/oz in the coming years and when it does Jane Public will wish she had never sold her rings and bangles and will likely resume buying again. Gold.ie

-Central banks expected to buy any IMF gold offered. Gold sales by the International Monetary Fund are unlikely to depress the metal’s price because central banks would be likely buyers. The concluding statement from the Group of 20 industrial and developing nations last week said the IMF will raise $50 billion for aid to the poorest countries, with part of that money expected to come from IMF gold sales.

IMF Managing Director Dominique Strauss-Kahn said the sales refer to the 403.3 metric tons already under discussion and still subject to U.S. congressional approval. No further sales were planned, he said. A metric ton equals 2,204.62 pounds. Read more here-http://www.gata.org/node/7343 or http://www.gata.org/node/7337

-Goldman Says IMF Gold Sales to Have ‘Limited Impact.’ The International Monetary Fund’s proposed gold sales are likely to have a “limited impact” on prices as they are countered by investment into exchange-traded funds and central bank purchases, Goldman Sachs Group Inc. said.

Gold fell below $900 an ounce after leaders from the Group of 20 nations said last week they would seek to help the world’s poorest countries using funds from the planned sales. The IMF’s board a year ago approved plans to sell 403.3 metric tons of bullion to shrink the Washington-based lender’s annual deficit.

“We would expect a potential sale under the current proposal could lower gold prices by 11 percent over the two to three years of a proposed sale,” Goldman said in a report dated Monday. A decision to sell gold requires the backing of 85 percent of the IMF’s executive board and would be subject to U.S. Congressional approval. The G-20 has asked the IMF to present “concrete proposals” at meetings later this month. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid;=ar8vZcEaccwI&refer;=commodities

-”For the I.M.F. gold sales to take place [and they have been expected for well over a year now] Congress must first agree to them. Second, the purpose of the sales was originally to shore up the I.M.F. Balance Sheet. The $750 billion injection from the G-20 removes that need now.

Aid to the poorest nations replaces that. Gold sales at current prices would achieve proceeds of $116.5 billion. The sales, if approved, could take place over a few years if dropped into the ‘open’ gold market. This is less that the Central Bank Gold Agreement ‘ceiling’ at the moment. If sold by auction China and or Russia would be happy to snap up this amount.

As Russia is already buying around 5 tonnes a month at the moment, they would love to get 400 tonnes even in one shot as they have pledged to increase their gold reserves to 10% from the current 3% of their reserves. “So in conclusion, I.M.F. gold sales will either have no impact on the gold price [even when they eventually take place] or if another central bank buys will act as a positive factor in the gold market.” Julian Phillips-goldforecaster.com

-A Night With The Bears at Toronto’s Elgin Theatre Put on by Sprott Asset Management, the event put four of the world’s most pessimistic market watchers Eric Sprott, Meredith Whitney of Meredith Whitney Advisory Group, Nouriel Roubini of New York University and Ian Gordon, author of The Long Wave Analyst newsletters in the same room to share their views on the economy and the markets.

Watch the BNN interviews here-BNN speaks to Nouriel Roubini, professor of economics, New York University’s Stern School of Business and Eric Sprott, chairman and CEO, Sprott Asset Management. Watch video here-http://watch.bnn.ca/#clip158793 and -BNN interviews Meredith Whitney, founder, Meredith Whitney Advisory Group LLC; and Ian Gordon, author, “The Long Wave Group”. Watch video here-http://watch.bnn.ca/#clip158804

-Eric Sprott commentary, Does “Backed By Government” Really Mean Anything Anymore? Read more here-http://www.sprott.com/pdf/marketsataglance/MAAG.pdf

-ETFS Files For U.S. Palladium, Platinum ETFs. Read more here-http://www.indexuniverse.com/component/content/article/10-news-in-focus/5657.html?Itemid=285

-Workers steered to high-risk investing. Federal rule imposed just before market crash. Shortly before the first signs of the stock market collapse, the Bush administration made a crucial decision that has propelled an estimated one to two million workers into stock-heavy retirement funds.

Many of the funds in which workers were automatically enrolled dropped more than 25 percent last year, while a more conservative investment strategy rejected by the Bush administration would have resulted in a gain of 4.7 percent. Read more here-http://www.boston.com/news/nation/washington/articles/2009/04/05/workers_steered_to_high_risk_investing/

-About 53 percent of U.S. companies that issued high-risk, high-yield bonds will default over the next five years, according to Jim Reid at Deutsche Bank AG. The figure compares with a 31 percent five-year rate in the early 1990s and 2000s, and as much as 45 percent “in a very, very different market in the Great Depression,” Reid, the London-based head of fundamental credit strategy, wrote in a note to clients today.

The estimate is based on the premium investors demand to hold the notes and assumes recoveries from the defaults will be zero, Reid wrote. “Given that this recession will easily outstrip the 90s and 00s, then 40 percent high-yield defaults over five years seems to be a minimum starting point for this default cycle,” he wrote. A 50 percent rate is “not unrealistic.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aVSo_s5NdPEs

-Communities print their own currency to keep cash flowing. A small but growing number of cash-strapped communities are printing their own money. Borrowing from a Depression-era idea, they are aiming to help consumers make ends meet and support struggling local businesses.

The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount say, 95 cents for $1 value and spend the full value at stores that accept the currency. Read more here-http://www.usatoday.com/money/economy/2009-04-05-scrip_N.htm

-Recession outlasts even extended jobless benefits. In the coming weeks and months, hundreds of thousands of jobless Americans will exhaust their unemployment benefits, just when it’s never been harder to find a job. Congress extended unemployment aid twice last year, allowing people to draw a total of up to 59 weeks of benefits. Now, as the recession drags on, a rolling wave of people who were laid off early last year will lose them.

Precise figures are hard to determine, but Wayne Vroman, an economist at the Urban Institute, estimates that up to 700,000 people could exhaust their extended benefits by the second half of this year. Some will find new jobs, but prospects will be grim: Layoffs are projected to go on, and many economists expect the jobless rate, already at 8.5 percent, to hit 10 percent by year’s end. “It’s going to be a monstrous problem,” Vroman said. Read more here-http://news.yahoo.com/s/ap/20090405/ap_on_bi_ge/unemployment_losing_benefits

-Confidence among U.S. chief executive officers retreated in the first quarter to the lowest level in at least seven years, showing government efforts to stem the recession may take longer to renew their optimism. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=agrsAeZUcqQw&refer;=home

-The government is engaged in a far-reaching and expensive effort to rescue the economy. Here’s how you can keep tabs on the bailouts. Read more here-

http://money.cnn.com/news/storysupplement/economy/bailouttracker/

-Japan to Spend More Than $99 Billion in New Stimulus. Read more here-http://www.nytimes.com/aponline/2009/04/06/business/AP-AS-Japan-Stimulus.html

-Ireland’s government cut its economic outlook, increased taxes and said it will take control of banks’ toxic real estate loans to protect the country and its financial industry from the worst global recession since World War II. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aNh4QYpUv4i8 or http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5121728/Ireland-imposes-emergency-cuts.html

-UK needs to plug £39 billion budget gap. Britain needs to find 39 billion pounds more than planned if it is to meet its goal of a balanced budget by the 2015/16 tax year, the Institute for Fiscal Studies said on Monday.

The sum amounts to a further 1,250 pounds in higher taxes or lower spending per family, and involves roughly twice the fiscal tightening Chancellor Alistair Darling pencilled into his November pre-budget report, when he set the 2015/16 target. Read more here-http://uk.reuters.com/article/businessNews/idUKTRE5352LE20090406

-Reports: China auto sales surpass US for 3rd month. Preliminary figures show auto sales in China reached about 1.03 million in March, exceeding U.S. sales for the third month in a row, state media reports said Wednesday. Read more here-http://apnews.myway.com/article/20090408/D97E8G900.html

-Venezuelan leader: ‘Capitalism needs to go down.’ Read more here-http://www.breitbart.com/article.php?id=D97B37LO0&show;_article=1

-Japan will invest $33.5 billion in Venezuela, mostly in oil, natural-gas and chemical projects, President Hugo Chavez said at the end of a state visit. Investments from the Asian nation include $10 billion within five years in liquefied natural gas, $8 billion in petrochemicals, $1.5 billion in refining and $4 billion in a joint-project finance fund, Chavez said, according to an e- mailed statement sent by his press office. Chavez didn’t specify where the remaining $10 billion would be invested, according to the statement. Read more here-

http://www.bloomberg.com/apps/news?pid=20601072&sid;=aLJcFFFPoLjs&refer;=energy

-Iran to say mastering final stage of nuclear cycle. Read more here-http://news.yahoo.com/s/nm/20090408/wl_nm/us_iran_nuclear

-Iranian nuke plot vaporized in the city: NY banks unwittingly aided in material transfers, says DA. The Manhattan district attorney’s office has smashed a sinister plot to smuggle nuclear weapons materials to Iran through unwitting New York banks, the Daily News has learned. Read more here-http://www.nydailynews.com/news/2009/04/07/2009-04-07_iranian_nuke_plot_vaporized_in_the_city_-2.html

-Colorado State University’s Atlantic hurricane forecast, the most-watched annual prediction, was lowered today to 12 named storms for the 2009 season, with six developing into hurricanes. Researchers William Gray and Philip Klotzbach cut the number from a preliminary estimate of 14 in December. Two of the hurricanes should reach major strength, meaning winds of 111 mph (178 kph) or more on the Saffir-Simpson Scale, they said today.

The Fort Collins, Colorado, school’s forecasts are followed by insurers and energy markets, and last year almost hit the mark exactly. In April 2008, Gray and Klotzbach predicted 15 storms would form; in August they raised the outlook to 17. The 2008 season spawned an above-average 16 named storms. Read more here-

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

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/HistoricalValueTracker.html

-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.b-tv.com/features/watch-now.html?id=326

-Rio Tinto Group, the third-biggest mining company, said the planned restart of the processing plant at its Argyle diamond mine, the world’s largest, will depend on market conditions. “We expect to restart the diamond processing plant on June 1 as planned but with market conditions we can’t guarantee that,” Gervase Greene, a spokesman for the London-based company, said by phone from Perth, Australia. The plant at the West Australian mine was halted in March for three months.

Diamond miners including De Beers, the world’s largest, have shut mines and slashed output as the global recession curbs demand for jewelry. In January, Rio slowed an expansion at the A$1.86 billion ($1.3 billion) Argyle mine, which the company says accounts for 25 percent of the world’s annual mined diamond output. The Argyle mine supplies 90 percent of the world’s pink diamonds, with those gems accounting for just 1 percent of total production at the mine. Read more here-

http://www.bloomberg.com/apps/news?pid=20601081&sid;=a1ci2X5J1KIs&refer;=australia

-Diamonds an investor’s best friend? Some investors worried about the financial crisis are putting their money into these slow, steady earners. A growing number of Polish investors are sheltering their money from the financial crisis by investing in diamonds. According to Pemysl Synek, general director of Diamonds International Corporation, the price of diamonds has risen for the last 100 years and annual growth on the global diamond market has come in at between three to seven percent over the past 20 years.

“Every wise investor diversifies his wealth and diamonds are one means of investing money; they are considered the second safest investment after gold,” said Synek. In mid-2007, when the first signs of a global slowdown started to become visible, the diamond industry noted a significant rise in demand. Then in 2008, due to the falling US dollar, diamond prices jumped by as much as 50 percent, according to Synek. “At the end of last year the yield stabilized at nine percent annually, which can be considered a success, given the crisis circumstances.”. David Franke, CEO of DIC PL, explained the appeal of diamonds.

“They are a world currency, can be capitalized quickly and are hard to destroy. Plus diamonds are a symbol of fashion, success and social status,” said Franke. Investments can start at a one carat gem, and a stone’s cut, color and clarity are all taken into consideration when assessing its value. For example, a high-quality four-carat stone is worth around $160,000. Read more here-http://www.wbj.pl/article-45013-diamonds-an-investors-best-friend.html?type=wbj

-Sotheby’s Hong Kong Jewels Sale Garners $16M. Strong demand for larger diamonds of 5 to 15 carats helped Sotheby’s generate $16 million (HKD 124.2 million) in sales at its magnificent jewels and jadeite auction in Hong Kong. “Today’s sale was dominated by savvy Asian private buyers, who recognized our sale offered an opportunity to acquire top-quality stones at prices not seen in the last year or so,” said Quek Chin Yeow, deputy chairman and head of the jewelry department at Sotheby’s Asia.

“The white diamond market was particularly robust for stones from 15 to 5 carats, competition was especially fierce for diamonds of 5 carats or larger with few flaws, with multiple bids on many lots,” Yeow said. He noted a number of new buyers from mainland China, “many of whom were transacting at levels that we have not seen from Chinese buyers before.” He added that the auction signalled a return of many established collectors to the market.

Sotheby’s reported Tuesday that the auction sold 67.6 percent by lot and 50.9 percent by value. The top lot was a pair of very fine, marquise-shaped D color flawless diamond earrings, weighing a total of 16.58 carats, which sold for $1.7 million (HKD 13 million).

The second lot was a pear-shaped, 13.53-carat D color flawless loose diamond, which sold for $1.5 million (HKD 11.8 million). A 4.37-carat fancy gray-blue diamond and diamond ring rounded out the top three lots, selling for $699,288 (HKD 5.4 million). Yeow reported that the headlining lot as well as a number of high-value jadeite lots failed to sell. Diamonds.net-Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=aHzht5UJrbxY&refer;=muse

-Sotheby’s NY Magnificent Jewels Sale Features Several Important Diamonds. Sotheby’s New York spring sale of Magnificent Jewels will be held on April 23, 2009, offering an array of signed jewels and important diamonds.

The top lot is a fancy blue diamond ring set with a cut-cornered rectangular modified brilliant-cut stone weighing 8.24 carats, which is expected to bring in excess of $2.5 million, according to Sotheby’s. A fancy vivid yellow diamond ring, signed Jacob & Co., is set with a 15.61-carat center stone and 2.55 carats of flanking half-moon white diamonds; it has a presale estimate of $925,000 to $1 million. A pair of fancy vivid yellow diamond earrings featuring matched emerald-cut stones weighing 7.47 and 7.32 carats has a presale estimate of $800,000 to $1 million.

Highlights from the upcoming May 12 Geneva jewelry auctions are on display in New York, including the rare fancy vivid blue, internally flawless, cushion-shaped diamond weighing 7.03 carats from the historic Cullinan diamond mine in South Africa. This diamond has a presale estimate of $5.8 million to $8.5 million. Read more here-

http://www.diamonds.net/news/NewsItem.aspx?ArticleID=25901

FINANCIAL CRISIS FAR FROM OVER-U.S. ECONOMY GRIM

-Financial Crisis ‘Far From Over,’ Panel Says. Govt. May Spend More than $4 Trillion but Economy Faces ‘Prolonged Weakness,’ Oversight Panel Reports. Though some economic measures are improving, the financial crisis “is far from over” and “appears to be taking root in the larger economy.” This, despite the government’s commitment to spend trillions of taxpayer dollars on a massive bailout of the financial system.

These were the findings released in a report today by the Congressional Oversight Panel, the body charged with overseeing the government’s Troubled Asset Relief Program, the $700 billion plan aimed at bailing out the country’s financial sector. “We still have a long way to go. A very long way,” Elizabeth Warren, the Harvard Law School professor who chairs the panel, said in an interview today with Bloomberg News.

The panel reported that the government has spent, lent or set aside more than $4 trillion through the Troubled Asset Relief Program, the Federal Reserve and the Federal Deposit Insurance Corporation. Today, the “credit markets no longer face an acute systemic crisis in confidence that threatens the functioning of the economy,” the report said.

But, it said, the economy now faces an “apparently prolonged period of weakness” with regard to financial firms and lending. It noted, for instance, that Citigroup and Bank of America received multiple injections of capital from the government while borrowing costs remain high for businesses and individuals. The panel also cited increasing numbers of home foreclosures and lower home prices as reasons for concern.

The panel criticized the Treasury Department for failing to identify what measurements it will use to determine whether its rescue programs are working. “If you don’t articulate what the metrics are going out you can’t know if anything succeeded or failed,” Warren said. Read more here-http://abcnews.go.com/print?id=7283059

-Beware talk of recovery as the world economy is not a picture of health. The apparent triumph of last week’s G20 summit has coincided with a more optimistic mood in markets. Is this the moment when we should recognize that the worst is over and start looking for recovery? Read more here-http://www.telegraph.co.uk/finance/comment/rogerbootle/5110771/Beware-talk-of-recovery-as-the-world-economy-is-not-a-picture-of-health.html

-Fed’s Fisher says U.S. economy grim. The U.S. economy is grim, and the Federal Reserve is “duty bound to apply every tool” to clean up the financial system and clear a path for a return to sustainable growth, Richard Fisher, president of the Dallas Fed, said on Wednesday.

But he said monetary policy alone would not be enough to resuscitate the economy, adding fiscal stimulus was critical in providing a spark for U.S. growth. “Monetary policy accommodative techniques are necessary but insufficient to the task,” Fisher told a symposium hosted by a private think tank in Tokyo.

“The trick to fiscal policy is to provide the spark, to provide the right incentives, get the small and medium-sized firms create jobs again, create dynamism in the economy without planting the seeds of inflation.” Read more here-http://www.reuters.com/article/newsOne/idUSTRE5370N220090408

-AIG crisis could be the tip of an insurance iceberg. The company’s situation reflects problems throughout the life insurance industry as investments suffer. Further strain could bring about a second financial crisis. Read more here-http://www.latimes.com/news/nationworld/nation/la-na-aig30-2009mar30,0,5715647,print.story

-Bankruptcy Filings by Businesses Increase 78% in First Quarter. Bankruptcy filings by larger companies liquidating or reorganizing in Chapter 11 in the first quarter rose 78 percent from the same period a year earlier and almost tripled from 2007 as the U.S. was mired in the 15th month of a recession. Almost 131,000 bankruptcies of all types were filed in March, the most for any month since 2005, when Congress erected barriers to individuals looking to rid themselves of debt.

Filings increased 9.2 percent in March over February, according to data compiled by Automated Access to Court Electronic Records, a service of Jupiter ESources LLC in Oklahoma City. March bankruptcies rose 38 percent from a year earlier and 79 percent from 2007. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aLROV2IZttVg&refer;=home

-U.S. Consumer Credit Decreased by $7.48 Billion. The pace of borrowing by U.S. consumers fell in February as fewer Americans sought credit to make purchases amid what may become the worst recession in seven decades.

Consumer credit fell by $7.48 billion, or 3.5 percent at an annual rate, to $2.56 trillion, the Federal Reserve said today in Washington. Credit increased by $8.14 billion in January, more than previously estimated. The Fed’s report doesn’t cover borrowing secured by real estate.

Demand for credit in the U.S. probably shrank further in March, the fourth straight month job losses exceeded 650,000, as unemployment climbed and banks remained reluctant to extend affordable loans. The recession that began in December 2007 has cost 5.1 million Americans their jobs, crippling the consumer spending that accounts for almost 70 percent of economic growth. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aPPY7XFSHnzk&refer;=home

BANKING TROUBLE FAR FROM OVER

-Bank of America Corp., the largest U.S. bank, needs to raise $36.6 billion in equity to bring capital ratios in line with its peers, according to Oppenheimer & Co. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=aQtZLKAka1CE

-Bank woes nowhere near over analyst. Loan losses will exceed Great Depression levels, says Mike Mayo of Calyon Securities. The percentage of loans that banks will need to write off will exceed levels seen during the Great Depression, according to a bank analyst’s report Monday. Read more here-http://money.cnn.com/2009/04/06/news/economy/loan_losses/index.htm?postversion=2009040614 or http://www.bloomberg.com/apps/news?pid=20601087&sid;=a1yCkrhVtOks&refer;=worldwide

-Banks brace for derivatives ‘big bang’. Credit default swap dealers are cleaning up a dark corner of the derivatives market, but the risk of a blowup remains. Read more here-

http://money.cnn.com/2009/04/07/news/big.bang.fortune/index.htm?postversion=2009040715

-Soros says U.S. banks “basically insolvent.” The U.S. economy is in for a “lasting slowdown” and could face a Japanese-style period of relatively low growth with the added problem of high inflation, billionaire investor George Soros said on Monday. Soros told Reuters Financial Television that rescuing U.S. banks could turn them into “zombies” that suck the lifeblood of the economy, prolonging the economic slowdown.

“I don’t expect the U.S. economy to recover in the third or fourth quarter so I think we are in for a pretty lasting slowdown,” Soros said, adding that in 2010 there might be “something” in terms of U.S. growth. Most economists expect the U.S. economy to stop contracting in the third quarter and resume growing in the fourth quarter, according to a latest monthly poll of forecasts by Reuters.

The recovery will look like “an inverted square root sign,” Soros said: “You hit bottom and you automatically rebound some, but then you don’t come out of it in a V-shape recovery or anything like that. You settle down step down.” In the fourth quarter, the U.S. economy contracted at a 6.3 percent annualized rate, and economists think the first quarter’s slide will be at least as severe, if not worse. Healing the banking system, which is “basically insolvent,” and housing markets is crucial to recovery, Soros said. Read more here-

http://www.reuters.com/article/ousiv/idUSTRE53537D20090406

-US to delay bank test results for earnings-source. The U.S. Treasury Department is planning to delay the release of any completed bank stress test results until after the first-quarter earnings season to avoid complicating stock market reaction, a source familiar with Treasury’s discussions said on Tuesday.

The Treasury is still talking about how results of the regulatory stress tests on the 19 largest U.S. banks will be released, and may disclose them as summary results that are not institution-specific, the source said.

The government is testing how the largest banks would fare under more adverse economic conditions than are expected in an attempt to assess the firms’ capital needs. The tests are due to be completed by the end of April, but Treasury has said they may be finished before then.

The source, speaking anonymously because the Treasury has not made a final decision on what to disclose, said officials do not want any test results released before the earnings season wraps up for most U.S. banks on April 24. Read more here-http://www.reuters.com/article/marketsnews/idINN0747118320090407?rpc=33

-Geithner’s Stress Test “A Complete Sham,” Former Federal Bank Regulator Says. The bank stress tests currently underway are “a complete sham,” says William Black, a former senior bank regulator and S&L; prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri Kansas City. “It’s a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough. Read and watch video here-

http://finance.yahoo.com/tech-ticker/article/225897/Geithners-Stress-Test-%22A-Complete-Sham,%22-Former-Federal-Bank-Regulator-Says

-U.S. banks that received billions of dollars of taxpayer money to bolster their capital could place bets on the same toxic assets that got them into trouble in the first place and with government support. It is unclear whether U.S. regulators will prevent banks receiving government aid from participating as buyers in the $1 trillion Public-Private Investment Program (PPIP) designed to unclog credit markets and bank balance sheets. Read more here-http://www.gata.org/node/7339

-The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout. Watch video here-http://www.pbs.org/moyers/journal/04032009/watch.html

-US Banks Operating Without Reserve Requirements. Banks typically have 3% of their assets in cash in order to meet customer needs. Since 1960, banks have been allowed to use this “vault cash” to satisfy their reserve requirements. Today, bank reserve requirements have fallen to the point where they are now exceeded by vault cash, which means lowering reserve requirements to zero would have virtually no impact on the banking system. US banks are already operating free of any reserve constraints. Read more here-

http://news.goldseek.com/GoldSeek/1238970345.php

4 TRILLION IN TOXIC DEBT STILL ON THE BOOKS

-Toxic debts could reach $4 trillion, IMF to warn. Toxic debts racked up by banks and insurers could spiral to $4 trillion (£2.7 trillion), new forecasts from the International Monetary Fund (IMF) are set to suggest.

The IMF said in January that it expected the deterioration in US-originated assets to reach $2.2 trillion by the end of next year, but it is understood to be looking at raising that to $3.1 trillion in its next assessment of the global economy, due to be published on April 21. In addition, it is likely to boost that total by $900 billion for toxic assets originated in Europe and Asia.

Banks and insurers, which so far have owned up to $1.29 trillion in toxic assets, are facing increasing losses as the deepening recession takes a toll, adding to the debts racked up from sub-prime mortgages. The IMF’s new forecast, which could be revised again before the end of the month, will come as a blow to governments that have already pumped billions into the banking system.

Paul Ashworth, senior US economist at Capital Economics, said: “The first losses were asset writedowns based on sub-prime mortgages and associated instruments. But now, banks are selling ‘plain vanilla’ losses from mortgages, commercial loans and credit cards. For this reason, the housing market will play a crucial part in how big the bad debt toll is over the next year or two.”

In its January report, the IMF said: “Degradation is also occurring in the loan books of banks, reflecting the weakening outlook for the economy. Going forward, banks will need even more capital as expected losses continue to mount.” At the same time, there is a clear shift in congressional attitudes in the United States about simply pumping money into the system, Mr Ashworth said. The British Government is also under pressure to repair its tattered finances. Injecting more money into the banks could further undermine its fiscal position.

The IMF’s jump will come as little surprise to economists who have suggested that the bad debts will be much higher than anticipated. Nouriel Roubini, chairman of RGE Monitor, expects bad debts from US-originated assets to reach $3.6 trillion by the middle of next year. This figure is expected to rise when bad debts from assets elsewhere are calculated, he said. Read more here-http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6047929.ece or http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ayi7r.Aiynhw

BEAR MARKET RALLY-DEAD CAT BOUNCE

-If you throw a dead cat off a skyscraper, it will bounce. Not because it’s alive; just because it hit bottom. The stock market has made a dead-cat bounce, even though the returns are spectacular for short-term investors, which I am not.

The long-term problem with the stock market is two-fold: 1) its earnings will decline as business sags deeper and deeper into this recession which will depress stock-market prices; and 2) the price/earnings ratio (PE) is still way above the typical PE at the bottom of bear markets. The stock market will have its ups and downs and literally suck Wall Street investors into short-term rallies as they try to pick “the bottom.”

What’s left of Wall Street believes the stock market will sooner or later get well. They believe you will eventually make a lot of money in the stock market. Perhaps you can make some short-term profits, but I don’t trust such short-term calls; I don’t make them, and you can’t depend on them. I’m in for the long haul, and the long haul says down, down, down, regardless of short-term rallies.

Sell into these rallies. The stock market is toxic, and will be for several years. Certain industry groups will do quite well over the next few years, if that’s what you want to do, but you will have to be a short-term trader. Howard Ruff

-Richard Russell says this is a bear stock market rally. Read more here-http://www.321gold.com/editorials/russell/russell040809.html

-George Soros, the billionaire hedge fund manager who made money last year while most peers suffered losses, said the four-week rally in U.S. stocks isn’t the start of a bull market because the economy is still shrinking.

“It’s a bear-market rally because we have not yet turned the economy around,” Soros, 78, said in an interview yesterday with Bloomberg Television, referring to the recent rebound in stock prices. “This isn’t a financial crisis like all the other financial crises that we have experienced in our lifetime.”

The Standard & Poor’s 500 Index of largest U.S. companies has climbed 21 percent since March 9 on optimism the worst of the 16-month U.S. recession is over. The economy continues to contract, and there’s a risk the U.S. falls into a depression, Soros said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aPqVE4sHWZ54&refer;=home

-The rally in global stocks over the past month is a “dead cat bounce,” as companies report “terrible” earnings this year and the global recession persists, Aberdeen Asset Management Plc said. “It does feel very much like a dead cat bounce if you like, or a bear market rally,” Young said. “The fundamentals for the stocks we’re looking at are not improving and this year is going to be pretty bloody for earnings, if not into next year as well.” Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=aR.m5To74E5k&refer;=home

-Global stocks may drop as much as 10 percent in a “correction” following gains in the last four weeks, before rebounding after July, investor Marc Faber said. The Standard & Poor’s 500 Index may decline to around 750 before further gains in July, Faber, 63, said in a Bloomberg Television interview in Singapore. That’s a drop of 10 percent from yesterday’s close. Stocks in the U.S. and other global markets are unlikely to fall below their October and November lows, he added.

“After the rally since March 6, we need some kind of correction, maybe around 5 to 10 percent, and after that we can maybe rally more into July,” said Faber, the publisher of the Gloom, Boom & Doom report. “The economic news, while it won’t be good, the rate of getting worse will slow down.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6BOmTKEjafs

ROUBINI STICKS TO BEAR FORECASTS-FEUDS WITH CRAMER

-There’s still bad news ahead for the U.S. economy and the bear market for stocks is not over yet, according to a prominent economist who foretold much of the current turmoil. Nouriel Roubini, a professor at New York University’s Stern School of Business and chairman of economic research firm RGE Monitor, said on Tuesday that he expected more dour macroeconomic data and problems in the banking and housing sectors, as well as pressures on consumers.

Big stimulus packages will eventually slow the rate at which economies contract, but that will take time, he added. “There will be a light at the end of the tunnel somewhere down the line, later rather than sooner,” he said at a Toronto news conference, which took place ahead of a Sprott Asset Management event entitled “A Night with the Bears.”

Roubini, who made a name for himself by sounding early warning signs about housing bubbles and credit crises, earlier told Canada’s BNN television that he still believed the recent market upturn represented a bear market rally, and not a change in sentiment.

“Macro news, earnings news and financial shocks are going to be worse than expected and that’s why I believe this is still a bear market rally,” he told BNN. Read more here-

http://www.reuters.com/article/newsOne/idUSTRE53706T20090408

-CNBC’s Jim Cramer has another feud on his hands. Just weeks after “The Daily Show” host Jon Stewart took Cramer to task for trying to turn finance reporting into a “game,” famous bear economist Nouriel Roubini criticized Cramer on Tuesday for predicting bull markets.

“Cramer is a buffoon,” said Roubini, a New York University economics professor often called Dr. Doom. “He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong. And after all this mess and Jon Stewart he should just shut up because he has no shame.”

Cramer recently wrote in a blog that Roubini is “intoxicated” with his own “prescience and vision” and said Roubini should realize that things are better since the stock market’s recent bottom in early March. The Standard & Poor’s 500 index has rallied 17 percent since then.

Roubini said in 2006 that the worst recession in four decades was on its way. He has attracted attention for his gloomy and accurate predictions of the U.S. financial market meltdown.

Roubini said the latest surge is just another bear market rally following the pattern of other rallies after the government intervened. He expects the market will test the previous low because of worse than expected macroeconomic news, disappointing earnings and because banks will fail after the stress tests come out.

“Once people get the reality check than it’s going to get ugly again,” Roubini said. Roubini said Cramer should keep quiet. “He’s not a credible analyst. Every time it was a bear market rally he said it was the beginning of a bull and he got it wrong,” Roubini said in an interview with The Associated Press. Read more here-

http://apnews.myway.com/article/20090408/D97E86U80.html

MASSIVE OUTFLOW OF FOREIGN CAPITAL FROM THE U.S.

-The latest U.S. Treasury International Capital (TIC) report shows the January outflow of foreign private investments was $158 billion. Since June of 2007, there has been a massive flight of foreign capital from the United States, though the impact has been mitigated by a collapse in U.S. investments abroad.

Nonetheless, the exodus reveals increasing unease by foreign capital holders about the U.S.’s economic future, especially troubling at a time when the government needs to finance a $3 trillion budget. The outlook for the dollar is not so good. Casey Charts

THE PLOT TO DESTROY A PUBLIC COMPANY-DO YOU STILL TRUST THE STOCK MARKET?

-Email Exposes Short Seller Plot to Destroy a Public Company. A few years ago, a clique of influential journalists went to extraordinary lengths to cover up the problem of illegal short selling. In the face of indisputable data and evidence, the journalists insisted, over and over, that “naked” short selling (hedge funds manipulating stock prices by flooding the market with phantom stock) rarely occurred. And they said short sellers (who profit from falling stock prices) don’t set out to destroy public companies.

Moreover, if a person were to criticize illegal short selling, the reporters would smear that person’s reputation with a savagery that was almost without parallel in contemporary journalism. At the time, these journalists were working at major news organizations like The Wall Street Journal, The New York Times, and CNBC, but most shared a common history: they had been founding editors or top employees of TheStreet.com, a financial news website.

The few who had not worked for TheStreet.com were close colleagues of TheStreet.com’s owner, Jim Cramer, who is best known as the eccentric host of CNBC’s “Mad Money” program. Having studied more than 1,000 stories by these journalists, I can assure the reader that nearly every one of them was sourced from a tight network of hedge fund managers, and that a great many of the stories were false or misleading.

Moreover, most of the people in this network (including Jim Cramer himself) are tied in important ways to two famous criminals from the 1980s Ivan Boesky and “junk bond king” Michael Milken. And though I realize that is hard for some people to absorb this, I will continue to provide evidence that a surprising number of the “prominent investors” in this network have had dealings with associates of organized crime the Mafia. Read more here-http://www.deepcapture.com/email-exposes-short-seller-plot-to-destroy-a-public-company/

REAL ESTATE-MORTGAGES

-New Zealand’s March House Prices Fall 9.3% From Year Earlier. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=acoOni7LgiAE&refer;=home

-Las Vegas trophy project becomes symbol of trouble. Read more here-http://www.reuters.com/article/newsOne/idUSTRE53800Q20090409

-U.S. apartment rents fell in the first quarter and the vacancy rate rose to a five-year high as job losses and falling incomes reduced demand, said Reis Inc. Vacancies climbed to 7.2 percent from 6 percent a year earlier and 6.6 percent in the fourth quarter, according to the New York-based research firm. Vacancies were at the same level as the first quarter of 2004, matching the highest since Reis began conducting its survey in 1999.

Job losses and falling wages are shrinking the pool of potential renters, bucking expectations that apartments would benefit from slumping home sales. The U.S. unemployment rate rose to 8.5 percent in March, the highest since 1983, the government said last week. The country has lost 5.1 million jobs since the recession began in December 2007. “We are arguably only at the beginning of the current downturn,” said Victor Calanog, research director of Reis. Read more here-

http://www.bloomberg.com/apps/news?pid=20601213&sid;=aitNnK7oTVKE&refer;=home

-California Foreclosures Jeopardize Renters as Banks Seize Homes. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid;=awjJmRaGgwSI&refer;=home

-Cities and counties are reporting a sharp increase in homeless families as the economic crisis leads to job loss and makes housing unaffordable. In Seattle, 40% more people are living on suburban streets. In Miami, calls from people with eviction notices have quadrupled.

“The demand from families with children has increased dramatically,” says Robert Hess of New York City’s Department of Homeless Services. Each month since September, shelter requests have been at least 20% higher than they were a year ago.

The Department of Housing and Urban Development requires a one-day count in January of people living on the street, in shelters or in transitional housing. National figures have not been compiled. Read more here-http://www.usatoday.com/news/nation/2009-04-05-homeless_N.htm

-Midtown Manhattan, the most expensive U.S. office market, had 10 million square feet of sublease space available at the end of March, 70 percent of which may be unrentable, according to commercial property broker CB Richard Ellis Group Inc.

Space being relinquished by financial services firms and other employers hit by the recession is coming up for sublease with short-term expiration dates that make the property unattractive to new tenants, said John Powers, CB Richard Ellis’s New York tri-state chairman. “Although there has been a tremendous rise in vacancy and availability, much of the sublease space is effectively unleasable,” Powers said in a statement today. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aPu5ckf9q_e8

-San Francisco office rents dropped 24 percent in the first quarter from a year earlier, the biggest decline since the dot-com crash in 2001, as the recession cut jobs and companies returned space to the market.

The average rent fell citywide to $38.80 a square foot from $50.92 for the highest-quality, best-located space, known as Class A space, according to a preliminary report by commercial brokerage Colliers International. The office vacancy rate rose to 13.2 percent from 12.6 percent in the previous quarter and up from 10.2 percent a year earlier.

“It’s tough to lease right now even if you’ve dropped the rent,” Alan Billingsley, a San Francisco-based analyst for Deutsche Bank AG’s RREEF Research, said in an interview. “We think the market won’t bottom until 2010.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_EyF60hLRgM

-Mortgage delinquencies soar in the U.S. More U.S. consumers are falling behind on their mortgages, an indication that the housing market has yet to hit bottom, a top credit bureau executive told Reuters. Dann Adams, president of U.S. Information Systems for Equifax Inc, reported that 7 percent of homeowners with mortgages were at least 30 days late on their loans in February, an increase of more than 50 percent from a year earlier.

He also said 39.8 percent of subprime borrowers were at least 30 days behind on their home mortgage loans, up 23.7 percent from last year. “I’m trying to find optimism in these numbers, but I’m pretty hard pressed to do that,” Adams said, despite a recent burst of relatively positive news that has fueled hope that the U.S. housing market has turned a corner. Read more here-http://www.reuters.com/article/ousiv/idUSTRE5363EV20090407

© 2010, Worldwide Precious Metals.
www.wwpmc.com

The GoldBugg Report – April 15 , 2009
Posted by Worldwide Precious Metals on Wednesday, April 15, 2009

As featured on: