Newsroom

The GoldBugg Report – April 7 , 2009

April 7, 2009

The Week in Review

The Dow has continued its Bear Market Rally but now appears to be topping out.

Oil has had a rollercoaster week – testing $55.00, falling below $48.00 and now pushing its way back up towards $52.00.

The US Dollar has lost ground against the Euro, British Pound, and Canadian Dollar and is treading water with the yen.

The week’s Jobless Report down 663,000 putting unemployment at 8.5% and still on its way to 10%.

The G20 Meeting took place this week. Rumors were that the IMF would be selling more than their already approved 403 Tons of gold for

Capital raising. This was just a rumor, subsequently denied by the IMF. However the rumor caused Gold and Silver Prices to retrace. The IMF’s lending

capacity was tripled in preparation for new borrowing requirements.

There were discussions about new Regulations promoting Transparency and Regulatory and Monitoring the activity of “Hedge Funds”.

General Motors and Chrysler were in the news in the early part of the week, but now there is silence in the media.

Mr. Bernanke of the Federal Reserve spoke again today and slipped in amongst his rhetoric that the Fed will be buying 1.25 Trillion in MBS

debt. He also had the audacity to state he does not see Fed actions as Inflationary.

Obama’s Budget, in excess of 3.5 Trillion passed the House and Senate without one Republican vote. According to Erik Paulsen by 2012 the

US will be paying 1 Billion a Day in Interest on its debt.

Here are your Short Term Support and Resistance Levels for this Week.

Volatility should be expected to continue in all Markets; therefore it is wise not to overextend one’s ability to hold for the Long Term.

We do not expect the current price levels of Precious Metals to be in this range for to much longer.

Trading Department – Precious Metals International, Ltd.

WORLD FINANCIAL REPORT ON RADIO APRIL 3 2009 SHOW

Please note that on Friday, April 10th, the Market will not be open for trading. Worldwide Precious Metals office will be closed as well.

We will be open on Easter Monday as the Markets will be open for trading at regular hours.

-$2 000/oz gold ‘quite conceivable’ in medium term Agnico CFO. The looming spectre of inflation, coupled with investors’ thirst for a safe place to put

their money, will likely drive bullion prices up “significantly” in the medium term, Agnico-Eagle Mines CFO David Garofalo said on Friday.

-Is There Any Gold Inside Fort Knox, the World’s Most Secure Vault?

-Silver Is Quietly Flashing a Buy Signal.

DEFINITIONS-QUOTES-QUICK HITS

-The G-20 (more formally, the Group of Twenty Finance Ministers and Central Bank Governors) is a group of finance ministers and central bank governors

from 20 economies: 19 of the world’s largest national economies, plus the European Union (EU). It also met once at heads-of-government level, in November

2008. Collectively, the G-20 economies comprise 85% of global gross national product, 80% of world trade (including EU intra-trade) and two-thirds of the

world population.

The G-20 is a forum for cooperation and consultation on matters pertaining to the international financial system. It studies, reviews, and promotes

discussion among key industrial and emerging market countries of policy issues pertaining to the promotion of international financial stability, and seeks to

address issues that go beyond the responsibilities of any one organization. Read more here-http://en.wikipedia.org/wiki/G_20_summit

-The G-20 Leaders’ Summit on Financial Markets and the World Economy in London April 2 2009. Read more here-http://en.wikipedia.org/wiki/2009_G-20_London_summit

-World leaders agreed on a regulatory blueprint for reining in the excesses that fed the worst financial crisis in six decades and pledged more than $1

trillion in emergency aid to cushion the economic fallout.

The Group of 20 policy makers, meeting in London, called for stricter limits on hedge funds, executive pay, credit-rating firms and risk-taking by banks.

They tripled the firepower of the International Monetary Fund and offered cash to revive trade to help governments weather the turmoil resulting from the

surge in unemployment. They avoided the divisive question of whether to deliver more fiscal stimulus to their own economies.

The statement amounts to an effort to rewrite the rules of capitalism to address an integrated world economy that has outgrown the ability of nations to

keep it in check. The assembly echoed on an international stage the introduction in the U.S. of securities regulation after the 1929 crash. Read more

here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=ax.wOCovMG

qE&refer;=home

-Failed 1933 London conference a warning for G20. Read more here-http://www.msnbc.msn.com/id/29973077/

-American industry has reached a point where a break in New York stock prices does not necessarily mean a national depression. Associated Press December

28, 1929

-While the crash only took place six months ago, I am convinced we have now passed the worst and, with continued unity of effort, we shall rapidly

recover. President Herbert Hoover, 29 June 1930

-Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.

Charles Mackay-Bio here-

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

-”I can think of nothing I would rather have our politicians do than argue about AIG bonuses. The more time they spend fighting for TV time to mislead

their constituents into thinking they are doing something, the less time they have to actually do something and screw things up. Worrying about last year’s

bonuses is easily the best use of their time.” Mark Cuban Mar 2009

-I expect we will see $1,500 gold in the next 12 months. Peter Brieger Chairman & CEO GlobeInvest Capital Management-BNN March 31 2009

-With the U.S. determined to create dollars at a rate faster than the quantity of Gold in the world increases, the price of Gold in dollars can only rise.

Ned W. Schmidt-Read more here-

http://news.goldseek.com/NedSchmidt/1238515200.php

-International quantitative easing, zero percent interest rates and competitive currency devaluations will likely see all fiat currencies fall against the

finite currency that is gold and we have likely only seen the early stages of this in recent months. Gold.ie

-”The average retail investor has little or no investment in gold and no understanding of how important it will be. The year 2009 will be volatile, but

volatility is a small price to pay for where gold is headed. An explosion in gold and silver is inevitable in the years to come.” John Embry, chief

investment strategist, Sprott Asset Management

-”The thing that encourages me is the fact gold has been as strong as it has been when the dollar has been strong,” “It tells you that when the dollar

goes weak, and you see it from time to time, gold has an explosive move.” Evy Hambro, managing director of BlackRock’s $5.2 billion World Mining Fund-Read

more here-

http://www.bloomberg.com/apps/news?pid=20602013&s;

id=a_aaqKRIk8q0&refer;=commodity_futures

-IMF managing director Dominique Strauss-Kahn said Wednesday that talks on a new world reserve currency to replace the US dollar were “legitimate” and

could take place “in the coming months.” China this week called for a replacement of the dollar, installed as the reserve currency after World War II, with a

different standard run by the International Monetary Fund. Read more here-http://uk.news.yahoo.com/18/20090325/tbs-talks-on-new-world-

reserve-currency-8cc5291.html

-Russia backs return to Gold Standard to solve financial crisis. Russia has become the first major country to call for a partial restoration of the Gold

Standard to uphold discipline in the world financial system. Read more here-http://www.tel

egraph.co.uk/finance/financetopics/g20-summit/5072484/Russia-backs-return-to-Gold-Standard-to-solve-financial-crisis.html

-Russia wants ruble, yuan, gold in new currency basket. Read more here-http://www.reuters.com/article/marketsNews/idUSLS37648120090328

-Russia, China cooperate on new currency proposals. Read more here-http://www.breitbart.com/article.php?id=CNG.7e6cab

4fec704a0fdd135ecdac00673b.9c1&show;_article=1

-OECD Says Sharp US Dollar Fall Unlikely. Read more here-http://www.foxbusiness.com/story/markets/mark

et-overview/interview-oecd-says-sharp-dollar-fall-unlikely/

-Venezuelan President Hugo Chavez tried Tuesday to court Arab support for another swipe at America as its economy stumbles: a proposal for a new,

oil-backed currency to challenge the global prominence of the dollar. Read more here-http://www.gata.org/node/7323 or http://www.t

heglobeandmail.com/servlet/story/RTGAM.20090331.wchavez0331/BNStory/International/?page=rss&id;=RTGAM.20090331.wchavez0331

-The intervention we are seeing in the markets right now is blatant and strong apparently hoping to convince J.Q. Public that the train is leaving the

station. There is a strong and concerted effort by the Fed, the administration and their cooperatives to paint this tape higher and higher, without any pull

back. Dennis Slothower Stealth Stock Daily-Explicitly citing Wednesday’s last-hour rescue rally at 3:00 p.m.

-New signs emerge that recession may be near bottom. New signs that the recession could be nearing a bottom emerged Thursday, as factory orders were far

better than expected and the Dow industrials surged over 8,000 for the first time in two months. Read more here-http://news.yahoo.com/s/ap/20090402/ap_on_bi_go_ec_fi/economy

-U.S. could face second recession next year. Although the U.S. economy is expected to return to growth later this year, there is a danger of a second

recession if monetary easing and a weak dollar leads to increased inflation expectations, a report said on Wednesday.

Massive stimulus spending and moves by the Federal Reserve to fuel economic activity is expected to jump-start the anemic U.S. economy in the last quarter

of this year after it contracted 6.3 percent in fourth quarter of 2008. But the Fed’s moves to boost the economy by slashing interest rates and buying up

billions in government debt could have undesired consequences, The Conference Board, a private research group, said in the report.

“If the United States experiences a too-rapid recovery, there may be a risk of another recession in 2010,” said Bart van Ark, vice president and chief

economist of The Conference Board.

“It may fuel expectations for a return to inflation, adding to the uncertainty concerning the pattern and path of economic recovery,” he said. The U.S.

economy has the potential for a “double-dip” recession, Van Ark noted, similar to 1980 and 1982, as commodity prices rise on the back of a falling dollar and

monetary easing. Read more here-

http://www.reuters.com/article/newsOne/idUSTRE5308HW20090402

-One thing we feel is for sure, the U.S. government, with its lack of knowledge, believes it can print whatever amount of money is necessary to try to

save the U.S. economy and the world’s financial and banking Industries. This is the formula for massive inflation and devaluation of the U.S. dollar.

We believe the only way to attempt to combat what is happening and what is about to happen, in order to preserve capital and purchasing power, is through

the ownership of physical precious metals bullion products. That’s why those who do, should sleep well, believing, knowing they are doing the right thing for

their future and the future of their children.

Precious Metals International

-There were so many announcements by the Federal Reserve and the Treasury throughout March you have to review our previous weekly Memos to keep track. The

Bottom line is they are Dogmatic, and Dictatorial in their insistent approach that they can print whatever amount of money is needed to “Save the Markets,

the Big Brokerage Firms, and the Banks”.

The Feds Balance Sheet is now in excess of Three Trillion. Mr. Obama’s Budget is a mere 1.75 Trillion in Deficit spending for 2009 alone. The fed is

already buying up Billions at the Treasury auctions with no end in sight, to offset what foreign Governments, like China, no longer wish to buy.

All of these actions, and there are plenty more to come down the line add up to one thing and we apologize for our redundancy “inflation, inflation,

inflation” It’s on its way and there is nothing any of us can do to stop it.

We feel that April should produce higher prices for the Precious Metals as we are continuing to see increased demand for Gold and Silver and with all of

the uncertainty looming out there we expect to see the “Flight to Quality” continue. Remember to stay pro-active, take advantage of any price dips that may

occur but do not overextend your ability to own and hold for the long term. Precious Metals International

-Gold is the one asset you can own that no matter what else happens won’t go to zero. The same is true to varying degrees for other metals and

commodities, but especially true of gold. Anything else is paper, whether its dollars, futures, or even gold stocks it’s still paper, and all paper can go to

zero. Louis James-Read more here-

http://www.321gold.com/editorials/casey/casey032709.html

-The bear market isn’t anywhere near over. What we are now expecting is a bear market rally. I think under the circumstances the outlook for investing in

the general stock market is very poor. My ultimate target for the Dow is 1,000. Gold and gold equities on the other hand should perform very well in this

chaotic environment, but keep some cash too, because it increases in value during deflation. Ian Gordon-Read more here-http://www.theglobeandmail.com/servlet/story/RTGAM

.20090401.wgordondiscussion0401/BNStory/Business/

and http://www.theglobeandmail.com/servlet/story/RTGAM.20090402.w

rgordon02/BNStory/Business/

-I am absolutely convinced that we will not peak in 2009! I believe that the price of gold is manipulated. I believe that we will go over US$1,200 by the

end of 2009, but I am not sure if we can defend that level. The establishment surely will do something so that the price will not go too high in too short a

time. In looking back at the rise of gold from $35 to $850 during the ’70s, the former Fed Chairman Paul Volcker said, “It was probably a mistake to allow

gold to rise so high.”

And Volcker now is on the Obama Team! We will not have a peak like 1980, but gold will rise constantly. Buying on dips like in autumn 2008 is the best

strategy, in my opinion. Perhaps sometime later (in a few years, but not ‘09) gold will start to move US$50 or US$100 for some days in a row to US$2,500 or

more. Sascha Opel-Read more here-http://news.goldseek.com/GoldSeek/1235926800.php

-9,000/9,200 on the Dow by mid-April is very possible we would be surprised by a stampede to 11,000 in the same time period. But investors should not be

under any illusions that this is the start of a new bull market. Violent rallies within the context of a longer-term bear market are not unusual. If a run

like that were to occur it would be spectacular but ultimately prove to be merely a sucker rally. We continue to believe that the final lows in this bear

market will not occur until at least 2012 and possibly not until 2016. Ultimate targets could be around 4,000 DJI.

The markets and the economy are in a mess. The authorities are throwing everything they can at it to try and save the financial system. But their approach

is misguided; fighting a debt collapse with more debt at taxpayer expense is a plan that will ultimately fail miserably. But the rebound rally could be an

opportunity to not only regain back some of the losses gleamed over the past 17 months but to raise cash and restructure, ready for the next phase of the

great bear market of the first decade of the new millennium. David Chapman-Read more here-http://news.goldseek.com/UnionSecurities/1238181765.php

-Managers of collateralized debt obligations are struggling to prevent losses in the funds because the cost of trading the underlying contracts has

soared, according to a report by Fitch Ratings. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a08cXmkLai

ow&refer;=home

-Mexican President Felipe Calderon said the country will activate a $30 billion to $40 billion credit line from the International Monetary Fund. Read

more here-

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

mY&refer;=home

-The central banks of China and Argentina reached an agreement for a three-year, 70 billion yuan ($10 billion) currency swap, Chinese Central Bank

Governor Zhou Xiaochuan told reporters in Medellin, Colombia.

It’s the first such accord between the world’s third- biggest economy and a Latin American nation. The move follows swap accords between China and

Indonesia, South Korea, Hong Kong, Malaysia and Belarus. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=amo3z_441h

7g&refer;=home or http://www.gata.org/node/7320

-China expands currency swaps to avoid trading in dollars. China’s leaders, increasingly concerned about the nation’s $740 billion of U.S. Treasuries, are

making it easier for trading partners and consumers to do business in yuan.

The People’s Bank of China has agreed to provide 650 billion yuan ($95 billion) to Argentina, Belarus, Hong Kong, Indonesia, Malaysia, and South Korea

through so-called currency swaps. More such arrangements are being planned so importers can avoid paying for Chinese goods with dollars, the central bank

said. In Hong Kong, which has pegged the currency to its U.S. counterpart since 1983, stores from Park’n Shop supermarkets to jewelers accept yuan. Read

more here-http://www.gata.org/node/7331

-Ontario Teachers’ Pension Plan, Canada’s third-biggest retirement-fund manager, will pare back on stocks and bonds this year after losing a record 18

percent on its investments in 2008 amid the worst financial crisis since the Great Depression. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=axbyYdeu

AOUY&refer;=canada

-Recession Puts a Major Strain On Social Security Trust Fund. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/03/3

0/AR2009033003291_pf.html

-Welcome to America, the World’s Scariest Emerging Market. Read more here-http://www.washingtonpost.com/wp-dyn/conten

t/article/2009/03/25/AR2009032502226.html?referrer=emailarticle

-Swiss banks ban top executive travel. Switzerland’s private banks have started to ban their top executives from traveling abroad, even to neighboring

France and Germany, because of fears they will be detained as part of a global crackdown on bank secrecy. Read more here-http://www.ft.com/cms/s/0/df9ce572-1a36-11de-9f91-0000779fd2ac.html

-10 countries, 10 solutions. A financial crisis has engulfed countries from the best-off to the worst-off around the world. The solutions to the problem

are varied. Read more here-

http://money.cnn.com/galleries/2009/news/0903/gallery.g20_economies/ind

ex.html

-Israel might choose to attack Iran to prevent it from developing a nuclear bomb, the top U.S. commander in the Middle East said today. Army General David

Petraeus told Congress that “the Israeli government may ultimately see itself so threatened by the prospect of an Iranian nuclear weapon that it would take

preemptive military action to derail or delay it.”

While Iran insists its nuclear program is intended for peaceful power generation, Petraeus, the head of U.S. Central Command, said “Iranian officials have

consistently failed to provide the assurances and transparency necessary for international acceptance and verification.”

Iran refuses to suspend uranium enrichment, in defiance of United Nations Security Council resolutions, and won’t give international inspectors full

access to its nuclear facilities. Iran’s “obstinacy and obfuscation have forced Iran’s neighbors and the international community to conclude the worst about

the regime’s intention,” Petraeus said in a statement submitted to the Senate Armed Services Committee for a hearing today. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_5_5QukbyRM

-Iran continues to pose a “significant challenge to Iraq’s long-term stability and political independence,” the Pentagon said. “Iran continues to host,

train, fund, arm and guide militant groups that seek to bleed the U.S. in Iraq, and Iran remains opposed to a long-term partnership between the government of

Iraq and the United States,” the Pentagon said in its latest quarterly report released today to Congress on conditions in Iraq.

Iran last year tried, and failed, to derail U.S. negotiations with the Iraqi government that produced an agreement calling for the withdrawal of U.S.

troops by December 2011, the report said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a2cSpAyes4wQ

-Bernie Madoff’s yacht seized. Federal marshals took the disgraced financier’s 55-foot boat called ‘Bull.’ More seizures expected. Read more here-

http://money.cnn.com/2009/04/01/news/companies/madoff_as

sets/index.htm?postversion=2009040114

-A lawyer for victims of Bernard Madoff’s $65 billion Ponzi scheme is seeking to force the fraudster into personal bankruptcy to ensure that all his

assets are used to pay those from he stole.

“It’s an important step to ensure that all Madoff assets are brought before the bankruptcy court to be used for victims of this massive fraud,” Jonathan

Landers, a lawyer with Milberg LLP, which represents more than 70 victims, said in a phone interview. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&refer;=&sid;=aAT

5mKk4fHPg

-The U.S. filed civil and criminal charges against New York hedge-fund manager Edward T. Stein, accusing him of running a “classic Ponzi scheme” that

moved more than $55 million through accounts while preying on friends and acquaintances.

Stein, who controls Gemini Fund I hedge fund, DISP LLC and Prima Capital Management Corp., moved millions from at least 83 investors through accounts he

controlled, the U.S. Securities and Exchange Commission said in an “emergency enforcement action” filed today in federal court in Manhattan. Read more

here-

http://www.bloomberg.com/apps/news?pid=20601110&sid;=a.77rAgvkI_c

-One in 10 Americans gets help from U.S. to buy food. Read more here-http://www.reuters.com/article/domesticNews/idUSTRE5314B320090402

-Canadians find vast computer spy network: report. Canadian researchers have uncovered a vast electronic spying operation that infiltrated computers and

stole documents from government and private offices around the world, including those of the Dalai Lama, The New York Times reported on Saturday.

In a report provided to the newspaper, a team from the Munk Center for International Studies in Toronto said at least 1,295 computers in 103 countries had

been breached in less than two years by the spy system, which it dubbed GhostNet. Read more here-http://news.yahoo.com/s/nm/20090328/ts_nm/us_security_spying_computers

-Malicious software that has infected millions of computers across the globe failed to wreak havoc on Wednesday as some feared, but researchers warned the

powerful Conficker worm could still strike.

Also known as Downadup or Kido, Conficker turns infected PCs into slaves that respond to commands sent from a remote server that effectively controls an

army of computers. The fears of an attack, however, may have been a windfall for anti-virus software makers, who warned consumers about the worm, industry

analysts say. Read more here-

http://www.reuters.com/article/wtUSInvestingNews/idUSN0151366520090401

GOLD

-$2 000/oz gold ‘quite conceivable’ in medium term Agnico CFO. The looming spectre of inflation, coupled with investors’ thirst for a safe place to put

their money, will likely drive bullion prices up “significantly” in the medium term, Agnico-Eagle Mines CFO David Garofalo said on Friday.

“Everybody’s printing money right now,” he said in an interview at the gold-miner’s Toronto office. “And I think it almost doesn’t matter how badly the US

dollar does relative to the euro or the yen: they are all going to do badly relative to the gold price, because gold is the one currency you can’t print.”

etail

-More moronic gold market ‘analysis.’ The European Central Bank said Wednesday that it had completed sales of 35.5 tonnes of gold under the terms of a

2004 central bank agreement.

While the ECB did not provide financial details of the sale, with gold prices at around $920 an ounce, the latest sales would have a value on the order of

$1.15 billion.

Analysts said they could only speculate on what the money raised might be used for, while noting that the sales were part of a normal procedure. Read

more here-

http://www.gata.org/node/7328

-A reporter actually gets it: IMF gold will never hit market. G20 Supports IMF’s Plan to Sell 403 Tons of Gold. Read more here-http://www.gata.org/node/7334

-Some have been concerned about the effect on the gold price if the IMF gets Congressional approval to go ahead with its proposed plan to sell 403 tons of

gold to diversify its revenue and strengthen its balance sheet.

The fund itself, though, has said it plans to coordinate closely with Central Bank Gold Agreement signatories to minimize the impact of such a large gold

sale. The CBGA caps central bank gold sales at 500 tons per year.

And Morgan Stanley analysts downplayed the threat yesterday, writing that any IMF gold sales are likely to be made “off-market.” That is, the fund could

sell direct to countries with huge dollar reserves, such as China, Japan and Russia, to help them diversify their reserve portfolios without disrupting the

gold markets. Casey Daily Resource

-Is There Any Gold Inside Fort Knox, the World’s Most Secure Vault? Read more here-http://www.gata.org/node/7305

-Concentrated shorts proven to suppress gold and silver. Read more here-http://www.gata.org/node/7307

-Avery Goodman: Did ECB save Comex from gold default? Read more here-http://www.gata.org/node/7333

-Chris Powell, Secretary/Treasurer, Gold Anti-Trust Action Committee-GATA, interviewed March 31 2009 on FOX news. Watch video here-

http://news.goldseek.com/GATA/1238518335.php

or http://www.gata.org/node/7324

SILVER

-Silver looks cheap but you’ll have to be patient. Read more here-http://www.moneyweek.com/inve

stments/precious-metals-and-gems/silver-looks-cheap-but-youll-have-to-be-patient-14703.aspx

-Silver Is Quietly Flashing a Buy Signal. Read more here-http://www.silverbearcafe.com/private/03.09/flashing.html

-Gene Arensberg: SLV exceeds its silver storage capacity. Read more here-http://www.gata.org/node/7318

-Ted Butler silver commentary for the week in three parts-Part 1-http://news.silverseek.com/TedButler/1238441075.php Part 2-

http://news.silverseek.com/TedButler/1238529622.php Part 3-http://news.silverseek.com/TedButler/1238609316.php

-CFTC commissioner Bart Chilton comments on the silver investigation and e-mails from concerned silver investors. Read more here-

http://news.silverseek.com/SilverSeek/1238529577.php

-Big rise in gold, silver and platinum ETFs shows good background investor interest. Precious metals ETFs showed big increases in the first quarter of the

year platinum rising even more than gold and silver which both showed big increases. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=81285&sn;=D

etail

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

-Buyers are more focused on quality spending at Basel this year, and that there is a growing presence of private investment buyers in the fancy color

market. Eden Rachminov of Rachminov Diamonds commenting on the recent BaselWorld Watch and Jewellery Show. The world’s biggest and most important event for

the watch and jewellery industry was held from

March 26 to April 2 2009 in Basel, Switzerland. Website here-http://www.baselworld.com/go/id/ss/lang/eng/

-Dealers Report Mixed Activity at Basel. Observers reported strong demand for 1-carat stones, while the 1 to 3 carat range showed some movement. Demand

for larger diamonds of 5 carats and up improved as some dealers accepted “crazy offers” while others held off. Prices for fancy colors held steady,

especially for very nice, top-end stones of around 3 carats in all intense colors. There were reports of prices on 10-carat to 15-carat fancy yellow stones

dropping as much as 20 percent. Read more here-

http://www.diamonds.net/news/NewsItem.aspx?ArticleID=25887

-Diamond May Get $8.5 Million at Sotheby’s, Petra Says. Petra Diamonds Ltd., a miner of the gems in Africa, plans to sell its first cut and polished stone

at Sotheby’s in an auction that it estimates will fetch as much as $8.5 million.

The 7.03-carat blue diamond was cut from a 26.58-carat rough stone found at its Cullinan mine in South Africa, St. Helier, Jersey-based Petra said in a

statement. A carat equals 0.2 gram. The gem will be exhibited in Hong Kong, Paris, New York and London before being auctioned in Geneva on May 12.

“This stone certainly ranks among the most important blue diamonds that I have had the privilege of offering for sale,” David Bennett, head of jewelry for

Europe, the Middle East and international at Sotheby’s, said in a separate statement today.

Sotheby’s sold a vivid blue emerald diamond in October 2007 for a then-record $1.32 million per carat. The 6.04-carat stone fetched $7.9 million in Hong

Kong, the company said. It has since sold two further pear-shaped blue diamonds for $4.9 million and $4.7 million.

Petra sold a 39.19-carat rough blue diamond from Cullinan for $8.8 million in October. The world’s most expensive blue diamond is the 17th century Blue

Wittelsbach Diamond, which fetched $24.3 million at Christie’s in December. Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=aEKaYMz3Q3

Rg&refer;=muse

OIL

-Financier sees oil shock from credit crunch. The global financial crisis and collapse in the oil market have stalled vital investment in oil exploration

and production and are likely soon to lead to a sharp spike in prices, an energy consultant and financier says. Matt Simmons, founder of Houston-based

investment bank Simmons & Co, argues the underlying rate of decline of the world’s aging oilfields is as much as 20 percent a year and only high levels

of investment can reduce that to single digits.

With credit tight and oil prices almost $100 a barrel below their highs last year, oil companies are unable to sustain previous levels of spending and the

result is falling production, he said in an interview on Thursday. “We are three, six, maybe nine months away from a price shock. We are not talking about

three to five years away it will be much sooner,” Simmons told Reuters in London.

“These prices now are dangerously low. The lower prices fall, the less oil will be produced and the greater the chance of an oil spike,” he said. Oil

prices hit record highs of almost $150 per barrel last July but have tumbled since then as the global economic downturn has cut energy consumption by

consumers and companies alike. Read more here-

http://www.reuters.com/article/newsOne/idUSTRE52P2D620090326

-An oil-shale formation in western Colorado may hold an estimated 1.53 trillion barrels of oil, 50 percent more than the last assessment, the U.S.

Geological Survey said. The amount of oil in the Piceance Basin was last assessed in 1989, the survey said in an e-mailed release. There is no economically

viable method of extracting it, the agency said. Read more here-

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

y8xmdmRFY

-U.S. May Have 115 Billion Barrels of Oil Offshore. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aGZguUvvSYcU

-Oil Producers, Companies May Settle for $50 Crude This Year. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aoX49J3dkqQU

-How Goldman Sachs Was at the Center of the Oil-Trading Fiasco that Bankrupted Pipeline Giant Semgroup. When oil prices spiked last summer to $147 a

barrel, the biggest corporate casualty was oil pipeline giant Semgroup Holdings, a $14 billion (sales) private firm in Tulsa, Okla. It had racked up $2.4

billion in trading losses betting that oil prices would go down, including $290 million in accounts personally managed by then chief executive Thomas

Kivisto.

Its short positions amounted to the equivalent of 20% of the nation’s crude oil inventories. With the credit crunch eliminating any hope of meeting a $500

million margin call, Semgroup filed for bankruptcy on July 22.

But now some of the people involved in cleaning up the financial mess are suggesting that Semgroup’s collapse was more than just bad judgment and worse

timing. There is evidence of a malevolent hand at work: oil price manipulation by traders orchestrating a short squeeze to push up the price of West Texas

Intermediate crude to the point that it would generate fatal losses in Semgroup’s accounts.

“What transpired at Semgroup was no less than a $500 billion fraud on the people of the world,” says John Catsimatidis, the billionaire grocer turned oil

refiner who is attempting to reorganize Semgroup in bankruptcy court. The $500 billion is how much the world would have overpaid for crude had a successful

scam pushed up oil prices by $50 a barrel for 100 days. Read more here-http://www.gata.org/node/7308

GLOBAL FINANCIAL CRISIS-RESCUE

-George Soros, the man who broke the Bank, sees a global meltdown. Read more here-http://www.timesonline.co.uk/tol/news/uk/article5989163.ece

-Deutsche Bank AG Chief Risk Officer Hugo Banziger said the credit crisis is “far from over” and global financial regulations must be overhauled to regain

investor trust. “We are in the middle of it,” Banziger, 53, said yesterday at the Frankfurt School of Finance and Management. The industry has “an

opportunity” to build a stable financial system that seeks higher capital buffers, while encouraging investors to return money to the market and help stem

the crisis, he said.

Deutsche Bank in February reported its first annual deficit in more than 50 years after the worst financial crisis since the Great Depression pummeled

bond and stock trading. The crisis has caused $1.3 trillion in losses for financial companies worldwide, a total that may climb to more than $3 trillion,

Banziger said yesterday, citing forecasts. Read more here-

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

bg&refer;=home

-The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in

the country last year, to stem the longest recession since the 1930s.

New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program,

designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S.

and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=armOz

fkwtCA4&refer;=worldwide

-Paul Krugman criticises White House approach to crisis. Nobel Prize-winning economist Paul Krugman has criticized leading economic officials in the Obama

White House for still believing in the “magic of the financial marketplace” given Wall Street’s “financial wizards” are little more than “sleight-of hand

stage magicians.” Read more here-

http://www.telegraph.co.uk/finance/ec

onomics/5062744/Paul-Krugman-criticises-White-House-approach-to-crisis.html

-U.S. Treasury Secretary Timothy Geithner’s plan to remove toxic assets from bank balance sheets will fail to revitalize the financial system, “Black

Swan” author Nassim Nicholas Taleb said. “We’re heading in exactly the wrong direction,” Taleb said in a Bloomberg television interview. “I want an overhaul,

I want something drastic. This is going to fail, this is not it.”

Geithner has proposed to revive banks without resorting to nationalization through the Public-Private Investment Program that will buy difficult-to-value

assets. Leaders from the Group of 20 nations meeting in London this week are unprepared to fix the global financial system because they don’t grasp how

markets work or the root causes of the credit crisis that has led to $1.2 trillion in losses and asset writedowns, Taleb said.

Rare and unforeseen events are known as “black swans,” after Taleb’s 2007 book, “The Black Swan: The Impact of the Highly Improbable.” Taleb is a

professor of risk engineering at New York University and also advises Universa Investments LP, a Santa Monica, California-based firm opened in 2007 by Mark

Spitznagel, Taleb’s former trading partner. The Treasury’s plan is unfair to taxpayers and rewards the failure of banks that didn’t understand the risks they

took when using debt to boost returns in the mortgage market, Taleb said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=avMr2dI3Xw94

-FDR Economist Says Obama Should Put Stimulus First. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&refer;=home&

;sid=atf_2mZ2XQKw

-Another silent balance sheet killer for banks could be the increasing number of commercial loans going into default says Richard LeFrak. Watch interview

here-

http://www.cnbc.com/id/15840232?video=1074990842&play;=1

INTEREST RATES-INFLATION

-The ECB Thursday lowered its key interest rate by 25 basis points, less than economists expected, even as the euro-region economy shows signs of slipping

deeper into recession. Trichet said today that the bank will announce “full details” of possible further non-standard measures in May. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aUn6warWGU

ys&refer;=home or http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6iKAMbXAfrs

-Interest rates could increase ‘with vigour’, warns chief economist. The Bank of England’s chief economist has warned that policy-makers will hike

interest rates back up with “vigour” when needed, to keep inflation in check. Read more here-http://www.tel

egraph.co.uk/finance/economics/interestrates/5060492/Interest-rates-could-increase-with-vigour-warns-chief-economist.html

-It’s time to admit inflation is going to be a major problem. I don’t wish to be smug. But can we now agree that, despite repeated warnings from ministers

and the City, the UK won’t get caught in a “deflationary spiral” and inflation is a much greater danger? Read more here-http://www.telegraph.c

o.uk/finance/comment/liamhalligan/5066497/Its-time-to-admit-inflation-is-going-to-be-a-major-problem.html

-Howard Ruff-The Case for Inflation. Read more here-http://www.kitco.com/ind/Ruff/ruff_mar162009.html

-Inflation Is Tempting for Indebted Nations. Read more here-http://online.wsj.com/article/SB123836516806167317.html

ERIC SPROTT SEES NO REASON TO CHANGE HIS OUTLOOK ON MARKETS

-When it comes to a bearish view of the markets, veteran money manager Eric Sprott takes a back seat to no one. So it’s not surprising that his firm,

Sprott Asset Management, would organize an event, called A Night with the Bears in Toronto, or that he would be one of the four prominent pessimists who will

be addressing the latest market currents.

So what does the ordinary investor do in this environment? I can only tell you what I do and what I do on behalf of our clients. There are only two things

we do today: precious metals and shorting. There are only three things in the world that have worked during the crisis. Having cash, which I question,

because of the quantitative easing. Owning gold and precious metals or shorting the market. Read more here-http://www.theglobeandmail.com/servlet/story/RT

GAM.20090401.wxrsprott01art1931/BNStory/SpecialEvents2/

21^ST U.S. BANK FAILURE OF THE YEAR

-21st bank failure this year. Omni National Bank, based in Atlanta, Ga. was shuttered Friday. The failed bank had total assets of $956 million. Read more

here-

http://money.cnn.com/2009/03/27/news/companies/bank_failure/index.htm

BAD UNEMPLOYMENT NUMBERS GET WORSE

-ADP Says U.S. Companies Reduced Payrolls by 742,000. Companies in the U.S. cut an estimated 742,000 workers in March, pointing to no relief in sight for

the labor market amid the longest recession in seven decades, a private report based on payroll data showed today.

The drop in the ADP Employer Services gauge was larger than economists forecast and the most since records began in 2001. February’s reading was revised

to show cut of 706,000 workers, up from a previous estimate of 697,000.

Companies are slashing staff as tight credit conditions and shrinking household wealth cause sales to shrink. The Labor Department may report in two days

that employers cut payrolls in March for a 15th consecutive month, putting jobs losses in the current downturn at more than 5 million, according to a

Bloomberg survey.

“The weakness is distributed across all components of the economy,” Joel Prakken, chairman of Macroeconomic Advisers LLC in St. Louis, said in a

conference call. “We are going to see several more months of serious bleeding before we see lesser job losses.”

The ADP report was forecast to show a decline of 663,000 jobs, according to the median estimate of 30 economists in a Bloomberg News survey. Projections

were for decreases ranging from 525,000 to 750,000.

A government report April 3 may show payrolls at companies and government agencies shrank by 658,000 in March and unemployment rose to a 25-year high of

8.5 percent, according to a Bloomberg survey of economists. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a5v2qhnRrc

WU&refer;=home

-U.S. Initial Jobless Claims Rose by 12,000 to 669,000. The number of Americans filing unemployment claims unexpectedly rose last week to the highest

level since 1982 and those staying on benefit rolls jumped to a record as companies kept cutting jobs to trim costs.

Initial jobless claims swelled by 12,000 to 669,000 in the week ended March 28, topping 600,000 for a ninth straight time, after a revised 657,000 the

prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls soared in the prior week to 5.73 million.

Another Labor Department report tomorrow may show the jobless rate in March rose to the highest in more than 25 years, reinforcing concerns that the

economy will continue to bleed jobs as companies reduce output. Less employment and slowing incomes may thwart a rebound in consumer spending, setting back

prospects for an economic turnaround in the second half of 2009.

“It is difficult to sustain any rebound in consumer spending when you have such sharp declines in employment,” said Nigel Gault, chief U.S. economist at

IHS Global Insight in Lexington, Massachusetts. “It’s getting harder to get a job once you lose it.”

The Labor Department tomorrow may say the jobless rate last month climbed to 8.5 percent, the highest level since 1983, according to the median forecast

in a Bloomberg survey. Payrolls probably fell by 660,000 workers, bringing total job losses since the downturn began to about 5 million. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=auXXKT2kEq

Cg&refer;=home

-OECD predicts average 10% unemployment in west by 2010. Read more here-http://www.financialpost.com/scripts/story.html?id=1444185 or

http://www.ft.com/cms/s/0/9afb5d02-1d53-11de-9eb3-00144feabdc0.html or

http://www.bloomberg.com/apps/news?pid=20601110&sid;=albMP3kWo78Y

AUTO BAILOUT-SALES DOWN AGAIN

-President Barack Obama gave General Motors Corp. and Chrysler LLC deadlines to “fundamentally restructure” or lose government aid that has kept them

alive. Obama rejected the companies’ recovery plans and forced GM Chief Executive Officer Rick Wagoner to resign. He gave GM, the biggest U.S. automaker, 60

days to develop a new strategy. Obama said No. 3 Chrysler can’t survive on its own and gave it 30 days to complete a partnership with Italy’s Fiat SpA.

In a decision that surprised lawmakers and analysts with its toughness, Obama said at the White House today “we cannot continue to excuse poor decisions”

and “cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars.” The administration may use bankruptcy to “help them

restructure quickly and emerge stronger,” he said.

GM and Chrysler received $17.4 billion in aid since December to avoid bankruptcy as auto sales reached a 27-year low. The carmakers have been trying to

shed debt and workers and trim health-care costs to win $21.6 billion in more assistance. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aitR5RV13D

kw&refer;=home

-President Barack Obama believes a quick, negotiated bankruptcy is the most likely way for General Motors Corp. to restructure and become a competitive

automaker, people familiar with the matter said.

Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat SpA,

said members of Congress who were briefed on the GM and Chrysler situation before the president said two days ago that the automakers’ viability plans were

insufficient. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=arsCBMV2lx

D8&refer;=home

-Canada extended deadlines for General Motors Corp. and Chrysler LLC to work on their restructuring plans and said it won’t provide long-term loans until

the overhaul is complete. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=a4jZ9vdR

EPQc&refer;=canada

-Ford’s March U.S. Sales Fall 41%; Nissan Drops 38%. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aDWX8TFQHR

xY&refer;=home

-GMAC to resume car loans to subprime borrowers. GMAC Financial Services said it will resume making car and truck loans to subprime borrowers and will

lower inventory financing costs for cash-strapped auto dealers, part of a series of moves intended to spur sales at General Motors Corp.

The moves announced Wednesday come as the embattled automaker races to restructure and get customers back into its showrooms amid growing risk that it

will be pushed into bankruptcy by the Obama administration. Read more here-http://www.reuters.com/article/ousiv/idUSTRE5304IY20090401

-General Motors Corp has asked for $2.6 billion of low interest government loans to support the development of three new hybrid vehicles, according to a

business plan update released on Wednesday.

GM’s loan request, which would help develop two spinoffs from its all-electric Chevrolet Volt, raises to $10.3 billion the aid it is seeking under a U.S.

Energy Department program designed to support development of fuel-efficient vehicles. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idINN0152247120090402

PETER SCHIFF COMMENTARY AND INTERVIEW WITH MARC FABER

-Peter Schiff interview with Marc Faber about current financial markets. Read more here-http://www.europac.net/report/reports/report_faber.pdf

-At last week’s Casey Crisis Summit in Las Vegas, one of the most dynamic speakers was Peter Schiff, of Euro Pacific Capital, whom many may know for his

dust-ups with the serially-wrong financial guru, Jim Cramer. Schiff summed up our situation in words worth repeating: “President Obama and the majority of

our leadership on both sides of the aisle are confident that the right mix of monetary and fiscal policy can restart the spending party that defined America

for a generation.

And as the bleary-eyed revellers wisely reach for a cup of black coffee or stumble into a rehab center, Obama is pouring grain alcohol into the punch bowl

hoping to lure the walking zombies back onto the dance floor. Europe and Asia fully understand that Obama will ask them to lend the booze. “Washington is

telling us that our problems result from a lack of consumer spending. Therefore, the solution is for government spending to pick up the slack. However, if

Americans are too broke to spend, then how can our government spend for us?

The only money they have is taken from us through taxation. To postpone immediate tax hikes (adding interest for good measure), Washington plans to borrow

more from abroad. However, if our foreign creditors refuse to pony up, much of the money will simply be printed instead. “Printing money is merely taxation

in another form. Rather than robbing citizens of their money, government robs their money of its purchasing power.

Many people assume that if government provides the funds we can spend our way back to prosperity. However, it’s not money we lack but production. If the

government simply prints money and doles it out, we will not be able to buy more stuff; we will simply pay higher prices. The only way to buy more is to

produce more. It is production that creates purchasing power, not the printing press!” Casey Daily Resource-Peter Schiff commentary here-http://news.goldseek.com/EuroCapital/1238179795.php

REAL ESTATE-FORECLOSURES-MORTGAGES

-Home Prices in 20 U.S. Cities Fell by a Record 19% in January. Home prices in 20 U.S. cities fell 19 percent in January from a year earlier, the fastest

drop on record, as demand plummeted and foreclosures rose. The S&P;/Case-Shiller index’s decrease was more than forecast and compares with an 18.6 percent

decrease in December. The gauge has fallen every month since January 2007, and year- over-year records began in 2001.

A glut of unsold properties may keep prices low, shrinking household wealth and damping spending. Still, sales of new and previously-owned homes rose in

February, indicating the housing slump, now in its fourth year, may ease as policy efforts to unclog credit and aid borrowers begin to take hold.

“Arresting the slide in home prices will be key to ending the recession,” John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina,

said before the report. Other recent data though, he said, indicate “the housing slump may be nearing a bottom.”

The home price index was projected to decline 18.6 percent from a year earlier, according to the median forecast of 29 economists in a Bloomberg News

survey, after an originally reported drop of 18.5 percent in December. Estimates ranged from declines of 17.2 percent to 19 percent.

From a month earlier, home prices fell 2.8 percent in January, after a 2.6 percent drop in December, the report showed. The figures aren’t adjusted for

seasonal effects, so economists prefer to focus on year-over-year changes instead of month-to-month. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=azRIYCD3Hq

bc&refer;=home

-Pending Sales of Existing Homes in U.S. Rose 2.1% in February. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=akmRy_XQCJFo

-U.S. Home-Equity Loan Delinquencies Climb to Record. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aFmpNuQFy6VU

-Manhattan Office Availability Increases on Job Cuts. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aWX97fmtWPgY

-Manhattan Co-Op Prices Fall Most Since 1995 as Demand Plummets. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=am_Jodm5ij7U

-London Luxury Home Prices Fall for the Fourth Straight Quarter. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ajToTyp8BT8M

-Banks Starting to Walk Away on Foreclosures. Read more here-http://www.nytimes.com/2009/03/30/us/30walkaway.html

-Foreclosures spike so do mortgage-help plans. Lenders are fixing more loans, but the number needing assistance is soaring. Read more here-

http://money.cnn.com/2009/03/30/real_estate/February_Hope_Now/?p

ostversion=2009033010

-Foreclosure Crisis Hits Warp Speed: 6 Million Families Face Losing Their Homes in the Next Three Years. Read more here-

http:

//www.alternet.org/workplace/134003/foreclosure_crisis_hits_warp_speed:_6_million_families_face_losing_their_homes_in_the_next_three_years/

-Mortgage Crisis Over? Please, It’s Just Beginning. Read more here-http://www.businessinsider.com/henry-blodget-mortga

ge-crisis-over-please-its-just-beginning-2009-3

The GoldBugg Report – April 7 , 2009
Posted by Worldwide Precious Metals on Tuesday, April 7, 2009

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