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The Goldbugg Report - June 2, 2009

June 2, 2009

The Week in Review - May 29^th 2009

It was a short and volatile week in the stock market, but a long week in terms of news!

Monday the NY stock market was closed for Memorial Day. North Korea took advantage of the holiday to do an underground test of a nuclear weapon. This follows a previously performed nuclear test nearly 3 years ago on July 4 (again, on an American holiday). Their initial test was followed up by 5 short range missile tests launched from their eastern coast into the sea. When South Korea announced they would be joining the US led initiative to stop ships that are suspected of transporting technology and materials for weapons of mass destruction, the North declared it was essentially an act of war, that they would attack any vessel that tried to stop one of their ships and that the truce that ended the Korean War in 1953 was no longer valid. The aggressiveness of North Korea’s actions could lead to much more fear, uncertainty and volatility in all markets.

As we suggested might happen in our May 22^nd memo; the GM bondholders are getting the exact same treatment that Chrysler’s did. The difference is that a committee of bondholders decided to go along with their “sweetened” deal at the last minute saying "While the committee continues to remain troubled by preferential treatment that the UAW VEBA is receiving compared to the bondholder class — rejecting this offer in the expectation that the bondholders will do better in a litigated outcome was a risk the committee is unwilling to take". Under the new deal, the bondholders get the 10% of the company they were initially offered, with an option to buy another 15% at a deep discount. Even with the committee’s acceptance of the deal, it looks like GM may still file for bankruptcy. Many retail bondholders still oppose the deal saying the new offer remains unfair and that the UAW is still getting preferential treatment (the UAW will be getting 17.5% of the company under the new deal).

Chrysler is slated to come out of bankruptcy soon if the deal with Italian automaker Fiat comes through. If not, then expect Chrysler to be sold off piece by piece. If the Fiat deal does close, Chrysler will emerge as a four headed monster owned in part by the US Government (8%), the Canadian government (2%), Fiat (an initial 20% with an option to increase to 51%) and the United Auto Workers Union (an initial 55% stake). Senior lenders will be getting a whopping “recovery” of 29 cents on the dollar if the deal goes through as planned (this looks like a possible 116%, but that’s not possible. Or is it, considering the US Government is involved? )

On Wednesday, Moody’s affirmed that the AAA credit rating the US currently enjoys is still safe…for now. They made no assurances for the future saying “While our outlook for the US rating is stable, a reassessment of the long-term growth prospects of the economy and the ability of the government to return to a sustainable debt trajectory could put negative pressure on the rating in the future. How the economy and fiscal policy fare after the recession will be key.”

Consumer confidence numbers came out this week and were better than expected, supposedly leading to an early rally in the stock market. If that truly is the reason for the early rally then we see it as further proof that the stock market is trading entirely on emotion and could remain extremely volatile in the near term.

Oil prices surged to new 6 month highs on news that the US inventory fell by much more than analysts had expected due to refineries stepping up output to get ready for summer. OPEC also announced that they would leave output unchanged. With gas prices in the US already heading higher ahead of summer as they usually do and oil prices on their way back up, this could be another hit against consumer spending.

The US dollar is down 11% for the month, falling to 5 month lows against a basket of currencies helping to push Gold up to 3 month highs.

All commodities, with the exception of sugar, are up this week.

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

Volatility should be expected to continue as geopolitical issues and tensions around North Korea increase. Given that such situations typically lead to an increase in prices as investors seek to own hard assets, we feel that current prices are very attractive for long term appreciation. UBS analyst John Reade also stated in a note this week “a combination of a weaker dollar and rising inflation expectations would represent the perfect storm for gold.” Just remember that in volatile markets such as these, never over-extend your ability to own and hold for the long term. As we stated in our April 30^th memo, we see the potential of continuing price increases for Precious Metals throughout the months ahead.

Trading Department – Precious Metals International, Ltd.

 

WORLD FINANCIAL REPORT ON RADIO MAY 29 2009 SHOW

Worldwide Precious Metals will be at theWorld Resource Investment Conference in Vancouver
June 7th & 8th
www.cambridgehouse.ca

-The Aden Sisters say buy gold now!

-Why Gold Will Rise to at Least $6,000 per Ounce.

-Rogers: Choose Silver Over Gold. Watch video

GOLD

-Peter Brimelow: Gold on verge of historic breakout? Read more here-http://www.gata.org/node/7444

-Ambrose Evans-Pritchard: Gold bugs at last have their perfect trinity. The world's top hedge fund manager, John Paulson, has built a gold position of at least $5.5billion, the biggest such move since George Soros and Sir James Goldsmith bet on Newmont Mining in 1993. Read more here-http://www.gata.org/node/7440

-The Aden Sisters say buy gold now! Read more here-http://www.kitco.com/ind/Aden/aden_may272009.html

-Why Gold Will Rise to at Least $6,000 per Ounce. Read more here-http://www.kitco.com/ind/Sabrin/printerfriendly/may262009.html

-Gold may target a record $1,250 an ounce as a continuation head-and-shoulders pattern may be forming within a longer-term trend, Standard Bank Group Ltd. said, citing trading patterns. A break and close above $1,050.40 “provides warning that an important breakout” has occurred, Darran Grabham, the bank’s technical analyst, wrote in a note yesterday.

A head and shoulders pattern is formed when a commodity makes three consecutive peaks, with the middle being the highest. It forms during a series of increases over time. “The positive implications are substantial, with the minimum objective situated at $1,250,” Grabham wrote. Read more here-

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

-A Novice's Guide to Precious Metals (Part I). Read more here-http://seekingalpha.com/article/139415-a-novice-s-guide-to-precious-metals-part-i

-Gold Headed to $200 or $10.000 part III. Read more here-http://news.goldseek.com/EricHommelberg/1243344052.php

10 fundamental reasons to own gold

Gold remains ultimate form of payment No counter party risk

Currency debasement US Dollar losing status as world reserve currency

Gold crawling back into the monetary system

Negative real rates

Falling gold supply vs. increased investment demand

Gold & Historic averages gold should be trading above $2,500 these days

DOW/GOLD ratio points to $5,000+ gold before 2015

Gold & US public debt gold prices required to counter balance all US public debt held in foreign hands exceed the $10,000 mark

Large short positions half of all central bank's gold has been leased into the market. (about 15.000 tons). Covering these short positions is not possible without catapulting gold prices to unimaginable highs.

Gold acting as safe haven in times of rising geopolitical tensions

-John Embry: China, Western central banks out of sync on gold. Read more here-http://www.sprott.com/pdf/investorsdigest/digest.pdf

-Bob Moriarty of 321gold.com is convinced that the markets crash still has much further to go as more 'Black Swans' appear and investment in commodities notably gold and silver may be the only way for investors to protect themselves. Interview with The Gold Report. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=83729&sn=Detail

-The demand for gold coins has hit an all time high, the South Africa Gold Coin Exchange said on Friday. "The rapidly growing demand for gold coins strongly suggests that the gold bull market is well set to extend itself strongly into the future," said chairman Alan Demby in a statement.

An increasing number of analysts and commentators were predicting strong gold price advances, Demby added. He said during the course of 2008, the value of the exchange's sales of gold coins, primarily Krugerrands, was a substantial 80% higher than in 2007. Read more here-http://www.bi-me.com/main.php?c=3&cg=4&t=1&id=36726

-South Africa's gold output down 10%. South Africa's overall gold output in 2008 fell to its lowest level in 86 years due to the power shortage and dwindling grades, which lowered it to the world's number three producer behind China and the United States. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=83788&sn=Detail

-Gold, silver surge as buck battered: Got Gold Report from Gene Arensberg. Read more here-http://www.stockhouse.com/Columnists/2009/May/26/Gold,-silver-surge-as-buck-battered--Got-Gold-Repo

-Gold ETF holdings begin to climb again as price strengthens. With the gold price moving back over $950 late last week, and stock markets showing renewed signs of weakness, safe haven buying of gold is back in vogue. Read more here-http://mineweb.net/mineweb/view/mineweb/en/page34?oid=83755&sn=Detail

SILVER

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1243360187.php

-Rogers: Choose Silver Over Gold. Watch video here-http://www.24hgold.com/english/news-gold-silver-rogers-choose-silver-over-gold.aspx?contributor=Jim+Rogers&article=2063652980G10020

 

-Fortis bank metals monthly report. Read more here-http://www.virtualmetals.co.uk/pdf/FMM0509.pdf

-NanoMarkets, a leading industry analyst, today announced the release of "Silver Markets for Photovoltaics." This report is one of a series of "Metals in PV" reports examining opportunities for various metals in the photovoltaics industry. This report contains an analysis and market projections of silver inks, pastes and other related materials based on NanoMarkets' ongoing research on materials used in photovoltaics (PV).

PV is the fastest growing application for silver; NanoMarkets' research suggests that the volume of silver used for photovoltaics will reach over 24 million troy ounces in 2016.

NanoMarkets believes that thin-film PV and organic PV both will account for 27 percent of silver used by PV in 2016. Read more here-

http://www.azom.com/news.asp?newsID=17308

MARC FABER-U.S. INFLATION TO APPROACH ZIMBABWE

-The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said. Prices may increase at rates “close to” Zimbabwe’s gains, Faber said in an interview with Bloomberg Television in Hong Kong. Zimbabwe’s inflation rate reached 231 million percent in July, the last annual rate published by the statistics office.

“I am 100 percent sure that the U.S. will go into hyperinflation,” Faber said. “The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate.” Read more here-

http://www.bloomberg.com/apps/news?pid=20603037&sid=avgZDYM6mTFA&refer=home

-The costs of things as measured by the consumer price index have risen twentyfold since the Federal Reserve Act of 1913. This act empowered the central bank to create and control a new currency for the United States, the Federal Reserve Note. Over this same period, the federal deficit soared from $2 billion to over $11 trillion. Coincidence? We think not.

After President Nixon cut the dollar’s ties to gold, funding the whims of government was no longer burdened by the need for higher taxes. Now any gaps in the budget can be filled by simply printing more dollars. And as you can see, the politicians didn’t hesitate to meet the challenge. Price levels and federal debt have risen hand-in-hand ever since. Casey Charts

DEFINITIONS-QUOTES-QUICK HITS

-The United States government debt, commonly called the "public debt" or the "national debt", is the amount of money owed by the federal government of the United States to holders of U.S. debt instruments. Debt held by the public is all federal debt held by states, corporations, individuals, and foreign governments, but does not include intragovernmental debt obligations or debt held in the Social Security Trust Fund.

Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities. As of May 25, 2009, the total U.S. federal debt was $11,305,673,498,034.18, or about $37,095 per capita. Read more here-http://en.wikipedia.org/wiki/United_States_public_debt

-New American debt clock. Watch the big numbers fly by here-http://www.usdebtclock.org/

-General Motors Corp., the world’s largest automaker until its 77-year reign ended in 2008, plans to file for bankruptcy protection on June 1 and sell most of its assets to a new company, people familiar with the matter said.

GM’s path will be smoothed by an accord Thursday giving some of its biggest bondholders an equity stake in the reorganized automaker. The U.S. Treasury is requiring that an unspecified percentage of debt holders accept the terms by 5 p.m. New York time on May 30, Detroit-based GM said in a regulatory filing. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=a26dHH0N6LvY&refer=home

-General Motors Corporation (GM) (NYSE: GM), is a global automaker founded in 1908 with headquarters in Detroit, Michigan. It is the world's second-largest automaker after Toyota, ranked by 2008 global unit sales. GM was the global sales leader for 77 consecutive calendar years from 1931 to 2007. It manufactures cars and trucks in 34 countries.

GM employs 244,500 people around the world, and sells and services vehicles in some 140 countries. In 2008, 8.35 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Hummer, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. Read more here-http://en.wikipedia.org/wiki/General_Motors

-There is all the difference in the world between treating people equally and attempting to make them equal. F.A. Hayek-Bio here-http://en.wikipedia.org/wiki/Friedrich_Hayek

-The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists. Ernest Hemmingway-Notes on the Next War: A Serious Topical Letter 1935

-“I do think that the world economies are going to be very weak for years to come, and therefore stock markets will have a very difficult time. I expect stocks markets to go up and down so we will have rallies we've just had a huge one and then the markets will sell off again.” Jean-François Tardif-Read more here-

http://www.globeinvestor.com/servlet/story/RTGAM.20090526.wtardif0526/GIStory/

-My belief is that we're now nearing the beginning of the third speculative phase of the great gold bull market. If June gold can close above $1,003, I believe that will signal the beginning of gold's third speculative phase. Richard Russell, 26 May 2009

-The reaction of the central banks to rising gold. Keep it down, knock it down, flood it with shorts, talk it down, manipulate it down, scare it down by announcing coming large sales of gold. The outstanding features of the market today were a sinking dollar, fading bonds, and the persistent rise in gold. It's interesting that as gold rises daily, there's surprisingly little attention directed at its impressive action. Richard Russell, 22 May 2009

-Now I want to be much more committed to the precious metals, as it seems even more obvious to me that they will be the beneficiaries of money printing. Bill Fleckenstein-Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/why-this-downturn-is-different.aspx?page=all

-Hyperinflation is caused by the central bank buying the debt of a government for which spending is out of control, and then turning that debt into currency, which describes what is happening in the US today. So falling dollar exchange rates as we have seen in recent weeks is a normal response to the Fed's actions. And the more Treasury paper the Fed buys, the lower the dollar will fall in the foreign exchange markets and more to the point, the higher gold will rise. James Turk-Read and view updated charts here-

http://goldmoney.com/en/commentary/2009-05-25.html

-What should a Gold investor being doing now? First, hold your Gold. Second, build cash for any period of price weakness that might develop this Summer. Now would be a good time to review holdings of paper equities, selling any inappropriate ones that have benefited from the most recent bear market rally.

Hold that cash in a suitable vehicle with which to later buy Gold. Non U.S. dollar investors should be using any weakness in the price of Gold brought on by the recent rally in non dollar currencies to add to holdings. One need only look about at the leadership failures in current U.S. and U.K. governments to realize that Gold should indeed be in your portfolio.

Ned W. Schmidt-Read more here-http://news.goldseek.com/NedSchmidt/1243317900.php

-Buffett Aide Sokol Says Housing, Economy Aren’t Near Recovery. The U.S. housing market is nowhere near recovery and signs of stabilization are premature, said David Sokol, a top aide to billionaire investor Warren Buffett who oversees the nation’s second-largest real estate brokerage. Sokol was among money managers who told an investment conference in New York the economy is still deteriorating and they don’t have a lot of confidence in President Barack Obama’s economic policies.

“We’re not seeing the green shoots,” said Sokol, head of MidAmerican Energy Holdings Co., which owns HomeServices of America Inc. “We don’t see improvement.” MidAmerican is owned by Buffett’s Berkshire Hathaway, and Sokol is considered a possible successor to Buffett as head of Berkshire. Sokol spoke before reports today showed new-home sales posted their second increase in three months during April, and mortgage delinquencies and foreclosures rose to records in the first quarter.

Homes in the process of foreclosure are creating a “shadow backlog” of unsold properties that will continue to hang over the market, Sokol, 52, said in a speech yesterday at the Ira W. Sohn Investment Research Conference in New York. While official statistics show a 10- to 12-month supply of unsold homes, “we believe the backlog of homes for sale is twice that.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=as5eaFiSGc5I&refer=home

-In the technicians’ view, “Gold prices are expected to continue on their upward path in the near term, with the next key resistance offered at $970 from the March 20 high,” wrote Tom Pawlicki, of MF Global. Casey Daily Resource

-Julian Phillips, of Goldforecaster.com, is highly bullish, writing that, “Gold has broken out of its long consolidation and looks set to take on $1,000 again.” Phillips takes on the historical question, saying that, “This time of the year the gold market moved into the ‘summer Doldrums,’ but the last two years has seen this seasonality fade as investment demand knocked away this seasonality.

With Indian buyers virtually absent from the international gold market since October 2008 until April this year we could have expected 'Doldrums’ during that time. Now their absence is unnoticed as investment demand took the reins of the gold market and looks like holding them. So expect those Trade Winds to blow during summer and make the gold market an exciting place to be.” Casey Daily Resource-Read more here-http://www.kitco.com/ind/AuthenticMoney/may152009.html and http://www.kitco.com/ind/AuthenticMoney/may222009.html

“With crude oil breaking out above the $60 level and with index funds pouring money into the entire commodity sector, it is very difficult for the commodity bears to gain much downside traction,” wrote Dan Norcini on jsmineset.com. “The sum of money flowing into tangibles is enormous as a great deal of those funds were sitting in cash on the sidelines and waiting for a signal to get long. That they have done and are now doing and that is where the buying pressure is originating from across the entire commodity complex.

Keep in mind that they will buy until they get their allocation done irrespective of any particular fundamental factors. Technical money flows more and more dominate the world of trading and investing and arguing against that kind of money is worse than spitting into the wind. Just like when they are blindly selling these guys blindly buy and very few are willing to step in front of such a freight train whether it is coming or going.” Casey Daily Resource

-Why Wall Street is deserting Treasuries and the dollar. Read more here-http://latimesblogs.latimes.com/money_co/2009/05/this-week-couldnt-end-fast-enough-for-the-treasury-bond-market-or-the-dollar-both-of-which-were-hammered-again-today-as-inv.html and http://www.gata.org/node/7439

-New Investor Worry: Treasury Selloff Spiking Interest Rates. Read more here-http://www.cnbc.com/id/30968861

-Talking on CNBC about “the new normal”, Pimco’s founder and co-CIO Bill Gross, said “the Dow isn’t going back to 14K, and investors shouldn’t expect double-digit returns on stocks. Gross also said that “corporate profits in terms of their margins will be half of what they were several years ago and that P/E ratios will be significantly lower than what we’re used to”. Watch video here-http://wallstreetpit.com/4618-pimcos-bill-gross-on-economy

-Clive Maund, If you are long the broad US stockmarket Prepare To Get Buried. Read more here-http://www.kitco.com/ind/maund/may252009.html

-This is Not a Bull Market, Stocks Are Not Up, and They're Heading Even Lower. Read more here-http://www.kitco.com/ind/Summers/may252009.html

-The two-month rally in U.S. stocks is in its final stages and a correction will take place in the coming weeks, according to a technical analyst at Aurel BGC. “The speed of the market’s gains is slower and slower,” Paris-based Alexandre Le Drogoff said in a phone interview yesterday. “Mathematical indicators are showing the market losing steam.”

The Standard & Poor’s 500 Index has surged 32 percent from a 12-year low on March 9 as investors speculated the global recession is easing and earnings at companies from Ford Motor Co. to Wells Fargo & Co. beat analysts’ estimates. Technical analysts look at price charts to forecast so called resistance levels, or ceilings restricting further price increases, and support levels, or floors limiting declines.

Le Drogoff said his next resistance level for the S&P 500 is 924 and his next support is 875/878, though he hasn’t set a time frame for either prediction. “Excessive overselling has driven a powerful rebound,” Le Drogoff said. “We’re near the end of the rally. The message is one of caution.” Read more here-

http://www.bloomberg.com/apps/news?pid=20603037&sid=a68ndLIv7BeM&refer=home

-John Bogle Says Stocks May Take 10 Years to Reach New Records. John Bogle, who created the $73.3 billion Vanguard 500 Index Fund in 1976, said the Standard & Poor’s 500 Index may advance an average of 7 percent annually and could take 10 years to climb above its October 2007 record.

“Is it possible when we get to 2020 the S&P won’t be much above 1,550? You’re darn right it is,” Bogle, who was named one of the industry’s four “Giants of the 20th Century” by Fortune magazine in 1999, said in an interview at a conference in Chicago sponsored by research firm Morningstar Inc. “Could corporate earnings grow 7 percent a year from here? They could. Maybe it’s even a good bet, but no certainty.”

The benchmark index for U.S. equity gained an average of 15 percent annually during the 1990s and returned 18 percent on average yearly when dividends are included. Bogle said he expects the dividend yield on the S&P 500 to average 3.5 percent annually through 2020. Stocks are still a more attractive investment than government bonds, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=a8KEMw6IRvrM

-The Second Crash On the Way and Unstoppable. Read more here-http://www.kitcocasey.com/articles/2761/the-second-crash-%E2%80%93-on-the-way-and-unstoppable/

-Deficit woes likely to dog dollar for some time. It was an awful week for the dollar, which sank to its lowest level of the year last week, and with markets now focused on a trillion-dollar-plus U.S. deficit, the greenback's sharp slide is not over yet.

Unlike in the recent past, when investors terrified of a global financial meltdown sought safety in Treasury bills and other dollar assets, the greenback is now being driven by its own fundamentals, and all of them look fairly bleak. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idUSTRE54O48M20090525

-Dollar's fall reflects loss of haven appeal. Read more here-http://www.ft.com/cms/s/0/3e25ee68-466a-11de-803f-00144feabdc0.html

-Bets against dollar highest since start of economic crisis. Read more here-http://www.ft.com/cms/s/0/88e09848-49fa-11de-8e7e-00144feabdc0.html

-China warns Federal Reserve over 'printing money.' China has warned a top member of the US Federal Reserve that it is increasingly disturbed by the Fed's direct purchase of US Treasury bonds. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5379285/China-warns-Federal-Reserve-over-printing-money.html

-No dethroning dollar despite risks: China FX official. Read more here-http://www.reuters.com/article/ousiv/idUSTRE54Q0SW20090527

-Canadian household debt swells to $1.3 trillion. Read more here-http://www.cbc.ca/consumer/story/2009/05/26/canada-household-debt854.html

-Americans' credit scores fall as they struggle to pay bills. Read more here-http://www.usatoday.com/money/perfi/credit/2009-05-26-credit-scores-recession_N.htm

-Credit Card Debt Swallows American Households. Read more here-http://www.businessinsider.com/chart-of-the-day-credit-card-debt-vs-median-household-income-2009-5

-This year, the government is borrowing 50 cents of every dollar it spends. If that were just a blip caused by a historic financial crisis that necessitated a $787 billion fiscal stimulus and a $700 billion bank rescue in the space of about three months, there would be little cause for concern.

But it is not a blip. It is a relentless curve of red ink that will, within the decade, take U.S. debt levels to the record reached at the end of World War II, from 40 percent of the nation's output now to 80 percent, and then rapidly thereafter into the realm of banana republics.

"We are accumulating a massive debt. We owe about half of that debt to foreigners, including the Chinese and others whose foreign policy is not always well aligned with ours," said Isabel Sawhill, a former Clinton administration budget official who now co-directs the Center on Children and Families at the Brookings Institution. "So we are really losing control of our economic destiny and possibly losing control of our foreign policy as well."

Japan has lost its AAA credit rating, the United Kingdom may soon follow, and there is talk that the United States is headed fast down the same path. The markets fired a warning shot last week when the Treasury Department announced a huge sale of new debt $162 billion as part of its financing of the government's $1.8 trillion deficit this year. That's as much as the entire government spent just eight years ago. Within hours, interest rates on U.S. Treasuries shot up.

In recent weeks, the prices of credit default swaps on U.S. government debt - a measure of the risk that the government could do the unthinkable and default have risen to record levels. Read more here-http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/24/MN2B17PDPL.DTL&type=printable

-John Taylor: Exploding debt threatens America. Read more here-http://www.gata.org/node/7453

-IRS tax revenue falls along with taxpayers' income. Read more here-http://www.usatoday.com/money/perfi/taxes/2009-05-26-irs-tax-revenue-down_N.htm

-Early retirement claims increase dramatically. Instead of working longer as the economy worsens, more Americans are calling it quits before age 66. The ramifications could be profound for the retirees, families, government and social institutions. Read more here-http://www.latimes.com/news/nationworld/nation/la-na-retirement24-2009may24,0,3371288,print.story

-U.K. Treasury warns of £70bn hole in Budget forecasts. Alistair Darling faced fresh embarrassment last night when the Treasury's own survey of economic forecasts contradicted the Chancellor's and raised the possibility of a £70bn hole in the public finances. Read more here-http://www.telegraph.co.uk/finance/economics/5389398/Treasury-warns-of-70bn-hole-in-Budget-forecasts.html

-British banks revolt against Obama tax plan. British banks and stockbrokers may refuse to take on American clients if new international tax proposals outlined by President Obama are passed. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5374095/British-banks-revolt-against-Obama-tax-plan.html

-Furor grows over partisan car dealer closings. Evidence appears to be mounting that the Obama administration has systematically targeted for closing Chrysler dealers who contributed to Repubicans. What started earlier this week as mainly a rumbling on the Right side of the Blogosphere has gathered some steam today with revelations that among the dealers being shut down are a GOP congressman and closing of competitors to a dealership chain partly owned by former Clinton White House chief of staff Mack McLarty.

The basic issue raised here is this: How do we account for the fact millions of dollars were contributed to GOP candidates by Chrysler who are being closed by the government, but only one has been found so far that is being closed that contributed to the Obama campaign in 2008? Read more here-http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Furor-grows-over-partisan-car-dealer-closings-46261447.html

-Half of all listed shipping companies may go bust. Read more here-http://www.lloydslist.com/ll/news/half-of-all-listed-shipping-companies-may-go-bust/20017653938.htm;jsessionid=955BBDDA70F0D8B886B2BAA7963C0D6A

-South Africa Falls Into First Recession in 17 Years. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aI2FNutyJ1cM&refer=home

-Cold, hunger and job losses ignite dissent in Russian town. Impoverished workers resort to eating salads of weeds and nettle soup. Read more here-

http://www.independent.co.uk/news/world/europe/cold-hunger-and-job-losses-ignite-dissent-in-russian-town-1690418.html

-Mafia Cash Increases Grip on Sinking Italy Defying Berlusconi. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aHtly5QjUYzo&refer=home

-The dangers of printing money. View photo essay here-http://www.time.com/time/photogallery/0,29307,1879735_1846041,00.html

-GPS system 'close to breakdown.' Network of satellites could begin to fail as early as 2010. Read more here-

http://www.guardian.co.uk/technology/2009/may/19/gps-close-to-breakdown

WWW.RARECOLOREDDIAMONDS.COM

-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.youtube.com/watch?v=BWYMJnEz-n4

and http://www.rarecoloreddiamonds.com/articles/index.html

-Christie's Hong Kong Jewels Sale Tops $33M, 90% Sold by Lot. Christie's Hong Kong jewelry sale reported strong results with 90 percent of the lots sold for a total of $33,067,728. The top lot sold for $3,328,182 to an Asian private and featured a diamond pendant set with two pear-shaped D, flawless type IIa diamonds of 20.70 carats and 10.02 carats.

Other diamond highlights included a number of stones that sold for more than $1 million. A suite of vivid and intense colored diamonds, 14.67 total carat weight, sold for $1,886,742. A rectangular-cut, 15.02 carat, D, flawless type IIa diamond sold for $1,670,526 or $111,200 per carat. A pear-shaped 14.43 carat, D, internally flawless type IIa diamond ring by Cartier sold for $1,598,454 or $110,700 per carat.

A circular-cut 12.10 carat, F, flawless diamond sold for $1,238,094. A pair of pear-shaped 10.03 carat and 10.02 carat diamond ear pendants sold for $1,207,206, and a briolette-cut 14.99 carat, D, internally flawless diamond sold for $1,083,654. A jadeite double cabochon ring fetched $1,310,166 from an international private. Asian privates dominated most of the diamond sales.

Vickie Sek, director of Christie's Asia jewelry and jadeite department, noted, “The May 26th Hong Kong jewelry auction reaffirmed the unquestionable health and strength of the diamond market with as much as $111,000 per carat paid for a perfect rectangular-cut diamond of 15.02 carats. The 95 percent sell-through rate is further proof of the enthusiasm of Asian collectors for fine gems as well as quality jewels. A packed saleroom with competitive bidding resulted in almost half of the lots exceeding their high estimates.” Diamonds.net

-See all 30 colored diamond lots from the Christie’s Hong Kong jewelry sale here-http://www.christies.com/LotFinder/searchresults.aspx?intSaleID=22528#action=refine&intSaleID=22528&sid=2e63f7bd-1da0-4133-bf5d-a3f7469a7f35&selectedids=55215

TWO MORE U.S. BANKS FAIL-36 FOR THE YEAR-ZOMBIE BANKS-PROBLEM BANKS RISE

-Two Illinois Banks Seized, Bringing U.S. Tally This Year to 36. Two Illinois banks with combined assets of almost $1 billion were closed by regulators, pushing the toll of failed U.S. lenders to 36 this year amid the longest recession since the 1930s.

Strategic Capital Bank in Champaign and Citizens National Bank in Macomb were closed and the Federal Deposit Insurance Corp. was named receiver of both, the FDIC said. Strategic Capital’s deposits were assumed by Midland States Bank of Effingham, Illinois, and deposits at Citizens National were purchased by Morton Community Bank. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage,” the FDIC said.

Regulators are closing banks at the fastest pace in 15 years, including BankUnited Financial Corp. in Florida yesterday, and pumped $200 billion into the biggest banks in a Treasury rescue program. Costs from closing banks in the second quarter climbed to more than $8 billion, including $4.9 billion for BankUnited, from $2.28 billion in the first, FDIC data show.

Midland States will buy $536 million of Strategic Capital’s $537 million in assets, with the FDIC sharing losses on about $420 million of them, the regulator said. Midland States will assume all of the failed bank’s $471 million in deposits. Strategic Capital’s lone office will open on May 26 as a branch of Midland States. Read more here-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a42Xg57jVTzM or http://money.cnn.com/2009/05/22/news/companies/bank_failure/index.htm

-Zombie banks walk among us. Small banks facing severe loan losses and in need of capital continue to operate, indicating a reluctance on behalf of regulators to shut them down. Read more here-http://money.cnn.com/2009/05/22/news/companies/zombie_banks/index.htm

-U.S. ‘Problem’ Banks Rise to 15-Year High, FDIC Says. U.S. “problem” banks climbed 21 percent to the highest total in 15 years in the first quarter as provisions set aside for loan losses weighed on earnings, the Federal Deposit Insurance Corp. said.

The FDIC classified 305 banks as “problem” and their total assets rose 38 percent to $220 billion, the highest since 1993, the agency said without identifying any lender. The FDIC said its insurance fund slumped 25 percent to the lowest level in 15 years. “The banking industry still faces tremendous challenges,” FDIC Chairman Sheila Bair said today at a briefing in Washington. “Asset quality remains a major concern.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aKMYRsSE4vqM&refer=home

DOUBLE DIP RECESSION

-U.S. economy at risk of double-dip recession. The U.S. economy appears destined for several years of weak growth and high unemployment that leave it vulnerable to a recession relapse after the massive dose of government stimulus wears off. While tepid growth looks likely to resume late this year and build modestly into 2010, the credit bust has left households and businesses unable or unwilling to borrow and spend as freely as they did before the crisis.

The U.S. government has stepped in as lender and spender of last resort, but its deep pockets are not bottomless. Waning political and investor appetite for taking on more debt could stand in the way of any additional big spending plans. "When you remove the government stimulus, what the private sector can generate in terms of growth feels like a recession," said Jeffrey Rosenberg, head of global credit strategy at Banc of America Securities Merrill Lynch in New York.

Rosenberg thinks the U.S. economy may trudge along at a sluggish growth rate somewhere in the range of 0.5 percent to 1.5 percent while banks recover from the credit crisis, which could take another three years. "If that's what you're able to generate, that economy is not generating the job growth required to bring the unemployment rate down," Rosenberg said. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idUSTRE54P2ZC20090526

-Roubini says U.S. economy may dip again next year. Nouriel Roubini, the famously glum economist who predicted the financial crisis, said that while the recession in the United States may well be over at the end of the year, another dip was still possible next year.

"I still expect that economic growth in the U.S. is going to be negative through Q4, and that we'll see positive growth in Q1," Roubini told Reuters in an interview on the sidelines of the Seoul Digital Forum.

"The U.S. recession is going to be U-shaped, lasting roughly 24 months," he added. "Compared to the current consensus that says we are practically at the end of the recession ... my view is: no, it's going to last another six to nine months before it's over." Read more here-http://www.reuters.com/article/newsOne/idUSTRE54R1U120090528

S&P 500 PE IS SKY HIGH

-Today's chart illustrates how this plunge in earnings has impacted the current valuation of the stock market as measured by the price to earnings ratio (PE ratio). Generally speaking, when the PE ratio is high, stocks are considered to be expensive. When the PE ratio is low, stocks are considered to be inexpensive. From 1936 into the late 1980s, the PE ratio tended to peak in the low 20s (red line) and trough somewhere around seven (green line). The price investors were willing to pay for a dollar of earnings increased during the dot-com boom (late 1990s) and the dot-com bust (early 2000s). As a result of the current plunge in earnings and the recent 2.5 month stock market rally, the PE ratio has spiked to the low 120s a record high.

Source: www.chartoftheday.com

OIL

-Saudia Arabia: $200 Oil in 2 Years. Read more here-http://money.cnn.com/news/newsfeeds/siliconalley/green-tech/saudia_arabia_200_oil_in_2_years_2009_5.html

-Saudi Arabian oil minister Ali al- Naimi said the price of oil will climb to $75 a barrel when demand picks up. “We’ll get there eventually,” al-Naimi told reporters in Rome today where he will attend meetings with energy ministers from the Group of Eight industrialized nations. “The trick is keeping it between $70 and $80. It will be achieved as demand rises and the fundamentals are better than they are now.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=awtQr3leXiOk&refer=worldwide

-OPEC Is Seeking $70 Oil, Venezuela Minister Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ahxTnbKqMGVU

-Oil to ‘Correct’ Drop, Target $77: Technical Analysis. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=axR5n1YXEcXk

-Oil prices will return to $110 a barrel by 2015 as a rebound in economic growth worldwide boosts consumption, a U.S. Energy Department bureau said. Prices, which rose to a six-month high of $62.45 yesterday in New York Mercantile Exchange trading, will continue climbing past 2015 to $130 by 2030, as India, China and other developing nations use more oil, the Energy Information Administration said today in its annual International Energy Outlook report.

Oil prices have tumbled from an all-time record $147.27 a barrel in July as industries and consumers pulled back after credit markets froze and the global economy fell into its first recession since World War II. Energy demand will remain weak “in the near term” until the global economy begins to rebound, which may happen as early as next year, the agency said.

“With economic recovery anticipated to begin within the next 12 to 24 months, most nations are expected to see energy consumption growth at rates anticipated prior to the recession,” the agency said in a statement. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ap1Vblzb.ET0

-G8 Encourages Energy Investment to Prevent Surge in Oil Prices. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ahFUHxcHDhPw&refer=home

-Oil Above $50 Saves Gulf States During Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aiEExZkE_oS4&refer=home

-The forbidding landscape of the Arctic contains 13 per cent of the world's remaining undiscovered oil and as much as 30 per cent of its natural gas deposits, a new study from the U.S. Geological Survey says.

The updated estimates of the North's promising oil and gas resources comes as Canada and its polar neighbours aggressively pursue their competing claims to vast areas of continental shelf under the Arctic Ocean. Read more here-http://www.globeinvestor.com/servlet/story/RTGAM.20090528.warcticoil0528/GIStory/

REAL ESTATE-FORECLOSURES

-Peter Schiff, housing’s big picture is not pretty. While economists and real estate investors "celebrate" the slight deceleration in the pace of home price declines in the recent data, a quick look at home price trajectories over the past 100 and 50 years reveals little to cheer about and much to be feared.

More significant than small month-to-month changes is the flow of home price patterns over decades. In his book Irrational Exuberance, Robert Shiller determined that in the 100 years between 1900 and 2000, home prices in the U.S. increased by an average of about 3.4% per year. These figures have not been adjusted for inflation. If they had, home prices would have outpaced inflation by only the slimmest of margins.

This 100-year period includes the Great Depression, when home prices sank significantly, and it also involves decades in which our current home mortgage infrastructure simply did not exist. The second half of the century, with its baby boom, heightened inflation, suburban expansion and institutionalized mortgage apparatus, was much kinder to home prices. Even so, in the 50 boom years between 1950 and 2000, home prices increased an average of 4.4% per year. Even this pace barely beat inflation.

By all accounts, the home price boom that began in late 1997 (when the high of the previous 1989 peak was finally eclipsed) and topped out in June 2006 was extraordinary. The Case-Shiller 10-City Index, an amalgam of the home price trends in 10 of the largest U.S. cities, gained on average 19.4% per year during that time. The movements had very little to do with market fundamentals and everything to do with distortive government policies, a national mania for real estate wealth and a torrent of temporarily easy credit.

If we assume that the bubble was artificial, we can instead imagine that home prices should have followed the more typical path during that time. When you do these extrapolations, a very sobering picture emerges. Read more here-http://www.europac.net/commschiff.asp?id=16291

-The Housing Hurricane Will Howl Again. This is only a lull in the housing hurricane. We’re out of the eye of the hurricane, but here comes the back half of the storm. A lot of people think that we've seen the worst of the housing crisis. They're talking about green shoots and glimmers of hope, when they should be back in the storm shelter, preparing for a flood of inventory that will overwhelm the markets and produce another round of falling prices

For the past few months there has been a semi-moratorium on foreclosures. Most institutions with delinquent mortgages didn't foreclose. The signs that blanket many neighborhoods have been posted by a fraction of the lenders. Now the rest of the banks are rushing to get their properties on the market. Read more here-

http://online.barrons.com/article_print/SB124303112018248371.html

-Homes: Almost 20% cheaper. S&P/Case-Shiller index reports huge decline of 19.1% for the first quarter. Read more here-

http://money.cnn.com/2009/05/26/real_estate/CaseShiller_home_prices_Q1/index.htm or http://www.bloomberg.com/apps/news?pid=20601087&sid=aJjnVOs7SUW8&refer=home

-San Francisco Home Prices Fall 41% on Foreclosures. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=atBfoEWN00Ww&refer=home

-The average price of a U.S. home fell 7.1 percent in the first quarter, slower than the fourth quarter’s 8.3 percent drop that was the largest on record, the Federal Housing Finance Agency in Washington said today. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid=alTt9qEQPL1I&refer=home

-Housing Hitting Bottom Means Fewest Starts Since 1945. The slump in the U.S. housing market that caused the median value of homes to decline 24 percent since 2006 may bottom next month without any prospect of a rebound for another year, according to estimates from chief economists at Fannie Mae and Freddie Mac, the Mortgage Bankers Association and national realtors and homebuilder groups.

Existing home sales probably won’t reach pre-boom levels until the third quarter of 2010 and housing starts won’t surpass 1 million until 2011, a barrier last broken six decades ago, the economists said. “There are very few V-shaped recoveries in the history of real estate, and this one is likely to be even slower because of the size of the bubble,” said Robert Shiller, the Yale University professor who, with economist Karl Case, created home price indexes in the 1980s now used by Standard & Poor’s.

The rebound will be so anemic that 2009 building starts will total about 496,000 homes, the lowest since the end of World War II in 1945, according to the economists’ forecasts. Foreclosures on pay option adjustable-rate mortgages and a backlog of bank-owned properties will slow any revival and keep housing from playing its traditional role of boosting economic recovery.

Residential construction and home sales led the way out of the previous seven recessions, with housing starts improving an average seven months and resales gaining strength about four months before the economy picked up. Read more here-http://bloomberg.com/apps/news?pid=20601087&refer=home&sid=adbBR4rdQqag

-Purchases of new homes in the U.S. rose in April for the second time in three months as lower prices and cheaper financing stabilized demand. Sales increased 0.3 percent to an annual pace of 352,000, lower than forecast, after a 351,000 rate in March, the Commerce Department said today in Washington. The median sales price decreased 15 percent from April 2008, while the number of homes on the market fell to the lowest level in almost eight years. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a_syIHolWEnY&refer=home

-Home resales in the U.S. gained in April as foreclosure auctions and improved affordability spurred bargain hunters. Purchases increased 2.9 percent to an annual rate of 4.68 million, close to forecasts, from 4.55 million in March, the National Association of Realtors said today in Washington. The median price slumped 15 percent from a year earlier, the second- biggest drop on record, and distressed properties accounted for 45 percent of all sales. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aNhCunu0zbD0&refer=home

-Housing bubble begins to burst across the globe. Read more here-http://www.dailymail.co.uk/money/article-1187530/CITY-FOCUS-Housing-bubble-begins-burst-globe.html

-Dubai, home to the man-made Palm Jumeirah and World island developments, suffered the biggest reversal among global housing markets following the collapse of an investment bubble, Knight Frank LLP said.

House prices in Dubai, the second-largest of the seven sheikhdoms that make up the United Arab Emirates, fell 32 percent in the 12 months ended March 31, according to a report by the London-based property broker published today. A year earlier, homes appreciated at an annual rate of 48 percent.

Dubai “is in a mess,” said Nick Barnes, head of international residential research at Knight Frank. “A lot will depend on developers and how long they can hold on before getting into fire-sale territory.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aAcg3k55CWBA&refer=home

-U.K. House Prices May Drop 14% in 2009, JLL Forecasts. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aKI8JqPhJj2A or http://www.telegraph.co.uk/finance/economics/houseprices/5388738/House-prices-may-fall-another-14pc-by-2010.html

-1 in 8 U.S. homeowners late paying or in foreclosure. One of eight U.S. households with a mortgage ended the first quarter late on loan payments or in the foreclosure process in a crisis that will persist for at least another year until unemployment peaks, the Mortgage Bankers Association said on Thursday. Read more here-

http://www.reuters.com/article/topNews/idUSTRE54R3UP20090528?feedType=RSS&feedName=topNews&rpc=22&sp=true

-Job Losses Push Safer Mortgages to Foreclosure. Read more here-http://www.nytimes.com/2009/05/25/business/economy/25foreclose.html

-Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March as the government’s effort to revive the housing market lost momentum.

The U.S. delinquency rate climbed to a seasonally adjusted 9.12 percent and the share of loans entering foreclosure rose to 1.37 percent, the Mortgage Bankers Association said today. Both figures are the highest in records going back to 1972. Fixed rates rose to 4.91 percent, Freddie Mac said. New home sales fell 34 percent from April 2008, the Commerce Department said.

The three-year housing slump is proving resistant to efforts by the Federal Reserve and the Obama administration to lower rates and keep homeowners from failing on their mortgages. One in every eight Americans is now late on a payment or already in foreclosure as mounting job losses cause more homeowners to fall behind on loans, the MBA said.

“If people don’t have a paycheck they can’t support a mortgage,” Jay Brinkmann, the MBA’s chief economist, said in an interview. “The longer the recession lasts the more people run through their savings reserves, leading to higher delinquencies and higher foreclosures.” Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUW60TAkQ5EM&refer=home

-Recession Turns Malls into Ghost Towns. Read more here-http://online.wsj.com/article/SB124294047987244803.html

-It’s Tee Time. Where Is Everybody? Off the turnpike here in central Florida, hidden behind stucco walls, sits a sprawling Tuscan-style clubhouse on a hill overlooking a string of lakes, a golf course and green fields. This 1,900-acre property, called Bella Collina, was designed to hold 800 homes. Today, only 48 houses dot the landscape, and just three are occupied.

The clubhouse, though open, is eerily quiet, and a promised swimming pool and equestrian center have yet to be built. Bella Collina, the brainchild of Edward Robert Ginn III, looks like a ghost town. So does Tesoro, another resort opened by Mr. Ginn near Port St. Lucie, where just 150 houses sit on 900 lots. And the Conservatory in Palm Coast, also from Mr. Ginn, is even more barren: 335 out of 340 lots are empty. As the real estate boom expanded in recent years, developers and home buyers believed that residential golf resorts were a sure-fire bet.

Many buyers looked to buy properties that they could flip for a quick profit. Others were lured by stunning views, club services and security. While there is no reliable data on the growth in residential golf resorts, analysts say the market is well past its peak particularly in the Sun Belt and there is now an overabundance of developments. Read more here-

http://www.nytimes.com/2009/05/24/business/24golf.html?pagewanted=all

-Amid Housing Bust, Phoenix Begins a New Frenzy. Read more here-http://www.nytimes.com/2009/05/24/business/24phoenix.html

-Realtors are abandoning a listing ship. Read more here-http://www.latimes.com/business/la-fi-realtors25-2009may25,0,7207801.story

GEOPOLITICAL NEWS

-The unchecked spread of nuclear weapons technology to nations or groups is more of an “imminent threat” to the U.S. than North Korea’s nuclear test and its firing of five short-range missiles, the Obama administration’s National Security Adviser James Jones said.

The detonation and missile firings don’t in themselves “constitute an imminent threat,” Jones said yesterday in Washington, referring to North Korea’s May 25 explosion of a nuclear device and the subsequent missile launchings.

“They still have a long way to go” to create a nuclear weapon and “have a delivery system” for it, Jones told an audience of the Washington-based Atlantic Council during a question-and-answer period after he gave a speech. “That’s obviously a very worst-case scenario and one that we very much hope to avoid,” he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aR8xFfOaB27E&refer=home

-Obama says North Korea nuclear test a "grave concern." Read more here-http://www.reuters.com/article/politicsNews/idUSTRE54O14220090525?feedType=RSS&feedName=politicsNews&rpc=22&sp=true

-Russia fears Korea conflict could go nuclear. Read more here-http://in.reuters.com/article/worldNews/idINIndia-39913120090527

-Secretary of State Hillary Clinton said North Korea must face consequences for its “belligerent and provocative behavior” after Kim Jong Il’s regime threatened military action against South Korea.

Clinton spoke in Washington after North Korea’s official news agency said Kim’s government would no longer abide by the 1953 armistice that ended the Korean War and may respond militarily to South Korea’s participation in a U.S.-led program that would block ships suspected of carrying nuclear weapons or material for export.

The U.S. takes “very seriously” its commitments to defend South Korea and Japan, its principal allies in the region, Clinton said. She called on North Korea to return to the so called six party talks aimed at dismantling its nuclear arms program.

North Korea has continued to ratchet up tension since it tested a nuclear weapon on May 25, drawing international condemnation and the prospect of increased sanctions against the communist nation. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=aAjZnKdP7mlE&refer=canada

-Iran's Ahmadinejad rejects Western nuclear proposal. Iran's President Mahmoud Ahmadinejad on Monday rejected a Western proposal for it to "freeze" its nuclear work in return for no new sanctions and ruled out any talks with major powers on the issue. Read more here-http://www.reuters.com/article/newsOne/idUSTRE54O25V20090525 and

http://www.bloomberg.com/apps/news?pid=20601087&sid=a2WCDzDHASdk&refer=worldwide

-Iran sends warships to Gulf of Aden. Iran has sent six warships to international waters, including the Gulf of Aden, to show its ability to confront any foreign threats, its naval commander said on Monday.

Admiral Habibollah Sayyari, quoted by the ISNA news agency, made the announcement five days after Iran said it test-fired a surface-to-surface missile with a range of 2,000 km putting Israel and U.S. bases in the area within reach. Read more here-http://in.reuters.com/article/worldNews/idINIndia-39868320090525

-Israeli document: Venezuela sends uranium to Iran. Venezuela and Bolivia are supplying Iran with uranium for its nuclear program, according to a secret Israeli government report obtained Monday by The Associated Press.

The two South American countries are known to have close ties with Iran, but this is the first allegation that they are involved in the development of Iran's nuclear program, considered a strategic threat by Israel. Read more here-http://www.breitbart.com/article.php?id=D98DEPH80&show_article=1

-Half of Israelis back immediate strike on Iran. Read more here-http://www.breitbart.com/article.php?id=CNG.278ae37b736a0478b7223156a3bcf18a.401&show_article=1

-Army chief says US ready to be in Iraq 10 years. The Pentagon is prepared to leave fighting forces in Iraq for as long as a decade despite an agreement between the United States and Iraq that would bring all American troops home by 2012, the top U.S. Army officer said Tuesday.

Gen. George Casey, the Army chief of staff, said the world remains dangerous and unpredictable, and the Pentagon must plan for extended U.S. combat and stability operations in two wars. "Global trends are pushing in the wrong direction," Casey said. "They fundamentally will change how the Army works." Read more here-

http://news.yahoo.com/s/ap/20090526/ap_on_go_ca_st_pe/us_us_iraq_6

© 2009, Worldwide Precious Metals.
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The Goldbugg Report - June 2, 2009
Posted by Worldwide Precious Metals on Tuesday, June 02, 2009

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