Newsroom

The Goldbugg Report - June 30, 2009

June 30, 2009

WORLD FINANCIAL REPORT ON RADIO JUNE 26 2009 SHOW

-Glittering gold all the rage.

-Silver investment demand to overtake gold in 2009?

-David Morgan explains why silver remains the 'people's metal' and why it may be a better investment than gold.

GOLD

-Choppy times ahead for gold in near term BMO's Melek. While gold may be vulnerable to a near-term pullback, BMO's Bart Melek believes there are long-term motivations to hold the precious metal. “Notwithstanding any possible short-term correction, gold's impressive seven-year run is expected to continue well into 2011. Inflation concerns are likely to heat up once U.S. growth and monetary velocity start recovering.”

"Gold typically leads inflation by 12-18 months, so investors would be well advised to look toward improvements in monetary aggregates as leading indicators of inflation and higher gold prices. BMO Research expects higher trend inflation over the longer term." In his research, Melek asserts "central banks could be very gold positive."

"In addition, central banks around the world will likely put more gold in their reserves," he suggests. "Russian central bank authorities have already stated that future current account surpluses will be allocated toward gold purchases."

"Even more importantly, China has been acquiring gold in its official reserve. The fact that China has boosted its gold reserves is very material for the precious metal and currency markets. This may mute any possible correction, as there is likely a large buyer waiting in the wings," he advised. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85418&sn=Detail

-Gold Investment 'no longer the preserve of the wealthy.' Emma Plumpton, manager of the Grampian branch of the UK firm, noted that central governments are furiously printing money in order to "basically inflate their way out of debt." With the yellow metal traditionally moving in the opposite direction to the dollar and favoured as a hedge against inflation, Ms. Plumpton believes now is a good time to Buy Gold.

"Investing in gold is no longer the preserve of the wealthy," she told the Press and Journal. "The sheer size of the expected government deficits in the UK and America resulting from the stimulus measures look unsustainable." She added: "The investment case for the precious metal is also supported by the fact that global gold-mine production peaked in 2001 and has declined an average of eight percent year-on-year since." Read more here-http://goldnews.bullionvault.com/Goldbug/gold_investment/gold_investment_no_longer_the_preserve_of_the_wealthy_19230572

-Glittering gold all the rage. Gold has done everything investors could have asked for over the last 12 months. As financial markets collapsed, gold kept its value and proved its worth as a safe haven. Now it is on another roll. It came close to breaching the magic level of US$1,000 an ounce once again last week, and the record nominal high of US$1,033 an ounce is also in sight. Will it keep going up or is the end of the bull market in sight? A gold bull offers his views.

John Embry says investors should buy gold for one obvious reason: It always does well when it re-establishes itself as a currency. Clearly, that is happening right now as the U. S. dollar and other currencies look more dubious by the day, and gold emerges as the logical safe haven. "It's not gold that has changed, it's the value of paper money," he says. "Relative to the overall financial sphere, gold is a small asset class. So it doesn't take a lot of money moving in its direction out of paper to have an outsized impact."

Mr. Embry, chief investment strategist at Sprott Asset Management and one of the world's most outspoken gold bugs, has been active in the bullion market since the 1970s and has gotten progressively more bullish in recent years. His arguments are straightforward: Central banks are printing trillions of dollars, many of which are bailing out failed financial institutions. The logical results are currency debasement and extreme inflation.

The former is already happening; he figures the latter is just around the corner, and will be like "nothing we've ever seen before." In a hyper-inflationary environment, investors will continue to pour money into stores of value like gold, he says, more than offsetting any declines in physical demand for the metal. Add in the fact that mine production has steadily declined over the past few years, and you have more investor dollars chasing fewer available ounces of gold.

The result can only be higher prices. "I think US$1,500 [an ounce] is certainly achievable in the next 12 to 18 months. Beyond that, who knows," he says. Another bullish signal he loves to talk about is the central banks. Mr. Embry firmly believes Western central banks have clandestinely dumped gold on the market for years to keep the price suppressed, and their holdings are now far lower than they let on.

(He thinks they may have less than a third of the 31,000 tonnes they claim.) At the same time, Eastern powers such as China cannot be happy with all the U. S. dollars they are holding in their central banks, and it only makes sense for them to diversify their reserves by buying gold. Read more here-

http://www.canada.com/business/fp/money/Glittering+gold+rage/1689346/story.html

-Clive Maund gold market update. Read more and view charts here-http://news.goldseek.com/CliveMaund/1245598737.php

-If History Repeats, Gold Will Surge Soon. After the recent turn of events that closed the door on a new high for the price of gold this spring, attention turns to a very encouraging historical pattern that has developed during the current decade surges late in the odd-numbered years of 2001, 2003, 2005, and 2007 leading to much higher levels after the snow melts.

Will the 2009-2010 period produce a similar result? We'll find out soon enough. Read more here-http://seekingalpha.com/article/144285-if-history-repeats-gold-will-surge-soon

-No Gold, No Bullets: Now It's Personal. Read more here-http://news.goldseek.com/DollarCollapse/1245697526.php

-Ned Schmidt's Gold Thoughts. Read more here-http://news.goldseek.com/NedSchmidt/1245737040.php

-The golden wall of worry. Commentary: Gold timers have quickly retreated, which is a good sign. Read more here-

http://www.marketwatch.com/story/story/print?guid=D7E574FE-E5B9-4F5D-A9F0-13FCE52DD93D

-When is the Best Time to Buy Gold? Read more here-http://news.goldseek.com/GoldSeek/1245704122.php

If inflation returns, or even hyperinflation

If the economic crisis persists and gets worse

If uncertainty and fear continue, and chaos and rioting begin

If stock markets languish or suffer another meltdown

If the recovery spending of the world’s governments proves futile

If government interference in the economy continues to increase

If the value of the U.S. dollar takes a major fall

If world recovery from the current recession/depression takes years

If you’re still wondering whether you have enough “safe” money

-World Gold Council expects no impact from IMF sales. Read more here-http://www.gata.org/node/7513 or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=85262&sn=Detail

-Warren Bevan: China and IMF gold sales the real story. Read more here-http://www.gata.org/node/7525

-Michael Kosares: As gold's champion, China transforms market. Read more here-http://www.gata.org/node/7532

-GFMS still expects fresh gold peak in H2 09. Read more here-http://www.miningweekly.com/article/gfms-still-expects-fresh-gold-peak-in-h2-09-2009-06-25

-Gold Prepares For The Big One. We’ve all been patiently waiting for gold to breakout through strong resistance levels between $1,007 and $1,032. When the price has closed firmly and decisively over $1,032.50, we should expect $1,050, $1,150, $1,250-$1,260 and a potential for $1,375. Read more here-

http://www.kitco.com/ind/Wieg_cor/roger_jun252009.html

-Gold still a ‘safe haven’: analyst. Read more here-http://www.theajmonline.com.au/mining_news/news/2009/june-25th-09/other-top-stories/gold-still-a-2018safe-haven2019-analyst

-Gold can add returns with no extra volatility. The judicious use of gold as part of an investment portfolio can add to returns without significantly adding to risk. The Jaffe study concluded that adding gold and gold stocks to a large portfolio increases both risk and return, but that the additional return from these non-correlative assets more than compensates for the additional risk.

During the study period, gold bullion saw an average monthly return of 1.56 percent, considerably better that the 1.06 percent average monthly return for common stocks represented by the S&P 500. Gold stocks shone even brighter, returning an average of 2.16 percent per month. Read more here-

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=85360&sn=Detail

-Billionaire Paulson's big gold stake looks lacklustre. Holdings likely gained 2% this quarter as feared inflation remains dormant. Read more here-

http://www.marketwatch.com/story/story/print?guid=87959249-1FE7-425D-BB1C-2A5FB1B2AD84

-Gold To Go' vending machines could be coming to Britain. A German company plans to expand its network of gold vending machines. Read more here-

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/5575560/Gold-To-Go-vending-machines-could-be-coming-to-Britain.html

SILVER

Gold to silver ratio at 80 to 1 with gold at $2,400 the silver price would be $30.00

Gold to silver ratio at 70 to 1 with gold at $2,400 the silver price would be $34.29
Gold to silver ratio at 60 to 1 with gold at $2,400 the silver price would be $40.00

Gold to silver ratio at 50 to 1 with gold at $2,400 the silver price would be $48.00
Gold to silver ratio at 15 to 1 with gold at $2,400 the silver price would be $160.00

-Fortis bank June metals monthly. Read more here-http://www.virtualmetals.co.uk/pdf/FMM0609.pdf

-Gene Arensberg: Gold, silver coin premiums back to normal. Read more here-http://www.gata.org/node/7523

-History of Silver, Part I: the Metal of the Moon. Read more here-http://seekingalpha.com/instablog/407380-jeff-nielson/7772-history-of-silver-part-i-the-metal-of-the-moon

-History of Silver, Part II: the great “build”. Read more here-http://seekingalpha.com/instablog/407380-jeff-nielson/8240-history-of-silver-part-ii-the-great-build

-History of Silver, Part III: inventories gone! Read more here-http://seekingalpha.com/instablog/407380-jeff-nielson/8715-history-of-silver-part-iii-inventories-gone

-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1245598577.php

-Silver investment demand to overtake gold in 2009? Read more here-http://www.commodityonline.com/news/Silver-investment-demand-to-overtake-gold-in-2009-18862-3-1.html

-Silver and the US Dollar. Read more here-http://www.321gold.com/editorials/watson/watson062309.html

-David Morgan explains why silver remains the 'people's metal' and why it may be a better investment than gold. Read more here-

http://www.thedailybell.com/bellPage.asp?nid=424&fl

-David Morgan Interviewed by Nancy Massicotte of The Opportunity Show. Read more here-

http://news.silverseek.com/SilverInvestor/1245387889.php

-David Morgan: We Could See Silver Outperform Gold 2:1. Read more here-http://news.silverseek.com/SilverInvestor/1245788577.php

-Ted Butler silver commentary. Read more here-http://news.silverseek.com/TedButler/1245778743.php

-Silver/Gold Ratio Reversion 2.

Back in early February when I wrote the original essay in this series, the SGR was running near 72 which wasn’t much above the panic average. Today, about 4.5 months later, it is near 65. Since silver was radically more oversold than gold during the stock panic, it is rallying much faster than gold emerging out of the panic. So before this year is out the SGR should again converge with its 55 historical average.

This means even if gold does nothing, which is highly unlikely given the coming inflation scare, silver has plenty of room to run higher this summer. Despite recovering considerably already, it still remains way too cheap relative to gold. At $925, $950, $975, and $1000 gold, the long-term 54.9 average SGR yields near-term silver target prices of $16.85, $17.30, $17.76, and $18.21. All of these are nice gains over today.

But for a variety of reasons I doubt the SGR will conveniently stop at its average. First, note the SGR’s rising secular support line above that was broken by the panic. It showed a long-term tendency for silver to rise a bit faster than gold. And this makes sense since silver is such a small market. If investor interest and capital deployed in gold and silver each grow by a similar amount, silver will rise faster. If you extend that SGR support line, it hits 50 now and about 48 by the end of 2009. Let’s call it 49.

At 49 SGR secular support, at $925, $950, $975, and $1000 gold, silver would trade at $18.88, $19.39, $19.90, and $20.41. These prices are obviously even more attractive and much higher than today’s. But even this is nowhere close to the best-case scenario. Even with flat gold, the SGR could very well shoot a lot higher than 49, at least temporarily.

Once a long-standing equilibrium (a 55 SGR) is disrupted in the markets, there is usually a countermove in opposing proportion to the original disruption. Visualize a playground swing. Hanging straight down is equilibrium. If you pull the swing 1 foot in your direction and let it go, it will initially swing about 1 foot in the opposite direction before normalizing. But if you pull it 10 feet in your direction, a bigger disruption, the counterswing will be proportionally larger. The SGR was dragged far off equilibrium by the panic.

So it would not surprise me one bit to temporarily see the SGR swing proportionally in the opposite direction. Silver was so beaten down in the panic that the return of silver speculators will probably drive it far higher than gold would suggest is prudent. I don’t know how high the SGR could go in such a silver greed spike, but examine the chart above and make a guess. We could be in for a major silver spike before SGR equilibrium is restored, which would be wildly profitable for those long silver.

But perhaps the most bullish thing of all about this SGR reversion is that all my analysis so far assumes gold merely stays flat. But this is very unlikely. Not only are the yellow metal’s fundamentals very bullish today, but the Fed’s recent doubling of the US monetary base will soon stoke the biggest inflation fears since the 1970s. When mainstream investors start reallocating capital into gold, all bets are off the table on how high silver could go. Gold is the big silver wildcard right now, and it is an exceedingly bullish one. Read more here-

http://www.321gold.com/editorials/hamilton/hamilton061909.html

CHART OF THE WEEK-QUOTES-QUICK HITS

-Everyone knows that banks are going to take a bath on their credit card portfolios. The question is: How bad will it get. Not surprisingly, we've already reached an all-time high charge-off level, but nobody expects it to peak anytime soon. Bankruptcy filings, meanwhile, are creeping back up, but are still well below the levels seen before the law changed. Chart here-

http://www.businessinsider.com/chart-of-the-day-credit-card-loss-rate-at-all-time-high-2009-6

-US credit card chargeoffs break new record Moody's. The U.S. monthly credit card chargeoff rate surpassed 10 percent and hit a sixth straight record high in May, Moody's Investors Services said on Wednesday, as unemployment grew to a 26-year high. The chargeoff rate index which measures credit card loans the banks do not expect to be repaid rose to 10.62 percent in May from 9.97 percent in April. Read more here-http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN2415584020090624

source: chartoftheday.com

-"Whatever the mind of man can conceive and believe, it can achieve. Thoughts are things! And powerful things at that, when mixed with definiteness of purpose, and burning desire, can be translated into riches." Napoleon Hill-http://en.wikipedia.org/wiki/Napoleon_Hill

-"At the end of the day, there are four things about people that drive our economy. How many people there are, what age they are, what they are buying, and where they live or are moving." Harry S. Dent, Jr.-Bio here-http://en.wikipedia.org/wiki/Harry_Dent

-Today it is not big business that we have to fear. It is big government. Wendell Phillips-Bio here-http://en.wikipedia.org/wiki/Wendell_Phillips

-The past seventy-five years have seen the growth of government from a relatively small entity charged with defending the borders, adjudicating disputes and delivering the mail; to a bloated nightmare creature whose tentacles reach into every corner of our existence. Doug Hornig, Casey Research

-Government has no wealth of its own. Before it gives anything to anyone, it must take it from those who produce it. John Stossel

-Freedom is never more than one generation away from extinction. We didn't pass it to our children in our bloodstreams. It must be fought for, protected, and handed on for them to do the same. Ronald Reagan

-"I think we're going to have some of the worst inflation, with all the printing presses around the world running 24/7." David Dreman-Read more here-

http://www.reuters.com/article/ousiv/idUSTRE55M4YZ20090623

-Gold Will Hit $2,000 on 'Confetti Paper' Fears: Strategist. Gold is the safest asset to buy in these times as, despite reassurance from central banks, inflation is likely to crop up again next year or in 2011, Philip Manduca, investment manager at ECU Group, told CNBC Thursday.

Monetary authorities have printed so much money that price rises in the future are inevitable, he said. "You've got a lot of confetti paper fears out there as a consequence, you've just got to be bullish on gold even at these levels," Manduca said.

"It's going to go to $2,000 next year," Manduca said. "In the currencies and the companies, you've got political and corporate risk, go buy the pure asset." Read more here-

http://www.cnbc.com/id/31422228

-China Should Buy Gold to Hedge Dollar Fall: Researcher. China should buy more gold because the U.S. dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday.

Li Lianzhong, who heads the economic department of the Party's policy research office, said China should use more of its $1.95 trillion in foreign exchange reserves to buy energy and natural resource assets. Speaking at a foreign exchange and gold forum, Li also said that buying land in the United States was a better option for China than buying U.S. Treasury securities.

"Should we buy gold or U.S. Treasurys?" Li asked. "The U.S. is printing dollars on a massive scale, and in view of that trend, according to the laws of economics, there is no doubt that the dollar will fall. So gold should be a better choice." Read more here-http://www.cnbc.com/id/31535631 and http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=85486&sn=Detail

-Many analysts are now thinking that gold may have found a floor. Among them, Russell Browne, strategist at ScotiaMocatta, said that gold “has found support” near $927 an ounce, which marks a 50 percent retracement of its rally from $865 in mid-April to $990 this month. Browne cited Fibonacci analysis. Gold traded as low as $925.80 on June 15, but has generally honored its 100-day moving average, currently at $926.41.

That “100-day moving average near $925 has held firm despite a bearish move in gold from $990 to $927,” said Browne. Fibonacci analysis, according to Bloomberg, “uses a mathematical formula based on the theory that prices may rise or fall by certain percentages after reaching a high or low. A break of one level indicates an asset may move to the next, while a failure suggests a trend may stall.” Casey Daily Resource

-'Adjustments' needed in dollar's value, IMF economist says. An increase in exports is needed for a sustained recovery in the United States and this may require an adjustment in the value of the U.S. dollar, IMF chief economist Olivier Blanchard said on Monday.

"For the U.S., it is absolutely no question that a sustained recovery has to come from a large increase in exports. That may not be very easy to do. This may require fairly substantial adjustments in the dollar," he told a conference. Read more here-http://www.gata.org/node/7520

-Economist Phelps Says U.S. Wealth May Take 15 Years to Rebound. U.S. households may take as long as 15 years to rebuild wealth lost in the recession, said Columbia University professor Edmund Phelps, winner of the Nobel Prize in economics in 2006.

“The only way we’re going to get a healthy, full recovery is over a long period of time, involving households rebuilding their balance sheets and companies in trouble rebalancing their balance sheets,” Phelps said in an interview today with Bloomberg Television. “There’s no silver bullet that’s going to get us into good shape quickly.”

U.S. household wealth fell by $1.3 trillion in the first quarter of this year, with net worth for households and non- profit groups falling to its lowest level since 2004, according to a Federal Reserve report released June 11. Wealth dropped by a record $4.9 trillion in the last quarter of 2008. Read more here-

http://www.bloomberg.com/apps/news?pid=20601103&sid=aKMxwUC4D3nw

-World Bank Says Global Economic Recession to Deepen. The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.

The world economy will contract 2.9 percent, compared with a previous forecast of a 1.7 percent decline, the Washington- based lender said in a report today. Growth will be 2 percent next year, down from a 2.3 percent prediction, the bank said.

The bank, formed after World War II to fund health and development projects in poor countries, said that while a global recovery may begin this year, impoverished economies will lag behind rich nations in benefiting. The lender called for “bold” actions to hasten a rebound and said the prospects for securing aid for the poorest countries were “bleak.”

“The recovery is not going to be V-shaped,” said Alvin Liew, an economist at Standard Chartered Bank in Singapore. “We may see slower consumer demand over a prolonged period.”

The bank is more pessimistic than its sister organization, the International Monetary Fund. The IMF, which is forecasting a global contraction of only 1.3 percent this year and growth of 2.4 percent in 2010, said June 19 that it plans to revise estimates “modestly upward.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a5J9B_l2qURQ

-U.S. recession to bottom out this year: OECD. Read more here-http://www.reuters.com/article/newsOne/idUSTRE55N1IX20090624

-Soros says worst of global crisis is "behind us". Read more here-http://www.reuters.com/article/ousiv/idUSTRE55K1OE20090621

-Oil, Rates May Stifle Recovery: Roubini. Watch video here-http://www.cnbc.com/id/15840232?video=1160074276&play=1

-Bank of Canada Rate Should Remain 0.25% Through 2010, OECD Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid=a4V.Dfshby.M

-U.S. Fed keeps interest rates at 0.25%. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aVkQkByhQ.jo or

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajyETdAxywT8

-Nowotny Expects ECB to Keep Rates Steady Into 2010. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=adD4Yd.uAHPM

-UK borrowing reaches record in May as the red ink gets deeper. Government borrowing shot to a record monthly level of £19.9bn in May as soaring spending and dwindling tax receipts put another dent in the national accounts. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5570014/UK-borrowing-reaches-record-in-May-as-the-red-ink-gets-deeper.html

-Can they pay it back? The U.S. is about to go broke and they’ll take Canada down with them. Read more here-

http://www2.macleans.ca/2009/06/22/can-they-pay-it-back/print/

-State shutdowns loom as deadlines near. At least 19 states still have to approve their fiscal 2010 budgets before next Tuesday. If they don't, staffers might not be paid and services might shut down. Read more here-http://money.cnn.com/2009/06/24/news/economy/Clock_ticking_on_state_budgets/index.htm?postversion=2009062417

-States Turning to Last Resorts in Budget Crisis. Read more here-http://www.nytimes.com/2009/06/22/us/22states.html

-California set to issue IOUs as fiscal crisis weighs. Read more here-http://www.reuters.com/article/newsOne/idUSTRE55O07Q20090625

-Numbers On Welfare See Sharp Increase. Read more here-http://online.wsj.com/article/SB124562449457235503.html

-U.S. Jobless Claims Rise, Total Benefit Rolls Climb. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=anCtVrRFvn1U

-Mass layoffs match record high. Job cuts involving at least 50 people from a single employer rise in May to highest level since 1995. Read more here-

http://money.cnn.com/2009/06/23/news/economy/mass_layoffs.reut/index.htm

-Jobless rate in Western US tops 10 percent. Read more here-http://finance.yahoo.com/news/Jobless-rate-in-Western-US-apf-3224283879.html?x=0

-Al Qaeda says would use Pakistani nuclear weapons. Read more here-http://in.reuters.com/article/worldNews/idINIndia-40495320090621?sp=true

-Kim Jong Il Close to Ceding Power, South Korea Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aX5XZmSEnKHk

-North Korea threatened an “all-out war” against the U.S. as Kim Jong Il’s regime ratcheted up its anti-American rhetoric to mark the 59th anniversary of the start of the Korean War. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aN9xu8lzEd50

-Russia, Venezuela sign $4 bln joint bank deal. Russia and Venezuela signed a deal Tuesday to set up a new bank with starting capital of four billion dollars (2.9 billion euros) to fund joint projects as Moscow ramps up its role in South America. Read more here-http://www.breitbart.com/article.php?id=CNG.1debc0c644600c07a24e054a4ded5f8d.71&show_article=1

-CDC sees "something different" with new flu. Read more here-http://www.reuters.com/article/newsOne/idUSTRE55H5DB20090619

-Tracking the progress of H1N1 swine flu. See map here-http://flutracker.rhizalabs.com/

-Millionaires’ Club Shrank at Record Rate in 2008, Merrill Says. The ranks of the world’s millionaires shrank at the fastest rate in 2008, with North America suffering the biggest wealth loss worldwide, according to a survey by Capgemini SA and Merrill Lynch & Co.

The global slump in property and equity markets last year cut the number of millionaires by 15 percent to 8.6 million, wiping out two years of increases, the firms said in their 13th annual World Wealth Report published today. The value of the world’s millionaires’ assets slid 20 percent to $32.8 trillion, after a 9.4 percent increase the previous year, the survey said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aLE9ncbh8IY0

-R. Allen Stanford, the Texas financier accused of swindling investors in a $7 billion Ponzi scheme, pleaded not guilty to fraud. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=aTUidWKc9QQw

-Must watch comedy video-US to Trade Gold Reserves for Cash through Cash4Gold.com. Watch video here-http://www.youtube.com/watch?v=6JPcimrnXGA

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/HistoricalPriceTrackingsystem.html

 

-Watch BTV interview of Harold Seigel on colored diamonds and his website http://www.rarecoloreddiamonds.com/. Watch video here-http://www.rarecoloreddiamonds.com/watchnow.html

and http://www.youtube.com/watch?v=BWYMJnEz-n4

-Rio Tinto’s Pink Diamonds Play Tribute to Grand Passions & Great Loves. Rio Tinto’s 2009 Argyle Pink Diamond Tender is set to celebrate the 25th anniversary of its iconic offering of pink diamonds with an exceptional collection, including four outstanding heart-shaped gems. Suitably titled "Grand Passions," this year’s tender collection comprises 43 of the rarest and the best pink diamonds from Rio Tinto’s Argyle Diamond Mine in Western Australia. With around 10 years of production remaining for the Argyle Diamond Mine, these rare pink diamonds will be keenly contested for by investors, collectors and diamond experts from around the world.

Josephine Archer, business manager for Argyle Pink Diamonds, commenting on the 2009 collection, said, “the pink diamonds selected for this year’s tender are a fitting tribute to the artistry and passion of all those who worked to bring them to the marketplace. These diamonds are for appreciators of the truly exceptional, and we are delighted to be showcasing them to the world.”

Included in this year’s collection is a magnificent 2.61-carat, intense pink, heart-shaped diamond named Argyle AmourTM. The Argyle AmourTM is the most valuable heart-shaped pink diamond ever produced from the Argyle mine. Exuding passion, romance and warmth, this extraordinary diamond captures all that is Amour. The two other “hero” stones set to captivate bidders are the Argyle ShalimarTM diamond, a 1.25-carat, purplish-pink round diamond named after the exotic garden sanctuary built by Indian emperor Jahangir for his beloved wife, and, in keeping with the theme of legendary passions, the Argyle ScarlettTM diamond, a 1.10-carat red oval diamond.

According to Jean-Marc Lieberherr, general manager for sales and marketing of all diamonds from Rio Tinto’s diamond mines, “excitement around this tender collection is understandable. The rarity of Argyle pink diamonds has created a connoisseurship for them, and there is a growing recognition that the earth will not produce pink diamonds for that much longer.”

This will be the first year that the Argyle Pink Diamond Tender will be presented in Mumbai. Also for the first time, Argyle Pink Diamonds Select Ateliers in London, Sydney and Perth will showcase these rare diamonds to their respective clients at in-store preview events. Tender viewings will held be in Mumbai, from August 6 to 10, Perth, from September 1 to 11, and Hong Kong, from September 19 to 27. Read more here-http://www.diamonds.net/news/NewsItem.aspx?ArticleID=26551 or http://www.idexonline.com/portal_FullNews.asp?id=32447

WARREN BUFFETT-U.S. ECONOMY IS IN SHAMBLES-NO SIGN OF RECOVERY-MORE STIMULUS MAY BE NEEDED

-Warren Buffett to CNBC: U.S. Economy In "Shambles" No Signs of Recovery Yet. Read more and watch video here-http://www.cnbc.com/id/31526130

-Buffett Tells CNBC U.S. Economy Shows ‘No Bounce.’ Billionaire investor Warren Buffett said a recovery in the U.S. economy will take time as he’s not seeing signs of a rebound at his businesses spanning retailing, manufacturing and energy.

“In terms of the economy coming back, it takes a while,” Buffett told CNBC. “Everything we see about the economy is we’ve had no bounce.” Buffett is the chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc.

The U.S. gross domestic product plunged in the first quarter, dropping at a 5.7 percent annual pace, the Commerce Department said May 31. Buffett, who oversees candymaking, energy and manufactured-housing units, reported Berkshire’s first loss since 2001 in the first three months of the year. “Industrial demand is down like we’ve never seen it,” Buffett said. A recovery “will happen but it hasn’t happened yet.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ax72Awx7CPQ4 and http://www.reuters.com/article/wtUSInvestingNews/idUSTRE55N4BN20090624

-Buffett Says U.S. May Need More Stimulus as Unemployment Climbs. Billionaire investor Warren Buffett said the U.S. may need a second economic stimulus package as unemployment is poised to continue rising.

“It looks like we’re going to need more medicine, not less,” Buffett said today in a Bloomberg Television interview. “We’re going to have more unemployment. The recovery really hasn’t got going.” Buffett is chairman and chief executive officer of Omaha, Nebraska-based Berkshire Hathaway Inc.

President Barack Obama signed a $787 billion stimulus bill in February, which included tax cuts and spending on infrastructure projects intended to save or create 3.5 million jobs. In the first quarter, the U.S. gross domestic product plunged, dropping at a 5.7 percent annual pace, and Berkshire reported its first loss since 2001.

The economic rebound “will be a slow process,” said Buffett, who predicted the joblessness rate will exceed 10 percent. “It hasn’t turned yet. There’s no telling how long it will take. It will happen.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aS58Up2i8RFE

HARRY SCHULTZ PAINTS A GRIM PICTURE OF THE FUTURE

-In its current issue, HSL reports rumours that "Some U.S. embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of U.S. cash to purchase currencies from those governments, quietly. But not pound sterling. Inside the State Dept., there is a sense of sadness and foreboding that 'something' is about to happen within 180 days, but could be 120-150 days."

Yes, yes, it's paranoid. But paranoids have enemies and the Crash of 2008 really did happen.

HSL's suspicion: "Another FDR-style 'bank holiday' of indefinite length, perhaps soon, to let the insiders sort out the bank mess, which (despite their rosy propaganda campaign) is getting more out of their control every day. Insiders want to impose new bank rules. Widespread nationalization could result, already underway. It could also lead to a formal U.S. dollar devaluation, as FDR did by revaluing gold (and then confiscating it)."

HSL is still sticking with its 20-year "V" formation forecast, but emphasizes that within the current 10-year downtrend phase there will be rallies that will "last 1-2 years." It attributes its current success to "successfully trading almost daily, especially in commodity stocks (coal/potash/energy/ fertilizer/gold). Take profits constantly and rebuy on mini pullbacks. Prefer non-U.S. dollar companies; many such companies are listed in U.S. & Canada or Australia."

HSL says: "The world is staggering today between stagflation and net deflation right now; it varies widely around globe. Net deflation is a maybe 35% risk, due to toxics and/or deepening depression. Bit more likely, we'll slowly creep up to a dangerous 4.5% inflation on average, medium-term. But the wild card is the currency risk, which has a 50% (?) chance of boiling over and causing literally overnight (i.e. 24 hours) mega inflation in the asset markets." Read more here-

http://www.marketwatch.com/story/story/print?guid=C6166A8F-4020-4BA6-880C-E99288B10B0F

JOHN WILLIAMS-U.S. ECONOMY MUCH BLEAKER THAN OFFICIAL STORY

-To the power brokers in Washington or on Wall Street, John Williams is little more than an annoying crank, a bona fide member of the lunatic fringe. A U. S. network television interviewer once slammed the Oakland, Calif.-based economist as a "grassy knoll theorist." USA Today dismissed him as a purveyor of "gloom and doom," and the bureaucrats who analyze U. S. economic data believe he's "full of sh--," he readily admits.

But that hasn't stopped the 60-year-old Williams a veteran consultant to Fortune 500 companies, and founder of the Shadow Government Stats website www.shadowstats.com from continuing his crusade. Put simply, Williams says the official economic data reported by various U. S. government agencies is so heavily manipulated, it no longer reflects what's really going on in the world's largest, most indebted economy.

Under a string of Democratic and Republican regimes dating back to the 1960s, Williams says there has been a steady push to alter the way in which inflation, unemployment, economic output and other variables are measured or reported. The end result? The official numbers are heavily cooked, he says, and deliberately designed to put the sunniest spin possible on the state of the economy.

Although even the official government data confirms the U. S. has been in recession since the end of 2007, Williams says the downturn has been far deeper, and the prognosis is much bleaker, than the official stats show. Williams, a Dartmouth College economics grad who ran his family's chainsaw-importing business before he became a consultant in the 1980s, says the U. S. is effectively bankrupt.

It's in so deep, the federal government's total debt including future unfunded liabilities for Medicare and Social Security is now approaching $75 trillion US, he says, or more than five times GDP (gross domestic product). According to his analysis, the real U. S. unemployment rate is closer to 20 per cent than 10 per cent, and the severe peak-to-trough contractions in everything from housing starts to retail sales, durable-goods orders and consumer net wealth show the U. S. is in a depression.

Once foreign investors stop buying U.S. government bonds a process that's inevitable, he figures, with China already hoarding commodities as a hedge the U.S. will be forced to devalue its currency, crank up the printing presses, and steel itself for hyperinflation. "I think you're going to see inflation move up to 20 per cent, possibly within the next year," he says. "And I don't give it more than five years before foreign investors just dump their U.S. treasuries, we see a collapse in the credibility of the dollar, and it essentially becomes worthless." Read more here-http://www.edmontonjournal.com/business/Gary+Lamphier+prognosis+much+bleaker+than+official+story+economist+warns/1731480/story.html

INFLATION-HYPERINFLATION WATCH

-Hyperinflation Could Hit US In 5-10 Years: Dr. Doom. The US is headed toward hyperinflation, and within five to 10 years it could have inflation rates of 10 to 20 percent, said Marc Faber, editor and publisher of the Gloom, Boom & Doom Report. "In every society, when you have large fiscal deficits combined with easy monetary policies the likelihood that you will have high inflation is very, very high," Faber said. "And it happens very quickly."

These numbers rise so speedily because the government "massively" understates the country's rate of inflation, Faber said. To get a true reading, he said, people need to ditch core inflation numbers and include CPI in their analysis. "It’s a lie what they publish," said Faber. "If you underweigh education costs, and if you underweigh health care costs, then you come to a totally different result." Read more and watch video here-http://www.cnbc.com/id/31450173

-30 Years of Inflation Coming, But "Deflation Scare" Not Over Yet, Cycle Maven Says. Everyone is right to fret about inflation but the "deflation scare" isn't over yet, says Charles Nenner, founder of the Charles Nenner Research Center.

Renowned for his cycle work, Nenner sees deflation remaining dominant until year-end and inflation not picking up for another 18 months. But that will be the start of a 30-year (yes, year) upcycle for inflation says Nenner, who spent 12 years as a market-timing consultant for Goldman Sachs.

For those who believe the dollar is doomed, Nenner notes "all currencies are bad." In other words, currency trading will be a game of relative bets vs. a one-way trade against the greenback, as so many expect. Read more here-http://finance.yahoo.com/tech-ticker/article/267557/30-Years-of-Inflation-Coming-But-%22Deflation-Scare%22-Not-Over-Yet-Cycle-Maven-Says?tickers=GDX,XME,TIP,TBT,NEM,^DJI,^GSPC?sec=topStories&pos=9&asset=&ccode

-Fed's Hoenig says inflation a longer-term issue: report. Read more here-http://www.reuters.com/article/ousiv/idUSTRE55I2Y320090619

-Inflation sparks glowing on the horizon. Read more here-http://www.reuters.com/article/ousiv/idUSTRE55K20K20090621

-Inflation or Hyperinflation? Read more here-http://news.goldseek.com/MerkInvestments/1245860864.php

40 U.S. BANK FAILURES IN 2009

-40 banks failures in 2009. Banks in Georgia, North Carolina and Kansas are closed by regulators as the financial crisis takes a toll on local banks across the nation. Read more here-

http://money.cnn.com/2009/06/19/news/companies/bank_failure/index.htm

-North Carolina, Georgia, Kansas Bank Seizures Cost $363 Million. Banks in North Carolina, Georgia and Kansas with combined assets of $1.5 billion were seized by regulators last week, costing the U.S. insurance fund $363 million and pushing this year’s tally of failures to 40.

Southern Community Bank of Fayetteville, Georgia, and 111- year-old Cooperative Bank in Wilmington, North Carolina, were closed June 19 by state officials, and the Office of the Comptroller of the Currency shut First National Bank of Anthony, Kansas. The Federal Deposit Insurance Corp. was named receiver.

Southern Community’s $307 million in deposits were bought by United Community Bank of Blairsville, Georgia, and most of Cooperative’s $774 million in deposits went to First Bank in Troy, North Carolina, the FDIC said. Bank of Kansas in South Hutchinson acquired First Bank’s $142.5 million in deposits. The acquiring banks are assuming a combined $1.47 billion in assets, mostly loans, and signed agreements with the FDIC to share more than 80 percent losses with the government.

“The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector,” the FDIC said in each statement. “The agreement also is expected to minimize disruptions for loan customers.”

Regulators this year have closed the most banks since 1993 as a loss of 6 million jobs since the recession began contributes to mounting home foreclosures and loan delinquencies. The U.S. economy contracted at a 5.7 percent annual pace in the first quarter. More than a quarter of all states have unemployment rates higher than 10 percent, the Labor Department said last week. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aeKCvrtGsrhY

U.S. DOLLAR

-Fading of the Dollar's Dominance. The days of calling the dollar almighty may be numbered. Since World War II, when the dollar eclipsed the British pound as the king of world currencies, the United States has reaped the rewards of its monetary strength. The greenback's sense of indestructibility allowed the U.S. government to borrow cheaply and gave rise to an era of rich American globetrotters toting the world's most easily convertible form of cash.

But the financial crisis that started in the United States is dramatically intensifying the debate over the future of the dollar, and whether it can, or should, remain at the top of the financial food chain. Although a meaningful shift away from the dollar is likely to take years or more, some analysts believe that the debate is now reaching a tipping point. Read more here-

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303397_pf.html

-The U.S. dollar is clearly coasting on its legacy. The Obama Administration's actions have eroded confidence to the point that the rapidly developing BRIC membership has risked its own substantial stake in dollar investments to publicly call for an alternative.

These comments are the tip of the iceberg. Behind the scenes, we can bet that creditor states are preparing for flight. Though the dollar's slide has been stayed by pronouncements of confidence from Russia, Japan, China, and others, there will come a time when the pain is too great and the outcome too certain. Private investors who haven't already left the collapsing dollar ballroom may be crushed when the big players stampede for the door. John Browne-Read more here-http://www.321gold.com/editorials/browne/browne061809.html

-Moody’s Says World Has ‘No Credible Alternative’ to U.S. Dollar. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=aGlxDLf7cVZY

-Deficits, the Dollar and Exit Strategies. The government is pushing the limits on how much debt it can incur. During the past 25 years, the private sector in the United States pushed the limits on debt, and when this experiment in debt-fuelled consumption came to its crescendo, it sent shock waves throughout the global economy. Now it appears that the U.S. government is trying to push those same limits.

As you can see in the table below, during the 1950s it took $1.36 of debt to generate $1.00 of gross domestic product. However, that ratio has crept up over time, and in the current decade, it’s thus far taken $5.81 of debt to generate that same $1.00 of GDP. And now it’s apparently the government’s turn to ramp up debt. Read more here- http://www.schwabinsights.com/2009_06/strategy.html

STOCK MARKET

-Nouriel Roubini's Three Reasons Why Stocks Are Bound to Fall. Believe it or not, Nouriel Roubini professor at NYU's Stern School and Chairman of RGE Monitor has some good news: Aggressive government intervention prevented a great depression. The bad news: Roubini says the stock market rally is long in the tooth. (They don’t call him Dr. Doom for nothing.) He points to three factors that will lead to a correction in the near future.

1. Volatility and Uncertainty Will Increase.  Note: the CBOE Volatility Index is currently down more than 50% since the October panic.

2. Corporate Earnings Will Disappoint.  He says the market is pricing in a robust ‘V’ shape recovery. However, when earnings miss expectations, buyers will turn into sellers, as was the case this week with FedEx. (Research In Motion shares were down early Friday after the firm’s guidance failed to live up to expectations.)

3. The Global Financial System Still Faces Serious Problems.  Roubini thinks unemployment will rise to 11%, bank losses will increase across the globe, and the recession in Europe will get worse.

The silver lining: Roubini isn’t convinced the market will retest the lows. Read more and watch video here-http://finance.yahoo.com/techticker/article/266832/Nouriel-Roubini%27s-Three-Reasons-Why-Stocks-Are-Bound-to-Fall

-Insiders Exit Shares at the Fastest Pace in Two Years. Executives at U.S. companies are taking advantage of the biggest stock-market rally in 71 years to sell their shares at the fastest pace since credit markets started to seize up two years ago.

Insiders of Standard & Poor’s 500 Index companies were net sellers for 14 straight weeks as the gauge rose 36 percent, data compiled by InsiderScore.com show. Amgen Inc. Chairman and Chief Executive Officer Kevin Sharer and five other officials sold $8.2 million of stock. Christopher Donahue, the CEO of Federated Investors Inc., and his brother, Chief Financial Officer Thomas Donahue, offered the most in three years.

Sales by CEOs, directors and senior officers have accelerated to the highest level since June 2007, two months before credit markets froze, as the S&P 500 rebounded from its 12-year low in March. The increase is making investors more skittish because executives presumably have the best information about their companies’ prospects.

“If insiders are selling into the rally, that shows they don’t expect their business to be able to support current stock- price levels,” said Joseph Keating, the chief investment officer of Raleigh, North Carolina-based RBC Bank, the unit of Royal Bank of Canada that oversees $33 billion in client assets. “They’re taking advantage of this bounce and selling into it.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a5gNM5hd9W94

-Short Selling of S&P 500 Increases for First Time since March. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=ak6sp8AYk0NU

-For some long-term perspective, today's chart illustrates the Dow adjusted for inflation since 1925. There are several points of interest. For one, when adjusted for inflation, the bear market that concluded in the early 1980s was almost as severe as the one that concluded in the early 1930s.

Also, the inflation-adjusted Dow is now less than double where it was at its 1929 peak and trades a mere 30% above its 1966 peak not that spectacular of a performance considering the time frames involved. It is also interesting to note that the Dow is up 30.7% from its March 9, 2009 low which is actually slightly more than what the inflation-adjusted Dow gained from its 1966 peak to today. Read more here-http://www.chartoftheday.com/20090619.htm?T

source: chartoftheday.com

38 YEARS OF BAILOUTS

-In the wake of Penn Central filing for bankruptcy, America’s largest rail company at the time, Congress passed the Rail Passenger Service Act of 1970 and Amtrak was born. The new federal monopoly was expected to be self-sufficient by 1974.

Today, 38 years of federal subsidies and over $33 billion tax dollars later, the company has yet to turn a profit. So what is Congress’s solution? Throwing the dysfunctional enterprise $13 billion more tax dollars over the next five years, plus another $1.3 billion towards infrastructure and security. If the bureaucrats’ ongoing experiment with Amtrak is any indication of GM or Chrysler’s future, then American taxpayers are in for a world of hurt. Read more here-http://caseyresearch.com/displayCcs.php?e=true

REAL ESTATE-MORTGAGE-FORECLOSURE

-Many believe homeownership is no longer a way to build wealth: survey. Read more here-http://www.marketwatch.com/story/story/print?guid=B40E52D1-0065-40E5-B29E-E9561D794AC7

-California, Las Vegas Home Prices Decline on Foreclosure Sales. Home prices throughout California and in the Las Vegas area fell from a year earlier in May as a rise in foreclosures pushed down the value of single-family houses and condominiums.

The median price for an existing, single-family detached home in California declined 30 percent to $267,570, the California Association of Realtors said today in a statement. In the Las Vegas area, the median price for houses and condominiums fell 44 percent to $135,000, San Diego-based MDA DataQuick said in a separate statement today.

About 73 percent of all existing houses and condos sold in the Las Vegas-Paradise area were foreclosures last month, up from 56 percent a year earlier, and such sales accounted for 51 percent all existing-home transactions in California, MDA DataQuick said. Foreclosure sales represented 40 percent of California resales a year ago, the research company said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=ap29J9krkBY0

-Housing Eludes Recovery as Job Losses, Foreclosures Climb. Unemployment and consumer debt are putting home ownership beyond the reach of would-be buyers even as U.S. home prices reset to 2003 levels, according to a report today by Harvard University’s Joint Center for Housing Studies.

“Clear signs of a recovery have yet to emerge, and job losses and the steady stream of foreclosures are keeping many markets under pressure,” researchers for the Cambridge, Massachusetts-based center wrote. “Sales of both new and existing homes continued to struggle to find a bottom.”

Tight residential real estate markets and low mortgage rates fuelled a five-year property boom as the number of U.S. households paying more than half their incomes for housing jumped from 13.8 million in 2001 to 17.9 million in 2007, the researchers said. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aw.NN1SqL7xk

-U.S. homes recovery distressingly slow: Reuters/UMich. A "distressingly slow" U.S. housing recovery, with inflation-adjusted home values expected to decline over the next five years, makes it unlikely that housing wealth will drive consumer spending in the next decade, a Reuters/University of Michigan survey found.

Consumers are apt to maintain their renewed emphasis on savings and paring debt, Richard Curtin, director of the survey, said in a June home price update on Friday. Housing wealth changes have a lagged impact on spending, and the influence of declines seen in 2008 will depress growth in consumer spending in 2009 and 2010, the survey said. Read more here-

http://www.reuters.com/article/ousiv/idUSTRE55I3CJ20090619

-U.S. home prices fell 6.8 percent in April from a year earlier as rising unemployment and record foreclosures kept buyers out of the market. Measured monthly, the average price fell 0.1 percent from March, the Federal Housing Finance Agency in Washington said today. Read more here-

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

-Home resales in the U.S. rose in May for a second month as record foreclosures caused prices to drop. Sales prices of existing homes dropped 17 percent in May from a year before, spurring a second straight gain in purchases and helping reduce the nation’s glut of unsold properties.

Purchases rose 2.4 percent to an annual rate of 4.77 million, lower than forecast, the National Association of Realtors said in Washington. The median price drop was the third-deepest on record. Separate figures showed home values nationally fell 0.1 percent in April from a month earlier. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=aTaoPl2uei3s

-Purchase of new homes in the U.S. unexpectedly fell in May as builder discounts failed to keep pace with the foreclosure-driven slump in prices for resales. Read more here-

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

-Pulte Expects Home Sales Will Languish for Months. New home sales in the U.S. likely will remain little changed in coming months because of low consumer confidence and the difficulty would-be buyers have getting loans, Pulte Homes Inc. Chief Executive Officer Richard Dugas said at an investor conference today.

“Buyers are unwilling and unable to take on new mortgages,” Dugas said at a Wachovia Corp. conference in Boston. “Despite the record fall in prices and the tremendous deal that consumers get relative to the 30-year mortgage rates where they are today, we’re still having difficulty convincing people to get into the market.”

New home sales are down 75 percent from their 2005 peak and consumer confidence is 51 percent below its five-year high, data compiled by Bloomberg show. Record foreclosures have helped push the median new home price down 20 percent from its 2007 high as builders are forced to compete with a glut of unsold property. Read more here-

http://www.bloomberg.com/apps/news?pid=20601110&sid=a04AejfFSpvo

-Worse than subprime? Other mortgages imploding slowly. Call it son of subprime. Experts warn that a new wave of mortgage foreclosures may be coming soon and could rival the default rates for subprime mortgages and slow efforts to find bottom in a prolonged national housing slump.

The mortgages in question are $230 billion of option adjustable-rate mortgages, creative lending products that flourished at the height of the housing boom. In an option ARM, a borrower can opt to pay less than his or her monthly balance due, and the difference is tacked onto the outstanding loan balance.

Many experts had expected an explosion of defaults in the springtime on these roughly 564,000 outstanding mortgages. However, interest rates dropped to historic lows, and that delayed the detonation of what many housing analysts still see as a ticking time bomb.

"They're probably going to default at a rate that makes subprime look like a walk in the park," warned Rick Sharga , senior vice president for RealtyTrac, a foreclosure research firm in Irvine, Calif. Read more here-http://news.yahoo.com/s/mcclatchy/20090618/pl_mcclatchy/3255357

-Fannie, Freddie asked to relax condo loan rules: report. Two U.S. Democratic lawmakers want Fannie Mae and Freddie Mac to relax recently tightened standards for mortgages on new condominiums, saying they could threaten the viability of some developments and slow the housing-market recovery, the Wall Street Journal said. Read more here-

http://www.reuters.com/article/GCA-Housing/idUSTRE55L39120090622

-Not paying mortgage, yet stuck with keys. Backlog of seriously delinquent mortgages imperils recovery. Read more here-

http://www.washingtonpost.com/wp-dyn/content/article/2009/06/23/AR2009062303500_pf.html

-There may be another culprit scuttling a U.S. housing recovery: low home appraisals. Flawed appraisals are derailing real estate sales and depressing values across the U.S., the National Association of Realtors said yesterday as it reported that existing home prices declined 17 percent in May from a year earlier.

“It’s pointing to thousands of delayed or cancelled transactions,” Lawrence Yun, chief economist of the Chicago- based Realtors group, said in an interview. “We’ve had a massive inundation from members saying this is a big problem.”

Appraisal rules that went into effect on May 1 require lenders that sell loans to Fannie Mae or Freddie Mac to set up a firewall between appraisers and loan officers to prevent improper influence. The rules are the result of an agreement between the mortgage buyers and New York Attorney General Andrew Cuomo, who said an investigation found appraisers inflated values under pressure from lenders.

The agreement mandates that banks order a second appraisal on 10 percent of the loans they sell to Fannie Mae and Freddie Mac, and warns against accepting the higher of any two valuations. The guidelines have led to more conservative valuations by many appraisers and a “chill” in lending, according to John Brennan, research director at the Appraisal Foundation, a Washington-based trade group. Read more here-http://www.bloomberg.com/apps/news?pid=20601213&sid=aacHqlTB6jTg

-Government Pamphlet Taught Banks How To Finance A $70,000 Home With A $500 Downpayment. Read more here-

http://www.businessinsider.com/government-pamphlet-taught-banks-how-to-finance-a-70000-with-a-500-downpayment-2009-6

© 2009, Worldwide Precious Metals.
www.wwpmc.com

The Goldbugg Report - June 30, 2009
Posted by Worldwide Precious Metals on Tuesday, June 30, 2009

As featured on: