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The Goldbugg Report – July 28, 2009

July 28, 2009

- Gold Will Hit $2,000 on ‘Confetti Paper’ Fears

- Gold the King of metals will keep its crown Grandich.

- D-I-V-O-R-C-E – The much talked about Ted Butler article

GOLD

-Greenlight Holds Bullion, Buys Reinsurance Stocks. Greenlight Capital Inc., the $5 billion hedge-fund firm run by David Einhorn, told investors it switched all of its holdings in a gold exchange-traded fund into bullion during the second quarter. “At a minimum this will provide some savings as the costs of storing gold are less than the fees” for the SPDR Gold Trust, the New York-based firm said yesterday in a letter to investors.

Einhorn, 40, told clients in January he was buying gold for the first time amid the threat of inflation from higher government spending. The firm, started in 1996, held 4.2 million shares of SPDR Gold Trust in the first quarter, making the gold- backed ETF its biggest holding. Gold has climbed 5.8 percent this year. Read more here – http://www.bloombergnews.com/apps/news?pid=20601213&sid;=arz6MqVbTVBs or http://www.gata.org/node/7593

-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

-Following is a selection of analysts’ views on the outlook for gold, silver, platinum and palladium prices, gathered as part of the Reuters precious metals price poll for 2009 and 2010.

The survey was carried out over the last three weeks. Read more here – http://in.reuters.com/article/domesticNews/idINLF27496720090716 or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86383&sn;=Detail

-What Will it Take for Gold to Overcome $1000? In our articles and our newsletters we regularly highlight gold’s solid fundamentals.

• World financial/economic crisis may have culminated and greatest risks have been averted but it is still very far from over

• US dollar continues in its multi-year downtrend

• World governments are committed to issue huge volume of government debt for many years to come

• Quantitative easing debt monetization is becoming a routine practice of the Fed

• President Obama’s plans for government spending are making Bush deficits seem like child’s play

The list goes on and on. Most of gold bugs’ economic projections made years ago have come true, but gold has been stuck at a seemingly impregnable level of $1000 for almost 18 months. Will this level be overcome and when? Boris Sobolev-Read more here – http://www.321gold.com/editorials/sobolev/sobolev072009.html

-Eckart Woertz: Gulf should follow China into real assets, gold. Read more here – http://www.gata.org/node/7614

-Erste Group Research, a division of Erste Group Bank AG in Vienna, Austria, has just published a 53-page special report on gold. Special Report Gold 2009: “In Gold we trust.” We continue to see an outstanding risk/return profile for gold investments. We regard the current consolidation as good buying opportunity and envisage higher gold prices in the medium to long term.

The infamous USD 1,000 per ounce threshold should be clearly passed again in 2009, and positive seasonals should lend further support to the price from the third and fourth quarter. Passing USD 1,300 is our first target, in the long run the price may well pass the inflation-adjusted all-time-high of USD 2,300.

Read more here – http://produkte.erstegroup.com/CorporateClients/en/ResearchCenter/Overview/Research_Detail/index.phtml?ID_ENTRY=752

-Gold the King of metals will keep its crown Grandich. Market analyst Peter Grandich, sees good opportunities for investors who want to “buy things on the cheap” and also sees bright prospects for gold Interview with The Gold Report. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86272&sn;=Detail

-What now for gold as it holds up well in the weak price season? Many had predicted a sharp decline in the gold price during the traditionally weak northern summer period, but this hasn’t happened so what is seen to lie ahead for the yellow metal. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86499&sn;=Detail

-WGC study shows gold outperforms other traditional inflation hedges. The Word Gold Council has released its latest Gold Investment Digest and a report on gold as an inflation hedge.

Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86595&sn;=Detail

-Which is best investment top gold ETF or physical bullion? On news that the biggest investor in the SPDR Gold Shares switched its $390 million ETF holding into bullion, Julian Murdoch examines which, in reality, makes most sense for the gold investor. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=86520&sn;=Detail

-Swiss banks running out of storage space for gold bullion. Worries about the economy and the success in marketing gold ETFs has seen Swiss banks finding difficulty in meeting secure storage requirements for gold bullion. Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=86392&sn;=Detail

-Gold bars can, for the first time in almost a century, once again be bought locally as an investment. “South Africans were for a long time unable to share in the country’s gold wealth. The only possibility was to invest in gold companies or in Krugerrands, or to buy Mandela coins or jewellery, said Bernard Stern, chief executive of Metal Concentrators (MetCon).

Stern explains that large fines or even imprisonment could be imposed on individuals who violated the law. As a result South Africans could not hide gold “under their pillows or in a safe” for the lean years, a common practice in Europe and India. Read more here – http://www.miningmx.com/news/gold_and_silver/207371.htm

-In an essay posted this week at Seeking Alpha, J.S. Kim, proprietor of the SmartKnowledgeU investment advisory service, brilliantly skewers the gold and silver exchange-traded funds as likely frauds, perpetrators of a system of fractional-reserve gold and silver banking that is built on conflict of interest. Kim quotes the research of silver market analyst Ted Butler and GATA board member Adrian Douglas. Read more here – http://www.gata.org/node/7603

SILVER

Gold to silver ratio at 80 to 1 with gold at $2,600 the silver price would be $32.50

Gold to silver ratio at 70 to 1 with gold at $2,600 the silver price would be $37.14
Gold to silver ratio at 60 to 1 with gold at $2,600 the silver price would be $43.33

Gold to silver ratio at 50 to 1 with gold at $2,600 the silver price would be $52.00
Gold to silver ratio at 15 to 1 with gold at $2,600 the silver price would be $173.33

-China offers silver bullion for investment. China has introduced its first-ever investment opportunity for silver bullion. The bars are available in 500 grams, 1 kilogram, 2 kilograms and 5 kilograms with a purity of 99.9 percent.

Figures show that gold was 50 times more expensive than silver in 2007. But now that figure has reached to over 70 times, the highest in the past five years. Analysts say that silver has been undervalued in recent years. They add that the metal is a wise investment for individual investors, and could be a good way to cash in.

Wang Chunli, GM of Beijing Caibai Shopping Mall said “We are the first to offer silver bullion as an investment opportunity. The price for the first batch of the bullion is set very low, close to the cost of the raw material. The investment threshold is not high, and is more suitable for the general public. Silver is much cheaper than gold.” Read more here – http://www.cctv.com/program/bizchina/20090723/101308.shtml

-”But sometimes something comes along that makes me think about silver, such as David Morgan of the silver-investor.com site reporting that “during the past ten years, silver’s use in industry has gone from roughly 35% of the entire annual production in silver, to greater than 50%. Not only that, but it is the fastest growing area of the silver market.”

“So how much silver was mined? Well, the commoditynewscenter.com notes that “According to the US Geological Survey, about 672m ounces of silver was mined in 2008. And with an average silver price of $14.94 per ounce, if all mined silver was sold at spot, the entire supply chain would generate revenues of only about $10 billion.”

“It is statistics like these, coupled with the dismal fact of the virtual elimination of above-ground stocks of silver as the myriads of electronic devices produced over the decades consumed it all, that makes me look at the world with suspicious distrust, my eyes narrowed to slits and my hand inching under my jacket to the shoulder holster in case I have to blast my way out as I realize to my dismay that the creatures of this planet are so stupid that they can look at this silver thing, and yet not start buying silver right away! Richard Daughty-Read more here – http://www.kitco.com/ind/Daughty/jul172009.html

D-I-V-O-R-C-E – The much talked about Ted Butler article, http://news.silverseek.com/TedButler/1248708118.php

-Ted Butler silver commentary. Read more here – http://news.silverseek.com/TedButler/1248196925.php

-Ted Butler interview on why silver is a screaming buy. Read more here – http://www.thedailybell.com/bellPage.asp?nid=453&fl;

-Roland Watson silver commentary. Read more here – http://news.silverseek.com/SilverSeek/1248370061.php

-If you have ever considering buying silver, I recommend you do it soon, says Dr. David Eifrig, editor of the Retirement Millionaire newsletter, in Steve Sjuggerud’s Daily Wealth. Read more here – http://goldnews.bullionvault.com/buying_silver_072020091

-New and accessible silver investment trust goes live in the US. Gold and silver ETF investment has slowed recently as the markets have become more cautious; does the market have room for another instrument and are either silver or gold top-heavy? Read more here – http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=86662&sn;=Detail

-Silver is set to outperform gold, argued Citigroup in a note published Thursday, with the broker saying investment flows into gold are moderating while the outlook for silver is improving. The ratio for gold-to-silver prices should return to its historical norm between 55 and 60 from the current 70, it said. Read more here – http://www.marketwatch.com/story/story/print?guid=AE0D158D-A227-4D9D-9A3E-3DCF5F454F02

-A case for silver’s quiet strength. The price of sterling has historically followed the price of gold; right now it’s lagging. Gold gets all the glamour when it comes to precious metals, but it’s not the only thing you can hide under your mattress as a hedge against financial ruin. Silver is just as much money as gold. The French word for money is, after all, argent, or silver. Like gold, the metal is a store of money that protects against the frailties inherent in paper currency.

Those frailties are fairly obvious today, with the printing presses running at a high pitch and trillions in notional derivatives outstanding. Money supply is growing quickly and while official (and in my opinion “massaged”) inflation numbers don’t register it, it’s not hard to imagine that prices will move higher as the value of money falls. It just makes sense that if you multiply the supply of money available, it will lose its value.

So the case for precious metals is easy to make. The case for silver is, too: silver prices have a long correlation to gold prices, but that link has broken down recently. The price ratio between the two has averaged about 70:1 over the past year. The average going back 200 years is about 32:1. If the ratio were to revert to that average, silver would outperform gold by a factor of two times.

In fact, during the highly inflationary 1970s, the ratio was 16:1. Interestingly, the physical ratio of silver to gold in the Earth’s crust is about the same. The basic idea is that silver has the same investing attributes as gold but it might be relatively cheap if history is a guide. Fabrice Taylor-Theglobeandmail.com

-I believe the situation is even more dire in silver than in gold because gold is not being consumed but rather is becoming scarce because it is being hoarded by more and more smart investors. Silver is becoming scarce because it is both being hoarded by smart investors and being consumed by industry and ending up in landfills never to be recovered.

The U.S. Geological Survey estimates that silver will become extinct by 2020 just 11 years from now all silver in the earth’s crust will have been mined and consumed. Yet silver now is trading at only its cost of production. The world cannot live without silver. Paper derivatives can not be used to make cell phone batteries or RFID transmitters or electrical solder, etc.

Adrian Douglas-Read more here – http://www.gata.org/node/7559

CHART OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: This Is a Misery Index. Remember the Misery Index? It adds together unemployment and inflation to get a quick and dirty measure of, well, misery. But by this measure, since we’re in deflation, the current recession doesn’t look so bad.

So HuffingtonPost came up with its index, which uses the broader measure of unemployment (U6), along with a more narrow basket of prices on essential goods, adding in other things like food stamps and credit card delinquencies. We think HuffPo’s does a much better job of capturing the current misery than the old one. Read more here – http://www.businessinsider.com/chart-of-the-day-misery-by-huffpo-2009-7

-”A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Winston Churchill-Bio here – http://en.wikipedia.org/wiki/Winston_Churchill

-”There’s no reward in life without risk.” Barry J. Farber-http://en.wikipedia.org/wiki/Barry_J._Farber

-”You are the way you are because that’s the way you want to be. If you really wanted to be any different, you would be in the process of changing right now.” Fred Smith-Bio here – http://en.wikipedia.org/wiki/Frederick_W._Smith

-It is hard to imagine a more stupid or more dangerous way of making a decision than by putting those decisions in the hands of people who pay no price for being wrong. Thomas Sowell-Bio here – http://en.wikipedia.org/wiki/Thomas_Sowell

-There is only one way to kill capitalism by taxes, taxes and more taxes. Karl Marx-Read more here – http://en.wikipedia.org/wiki/Karl_Marx

-While the crash only took place six months ago, I am convinced we have now passed through the worst and with continued unity of effort, we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us. Herbert Hoover, President of the United States May 1, 1930-Bio here – http://en.wikipedia.org/wiki/Herbert_Hoover

-John Embry Expects $1,500 Gold and Early Stage Hyperinflation by Year End.

TGR: If you project gold going to $1,500 by the end of the year, are you projecting that the inflationary period will begin before the end of this year too?

JE: Not in a dramatic way. It will be in the early stages. This obviously presupposes that the dollar will fall in that environment, but yes, as the dollar falls, you’ll start to see more inflationary implications in my opinion. There will still be a lot of people out of work and it will start affecting those who are working. I think that will have a rather negative impact on the overall U.S. economy as well.

TGR: What are the implications of all of this on investments, be they in gold or whatever else?

JE: Personally, I have a significant proportion of my own wealth in gold and gold shares. I like most hard assets. What I wouldn’t own are financial assets, such as bonds or bank deposits and certainly not banks and financial institutions. If what I foresee comes to pass, there will be rewards for being in hard assets. That will protect you.

TGR: What would you advise investors who are just coming into the gold market?

JE: I was responding to a questionnaire recently about how to construct a gold portfolio in today’s market. If you’re being relatively conservative, you would always have a solid core in bullion. I don’t mean ETFs. I mean real bullion or a vehicle where you can audit the fact that the gold is there and not just trust someone saying that it is.

TGR: How much would you put in that core holding?

JE: Physical gold would be 20% to 25% of my portfolio. Read more here – http://news.goldseek.com/GoldSeek/1244827800.php

-Another massive injection of liquidity by the Federal Reserve is a near certainty as the calendar moves through the second half of the year. Foreign investors have for some time indicated a growing unwillingness to finance the failing economic policies of the U.S. The Federal Reserve may have to monetize a half trillion dollars of U.S. debt in coming months.

That flood of dollars can only send the value of the U.S. dollar down on foreign exchange markets. With that development will come a renewal of the bull market in $Gold. The Federal Reserve and the Obama Regime may be only months away from making $1,000 the new floor for $Gold. Ned W. Schmidt-Read more here – http://www.kitco.com/ind/Schmidt/jul202009.html

-Eric Sprott July commentary. We are now in the early stages of a depression. The economic indicators we follow to track real economic activity are all signalling a slowdown of massive proportions. You wouldn’t know it reading the mainstream papers of course they all focus on the relative decline in the slowdown’s intensity. Reading about the slowdown ‘slowing down’ is not the same as growth however, and does not warrant excitement in our opinion.

Our title this month paraphrases one of Bill Clinton’s presidential campaign messages from 1992. As one of the three key themes in Clinton’s campaign, “The economy, stupid” was printed on a sign in his headquarters in Little Rock to help campaign workers stay on message. This month we’re keeping it simple by focusing on the real economy and its implications for the stock market. Here is the real economy summarized in numbers, read more here – http://www.sprott.com/Docs/MarketsataGlance/July_2009.pdf

-Marc Faber says ultimate crisis still coming. The world has not seen the end of the financial crisis and the recent surge in markets was a result of excess liquidity coming from central banks, Marc Faber told CNBC in an interview. “If you pump money into the system and you create large fiscal deficits, you create volatility,” Faber, author of the Gloom, Boom and Doom Report, told CNBC in remarks reported on its website.

“We’ve seen an intermediate low in March, we’ll rally for a year or so or maybe 18 months the ultimate crisis will happen much later, and the ultimate crisis would clean the system,” he added. Faber, who did not forecast a precise time for that crisis, told CNBC that firing half the government workers in the world would be one way of dealing with the crisis. “If you shift government activity to the private sector the economy becomes more dynamic,” Faber said. Read more here – http://www.reuters.com/article/bondsNews/idUSBNG41907420090717

-The Financial Crisis Isn’t Over: Stephen Roach. The CIT Group woes show that the financial crisis is not over as more writeoffs are on the way, Stephen Roach, chairman at Morgan Stanley Asia. “Sorry to break to the news, but the financial crisis is not over, à la CIT. You’ve got plenty more writeoffs of bad paper to come,” Roach told CNBC.

“75 percent of the world’s economies today are still contracting and the biggest piece on the demand side of the global economy is the American consumer, who is dead in the water,” he added. The markets’ reaction to the “anemic character of the recovery” is pretty euphoric, and it actually is a manifestation of the excess liquidity poured into the system by monetary authorities, according to Roach. “Liquidity is seeking return and right now these markets are priced for a recovery that’s going to end up disappointing,” he said. Read more here – http://www.cnbc.com/id/31938270

-Roubini Says Risk of ‘Double Dip’ Global Recession. The global economy may fall back into a recession by late 2010 or 2011 because of rising government debt, higher oil prices and a lack of job growth, said Nouriel Roubini, the New York University economist who predicted the credit crisis.

A “perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labour market could “blow the recovering world economy back into a double-dip recession,” he wrote in a research note today. “It is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented.” Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aeY.UV6r3uiE

-Roubini: Economic Recovery to Be ‘Very Ugly’. Watch video here – http://www.cnbc.com/id/32012679

-Harvard’s Feldstein Sees Risk of ‘Double-Dip’ Recession in U.S. The U.S. recession may not be coming to an end and there is a risk the economy may experience a “double-dip” contraction, said Martin Feldstein, a professor of economics at Harvard University.

“There is a real danger this is going to be a double dip and that after six months or so we’ll have some more bad news,” Feldstein, the former head of the National Bureau of Economic Research and Reagan administration adviser, said today in an interview on Bloomberg Television. “We could slide down again in the fourth quarter.”

The economy could “flatten out” or “even be positive” in the third quarter, and then it’s likely to contract again in the last three months of the year as the effects of the federal stimulus program wear off and companies finish rebuilding inventories, he said.

“There isn’t going to be enough to sustain a really solid recovery,” he said, even though recent data has provided some “good news” on the economy. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=a3IpfKeeveVM

-U.S. recession easing but likely not over: survey. The National Association for Business Economics’ quarterly industry survey found that demand is stabilizing, but a small majority of the 102 respondents said their firms had not yet seen the bottom. Read more here – http://www.reuters.com/article/newsOne/idUSTRE56J0OR20090720

-National unemployment is now officially reported to be between 9.5% and 10%. If we study the rules for counting these numbers its readily apparent the answers are way-off. The birth-death government model is absolute fiction. True national unemployment is now nearing 20%. We forecast the actual national jobless rate to peak at 30% to 35% within two years.

Roger Wiegand-Read more here – http://www.kitco.com/ind/Wieg_cor/roger_jul172009.html

-Unemployment could undercut U.S. recovery: Bernanke. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56K0AI20090721

-Michigan Jobless Rate Tops 15%, California Sees Record Level. Six U.S. states posted record unemployment rates in June, while Michigan became the first to top 15 percent in a quarter century, threatening to deepen budget crises in capitals across the nation.

The total number of states with at least 10 percent joblessness rose to 15, the Labour Department reported today in Washington. Georgia, Nevada, Rhode Island, South Carolina, Florida and Delaware all reached their highest level of joblessness since records began in 1976. Today’s figures are a blow to states already hammered by falling income and sales-tax receipts. California suffered the biggest drop in payrolls among all states. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aOor3cUkmexE or http://money.cnn.com/2009/07/17/news/economy/state_unemployment_report/index.htm

-Americans Pay Back Debts Most Since ‘52 as Jobless Spur Savings. For the first time since Harry S. Truman was in the White House, Americans are paying back their debts, a phenomenon that just might help keep interest rates low as the Treasury sells a record $2 trillion of bonds and rising unemployment increases U.S. savings. Read more here – http://www.bloomberg.com/apps/news?pid=20601213&sid;=arUgjalkdR2g

-Canada Keeps Rate at 0.25%, Says Dollar Slows Rebound. Read more here – http://www.bloomberg.com/apps/news?pid=20601082&sid;=ak7dyddHZVm0

-Ron Paul Opening Statement Fed Hearing 07/21/2009. Ron explains the financial mess we are in today. Must watch video here – http://www.youtube.com/watch?v=pSRvnXtrmtE&eurl;=http%3A%2F%2Fgoldismoney.info%2Fforums%2Fshowthread.php%3Ft%3D393008&feature;=player_embedded

-2004-2009 Pompous Prognosticators Revisited. “We’re probably somewhere pretty close to a bottom.” Fund manager Barton Biggs September 2008. Read more here – http://news.goldseek.com/GoldSeek/1247208300.php

-Clinton stirs Israeli fears US will accept nuclear Iran. Secretary of State Hillary Clinton on Wednesday stirred Israeli fears that Washington would accept a nuclear armed Iran when she raised the idea of a US “defence umbrella” for Gulf allies. However, Clinton, during a visit to Thailand for an Asian security conference, said later that she was not announcing a new policy and simply wanted to turn Iran away from pursuing a nuclear weapon.

Clinton told Thai television in Bangkok that President Barack Obama’s administration was still open to engage Iran in talks about its nuclear programme but warned that Tehran would not be safer if it obtains a bomb. Read more here – http://www.breitbart.com/article.php?id=CNG.5fce011c9a76f3468914821101a3f8a5.381&show;_article=1

-Diplomats: Iran has means to test bomb in 6 months. Iran is blocking U.N. nuclear agency attempts to upgrade monitoring of its atomic program while advancing those activities to the stage that the country would have the means to test a weapon within six months, diplomats told The Associated Press Friday.

The diplomats emphasized that there were no indications of plans for such a nuclear test, saying it was highly unlikely Iran would risk heightened confrontation with the West and chances of Israeli attack by embarking on such a course. Read more here – http://www.breitbart.com/article.php?id=D99GET3G0&show;_article=1

-Reports: Iran reactor to be switched on this year. Russian news agencies quote the country’s nuclear agency chief as saying a Russian-built nuclear power reactor in Iran is still set to be switched on this year. Read more here – http://www.breitbart.com/article.php?id=D99JL72G0&show;_article=1

-More bodies go unclaimed as families can’t afford funeral costs. Read more here – http://www.latimes.com/news/local/la-me-unclaimed21-2009jul21,0,2534079.story

-The rate of U.K. pub closures is accelerating, with 52 going out of business every week at a cost of 24,000 jobs over the past year, figures show. Almost 2,400 pubs and bars have vanished from villages and towns in the past 12 months, according to research for the British Beer & Pub Association (BBPA).

Local pubs serving small communities have been the worst hit, the association said. The number of closures represents the steepest rate of decline since records began in 1990 and has risen by a third compared with the same period last year, when 36 pubs were closing every week.

A preference for drinking more cheaply at home, rather than going out, is thought to have contributed to closures. A BBPA spokesman said: “The biggest impact is the recession. There are fewer people out and fewer people spending money in pubs and bars. Pubs are diversifying but, unfortunately, if you are a community pub you can’t transform yourself into a trendy town centre bar.” Read more here – http://business.timesonline.co.uk/tol/business/industry_sectors/leisure/article6722488.ece

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

-Pink Argyle Diamonds Tour the World. The Argyle Diamond mine in Western Australia has selected 43 of its best pink diamonds, and is taking them on the road as part of its annual world-wide tender process. This year’s collection of gems, known as “Grand Passions”, would easily fit in the palm of your hand, but it’s worth millions of dollars.

Jo Archer, from Argyle Diamonds, says the stones are usually bought by jewellery connoisseurs, private collectors and celebrities. She says Argyle produces more than 90 percent of the world’s pink diamonds, yet pinks make up a very small percentage of production.

“It’s one-tenth of 1 percent of the mine’s production, so just a tiny sliver,” she says. “And for these tender stones, there’s a million carats of rough diamonds mined for every one carat of pink diamond that reaches tender status.” Diamonds.net-Read more here – http://www.abc.net.au/rural/news/content/200907/s2632976.htm

-Christie’s to sell Annenberg’s 32-carat diamond. A giant gem will hit the auction block in New York this autumn with the sale of the 32-carat emerald-cut Annenberg diamond, which is expected to fetch as much at $5 million, Christie’s said on Wednesday. The flawless ring-mounted diamond, owned by philanthropist Lee Annenberg, widow of publishing magnate Walter Annenberg, leads the auction house’s magnificent jewels sale on October 21.

“Gems of this size are extremely rare, and their presence on the market is always an important event in the world of diamonds,” said Rahul Kadakia, Christie’s head of jewellery. “This gem’s impeccable color, clarity, and polish as well as its prestigious provenance will attract jewellery collectors from all over the world.”

Annenberg, who died in March aged 91, served as chairman and president of the Annenberg Foundation after the death of her husband, a one-time U.S. ambassador to Britain who started the foundation to fund nonprofits, education and the arts. Annenberg also served a chief of protocol during the first term of President Ronald Reagan.

The gem will go on tour ahead of the sale with stops in Geneva, London, Hong Kong, Los Angeles and New York. In December the 35.6-carat Wittelsbach blue diamond smashed expectations and sold for $24.3 million, which experts said was consistent with rare and colossal diamonds fetching especially strong prices during times of economic woe. Read more here – http://www.reuters.com/article/lifestyleMolt/idUSTRE56L4PB20090722

BAILOUT MAY REACH $23.7 TRILLION-LONG TERM U.S. DEBT

-U.S. Rescue May Reach $23.7 Trillion, Barofsky Says. U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.

Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.

“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”

Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aY0tX8UysIaM

-Bailout risk: $23.7 trillion? More like $3 trillion. TARP’s overseer has struck a chord with his estimate that the government has committed $23.7 trillion to rescue the economy. Here’s what’s at risk. Read more here – http://money.cnn.com/2009/07/22/news/economy/bailout_watchdog_barofsky/index.htm

-TARP watchdog Neil Barofsky says the total size of the bailout has now hit $23.7 trillion, when all the guarantees are factored in. Of course, the government doesn’t just provide a bailout total, so different parties may come up with different numbers. But one thing’s clear: ever since the first bailout, the estimate has grown and grown and grown and grown and grown. Let’s hope today’s number is as big as it gets. Read more here – http://www.businessinsider.com/chart-of-the-day-the-bailout-cost-2009-7

-Fannie & Freddie: The most expensive bailout. Efforts to use the troubled mortgage finance firms to fix housing market problems are likely to push the taxpayer bill for Fannie & Freddie above $100 billion. Read more here – http://money.cnn.com/2009/07/22/news/companies/fannie_freddie_bailout/index.htm?postversion=2009072215

-The Long-Term U.S. Budget Outlook from the CBO-Congressional Budget Office. The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II.

As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020. Read more here – http://cboblog.cbo.gov/?p=328

U.K. DEBT HITS A RECORD

-UK debt hits a record of £799bn. Total outstanding government debt in the UK has risen to a record £799bn, or 56.6% of UK GDP the highest since records began in 1974. New borrowing in June was £13bn, almost twice as much as a year ago, the Office for National Statistics said, after the downturn shrank tax receipts.

The figures also reflect the cost of bank bail-outs and higher spending on social security benefits. One economist described the state of the public finances as “dire”. “The figures are modestly better than expected. It doesn’t take away from the fact that the state of public finances is dire and that a considerable degree of fiscal tightening will be required,” said Philip Shaw, chief economist at Investec.

“The figures are volatile on a month-on-month basis. The size of the shortfall and volatility mean there is little to celebrate.” Analysts had forecast borrowing of £15.5bn in June.

The UK is on track to meet Chancellor Alistair Darling’s forecast of £175bn of borrowing this financial year.

Public borrowing for May was revised down to £18.6bn from an initial estimate of £19.9bn. Business groups warned that, although it appears that public borrowing is in line with the chancellor’s forecast, the government must not sit back.

“It would be wrong to tighten policy while the recession continues, but maintaining Britain’s international credibility requires a robust plan for restoring our public finances over the medium-term,” said David Kern, chief economist at the British Chambers of Commerce.

“This must focus on curtailing public spending across the board, while avoiding damaging measures that would harm wealth-creating businesses.” Meanwhile, a National Audit Office (NAO) report said that tax receipts fell by 10% in the past year the biggest fall since 1923. Read more here – http://news.bbc.co.uk/2/hi/business/8160614.stm

-UK budget deficit hits record high in June. Total government spending in June hit £49bn, up from £44.2bn a year earlier. Read more here – http://www.guardian.co.uk/business/2009/jul/21/budget-deficit-hits-record-recession

FISCAL RUIN OF WESTERN WORLD BECKONS

-For a glimpse of what awaits Britain, Europe, and America as budget deficits spiral to war-time levels, look at what is happening to the Irish welfare state. Events have already forced Premier Brian Cowen to carry out the harshest assault yet seen on the public services of a modern Western state.

He has passed two emergency budgets to stop the deficit soaring to 15 percent of GDP. They have not been enough. The expert An Bord Snip report said last week that Dublin must cut deeper, or risk a disastrous debt compound trap. A further 17,000 state jobs must go (equal to 1.25 million in the US), though unemployment is already 12 percent and heading for 16 percent next year.

Education must be cut 8 percent. Scores of rural schools must close, and 6,900 teachers must go. “The attacks outlined in this report would represent an education disaster and light a short fuse on a social time bomb,” said the Teachers Union of Ireland. Nobody is spared. Social welfare payments must be cut 5 percent, child benefit by 20 percent. The police, already smarting from a 7 percent pay cut, may have to buy their own uniforms. Hospital visits could cost L107 a day, etc, etc.

“Something has to give,” said Professor Colm McCarthy, the report’s author. “We’re borrowing E400 million a week at a penalty interest.” No doubt Ireland has been the victim of a savagely tight monetary policy given its specific needs. But the deeper truth is that Britain, Spain, France, Germany, Italy, the US, and Japan are in varying states of fiscal ruin, and those tipping into demographic decline (unlike young Ireland) have an underlying cancer that is even more deadly. The West cannot support its gold-plated state structures from an aging workforce and depleted tax base. Read more here – http://www.gata.org/node/7604

FOUR MORE U.S. BANKS GO DOWN

-Four more banks bite the dust. Two in California , one in Georgia and one in South Dakota these FDIC closures bring the total number of failed banks in 2009 to 57. Read more here – http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ab6guPdqNcq4 or http://money.cnn.com/2009/07/17/news/companies/bank_failures/?postversion=2009071718

FOUR BAD STOCK BEAR MARKETS

UPDATED INFLATION CHART 1872 TO PRESENT

REAL ESTATE-RENTAL-MORTGAGES-FORECLOSURES

-The commercial real estate time bomb. There’s a new main character moving to center stage in the great real estate meltdown. Underwater homeowners vying to refinance or score a loan modification have grabbed much of the headlines (and bailout attention) to date. But now commercial real estate is moving into the spotlight as the next potential body slam for the economy. Read more here – http://moneyfeatures.blogs.money.cnn.com/2009/07/20/the-commercial-real-estate-time-bomb/

-Commercial mortgage failure at 20-year high in U.S.: report. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56J1A120090720

-Bernanke Says Commercial Property May Pose Risk for Economy. Read more here – http://www.bloomberg.com/apps/news?pid=20601068&sid;=a2mAhkgbWDXc

-Manhattan Storefronts Hit Highest Vacancies Since ’01. Manhattan shopping strips from the Upper East Side to SoHo are flooded with empty storefronts. The borough’s second-quarter vacancy rate rose to 12.4 percent and now stands at the highest since 2001 as rising unemployment and the recession curb spending, according to data compiled by Faith Hope Consolo, chairman of the retail leasing and sales division at Manhattan- based Prudential Douglas Elliman Real Estate.

“The consumer just stopped shopping,” Consolo said. More than 15 percent of the 185 stores on Madison Avenue between 57th and 72nd streets are vacant or about to lose tenants, according to New York-based broker Cushman & Wakefield Inc. In SoHo, 11 percent of the 551 stores are listed as available for lease. About 9 percent of the 265 stores on the Upper West Side are without tenants or soon will be.

Rents may fall as much as 23 percent by the fourth quarter from a year earlier and may continue dropping through 2010 given the pace of unemployment and consumer demand, according to Sam Chandan, chief economist at research firm Real Estate Econometrics in New York. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aCUtsLdJ9k0M

-U.S. Home Prices Have Smallest Decline in 10 Months. U.S. home prices had the smallest annual drop in 10 months, signalling the free fall of property values is abating in the three-year housing slump at the center of a global recession.

Prices declined 5.6 percent in May from a year earlier and rose 0.9 from April, the Federal Housing Finance Agency in Washington said today. “We saw a rebound of home prices in some parts of the country in part because the share of distressed sales dipped,” said Thomas Lawler, a former Fannie Mae economist who’s an independent consultant in Leesburg, Virginia. “That’s not any solace to anyone losing his shirt.”

Five U.S. regions showed price increases in May from April, the FHFA said. Job losses and record foreclosures have deterred buyers and slashed U.S. home prices 33 percent since the July 2006 peak, according to the S&P;/Case-Shiller index. The highest unemployment since 1983 and the biggest foreclosure rate on record thwarted government efforts to revive real estate demand.

The area that includes California had the biggest one-month gain from April, at 2.7 percent. The South Atlantic region that includes Florida saw a 1.4 percent increase in May. Prices in New England fell 2 percent and in the region that includes New York and New Jersey dropped 0.1 percent. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=akYQTO67sF2A

-Home Resales Rise for Third Month as Housing Steadies. Sales of existing homes in the U.S. rose in June for a third consecutive month, signalling the four year slump that precipitated the financial crisis is ending. Purchases climbed 3.6 percent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, the National Association of Realtors said today in Washington. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=aj5tMUyodk.I or http://www.bloomberg.com/apps/news?pid=20601087&sid;=atDcwF9fS0ws

-U.S. housing inventory data points to stabilization. Read more here – http://www.reuters.com/article/ousiv/idUSTRE56G3NC20090720

-Hamptons Luxury Market Stalls With Four-Year Inventory Pileup. Luxury home sales in the Hamptons, New York’s oceanside retreat for Wall Street and Hollywood luminaries, stalled in the second quarter as the number of unsold properties swelled and owners cut prices an average of 20 percent.

Only 37 houses and condominiums priced at more than $2.36 million sold in the Hamptons and on Long Island’s North Fork, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. Inventory jumped 46 percent. At the current sales pace it would take four years to sell all 584 luxury homes on the market.

“You have concerns about future layoffs and lower compensation,” Miller Samuel President Jonathan Miller said. “Unemployment needs to top out and begin to decline before you see renewed confidence in the second-home market.” Read more here – http://www.bloomberg.com/apps/news?pid=20601213&sid;=aI4op.R9fF.0

-Trump Park Avenue Penthouse Duplex Falls from $51 M. to $31 M. Read more here – http://www.observer.com/2009/real-estate/trump-park-avenue-penthouse-duplex-falls-51-m-31-m

-U.K. Property Asking Prices Rebounded in July, Rightmove Says. British home sellers raised asking prices this month to meet increased demand from buyers, Rightmove Plc said. The average cost of a home rose 0.6 percent to 227,864 pounds ($372,000) after falling 0.4 percent in June, the operator of the U.K.’s biggest residential property Web site said today in a statement. Prices in London had the first annual gain of the year so far.

The housing market is showing signs of recovery from the worst economic contraction in a generation after officials rescued banks and started printing money. Ernst & Young LLC’s Item Club today raised its forecast for British gross domestic product in 2010 to show expansion. Read more here – http://www.bloomberg.com/apps/news?pid=20601087&sid;=a5k9OgVx0ZWQ

-Spanish Rents Fall in Worst Housing Glut Since 1950s. Arancha Ibarra considers herself one of the lucky victims of Spain’s housing collapse. After struggling to find a buyer for her renovated two- bedroom apartment in Madrid for two years, Ibarra found a tenant for 750 euros ($1,066) a month, becoming one of the 1.5 million second-home owners thrust onto the country’s rental market.

The number of properties for rent in Spain climbed 55 percent in the past two years to 3.3 million, the highest since the Ministry of Housing started collecting the data in 2004. Rents in cities, including Madrid and Barcelona, are falling for the first time in seven years with declines of as much as 8 percent, according to Madrid-based property research firm Idealista.com.

“Those who need to sell but can’t are being forced to lease,” said Fernando Encinar, co-founder and head of research at Idealista.com, Spain’s largest real estate Web site with 308,000 listings for rent and purchase. “We haven’t seen this number of properties for rent since the 1950s.”

Spain built about 29 percent of new homes in the European Union from 2001 to 2007, even as it represented just 9 percent of the population. The resulting glut of 1.5 million unsold houses and apartments sparked the end of a decade-long real estate and construction boom that accounted for about 20 percent of the country’s gross domestic product in 2007. Read more here – http://www.bloomberg.com/apps/news?pid=20601109&sid;=aTcShxOgN1o8

-Foreclosures at record high in first half 2009 despite aid. U.S. home foreclosure activity galloped to a record in the first half of the year, overwhelming broad efforts to remedy failing loans while job losses escalated. Foreclosure filings jumped to a record 1.9 million on more than 1.5 million properties in the first six months of the year, RealtyTrac said on Thursday.

The number of properties drawing filings, which include notices of default and auctions, jumped 9.0 percent from the second half of 2008 and almost 15 percent from the first half of last year. “Despite everybody’s best efforts to date we’re not really making any headway against the problem,” Rick Sharga, senior vice president at RealtyTrac in Irvine, California, said in an interview.

Loans that were temporarily frozen by various state and federal programs, which mostly ended in March, started pushing through the process in the past three months. One in every 84 households with loans got at least one foreclosure filing in the first half of this year. “I don’t think this suggests the economy is any worse than anyone expected but I certainly don’t think it shows by itself any signs of improvement,” Sharga said. Read more here – http://www.reuters.com/article/businessNews/idUSTRE56F0XK20090716?feedType=RSS&feedName;=businessNews&rpc;=23&sp;=true

-After the Foreclosure: Downsizing and Doubling Up. Moving in with roommates and family: It’s what happens to folks who lose their homes, and it ain’t pretty. Read more here – http://www.msnbc.msn.com/id/32009116/ns/business-businessweekcom/

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

The Goldbugg Report – July 28, 2009
Posted by Worldwide Precious Metals on Tuesday, July 28, 2009

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