Newsroom
The Goldbugg Report – September 08, 2009
September 8, 2009
WORLD FINANCIAL REPORT ON RADIO SEPT 4 2009 SHOW
-Will gold reach $5000 plus?
-Gold price could still hit $1,200 this year.
-Industrial demand for silver sharpens bullish view.
GOLD
-Martin Armstrong, will gold reach $5000 plus? I have provided the technical analysis on Gold based on a monthly chart. The first real resistance is formed by the Primary Channel that shows $1,350 – $1,750 between 2010 and 2012. This represents still a plain old normal technical move with nothing that would reflect a meltdown. It is breaking this overhead resistance where it becomes support that we enter the “danger zone” of a true meltdown in Public Confidence.
Most of the projected resistance from the major low back in 1999, shows various targets from $1,700 to $2,750. However, if gold exceeds this level and it too forms the subsequent support, now we are looking at the $3,500 to $5,000 target zone. This is where we see the potential for Gold is a true economic meltdown of Confidence. Read more here-
http://news.goldseek.com/GoldSeek/1251747405.php and http://moneytalks.net/index.php?option=com_content&view;=article&id;=2111:will-gold-reach-5000&catid;=48:daily-updates&Itemid;=88
-S&P; 500 up 40% by December 2010 and then collapse? Gold and silver to jump. Merrill Lynch Asia (Bank of America) strategists Sadiq Currimbhoy, Arik Reiss, and Jacky Tang suggest that the S&P; 500 could soar another 40% by December 2010 before it collapses completely based on a unique comparison with the Nikkei 225.
Relationship suggests gold could go to $1175 and silver to $27.67: Were we to apply the same approach to the analysis of the short-term price for gold and silver a record price would result for gold and a dramatic increase would be realized in the price of silver. Gold has gone up only 8% YTD vis-à-vis the S&P; 500’s 13.9% or 57.5% as much.
Therefore, should the S&P; 500 go up 40% one could expect, under this scenario, that gold would go up a further 23% (57.5% of 40%) which would put gold well above that ‘precious barrier’ of $1000 to a record $1175 by the year’s end. Again, the results of the comparative analysis seem achievable.
Silver is up 30.3% YTD or 2.2 times that of the S&P; 500. That would translate into an 87% price increase in the current price of silver from $14.72 as of last Friday to $27.50 by the end of 2010. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=88283&sn;=Detail or http://www.bloomberg.com/apps/news?pid=20601109&sid;=aKzgH4hvhh.g
-Gold price could still hit $1,200 this year. Bullish on gold since it carried a $400-per-ounce price tag, Blue Phoenix Chief Investment Strategist John Licata expects the king of metals to ring in the New Year with a $1,200-per-ouncecrown. Interview with The Gold Report. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88360&sn;=Detail
-Gold may advance to a record $1,325 an ounce if it first breaks out of a symmetrical, triangular pattern, a move that may occur in the next one or two weeks, Standard Bank Group Ltd. said, citing trading patterns.
A so-called topside breakout would be indicated by a close at more than $980.85 an ounce, Darran Grabham, the bank’s technical analyst, wrote in a note. That would signal a short-term bull trend to at least $1,100 an ounce, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aqg7fd0Bs6lU
-New gold investors are often surprised to learn that gold prices have a heavy seasonal component. Seasonality makes intuitive sense for commodities inexorably tied to orbital mechanics, like wheat. Their annual late-summer harvest really increases supply. But why should gold, which is mined evenly and continuously throughout the year, have big price swings governed by the solar calendar?
Unlike the supply-driven seasonality in soft commodities, gold’s seasonality is demand-driven. Across the globe, surges in gold demand tend to clump around end-of-financial-year cash surpluses and festival seasons. This is not just an Asian phenomenon, it is even true in the modern West. Gold’s well-established seasonality creates tailwinds that make certain times of the year exceptionally bullish.
And today we are entering gold’s strongest seasonal period. Autumn is a very exciting time for investors and speculators long anything in the precious-metals complex. Gold strength doesn’t only benefit the Ancient Metal of Kings, but the whole PM ecosystem which mirrors (and amplifies) gold’s every move. This includes gold stocks, silver, and silver stocks. Autumn is the best time of the year to be long PMs. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton082809.html
-Historically September is best month for gold and gold stocks. September has been the best month on average for the gold price to show an increase with appreciation over the month in 16 of the past 20 years. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88271&sn;=Detail or http://news.goldseek.com/GoldSeek/1251730009.php
-Gold shines in September, analysis of 20 year’s data shows. Record contrasts with that of stocks; prior to 1988, gold didn’t do as well. Read more here-
http://www.marketwatch.com/story/story/print?guid=10720221-EFF9-4B67-9C23-CFBED969C5E1
-Last Chance to Buy Gold below $1000? Read more here-http://news.goldseek.com/EricHommelberg/1251910800.php
-Chinese sovereign wealth fund dumping dollars for strategic investments like gold. Reports suggest that China’s main sovereign wealth fund and other state entities are under pressure to invest in strategic Western assets as the country tries to offload its dollars for firmer-based wealth including gold and oil. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=88400&sn;=Detail
-Hong Kong bringing gold reserves home from London. Read more here-http://www.gata.org/node/7749
-Turning point for gold as Central Banks become buyers. With the possibility of Central Banks becoming net gold buyers and the speculation that the IMF gold may be sold “off market” gold analyst Jeff Nichols remains bullish on the precious metal’s prospects. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88296&sn;=Detail
-Long term trends the key for gold and silver investors. Day to day movements in the prices of both gold and silver have little relevance to overall price trends. Read more here-
http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88215&sn;=Detail
-Ned W. Schmidt gold thoughts. Read more here-http://news.goldseek.com/NedSchmidt/1251784980.php
-Roger Wiegand on Precious Metals: “We Haven’t Seen Anything Yet”. Read more here-http://news.goldseek.com/GoldSeek/1251489392.php
-Gold price to remain range bound over short term Fitch. The ratings agency believes the price of gold is heavily influenced by investor demand on one side and scrap and official gold sales on the other. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88434&sn;=Detail
-Smart Money Analysis-Paulson’s AngloGold bet points to inflation. Read more here-http://www.reuters.com/article/marketsNews/idAFN0150657920090902?rpc=44&pageNumber;=1&virtualBrandChannel;=0
-The myth of declining gold demand. Read and watch video here-http://www.usagold.com/video/20090828.html
-Where have all US Mint gold & silver coins gone? Read more here-http://www.commodityonline.com/news/Where-have-all-US-Mint-gold–silver-coins-gone-20753-3-1.html
-”There’s no reason to invest in gold,” said ‘Betsy’. Read more here-http://www.321gold.com/editorials/casey/casey081409.html
-Germany’s MMNews interviews GATA Chairman Bill Murphy. Read more here-http://www.mmnews.de/index.php/200908313669/Gold-Silber/Gold-Manipulation.html
-GATA Chairman Bill Murphy interviewed by King World News. Listen here-http://www.gata.org/node/7735
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,100 the silver price would be $13.75
Gold to silver ratio at 70 to 1 with gold at $1,100 the silver price would be $15.71
Gold to silver ratio at 60 to 1 with gold at $1,100 the silver price would be $18.33
Gold to silver ratio at 50 to 1 with gold at $1,100 the silver price would be $22.00
Gold to silver ratio at 40 to 1 with gold at $1,100 the silver price would be $27.50
Gold to silver ratio at 30 to 1 with gold at $1,100 the silver price would be $36.67
Gold to silver ratio at 20 to 1 with gold at $1,100 the silver price would be $55.00
Gold to silver ratio at 15 to 1 with gold at $1,100 the silver price would be $73.33
-China pushes silver and gold investment to the masses. A report suggests that the Chinese government is pushing the general public into buying gold and silver bullion, which could have a dramatic effect on the markets. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88452&sn;=Detail
-Industrial demand for silver sharpens bullish view. Prospects for global economic recovery may increase the call for silver from industrial users, leaving the metal ripe for fresh gains on top of already firm investment interest.
Interest from industrial consumers, which accounted for more than half of silver demand last year, could lead to the metal outperforming gold this year but only if confidence in the economy continues to grow, analysts said.
“Silver has really taken its lead from gold this year,” said Standard Bank analyst Walter de Wet. “But now, with industrial production picking up, you have to favour silver, relative to gold at least as long as industrial demand keeps growing.”
The metal’s relationship with base metals, which, like silver, are widely used in industry, has grown in recent weeks after a spate of stronger-than-expected economic data. “Investment demand is the main driver of silver, but it is also benefiting from the positive industrial outlook and the rally in the base metals,” said VM group analyst Matthew Turner.
“If you look at all the commodities, base metals have left most of them behind this year in price terms, even energy,” he said. “There has been so much industrial metal demand that silver is riding on the coat tails of that.” Read more here-http://uk.reuters.com/article/idUKLNE58003D20090901?sp=true
-H1N1, the A-type influenza virus that looms large across the top half of our planet, already has scientists and industrial researchers testing experimental disinfectants, triage diagnostic tools for airports and hospitals and silver-embedded sterilizers for doorknobs, water fountains, bandages and viral-prone surfaces. Silver is fast becoming a select ingredient for hospital surfaces, plasters, clothing and a wide array of medical devices. Thom Calandra-Read more here-http://www.stockhouse.com/Columnists/2009/Sept/1/Silver,-H1N1—rare-earth-events-are-imminent or http://www.gata.org/node/7745
-Silver market analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/7738
-Martin Hennecke, associate director at Tyche says go for silver and gold. Read and watch more here-http://www.cnbc.com/id/32638139
PLATINUM-PALLADIUM
-Demand to outstrip platinum supply between 2010 and 2016 Platinum Australia. Read more here-
-‘Very strong’ resurgence in Chinese platinum jewellery Implats. Read more here-http://www.miningweekly.com/article/very-strong-resurgence-in-chinese-platinum-jewellery-implats-2009-09-03
-Russian Palladium Stockpiles Exhausted. Mining Weekly reports that the Russian palladium stockpiles have finally run out, and palladium prices are expected to soar as a result. The demand for palladium will undoubtedly grow substantially once the financial crisis in developed countries tones down and car sales start recovering.
Mining company African Rainbow Minerals CEO Andre Wilkens told Mining Weekly that Russian miner Norlisk Nickel, ARM’s partner in South Africa, is back to its normal monthly levels of palladium production. Mining company Impala Platinum Marketing Executive Derek Engelbrecht called on Russia to stop destocking its palladium reserves.
In the beginning of the decade, palladium reached a price of $1,000 per ounce. Today its price is climbing towards $300 per ounce, after dropping to a level of $150 per ounce. However, Engelbrecht states that palladium prices will not rise back to $1,000 per ounce in the near future. According to Engelbrecht, China and India both hold abundant palladium mines, and are expected to take the lead in this market in the near future. Israelidiamond.co.il
-Steady rise of palladium price expected Implats. Read more here-http://www.miningweekly.com/article/implats-bullish-on-palladium-2009-09-01
-PGM prices uncertain as German auto scrappage scheme also closes. The German version of the “Cash for clunkers” programme which gave consumers more than twice the $3 billion expended in the US to help subsidise the purchase of almost two million new cars is now at an end and some are expecting a decline in the German auto market of as much as 30%. Read more here-http://mineweb.co.za/mineweb/view/mineweb/en/page35?oid=88460&sn;=Detail
-Shortage of Rare Earths Used in Hybrids, TVs May Loom in China. Read more here-http://www.bloomberg.com/apps/news?pid=20601012&sid;=afn.hOk6pEHg
-As hybrid cars gobble rare metals, shortage looms. The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods.
That makes Toyota’s market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world’s dominant rare earths producer, limits exports while global demand swells.
Worldwide demand for rare earths, covering 15 entries on the periodic table of elements, is expected to exceed supply by some 40,000 tonnes annually in several years unless major new production sources are developed. Read more here-http://www.reuters.com/article/wtUSInvestingNews/idUSTRE57U02B20090831
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: Bad Economy Means Less Death. Good news! The recession means fewer people are dying or, to put it another way, people are living longer. A new study from the Canadian Medical Association Journal confirms a long-held theory that mortality is pro-cyclical, meaning that the better the economy, the more people are dying. This is not the case in poor countries.
What explains the effect? The authors cite a few mechanisms, including the increased use of social safety nets, having more leisure time, less overeating, less alcohol consumption and also (logically) less worker stress. Read more here-http://www.businessinsider.com/chart-of-the-day-worse-economy-less-death-2009-9
-Chart of the week: You should have gone into the public sector. Do you want to make good pay, have awesome benefits, and amazing, iron-clad job security? Don’t go looking in the private sector. New analysis from the BEA, via Cato-at-Liberty, shows that the average Federal worker makes well more than their private sector counterpart.
And look at wage growth. Since 2000, Federal average pay is up 55%, compared to just 29% wage growth in the private sector. And this doesn’t even take into account the awesome health benefits. Read more here-http://www.businessinsider.com/chart-of-the-day-you-should-have-gone-into-the-federal-government-2009-8
-The story goes that in South India, villagers use a special tactic for capturing small monkeys. The South Indians hollow out a gourd or coconut and place some rice inside of it. They leave a small hole in the gourd big enough that the monkey can put his hand through it. But, when the monkey grabs hold of the rice, his fist is too big to pull back through the hole.
Tempted by the rice and driven by hunger, the monkey will reach into the gourd, grab the rice, but suddenly finds he is trapped. He does not know that all he has to do is let go of the rice and he can pull his hand back out. Because he’s hungry, however, he holds on to the rice and is unable to pull his fist out. He is trapped, thus making him an easy catch for villagers.
We humans are likewise easily distracted by possessions, ideas, and or actions. We grab a hold of them and are trapped. However, we want the item so badly that we won’t let go and remain trapped. We don’t realize that if we let go, we are released from the hold of the trap. Anonymous
-The Constitution of the U.S. is not an instrument for the government to restrain the people, it is an instrument for the people to restrain the government… lest it come to dominate our lives and interests. Patrick Henry-Bio here-http://en.wikipedia.org/wiki/Patrick_Henry
-Unchecked, government social programs are a security threat because they weaken the ultimate line of defence: the free-born citizen whose responsibilities are not subcontracted to the government. Mark Steyn-http://en.wikipedia.org/wiki/Mark_Steyn
-Central banks in recent years have been selling constantly, and I’m strongly suspicious that the President’s Working Group on Financial Markets the “Plunge Protection Team” participates in the gold market as well, to keep the price suppressed.
As recently as November 2008, Bernanke admitted to me in a Financial Services Committee hearing that the only time gold is discussed with other central bankers is for the purpose of selling never to consider its merit in serving as a reserve for a new currency agreement. Representative Ron Paul, R-Texas, from his new book End the Fed to be published on September 16, 2009
-Giving you gold price objectives has not proved in the past to be in your best interest as we are read by both sides of the gold market spectrum. However, one time only, here they are:
$1000 three tries and success, this is the third try. Then $1024, $1089, $1156, $1225, $1296, $1369, $1444, $1521, $1600, and $1681. Jim Sinclair
-“The dollar is going to be the main driver for gold strengthening for the rest of the year.” David Barclay a metals analyst at Standard Chartered Plc in London-Bloomberg
-“The next trending step higher is under way” for gold, SEB AB analysts in Stockholm said today in a report. The metal may rise to $1,112, according to the report. Bloomberg
-“A good deal” of gold’s move higher “is technical, with models likely to be chasing the break of a recent tight range,” Sydney-based Greg Gibbs, a Royal Bank of Scotland Group Plc strategist, said today in a note. “The ability of gold to continue to rise perhaps tells us that investors are far from calm about the longer-term global economic outlook and the policy response to it.” Bloomberg
-We get the sense that something really quite ominous is upon us and that some news and clearly not good news is waiting out there on the market’s periphery that shall tend, on balance, to weigh heavily upon stock prices, shall weigh heavily upon government intervention efforts; shall weigh heavily upon the global capital market’s collective psychology we have the sense
that we are at an historic turning point for the gold market, and that turning point was made mid-day yesterday when the dollar began to strengthen, as commodity prices began to weaken, and yet gold held steady as a rock. Dennis Gartman
-I got a little tidbit of information yesterday from Simon Black’s International Man e-mail commentary. His source in China had this to say “Gold was attainable by Chinese via Panda coins (China’s version of Eagles) or jewellery since the 1980s. Walking into a bank and buying coins/bars however is a recent phenomenon.”
“The critical point to understand is that the government has never before pushed gold and silver as an investment vehicle. It has gone from being illegal, to being the hottest asset on the market simply because of the government’s marketing efforts.” “I’m convinced that this will create significant upside, especially for silver. You should see how people stand in line at banks to buy silver bars now.” Ed Steer
-Will Rogers said, “Invest in inflation, it’s the only thing that is going up.” But how about timing? The best way to invest in a trend is to get on board before it turns serious. We don’t have inflation yet, In fact, we are in a deflationary period. Prices are actually coming down, and things are relatively cheap.
If you bet on inflation now, you are betting on the future. Right now, gold and silver are actually defying deflationary trends and have been gradually creeping up. But they are still relatively cheap compared to what they will be. All socialist states end up producing hyperinflation and destroying their own currency, without exception. The way to make money is to get in early, before inflation starts to boom.
Can you imagine how much gold and silver buying will soar when gold is over $1,000 and silver is over $25? That will happen to dumb investors. Gold is now $990 and silver a little over $16. Now is the time to buy and wait patiently. Howard Ruff
-According to TrimTabs, corporate insiders were net sellers of their stock to the tune of $6.3 billion in August the selling/buying ratio was a huge 30.7x (insiders bought only $210 million). Not only that, but share buybacks slowed to a trickle in August too $3.6 billion, which was the third lowest tally in the past two years. Read more here-
-Sobering piece in this morning’s San Jose Mercury News on the vast amount of unoccupied office space in the Valley as a result of the economic downturn.
A few tidbits from the story:
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20.5% of Silicon Valley office space is vacant, the highest level since 2003.
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18.9% of R&D; space is vacant, the highest since early 2006.
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Total empty R&D; space in the valley: 29.1 million square feet.
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Total empty office space: 12.6 million square feet.
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Completely vacant R&D; buildings: 277.
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Completely vacant office buildings: 39.
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Sunnyvale’s vacancy rate has reached 53.4%. As it happens, a project called Moffett Towers is in the process of adding 1.6 million additional square feet of office and R&D; space in Sunnyvale in 7 eight-story buildings. Six are completed. All are empty.
In July, the unemployment rate in the Valley hit 11.8%. Read more here-http://blogs.barrons.com/techtraderdaily/2009/08/31/silicon-valley-land-of-the-see-through-office-building/?mod=yahoobarrons
-The Federal Reserve will be unable to prevent the trillions of dollars in government stimulus pumped into the U.S. economy from stoking inflation over the next decade, a survey of business economists showed. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=awguLss.uevA
-America’s long-term budget outlook has worsened. Not for the last time. Read more here-http://www.economist.com/world/unitedstates/displayStory.cfm?story_id=14324535
-Dollar Is Funny Money in Push for World Currency: Kevin Hassett. Read more here-http://www.bloomberg.com/apps/news?pid=20601039&sid;=adiwJJwwge88
-The Dollar Will Fall, The Only Question Is “When?” Read more here-http://finance.yahoo.com/tech-ticker/article/311525/The-Dollar-Will-Fall-The-Only-Question-Is-%22When%22
-The Rise and Fall of the Dollar: 1800-2009. See graphic here-http://blog.mises.org/archives/010553.asp
-For a world first, the announcement came with remarkably little fanfare. But last month the Swedish Riksbank entered uncharted territory when it became the world’s first central bank to introduce negative interest rates on bank deposits. Read more here-http://www.gata.org/node/7730
-Regulators Shutter Three U.S. Banks, Bringing 2009 Toll to 84. Regulators closed banks in California, Maryland and Minnesota pushing U.S. bank failures to 84 this year amid continuing fallout from the worst economic crisis since the Great Depression.
The Federal Deposit Insurance Corp. was named receiver for Affinity Bank of Ventura, California, Bradford Bank of Baltimore and Mainstreet Bank of Forest Lake, Minnesota, after yesterday’s closings, the FDIC said. Assets of $1.9 billion and deposits of $1.7 billion from the three banks were turned over to new lenders at a total cost of about $446 million to the FDIC’s deposit insurance fund, according to agency statements.
Regulators have closed banks at the fastest pace in 17 years and more are likely as losses mount from soured real- estate debt. A total of 416 banks with combined assets of $299.8 billion failed the FDIC’s grading system for asset quality, liquidity and earnings in the second quarter, the most since June 1994, the regulator said in a report Aug. 27. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aSdMMGzkt1do
-The Coming Deposit Insurance Bailout. Another lesson that federal guarantees aren’t free. Read more here-http://online.wsj.com/article/SB10001424052970204731804574385072164619640.html?mod=googlenews_wsj
-For FDIC, a long tunnel and little light. Read more here-http://blogs.reuters.com/rolfe-winkler/2009/08/27/for-fdic-a-long-tunnel-and-little-light/
-U.S. Consumer Bankruptcies Rose 24 Percent in August. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aqyxH6p.cd_c
-U.S. Cities’ Woes to Worsen as Taxes Trail Pace of Recovery. Read more here-http://www.bloomberg.com/apps/news?pid=20601070&sid;=ai724AYZvzsU
-Stiglitz Sees ‘Significant Chance’ U.S. Rebound Not Sustained. The U.S. economy faces a “significant chance” of contracting again after emerging from its worst recession since the 1930s, Nobel Prize-winning economist Joseph Stiglitz said.
“It’s not clear that the U.S. is recovering in a sustainable way,” Stiglitz, a Columbia University professor, told reporters today in New York. Economists and policy makers are expressing concern about the strength of a projected economic recovery, with Treasury Secretary Timothy Geithner saying yesterday that it’s too soon to remove government measures aimed at boosting growth.
Stiglitz said he sees two scenarios for the world’s largest economy in coming months. One is a period of “malaise,” in which consumption lags and private investment is slow to accelerate. The other is a rebound fueled by government stimulus that’s followed by an abrupt downturn an occurrence economists call a “W-shaped’ recovery. “There’s a significant chance of a W, but I don’t think it’s inevitable,” he said.
Stiglitz said it’s difficult to predict the economy’s trajectory because “we really are in a different world.” He said the crisis of the past year resulted from lax regulation that allowed some financial firms to grow so large that the system couldn’t handle a failure of any of them. “These institutions are not only too big to fail, they are too big to be managed,” he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=avoMA970qQjs
-End of Stimulus May Cause A ‘Double-Dip’ Recession: Gross. Read and watch video here-http://www.cnbc.com/id/32660536
-Graphic: If I had a trillion dollars. Recent estimates show that the U.S. debt could double to an astounding $20-trillion in the next decade. The graphic below tries to explain the astronomical sum. See graph here-http://network.nationalpost.com/np/blogs/posted/archive/2009/08/25/graphic-if-i-had-a-trillion-dollars.aspx
-HSBC Says Switzerland Luring More Rich Foreigners as Taxes Rise. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ae3NU.gekp.0
-Oldest Swiss Bank Tells Clients to Sell U.S. Assets or Leave. Wegelin & Co., Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the world’s biggest economy.
U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities that may be inherited by the heirs of people who have such holdings prompted the advice from the St. Gallen, Switzerland-based bank, said Managing Partner Konrad Hummler.
“We came to the conclusion that it’s a threat to our clients,” Hummler, who is also president of the Swiss Private Bankers Association, said in an interview yesterday during a conference in Zurich. “It’s also a threat to us as a bank because as a custodian we are an executor to the estate. We find this aspect discomforting, so we recommend selling all American securities whatsoever.” Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=ae3NU.gekp.0
-From Switzerland with No Love Wegelin Bank Says Goodbye to the U.S. Read more here-http://www.wegelin.ch/download/medien/anlagekommentar/kom_265en.pdf
-Peak water. Read more here-http://theburningplatform.com/economy/peak-water-1
-U.S. Food-Stamp Recipients Reach Record 35.1 Million. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=atCF1wakoZGk
-Iran Is Continuing Uranium Enrichment, UN Agency Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a.IhIWKIZMaA
-Iran Won’t Bow to Deadline Demand for Nuclear Talks. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a5mh3RwBMJag
-Gates Says Afghan War ‘Not Slipping,’ U.S. Has ‘Right Approach’. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aKcj03QWuBEU
-North Korea Says It’s Entered Final Stage of Enriching Uranium for Weapon. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aNA_kN1LXYok
-Bernard Madoff thought regulators had caught him in 2006 and was “astonished” U.S. Securities and Exchange Commission investigators never followed up on information he gave them, the agency’s internal watchdog said. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aoFFqspXtMDg
-Israel’s Wealthiest Woman Says She Can See the Future. Read more here-http://www.washingtonpost.com/wp-dyn/content/article/2009/08/30/AR2009083002473_pf.html
-Senate Bill Would Give President Emergency Control of Internet. Details of a revamped version of the Cybersecurity Act of 2009 show the Senate bill could give the president a “kill switch” on the Internet and allow him to shut out private networks from online access. Read more here-http://www.foxnews.com/politics/2009/08/28/senate-president-emergency-control-internet/
-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
-Sotheby’s to Offer Flawless, 30-Carat Diamond Ring at October Sale. Sotheby’s will offer a pear-shaped, 29.53 carat, D diamond ring reputed to be internally flawless during its upcoming Important Jewels sale in New York, to be held on October 19, 2009. The rare type IIa stone is flanked by two heart-shaped stones that are 1.35 and 1.51 carats, respectively. The lot has been attributed a presales estimate of $1.8 million to $2.2 million and is set in a decorative platinum mounting.
The ring is from a New York estate collection that also includes jewels by Van Cleef & Arpels, Tiffany & Co., David Webb and Bulgari. It will first be exhibited at Sotheby’s Hong Kong show from October 2 to 6 and then at a public exhibition in New York, beginning on October 14, culminating in its availability at the Important Jewels auction. Diamonds.net
WORST OF SLUMP YET TO COME
-Ann Pettifor predicted a painful end to the good times. Now she says that only radical action can prevent further gloom. Ann Pettifor is a member of a select club the seers who saw it all coming. Now the economist, who predicted the credit crunch as far back as 2003, believes that the worst is yet to come unless there is radical reform of the financial system.
Six years ago she parodied the International Monetary Fund’s annual economic forecast with her own The Real World Economic Outlook. Then, in 2006, her book The Coming First World Debt Crisis, warned that rich countries were heading for a debt crisis that would overshadow anything seen in the developing world. Both were ridiculed.
With the British and world economies languishing in the worst recession since the Great Depression and with once-mighty banks reliant on government life support, she could be forgiven for being a little smug. Not a bit of it: “No, being Cassandra is not something I wish for. I hate this role of being a gloomer and doomer, as I’m an optimist by nature. But I am very pessimistic now.”
She is dismayed that politicians have failed to seize the opportunity that the crisis has given them to embark on tough reform of the banking system. Stock markets have rebounded and house prices have stopped falling, but Ms. Pettifor fears that politicians and households have started to relax prematurely. Read more here-
http://business.timesonline.co.uk/tol/business/economics/article6816287.ece
BEAR MARKET RALLY
-For some perspective on the current stock market rally and how it compares the 1929-1932 bear market (which also included bank failures, bankruptcies, severe stock market declines, etc.), today’s chart illustrates the duration (calendar days) and magnitude (percent gain) of all significant Dow rallies that occurred during the 1929-1932 bear market (solid blue dots).
For example, the bear market rally that began in November 1929 lasted 155 calendar days and resulted in a gain of 48%. As today’s chart illustrates, the duration of the current Dow rally (hollow blue dot labelled you are here) is longer than any that occurred during the 1929-1932 bear market. As for magnitude, only the November 1929 bear market rally resulted in a better performance than what has occurred during the current rally to date. Read more here-http://www.chartoftheday.com/20090828.htm?T
GLOBAL DERIVATIVES STILL GROWING
-The global derivatives market has grown rapidly in the past decade. By one measure of market size the notional value, which is the value of the underlying derivatives contract the derivatives market expanded from $87 trillion in 1998 to $592 trillion as of the end of 2008.
To date, the United States has published very little information on cross-border derivatives because of the limited availability of data. The U.S. Department of the Treasury, the Federal Reserve Bank of New York, and the Federal Reserve Board began collecting data on U.S. cross-border transactions and positions in derivatives in March 2005.
They collect the data through the Treasury International Capital (TIC) reporting system, which for many years has collected similar data for securities such as stocks and bonds. Below is a chart of the growth in the size of derivatives of just cross-border transactions for U.S. banks:
Most of these positions net against each other, so the $6 trillion vastly overstates the risks involved, but such a big number certainly carries some concern for its size. It’s amazing that this grew so much from a little over $1 trillion in 2006, at the onset of the Credit Crisis. It’s impossible to know how much risk is involved in such positions, but one measure is the difference of the positives and negatives, which is calculated below for all derivatives combined. That measure has doubled since the end of 2007.
As derivatives are difficult to value, they are usually just ignored in traditional statistical measures like our international investment accounts. Now they are so big, they can affect the measures, and there is some evidence that the discrepancy in international accounts would be less if these were properly included. My interpretation is only that there is a growing risk (not decreasing, as might be expected because of the financial crisis) to financial systems buried in these huge and still growing derivatives. Bud Conrad-Read more here-
http://www.caseyresearch.com/displayCdd.php?id=208
REAL ESTATE-MORTGAGES-FORECLOSURES-RENTAL
-Housing Won’t Lead U.S. Out of Recession, Gross Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=arMoynrLZVUs
-Home Prices Rise 1.7 Percent, Gaining in All Areas. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a.aAAu51wmbU
-Pending Sales of Existing Homes in U.S. Rose in July. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aT80nhnFzzvw
-U.K. House Prices Climb for First Time in Two Years. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6SNezjRrUPU
-London’s Luxury Homes Sell at the Fastest Pace Since July 2007. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aKkxmq34nT3E
-Commercial Mortgage Defaults Jump for U.S. Banks. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a9FRZ6ipJB8Y
-Commercial Real Estate Lurks as Next Potential Mortgage Crisis. Read more here-http://online.wsj.com/article/SB125167422962070925.html
-For Commercial Real Estate, Hard Times Have Just Begun. Read more here-http://www.nytimes.com/2009/09/02/business/economy/02office.html?_r=1&partner;=rss&emc;=rss
-Coming Soon: The Alt-A Mortgage Reset Bomb. Read more here-http://www.businessinsider.com/henry-blodget-coming-soon-the-alt-a-mortgage-reset-bomb-2009-8
-Greenwich Homeowners Push $40,000 Rentals in Worst Sales Market. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=a_xD5LU.fl2M
-Chart of the day: The End of Peak Homeownership. In his analysis of the “new normal,” PIMCO chief Bill Gross discussed the declining rate of homeownership in America an obvious phenomenon, given what we’re going through in this economy.
But we still have a long way to go to get to where we were the boom started, and we might even go further down than that. Nobody believes in the homeownership myth anymore, for one thing. And we’re a changing society. We’re more mobile than ever before, and the idea of being locked down in a home with a 30-year mortgage just makes less and less sense. Read more here-http://www.businessinsider.com/the-end-of-peak-homeownership-2009-9
© 2012, Worldwide Precious Metals Canada Ltd.
www.wwpmc.com
The Goldbugg Report – September 08, 2009
Posted by Worldwide Precious Metals on Tuesday, September 8, 2009
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