Newsroom
The Goldbugg Report – October 13, 2009
October 13, 2009
-Gold Prices May Rise to $1,650
-Gold, ‘Off The Charts’, May Target $1,500: Technical Analysis.
-Clive Maund silver market update.
GOLD
-Gold Prices May Rise to $1,650, James Sinclair Says. Gold may climb to $1,650 an ounce by early 2011 on demand for an alternative to holding dollars and other currencies, said James Sinclair, a commodity investor and the head of Tanzanian Royalty Exploration Corp.
“The carry trade has dropped the dollar as a currency of choice,” Sinclair, the chief executive officer of Surrey, British Columbia-based Tanzanian Royalty, said today in a Bloomberg Radio interview. “Gold is competition to currencies.”
The spot price is heading for the ninth annual gain as demand rises for a hedge against inflation and the dollar heads toward a loss for the year. Some investors are buying the metal on concern that ballooning U.S. government debt will drive the dollar lower.
There is an “extreme amount of liquidity that has been injected in the financial system, not just in the U.S., but around the globe,” Sinclair said. The dollar has been undermined by major trading partners suggesting an alternative to the greenback and by China’s attempts to “internationalize” its currency by issuing more debt, Sinclair said.
President Barack Obama has increased marketable U.S. debt to an unprecedented $7.1 trillion as the government borrows to revive growth. Goldman Sachs Group Inc. has predicted that the U.S. will sell about $2.9 trillion of debt in the two years through next September. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6fYQA6UmP0E
-Gold, ‘Off The Charts’, May Target $1,500: Technical Analysis. Investors should hold onto long positions in gold as bullion has “significant upside potential” to reach as high as $1,500 an ounce, Barclays Capital said, citing trading patterns.
“Having rallied ‘off the charts’, we are left to resort to projections and extrapolated trendlines to forecast where the move might stop,” Jordan Kotick, global head of technical analysis at Barclays Capital, wrote in a note e-mailed today. So-called trendlines are used to determine momentum and are found by connecting an asset’s high prices and low prices over a given period to form a channel.
“Channel resistance currently is at $1,370; history suggests a run at $1,500,” Kotick wrote. “Taking it a step at a time, in the coming weeks, we view consolidation above $1,020 as extremely positive, targeting $1,050 initially, and $1,120,” he added. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=a0m8QhfjdEG4
-Top-ranked manager John Hathaway of the Tocqueville Gold Fund offers this astounding prediction: The price of the precious metal could rise to more than $5,000 an ounce. Hathaway, who manages $1 billion at the Tocqueville fund, sees gold soaring for several reasons, including rising inflation and the rather curious fact that in two previous instances the price of an ounce of gold and the level of the Dow Jones industrial average have come close to converging.
In 1933, when gold traded at $32 an ounce, the Dow bottomed out at 50 in February. In 1980 gold climbed to its high of $850 on Jan. 21, when the Dow closed at 873. Today Tocqueville sees something similar happening, with gold rocketing to $5,000 or $10,000 an ounce (the Dow is now at about 9700). Cnnmoney.com
-Gold will continue to set new highs Blanchard. Analysts at gold dealer Blanchard & Co. see the recent upwards trend in the gold price as sustainable and likely to continue. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=90375&sn;=Detail
-U.S. gold economist, Jeffrey Nichols, seems more bullish than ever on the prospects for substantial upwards movement in the price of gold over the next few years considering the latest development in the markets, perhaps even more so than in his previous analyses. While Nichols has tended to be a gold bull in the past he has also been one of the more sober commentators amongst this genre so his developing views do require some attention.
Nichols concludes that thanks to extremely expansionary monetary policy and with a little help from ETF investors, central banks, and new or evolving markets like China and India – the gold price will continue to move ahead. He reckons $2,000 to $3,000 is on the cards in the next few years. Read more here-
http://www.mineweb.net/mineweb/view/mineweb/en/page33?oid=90221&sn;=Detail
-Bill Strazzullo, chief market strategist at Bell Curve Trading, says oil is a moving target and predicts it will trade in a range between $55-$85/barrel. Gold, however, is a different animal altogether. “Gold has the most potential here,” Strazzullo says.
While bears are concerned about deflationary pressures, some high-profile hedge funds are scooping up gold futures and Strazzullo is going with the same theme. He predicts gold could soon hit $1200 per ounce, on its way to $1400. Read and watch more here-http://finance.yahoo.com/tech-ticker/article/347728/Commodity-Strategy-Gold-Has-More-Upside-Potential-vs.-Oil-Strazzullo-says
-NIA, National Inflation Association, Says Gold Could Rise to $5,400. Read more here-http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=PR&date;=20091006&id;=10469369
-Peter Schiff: U.S. Rally Is Doomed, Gold Will Hit $5000. Unlike the “legitimate bull markets” of many foreign markets, Peter Schiff believes the U.S. is merely experiencing a “rally in a bear market,” and is lagging the rest of the world “for a reason.”
The worst is not over, according to Euro Pacific Capital’s Schiff, who predicts the Dow will fall another 90% from current levels when measured against gold. A longtime dollar bear and gold bull, he foresees gold hitting $5000 per ounce “in the next couple of years,” and predicts the Dow and gold will trade on a one-to-one ratio vs. the current level of around 9.7-to-1.
Schiff believes gold is currently “climbing a wall of worry” but will eventually become as hot as tech stocks in 1999 and start moving up $100 per day. Schiff’s forecast is based on his view the U.S. dollar is going to collapse under the weight of our massive deficit and reckless policies of the Obama administration, which he compares to the massive spending programs of the 1960s, which paved the way for gold’s ascent in the 1970s. “Obama is making the same mistakes as Bush, but he’s doing them on a grander scale,” says Schiff. Read more here-http://finance.yahoo.com/tech-ticker/article/342802/Peter-Schiff-U.S.-Rally-Is-Doomed-Gold-Will-Hit-5000 Watch video here-
http://www.youtube.com/watch?v=4NtvRJ9I6Ng&feature;=player_embedded
-$5,000/oz gold? Rob McEwen says it’s coming in 2014 or 2015. When über mining investor Rob McEwen makes predictions on gold prices or appears to have developed an interest in silver mines, retail investors heed his clarion call and place their bets that the gold price is about to soar.
In a presentation to the Denver Gold Group on U.S. Gold Monday, McEwen was somewhat subdued as he only briefly mentioned he thought gold could hit $5,000 an ounce before the end of the gold cycle As this reporter scrambled for a clarification of his remarks in a brief interview, McEwen stuck by his prognostication, forecasting the end of the gold cycle would occur either in 2014 or 2015. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=89220&sn;=Detail
-Clive Maund gold breakout alert! Gold is in position to embark on a major uptrend here that is expected to result in it tacking on a 30%-60% gain in the space of about 6 months. Silver should make spectacular gains during the same period. Read more here-http://news.goldseek.com/CliveMaund/1254841200.php or http://news.goldseek.com/CliveMaund/1254722760.php
-Two days ago, the price of gold broke out to a new high and we are delighted with this result. As you will recall, we were expecting an upward breakout in gold and it looks as though its price will now surge over the following months. It is noteworthy that since the breakout occurred, gold has managed to stay above the previous high.
The longer the price of gold stays above US$1,030, the greater the probability that the yellow metal will stage a spectacular rally until spring next year. It is our contention that this breakout is the real deal and the pathetic action of the US Dollar Index supports our view. Rather than rally, the American currency has embarked on another southbound journey and this is extremely bullish for gold.
Furthermore, the recent zoom in silver and the precious metals mining stocks is additional evidence that this breakout is not a head fake. Figure 1 highlights the recent breakout in gold. As you will observe, gold’s bull-market has been punctuated by lengthy consolidations and this is the third time gold has broken out towards the end of the third calendar quarter.
If history is any guide and the trend consistency is intact, this rally will continue until spring next year and we could see a 40-50% advance! Should this rally materialise, the mining stocks will go ballistic and silver will rocket above its previous bull-market high.
In light of the recent breakout, we suggest that you hold on to your positions in the precious metals sector and add more capital. The long wait is finally over and precious metals bulls are about to get rewarded! We plan to hold on to our positions for several months and will consider booking profits when we see an epic blow-off early next year. Puru Saxena-Read more here-http://www.321gold.com/editorials/saxena/saxena100809.html
-The economy imploded a year ago. It was traumatic and devastating to many, but it wasn’t really surprising to serious gold investors. Those who seemed most surprised should not have been: reporters in the mass media who are supposed to be our guardians. They had ignored, and even suppressed, explicit warnings about everything that came to pass.
Yet now, when many in the media review what transpired one year ago and even have the chutzpah to draw “lessons” of what we supposedly now know they overlook their own complicity in what happened. And in their list of lessons they neglect to mention obvious conclusions:
* Debt cannot be papered over.
* Inflated currency is no substitute for gold.
* A personal portfolio should be diversified beyond stocks.
* Consumer confidence cannot be manipulated indefinitely.
* Politicians can’t ensure prosperity for this generation by bankrupting the next.
The media instead go to the same “experts” who were surprised by the economic meltdown to tell us what lessons we, the duped, should now draw. Usually their lessons come down to this: we should take their advice again more regulation, higher taxes, more government spending, more lawyers and bureaucracy. Read more here-
http://news.goldseek.com/GoldSeek/1254809220.php
-As dollar fades, gold’s currency shine brightens. As the dollar’s dominance fades with the emergence of a multipolar world, gold may stand to gain the most of all assets thanks to an unlikely quality neutrality.
While no major currency is likely to replace the dollar anytime soon, the need for an alternative is clear, and growing. China among others is considering how to diversify its more than $2 trillion in foreign exchange reserves; talk of using other currencies to trade oil or commodities continues to circulate.
Supply constraints mean there is no chance of a full revival of the gold standard era, when currencies were pegged directly to gold, but investors say gold’s duel role as both currency and asset make it an almost irresistible buy for years to come as financial geopolitics add risk into global markets.
“The fact that gold has a currency aspect without being tied to any country is key to enhancing its value as an asset,” said Koichiro Kamei, managing director at financial research firm Market Strategy Institute. “The realization that gold can be turned into anything spread quickly and widely as people used it to raise dollars last year when they were short of dollars.” Read more here-http://www.reuters.com/article/hotStocksNews/idUSTRE5963BX20091007
-John Embry Sept 25th commentary. Gold is entering a strong seasonal period. Read more here-http://www.sprott.com/Docs/InvestorsDigest/2009/09_25_2009.pdf
-Mike Zielinski of the Mint News Blog reports today that because of high demand for gold and silver coins, the U.S. Mint has suspended production of gold and silver collector coins so that it may concentrate on bullion coins. Read more here-http://www.gata.org/node/7867
-New gold suppression documents examined on King World News. Listen here-http://www.gata.org/node/7852
-Peter Grandich: GATA has beaten the gold bears. Read more here-http://www.gata.org/node/7870
-Swiss money manager concurs with GATA on gold rigging. Read more here-http://www.gata.org/node/7857
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,600 the silver price would be $20.00
Gold to silver ratio at 70 to 1 with gold at $1,600 the silver price would be $22.86
Gold to silver ratio at 60 to 1 with gold at $1,600 the silver price would be $26.67
Gold to silver ratio at 50 to 1 with gold at $1,600 the silver price would be $32.00
Gold to silver ratio at 40 to 1 with gold at $1,600 the silver price would be $40.00
Gold to silver ratio at 30 to 1 with gold at $1,600 the silver price would be $53.33
Gold to silver ratio at 20 to 1 with gold at $1,600 the silver price would be $80.00
Gold to silver ratio at 15 to 1 with gold at $1,600 the silver price would be $106.67
-I invest for inflation. In 1971 President Nixon took the world off the gold standard, which means the world’s central banks can print as much money as they want. I was in Vietnam in 1972 and saw what happens when people do not trust paper money. Rather than try to live below my means and save money, I invest in gold, silver, and oil commodities that go up in price as the government prints more money.
When investing for inflation, I am not investing for cash flow. In this case, I am investing to protect my wealth from the predatory practices of the Federal Reserve Bank, the U.S. Treasury, and the ultra rich manipulating the world economy.
China does not trust the U.S. dollar. Today China is using U.S. dollars to buy commodities such as oil, copper, gold, and silver. The good news is silver is still inexpensive. In 2007 gold was approximately 50 times more expensive than silver. In 2009 the gap is 60 times which means silver is a bargain.
Silver is used in the electronics industry and is consumed daily; stock piles of silver are dwindling. On top of that, for the first time in modern history, there is more gold in the world than silver. In other words, silver is more valuable than gold. The good news is, at less than $20 an ounce, almost anyone can afford to start preparing for the worst and building their own house of silver. Robert Kiyosaki-Read more here-http://finance.yahoo.com/expert/article/richricher/192575 Read and watch video interview here-http://moneynews.newsmax.com/streettalk/silver_investment_kiyosak/2009/09/25/264718.html
-Silver analyst Ted Butler interviewed by King World News. Listen here-http://www.gata.org/node/7853
-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1254713506.php
-Indian bank to start selling silver bars. HDFC, a large gold seller is looking to sell into the silver retail market because it says investment demand is growing faster than jewellery. Read more here-http://mineweb.net/mineweb/view/mineweb/en/page32?oid=90344&sn;=Detail
-Silver institute Q3 report. Read report here-http://www.silverinstitute.org/images/pdfs/3q09.pdf
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: When Banks Start Lending, Watch Out! Amazingly, massive printing by governments around the world hasn’t resulted in massive inflation at least in terms of crazy price movements. But don’t get complacent.
From Kyle Bass’s latest investor letter comes this chart of the US monetary base, and obviously the big, gold-shaped “excess reserves” spike stands out. This is basically cash that banks are hoarding. As he notes, if this V-shaped recovery materializes as the market expects, the banks start lending, inflation lies in wait, and will roar back to life. Read more here-http://www.businessinsider.com/chart-of-the-day-us-monetary-base-2009-10
-Chart of the week: The Dollar Collapse Is A Huge Part Of This Rally. Earlier today, David Rosenberg called the stock market rally a “money illusion,” since without the benefit of the dollar collapse, things look a lot worse.
Well, the rally isn’t 100% based on the dollar just about 50%. As you can see here, since early May, when the Dollar really started breaking down the S&P; 500 as measured in Euros is up less than half of what the S&P; 500 is up in Dollar terms. Read more here-http://www.businessinsider.com/chart-of-the-day-sp-500-in-dollars-and-euros-2009-10
-”Henry Ford was right. A prosperous economy requires that workers be able to buy the products that they produce. This is as true in a global economy as a national one.” John J. Sweeney-Bio here-http://en.wikipedia.org/wiki/John_Sweeney_%28labor_leader%29
-”I’ve not see gold’s fundamentals this bullish in years.” Peter Grandich, a metals writer at Agoracom
-Probably the biggest key is that gold recently spent two weeks above $1,000 and we believe gold is prepared for a breakout that will take its price anywhere from $1,200 to $1,700 an ounce. Gold’s long-term reverse head and shoulders pattern, one of the most powerful patterns in charting is in a breakout mode. Bob Chapman-Read more here-
http://news.goldseek.com/InternationalForecaster/1254675600.php or http://news.goldseek.com/InternationalForecaster/1254934483.php
-The gold price is still significantly below its inflation-adjusted high. The price hit $850/oz in January 1980, which represents a price today of about $2,300/oz when adjusted for inflation.
Telegraph.co.uk
-About gold, the Adens note that “gold’s peak in 1980 at $850 is the equivalent of about $2,300 in current dollars. Gold has not even approached that level yet and the situation is far more serious now than it was then.”
“The focus now is on the next phase of the current rise. If we continue to use proportions, the bull market’s second rise from 1976 to 1980 gained 750%. Using the same growth and applying it to the current bull market, we could see gold eventually reach $4100 during the next run-up.
And if you take the entire bull market gain in the 1970s at 2300% and extrapolate, then $5800 would be the equivalent upside target.” Long-term, the Adens expect an inflationary collapse. Aden Sister-Read more here-http://www.marketwatch.com/story/story/print?guid=C9D3BD6A-5539-4824-9D64-32BCEBF54820
-Kyle Bass, the hedge-fund manager who made $500 million in 2007 betting against subprime securities, is buying shorter-term debt and precious metals, anticipating hyperinflation will lead to higher interest rates. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aS3y4MpdNi_Y
-Jim Rogers, the investor who predicted the commodities boom earlier this decade, expects gold to pass its inflation-adjusted 1980 peak of $2,312. “Gold is going to be much higher over the course of the bull market, in a decade or however long it lasts,” he says. Rogers, who in the past has criticized the Federal Reserve for being lax on inflation, considers gold the ultimate safe haven in times of financial stress. Cnnmoney.com
-FDR said “there is nothing to fear but fear itself” and yet is fear that is helping drive every asset class right now. The action in all of the markets has been very interesting. The equity market continues to trade on light volume this tells you that there is little conviction and that it does not take much in the way of buying activity to generate whippy rallies.
But to see the S&P; 500 now within 15 points from a post-collapse high, to see the yield on the 10-year Treasury note back below 3.2%, despite the gargantuan new supply, and to see gold break out to all-time highs, is remarkable. The only possible explanation comes from a market analyst on Bloomberg yesterday it is not greed, but fear. Institutional equity investors fear missing out on the rally.
Bond investors fear deflation and the stock market is way overdone and is ripe for a steep correction. The gold bugs fear that the fiscal and monetary largesse globally will lead to inflation and fear that the U.S. dollar is on the verge of collapse. Never before has fear felt so reassuring pick an asset class, and it’s going up in price. David Rosenberg-Gluskin/Sheff
-Stiglitz Deflation Threat Pushes Fed to Stay at Zero. The U.S. faces the possibility of deflation for the first time since the Eisenhower administration, a threat that may prompt the Federal Reserve to keep interest rates near zero through next year. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=ame31IjWda6w
-ECB, BOE Leave Rates Unchanged to Support Economic Recoveries. The European Central Bank and the Bank of England kept their benchmark interest rates at record lows to support a recovery from the worst economic slump since World War II.
The ECB left the main rate at 1 percent and President Jean- Claude Trichet signalled at a press conference in Venice that the ECB has no plans to raise borrowing costs, describing their level as “appropriate.” The U.K. central bank kept its rate at 0.5 percent and maintained a program to buy 175 billion pounds ($278 billion) of government bonds with newly created money. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aifGEopfb2uc
-Is the U.S. Preparing to Bomb Iran? Is the U.S. Stepping Up Preparations for a Possible Attack on Iran’s Nuclear Facilities? Read more here-
-Majority in U.S. Would Back Attack to Prevent Iran Nuclear Bomb. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aNvqCq5beGAE
-Report Says Iran Has Data to Make a Nuclear Bomb. Senior staff members of the United Nations nuclear agency have concluded in a confidential analysis that Iran has acquired “sufficient information to be able to design and produce a workable” atom bomb. Read more here-http://www.nytimes.com/2009/10/04/world/middleeast/04nuke.html?_r=3
-Iran Inspection Set for Oct. 25, UN Atomic Chief Says. Mohamed ElBaradei, head of the United Nations nuclear agency, said inspectors would visit Iran’s newly disclosed uranium processing plant on Oct. 25, as he called on Tehran to assure the world it wasn’t building a bomb. Read more here-
http://www.bloomberg.com/apps/news?pid=20601110&sid;=atQNoVZrfy04
-Iran conflict could send oil to high: Raymond James. Oil prices may surge to a record if conflict over Iran’s uranium enrichment leads the oil producer to slash exports or block the Strait of Hormuz, Raymond James analysts said in a Monday research note.
The note says that the risks of a military strike against Iran’s nuclear facilities are rising, which could potentially cut off the OPEC nation’s 2-million-barrels-a-day of exports. It could also lead to a blockage of 20 percent of global oil supplies which are transported through the Gulf’s Strait of Hormuz, the note said.
While the threat of a disruption due to the standoff between the West and Tehran over its nuclear program has pushed up oil prices from time to time over recent years, oil markets have remained calm amid rising tensions during the past month.
“With oil (prices) now around $70 a barrel we would argue that the market isn’t factoring in the risks,” said Pavel Molchanov, one of the report’s authors, in a telephone interview. “Catalysts for higher oil prices could include more saber-rattling, or Iran reverting back to a more confrontational stance.” Read more here-
http://www.reuters.com/article/gc08/idUSTRE5944T120091005
-North Korea Says Dismantling Its Nuclear Weapons ‘Unthinkable.’ Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aJS46gmAKirs
-Gourmet magazine closes after 70 years. Downturn and ad drought claim longstanding Gourmet magazine. Publisher Condé Nast announces 3 other closures: Cookie and bridal magazines Elegant Bride and Modern Bride. Read more here-http://money.cnn.com/2009/10/05/news/companies/gourmet_magazine/index.htm?postversion=2009100517
-Q+A-How do you know you have the flu? Read more here-http://www.reuters.com/article/newsOne/idUSN0643876320091008
-Most Babies Born Today Will Live 100 Years, Scientists Say. Read more here-http://www.bloomberg.com/apps/news?pid=20601124&sid;=aGCHVoAxPlu8
-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
-Blue Diamond Fetches Asian Record of $5.7 Million at Sotheby’s. An 8.74-carat blue diamond, the size of a hazelnut, fetched HK$43.8 million ($5.7 million) in Hong Kong, the most expensive of its type sold at auction in Asia.
The emerald-cut, so-called fancy intense blue gem, went to an anonymous phone buyer after a two-minute tug-of-war with at least four rivals that escalated at a rate of HK$1 million a bid. The diamond has the third-highest grade of VVS1, which means it is very slightly flawed, according to host Sotheby’s.
A carat is one-fifth of a gram. New York-based Sotheby’s says it holds the per-carat world auction record for any gemstone with its May sale of a 7.03-carat cushion-shaped fancy vivid-blue diamond in Geneva for 10.5 million Swiss francs ($9.5 million); it was sold to Hong Kong property tycoon Joseph Lau.
“Only about a handful of such diamonds exist in the world,” said Fyzee Thambi, a Hong Kong-based gem dealer, in an interview at the venue yesterday. “That price is a bargain. In better economic times, people would have paid much more for it.” Diamonds are prized for being portable stores of value. Read more here-
http://www.bloomberg.com/apps/news?pid=20601088&sid;=aRQFbHxkoXpc or http://www.idexonline.com/portal_FullNews.asp?id=33045
-Diamonds aren’t forever, the pipes are running dry. According to Rio and BHP Billiton analysis, most existing mine resources for rough stones will be gone within 15 years. This is because new diamond discoveries are becoming increasingly rare. According to Rio, annual discoveries of kimberlite ”pipes” kimberlite is a host rock for diamonds have fallen (on a five-year moving average basis) to little more than 100.
And history shows that only one in 10 kimberlite pipes contain diamonds and only one in 100 of those are economic to mine. The lack of new discoveries since the mid-1980s means the world’s mine reserves of rough diamonds have fallen from 80 years’ supply to the 15 years that Rio now forecasts. Read more here-
http://www.smh.com.au/business/diamonds-arent-forever-the-pipes-are-running-dry-20090923-g2sp.html
-American Museum of Natural History Showcases 25 Notable Diamonds. A new diamond exhibit at the American Museum of Natural History in New York City displays 25 outstanding diamonds. On show is an intense pink brilliant set in gold with small pink diamonds, all coming from the Argyle Mine in Australia, and designed by Carvin French.
Another impressive diamond is a round, brilliant-cut, 5.4-carat diamond pendant surrounded by 20 sapphires in white gold setting, designed in 1960. Five vivid, colored diamonds representing blue-green, orange-yellow, purplish-pink, blue, and orange gems from the Olympia Diamond Collection are also displayed.
The colored diamond collection is on loan from Scarselli Diamonds and curated by gemologist Joshua Sheby. Fancy, naturally colored diamonds graded as vivid indicate they that they display the most color saturation and are very rare finds. Idexonline.com
-Are we in for a diamond price bubble? Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page37?oid=90371&sn;=Detail
THE FALL OF THE U.S. DOLLAR
-The demise of the dollar. In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.
In the most profound financial change in recent Middle East history, Gulf Arabs are planning along with China, Russia, Japan and France to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years. Read more here-http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html
-Russia Today interviews journalist Robert Fisk who rocked the currency markets. Watch more here-http://www.gata.org/node/7876
-Saudis, Russians, Kuwaitis deny oil dollar-dump plan. Read more here-http://www.gata.org/node/7864
-New documents from Zero Hedge show longtime U.S. fear of oil trade’s dollar dump. Read more here-http://www.gata.org/node/7866
-Reuters follows Independent’s story on oil’s dollar dump. Read more here-http://www.gata.org/node/7862
-Ambrose Evans-Pritchard: Strengthening yuan, not oil trading, will dethrone dollar. Read more here-http://www.gata.org/node/7868
-Asian central banks intervene to slow dollar’s fall. Read more here-http://www.gata.org/node/7874
-China calls time on dollar hegemony. You can date the end of dollar hegemony from China’s decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners. Read more here-http://www.telegraph.co.uk/finance/china-business/6266790/China-calls-time-on-dollar-hegemony.html
-UN calls for new reserve currency. The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the “privilege” of building a huge trade deficit. “Important progress in managing imbalances can be made by reducing the reserve currency country’s ‘privilege’ to run external deficits in order to provide international liquidity,” UN undersecretary-general for economic and social affairs, Sha Zukang, said.
Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: “It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity.” He said: “Greater use of a truly global reserve currency, such as the IMF’s special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes,” he said.
The SDRs are the asset used in IMF transactions and are based on a basket of four currencies the dollar, euro, yen and pound which is calculated daily. China had called in March for a new dominant world reserve currency instead of the dollar, in a system within the framework of the Washington-based IMF. Read more here-http://www.breitbart.com/article.php?id=CNG.e272eaa74dccc30f21c6ff7638b0f37b.461&show;_article=1
-Max Keiser: Dollar to be buried way before 2018. Watch video here-http://www.russiatoday.com/Top_News/2009-10-06/dollar-funds-americas-wars.html or
http://www.youtube.com/watch?v=D7dH4e8HYFA&feature;=player_embedded
-More than a decade after former Treasury Secretary Robert Rubin made the “strong dollar” national policy, currency traders say the same words coming from the Obama administration have little meaning. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=ad4mbyFqcjg0
98 U.S. BANKS SHUTDOWN
-Regulators close more banks. Regulators have shut Warren Bank in Warren, Mich., and two small banks in Colorado and Minnesota, boosting the number of failed U.S. banks this year to 98 as loan defaults rise in the worst financial climate in decades. Read more here-http://apnews.myway.com/article/20091003/D9B3KTJ80.html
GLOBAL BANKING CRISIS
-U.K. Faced ‘Bank Runs, Riots’ as RBS and HBOS Neared Collapse. A year ago today, Royal Bank of Scotland Group Plc and HBOS Plc were close to collapse, causing a chain reaction that could have ended with riots in U.K. cities, security analysts and economists said.
Bank failures would have forced the government to cancel police leave and deploy troops as the breakdown of the financial payments system threatened the ability of utilities to provide essential services, said David Livingstone, a fellow at the Royal Institute for International Affairs in London, a former adviser to the government’s Cobra crisis response committee.
“You are talking about a situation with mass disorder and panic,” the former Royal Navy officer said in an interview. There would be “riots, pandemonium, everyone fending for themselves.” Read more here-http://www.bloomberg.com/apps/news?pid=20601083&sid;=aMfETcYI2t7Y or http://www.bloomberg.com/apps/news?pid=20601109&sid;=aUa2a9yR5M8w
-An inconvenient truth: financial crises are inevitable. The IMF’s new early warning system to avoid crises such as the credit crunch is doomed to disappoint, says Edmund Conway. Read more here-http://www.telegraph.co.uk/finance/comment/edmundconway/6249065/An-inconvenient-truth-financial-crises-are-inevitable.html
-The Bank, whose job it is to support low-income countries, has had to hand out so much cash in the wake of the financial crisis that it faces a shortfall in what it can spare for new projects within 12 months.
“By the middle of next year we will face serious constraints,” said its president Robert Zoellick, as he launched a major campaign to persuade rich nations to pour more money into the Washington-based institution. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6255816/World-Bank-could-run-out-of-money-within-12-months.html
-Banks brace for Latvia’s collapse. The Baltic States are once again in the eye of the storm after leaked reports that Sweden is bracing for a full-blown economic and political “breakdown” in Latvia. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6263039/Banks-brace-for-Latvias-collapse.html or
http://www.bloomberg.com/apps/news?pid=20601087&sid;=a2dW2kp6cCA0
-Stiglitz Says Bank Stress Tests May Not Reflect Industry Health. Nobel Prize-winning economist Joseph Stiglitz said stress tests carried out across the financial system may not reflect the health of the banking industry.
“There’s a question of whether you can trust stress tests,” Stiglitz told Bloomberg News today at an event in Dublin. “If you had announced at the end of stress tests” that the banks “would not pass, it would have caused panic.” Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aQBrHL2NC6ek
-Government Watchdog Says Treasury and Fed Knew Bailed-Out Banks Were Not Healthy. Senior Officials Had Financial Concerns About Nine Bank Institutions Receiving TARP Funds. Read more here-http://abcnews.go.com/Business/lied-watchdog-treasury-fed-knew-bailed-banks-healthy/story?id=8748299 or
http://www.bloomberg.com/apps/news?pid=20601103&sid;=a8m5sPx1dFAc
-Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt. The number of U.S. lenders that can’t collect on at least 20 percent of their loans hit an 18-year high, signaling that more bank failures and losses could slow an economic recovery.
Units of Frontier Financial Corp.,Towne Bancorp Inc. and Steel Partners Holdings LP are among 26 firms with more than one-fifth of their loans 90 days overdue or not accruing interest as of June 30 a level of distress almost five times the national average according to Federal Deposit Insurance Corp. data compiled for Bloomberg News by SNL Financial, a bank research firm. Three reported almost half of their loans weren’t being paid.
While regulators may not force firms on the list to close, requiring them to raise capital and curb loans may impede recovery in Florida, Illinois and seven other states. The banks are among the most vulnerable of a larger group of lenders whose failures the FDIC said could cost $100 billion by 2013.
“There are some zombie banks out there,” said Bert Ely, chief executive officer at Ely & Co., a bank consulting firm in Alexandria, Virginia. “Neither the banking industry nor the economy benefits from keeping weak banks in business.”
Ninety-five banks have failed this year at the fastest pace in almost two decades, depleting the FDIC’s insurance fund. The agency proposed on Sept. 29 that financial firms prepay three years of premiums, which would add $45 billion of reserves. The fund sank to $10.4 billion as of June 30, the lowest since 1993. It will run at a deficit starting this quarter, the agency said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aXZinRhF5tlA
-U.S. banks slow to absorb commercial property losses: report. A U.S. Federal Reserve report found that banks in the country are slow to take losses on their commercial real estate loans that have been hit by slumping property values and rental payments, the Wall Street Journal said.
Citing a Sept 29 presentation made by Fed analyst K.C. Conway to banking regulators, the paper said the report’s remarks suggested that regulators were preparing for a rerun of housing-related losses that plagued many banks after the residential property bubble burst. Read more here-http://www.reuters.com/article/ousivMolt/idUSTRE5960S020091007
SOROS-BASICALLY BANKRUPT BANKS RESTRAIN U.S.
-Billionaire investor George Soros said the U.S. economic recovery will be sluggish as “basically bankrupt” financial companies and indebted consumers impede it. “The U.S. will be very slow in recovery,” Soros said in a panel discussion in Istanbul, where the annual meetings of the International Monetary Fund and World Bank took place. “The United States has a long way to go.”
Financial companies in the Americas have written down or lost $1.1 trillion since the financial crisis began two years ago, while the U.S. savings rate has risen to its highest level in 24 years as consumers retrench. Soros signalled a stronger rebound in Europe, a view at odds with the IMF. The Washington- based lender last week said the U.S. economy will grow 1.5 percent next year, five times the pace of the euro area.
“Europe has been less damaged,” Soros said today. The European Central Bank may be faster than the Federal Reserve to start withdrawing stimulus, he said, adding that it is “too early, certainly for the United States,” for policy makers to start reversing their emergency measures.
Policy makers may struggle to revamp the regulation of the financial system now that the economy and markets are recovering, he said. “It will be very difficult to accomplish,” he said. “The crash of 2008 now seems like a bad dream and people like to treat it like a bad dream and forget about it and get back to business as usual.” Read more here-
http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=ajYVNCQSHgTg
U.S. DEFICIT-DEBT
-U.S. Budget Deficit Estimate $1.4 Trillion. The U.S. government spent a record $1.4 trillion more than it collected in the fiscal year ended September 30, congressional analysts said on Wednesday, in their final estimate before the official numbers are issued.
Bank bailouts, stimulus spending and declining tax revenues due to a deep recession led the government to post a deficit that amounts to 9.9 percent of the U.S. Gross Domestic Product for the 2009 fiscal year, the Congressional Budget Office said. The Treasury Department will report the actual deficit later this month. The deficit for fiscal 2008 was $459 billion. Read more here-http://www.nytimes.com/reuters/2009/10/07/business/business-uk-usa-budget.html
-Social Security Applications Almost Double Because of Recession. Applications for Social Security benefits rose almost 50 percent more than expected this year because of the recession, according to the federal retirement program.
“We are seeing a significant increase in both retirement and disability applications as a result of the recession,” said Mark Lassiter, a Social Security spokesman. The 150,000 extra retirees may add to the financial pressure on the entitlement program. In May, Social Security trustees said expenses would exceed revenue beginning in 2016, one year earlier than their previous forecast. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=auyVsU9FRcts
-Chart of the week: Besides The Fed, Nobody Is Buying Agency Debt. Where would we be without the Fed and its printing press? There’s been a lot of debate about the appetite of foreign investors of our debt Treasury auctions continue to be strong, even as noises emanate from overseas about wanting to dump the dollar.
But here’s a stark fact, via the Council on Foreign Relations: Only the Fed is buying agency debt. Foreign buyers, who once consumed it voraciously, have been net sellers so far this year. Read more here-http://www.businessinsider.com/chart-of-the-day-who-bought-us-government-deb-2009-10
U.S. UNEMPLOYMENT
-Last Friday, the Labour Department reported that nonfarm payrolls decreased by 263,000 in September. As a result, today’s chart provides some perspective on the US job market. Note how the number of jobs has steadily increased (top chart) over the long-term.
During the last economic recovery, however, job growth was unable to get back up to trend (first time since 1960). More recently, nonfarm payrolls have pulled away from its 50-year trend by a record percentage (bottom chart). In fact, the number of US jobs is currently at level first seen in early 2000. Read more here-http://www.chartoftheday.com/20091002.htm?T
-September Unemployment: ACTUAL LOSS 995k. Read more here-http://www.321gold.com/editorials/denninger/denninger100509.html
-U.S. Unemployment Probably Higher Than Reported, Silvia Says. Unemployment in the U.S. is probably higher than September’s 9.8 percent rate reported by the Labor Department today because the number of people looking for work is declining, economist John Silvia said.
“People are just disappearing,” Silvia, 61, chief economist at Wells Fargo Securities in Charlotte, North Carolina, said today in a Bloomberg radio interview. “Discouraged workers go up. Marginal workers go up.” The 263,000 jobs lost last month brought the total since the recession began in December 2007 to 7.2 million the most since the Great Depression.
The so-called participation rate, which represents the proportion of the population the workforce, declined to 65.2 percent in September, the lowest level since May 1986, from 65.5 percent in August. “The reason the unemployment rate is not going up faster is because you have a lot off people dropping out,” said Silvia, a former congressional economist. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aYxjmA7Mh96Q
-U.S. Unemployment Now Lasts Longer Than Benefits. For the first time, the average amount of time it takes fired employees to find a new job exceeds the length of their standard unemployment benefits.
The CHART OF THE DAY shows the average duration of unemployment is now 26.2 weeks, longer than the 26 weeks of state benefits normally provided to workers who lose their jobs. It’s the first time that has occurred since the Bureau of Labor Statistics began keeping records in 1948. Read more and see chart here-
http://www.bloomberg.com/apps/news?pid=20601109&sid;=ajY2EJWqg3ZE
-For the first time in three decades, a U.S. recession may wipe out all the jobs created during the previous expansion, according to Ed McKelvey, a senior economist at Goldman Sachs Group Inc. in New York.
Pending payroll revisions and the likelihood that employment will keep dropping in coming months mean the 8.3 million jobs created from 2003 through 2007 will be lost, McKelvey wrote in an Oct. 6 note to clients.
The only other time that’s happened in the post-World War II era was during the “aborted” recovery sandwiched between the 1980 and 1981-82 recessions, McKelvey said. “The current situation is obviously quite different,” he wrote. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aBH460YDfWSs
-Chart of the week: The Long, Long Job Search. Last weeks jobs report was ugly by nearly every measure. There were huge job losses, income growth was weak, and the work week hit a record low again.
And here’s another depressing measure: The duration of time people spend unemployed. Today’s chart measures the share of the labour force that has been unemployed at least 15 weeks. As you can see, we’re in uncharted territory. Read more here-http://www.businessinsider.com/chart-of-the-day-employment-2009-10
REAL ESTATE-MORTGAGES-FORECLOSURES-RENTS
-U.S. housing prices may still fall more than 10 percent, killing an incipient recovery, as demand from first-time home buyers fades, leading economist Nouriel Roubini said on Thursday. Read more here-http://www.reuters.com/article/businessNews/idUSTRE59747820091008
-Home Sellers in U.S. Cut Prices by $28.4 Billion, Trulia Says. U.S. home sellers cut their asking prices by a total of $28.4 billion to attract buyers as the real estate recovery stalled, Trulia Inc. said.
The average discount was 10 percent as of Oct. 1, the San Francisco-based real estate data provider said today. Homes listed for more than $2 million were cut the most, with owners taking an average of 14 percent off the original price. Luxury homes accounted for 25 percent of all of the reductions.
Sales of existing U.S. homes unexpectedly fell in August for the first time since March, according to the National Association of Realtors, signaling the recovery will be slow to gain speed. The median price dropped 12.5 percent from August 2008.
“Consumers have to be slashing the prices of the homes they list,” Pete Flint, chief executive officer of Trulia, said in an interview. There’s a “significant inventory” of homes for sale. “You’re still going to see further price declines before the market stabilizes in 2010.”
Half of the 10 states with the highest percentage of discounted homes are in the Northeast: Massachusetts, Rhode Island, Connecticut, New Hampshire and New Jersey. A third of residences for sale in those states were reduced at least once, Trulia said.
New York, California and Florida accounted for 35 percent of the total value of price cuts nationally. In Nevada, Idaho, Arizona, Wyoming, Hawaii, Utah and California, sellers have dropped an average of 13 percent off the original price, according to Trulia. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aPKdx2VMGEBg
-MGM Mirage said its CityCenter Las Vegas construction project announced that a 30 percent price reduction will be offered at closing to the existing buyers of CityCenter’s three luxury residential offerings: The Residences at Mandarin Oriental, Las Vegas, Veer Towers and Vdara Condo Hotel. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a8Pt_NymMTu4
-The Federal Housing Administration, which insures mortgages with low down payments, may require a U.S. bailout because of $54 billion more in losses than it can withstand, a former Fannie Mae executive said.
“It appears destined for a taxpayer bailout in the next 24 to 36 months,” consultant Edward Pinto said in testimony prepared for a House committee hearing in Washington today. Pinto was the chief credit officer from 1987 to 1989 for Fannie Mae, the mortgage-finance company that is now government-run.
The FHA program’s volumes have quadrupled since 2006 as private lenders and insurers pulled back amid the U.S. housing slump, Pinto said. The jump has left the agency backing risky loans and exposed to fraud in a “market where prices have yet to stabilize,” he said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aOmu318hOZr4
-Foreclosures mark pace of enduring U.S. housing crisis. Every 13 seconds in America, there is another foreclosure filing. That’s the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year.
There are more than 6,600 home foreclosure filings per day, according to the Center for Responsible Lending, a nonpartisan watchdog group based in Durham, North Carolina. With nearly two million already this year, the flood of foreclosures shows no sign of abating any time soon.
If anything, the country’s worst housing downturn since record-keeping began in the late 19th century may only get worse since foreclosures, which started with subprime borrowers, have now moved on to the much bigger prime loan market on the back of mounting unemployment. Read more here-http://www.reuters.com/article/newsOne/idUSTRE59705J20091008
-California Hotel Foreclosures Triple in Travel Slump. Hotel foreclosures in California more than tripled in the first nine months of this year as business travelers and vacationers cut spending.
Foreclosures including the 400-room St. Regis Monarch Beach resort in Dana Point climbed to 47 in January through September from 15 a year earlier. Properties in default more than quadrupled to 259, Irvine, California-based Atlas Hospitality Group said in a statement. Atlas specializes in selling hotels. The survey didn’t include states other than California.
Declining occupancy rates and a dearth of credit for refinancing loans obtained during the U.S. real estate boom are squeezing the travel industry. Loans secured by more than 1,500 hotels with a total outstanding balance of $24.5 billion may be in danger of default, according to Realpoint LLC, a credit rating company that tracks the performance of securities tied to mortgages on commercial property.
“Urban areas are dependent on a mix of business, convention and leisure travel,” said Robert Mandelbaum, research director for PKF Hospitality Research in Atlanta. “There’s been a tremendous decline in business and convention travel.”
Lodging owners are struggling after adding rooms and properties from 2004 to 2007, when financing was easy to come by because banks could bundle loans into commercial mortgage-backed securities and sell them on to investors. About $83.4 billion in hotel-backed securities were issued in those years, according to Realpoint. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=axGEYgpz4Ciw
-U.S. Office Vacancies Reach Five-Year High of 16.5%, Reis Says. U.S. office vacancies rose to a five- year high in the third quarter, as job losses deepened and employers abandoned space in the recession, property research firm Reis Inc. said.
Vacancies climbed to 16.5 percent from 13.7 percent in the year since Lehman Brothers Holdings Inc. filed for bankruptcy, New York-based Reis said in a report. Effective rents, the amount actually paid by tenants, fell 8.5 percent, the biggest year-over-year drop since 1995.
“The decline in effective rents really accelerated after the fall of Lehman Brothers,” Victor Calanog, director of research at Reis, said in a statement. “Tenants will continue shedding occupied space as jobs are lost.” Read more here-http://www.bloomberg.com/apps/news?pid=20601103&sid;=aEfOnZ74Jis0
-U.S. Apartment Vacancies Hit 23-Year High of 7.8%. U.S. apartment vacancies rose to 7.8 percent in the third quarter, the highest since 1986, as rising unemployment reduced rental demand, Reis Inc. said.
Actual rents paid by tenants, known as effective rents, declined 2.7 percent from a year earlier, the New York-based property research firm said in a report today. Asking rents, or what landlords sought, fell 1.8 percent from a year earlier.
Job losses and falling wages are shrinking the pool of potential tenants. The U.S. unemployment rate rose to 9.8 percent in September, the highest since 1983, the Labor Department said Oct. 2. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a0aLTAleG.1Q
-Dropping Rents Will Drag House Prices Down with Them. The vacancy rate for rental apartments in the U.S. is now 7.8% and climbing, says the Wall Street Journal. This is the highest vacancy rate in 23 years.
Worse, the vacancy rate is expected to keep climbing through the winter, ultimately hitting the highest rate on record. This is good news for renters and bad news for landlords. It’s also bad news for anyone who owns and would like to sell a house. Read and watch more here-http://finance.yahoo.com/tech-ticker/article/349606/Dropping-Rents-Will-Drag-House-Prices-Down-with-Them?tickers=^dji,^gspc,hd,l,kbh
-U.S. apartment values, down about 35 percent from their peak, will probably fall further as rising unemployment cuts demand for rentals, said Ronald Zuzack, managing director of BlackRock Inc.’s real-estate unit.
“I think the valuations could go down another 10 percent,” Zuzack, of BlackRock Realty Advisors Inc., said today during a panel discussion at the RealShare Apartments 2009 conference in Los Angeles. “Apartments follow job growth.”
About $819 million of apartment buildings were sold in the U.S. in August, the latest month available, according to New York-based Real Capital Analytics Inc. That was down 18 percent from July. Building prices averaged $75,000 per apartment unit, compared with more than $120,000 in early 2007, the data provider said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a5kRSSzoORcs
© 2012, Worldwide Precious Metals Canada Ltd.
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The Goldbugg Report – October 13, 2009
Posted by Worldwide Precious Metals on Tuesday, October 13, 2009
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