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The Goldbugg Report – October 27, 2009
October 27, 2009
-The next target for gold is 1130, with a midterm target of 1300. The next target for silver is 19 with a midterm target of 26. Jim Willie CB
- Boiling Point, Warren Bevan
-Silver rose to a recent nominal high $20.88/oz in March 2008. After an 18 month period of correction and consolidation, silver looks set to challenge that high in the coming weeks…
GOLD
-Boiling Point, Warren Bevan http://news.goldseek.com/GoldSeek/1256485332.php
-Gold’s rally to a record means prices are still 53 percent below the 1980 inflation-adjusted peak. While gold rose 19 percent this year to $1,072 an ounce on Oct. 14, consumer prices almost tripled in the past three decades, eroding the metal’s value. Bullion hasn’t kept pace with the cost of bread, fuel or medical care. In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator.
Record government debt and interest rates close to zero percent are pushing gold higher for a ninth straight year, and options show investors expect the rally to continue. When prices reached all-time highs, the contract with the most open interest was the December call to buy the metal at $1,200. The contract to purchase at $1,500 an ounce was the third biggest.
“Gold is not at any peak,” said Martin Murenbeeld, the chief economist at Toronto-based DundeeWealth Inc., which manages $58.5 billion in mutual funds and brokerage accounts. “The world’s money supply has increased and gold hasn’t kept pace,” he said. “We’re now in a period where gold is catching up.”
The U.S. Dollar Index, which measures the currency against those of six major trading partners, fell on Oct. 15 to the lowest level in 14 months, and has dropped about 7 percent this year. President Barack Obama has increased the nation’s marketable debt 22 percent to $7.01 trillion to revive growth.
Gold would need to rise more than sixfold to top the 1980 record, using a more accurate inflation-adjustment, said John Williams, an economist and the editor of Berkeley, California- based Shadowstats.com. He said the government has understated the cost of living over the past two decades with adjustments in the way it measures the basket of goods and services monitored by the U.S. consumer price index, or CPI. “If the methodologies of measuring inflation in 1980 had been kept intact, gold would have to hit $7,150 to be the equivalent of the 1980 record,” Williams said.
At Jersey, Channel Islands-based GoldMoney.com, which held $759 million of gold and silver for investors as of Sept. 30, founder James Turk said bullion can climb eightfold based on the historical relationship between the metal and the Dow Jones Industrial Average. The Dow is up 10-fold since January 1980.
Gold and the Dow, which has gained 14 percent this year to 9,995.91, were at about the same level during the Great Depression and the early 1980s, he said. On Jan. 21, 1980, as gold futures surged to $873, the Dow slipped to 946.25.
“The dollar is constantly being debased and inflated,” Turk said. “By 2013, gold is going to be at $8,000 and the Dow will be at 8,000.” Philip Gotthelf, the president of Equidex Brokerage Group Inc. in Closter, New Jersey, says he expects gold to trade at $1,250 by year-end. “Gold has been pushing higher because it’s no longer just a hedge against commodity inflation, it’s also a hedge against a change in world-monetary standards.” Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=a3w9OGzFRe3Y
-Gold above $1,000 isn’t close to ‘uncharted territory.’ Read more here-http://www.gata.org/node/7920
-Gold Heading to $3000 Unless America Hits the “Reset” Button, Tice Says. Among the cavalcade of gold bulls to recently grace Tech Ticker’s stage, David Tice is something of a centrist. Gold will hit at least $3000 per ounce before the current rally ends says Tice, Federated’s chief portfolio strategist for bear markets. The forecast falls roughly in between Peter Schiff’s $5000 per ounce call and Jimmy Rogers’ forecast of $2000.
Tice is wary about the potential for a short-term reversal in the dollar down-gold up trend. “We certainly could have a pullback,” he says. “However, we believe this rally in gold is going to on for a long time.” As with Schiff, Rogers and pretty much everyone else these days, Tice is concerned about the “debasing” of the U.S. dollar and our reliance on foreigners to fund the deficit.
Unlike others of the Austrian School of economics, however, he does believe the government was right to spend money last year because “we were going through a meltdown.” But Tice is frustrated that policymakers appear to be trying to prop up a “dysfunctional system” rather than using the crisis as an opportunity to “reset” the U.S. economy.
“We need to get away from a consumption-based economy,” Tice says. “Yes, it’s going to be tough [and] accompanied by very bad economic statistics and a lot of unemployment. Yes it’s going to be painful [but] we cannot simply continue to have foreigners or the Fed buy our Treasuries, agencies and mortgage-backed securities, etc. We have no real choice.”
But with policymakers and politicians seemingly unwilling to make the hard choices, Tice is sticking with dollar alternatives like gold, gold miners (he declined to specify) and foreign currencies, including the euro, Swiss franc, Norwegian krona and Canadian dollar. Read more here-http://finance.yahoo.com/tech-ticker/article/353661/Gold-Heading-to-3000-Unless-America-Hits-the-Reset-Button-Tice-Says
-Greenlight’s Einhorn holds gold, says US policies poor. David Einhorn, the hedge fund manager who had warned on Lehman Brothers’ precarious finances, on Monday said he is buying gold and betting that interest rates will rise as he lambasted the U.S. government’s financial chiefs for short-sighted policy decisions.
The exploding size of the national deficit, which reflects government policies that have simply rewarded bad behavior with massive bailouts, will make gold and gold stocks as well as call options on higher rates good investments, said Einhorn.
Einhorn, the president of Greenlight Capital, with more than $5 billion in assets under management, advocated buying both physical gold and gold stocks “if monetary and fiscal policies go awry.” He noted, “Gold does well when monetary and fiscal policies are poor and does poorly when they are sensible.” Read more here-
http://www.reuters.com/article/marketsNews/idAFN1928788520091019?rpc=44 or http://www.marketwatch.com/story/story/print?guid=23465BA4-9D9F-4AA0-AD7E-88E2D5FBC7E6
-Gold will rise to $1,200 an ounce by yearend as the dollar extends a slump, increasing demand for the metal as a store of value, according to researcher CPM Group. Read more here-
http://www.bloomberg.com/apps/news?pid=20601012&sid;=aAzQFxbQ0DzI
-Gold at $1250+ within 6 months hold on to it! The Gold Report interviews Eric Hommelberg, well known gold commentator and publisher of Gold Drivers Report who is looking for a bull run in gold to last at least until the middle of the next decade. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91077&sn;=Detail or http://www.gata.org/node/7919
-ScotiaMocatta, the precious metals division of the Bank of Nova Scotia, said on Thursday gold prices could rise as high as $1,400 an ounce in 2010 as investors turn to the metal as a store of wealth. Read more here-http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSLM65364920091022?rpc=401&=undefined&sp;=true
-Central Bank of the Russian Federation updated their website with their September numbers. They show that their gold reserves rose another 400,000 ounces during the month that was. Their total gold reserves [at least what they're reporting] shows that they hold 19.0 million ‘fine troy ounces.’ So far this year, they’ve purchased a whopping 2.3 million ounces for their reserves. Richard Nachbar-Ed Steer
-Trading gold and silver buy low and sell high. Adam Hamilton-Read more here-http://www.321gold.com/editorials/hamilton/hamilton101609.html
-Weakening dollar and global recovery have increased demand for gold. The World Gold Council’s latest Gold Investment Digest, which covers activity to the end of Q3, noted gold demand rising on continuing dollar weakness and signs of a stronger global economy. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91159&sn;=Detail
-India festival saw unexpected jump in gold sales-trade. Read more here-http://in.reuters.com/article/domesticNews/idINBOM53082520091021?sp=true
-In India even the Post Office sells gold coins. As a cheaper option for holding gold jewellery as an investment, Indian consumers are being sold small gold coins and bars through major marketing campaigns by the banks and even by India Post. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=91018&sn;=Detail
-Where are the giant gold discoveries going, going, gone? Giant gold discoveries are needed to help replace declining older resources, but they are few and far between. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=91043&sn;=Detail
-Patrick A. Heller: Gold is king of New Orleans conference. Read more here-http://www.gata.org/node/7910
-Peter Brimelow: Gold bears gathering but bulls defiant. Read more here-http://www.gata.org/node/7916
-Greenwich Jewelry Turns to Cash as Gold Reaches $1,000 an Ounce. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aP0_Ze7PbVo8
-Lawrence Williams: Is your gold really there? Continuing doubts are being expressed that all the gold claimed to be held by Central Banks and others may not be there, or title is being held by several parties as the statistics just don’t appear to add up. Read more here-http://www.gata.org/node/7915
-Adrian Douglas: How much imaginary gold has been sold part 1? Read more here-http://www.gata.org/node/7908
-Adrian Douglas: How much imaginary gold has been sold part 2? Read more here-http://www.gata.org/node/7911
-Is gold market an accident waiting to happen or a crime scene? Read more here-http://www.gata.org/node/7906
-GATA’s Ed Steer interviewed by King World News. Listen here-http://www.gata.org/node/7907
-Canada’s BNN interviews Trace Mayer on gold suppression. Read more here-http://www.gata.org/node/7913 or http://news.goldseek.com/GoldSeek/1255880648.php
SILVER
Gold to silver ratio at 80 to 1 with gold at $1,800 the silver price would be $22.50
Gold to silver ratio at 70 to 1 with gold at $1,800 the silver price would be $25.71
Gold to silver ratio at 60 to 1 with gold at $1,800 the silver price would be $30.00
Gold to silver ratio at 50 to 1 with gold at $1,800 the silver price would be $36.00
Gold to silver ratio at 40 to 1 with gold at $1,800 the silver price would be $45.00
Gold to silver ratio at 30 to 1 with gold at $1,800 the silver price would be $60.00
Gold to silver ratio at 20 to 1 with gold at $1,800 the silver price would be $90.00
Gold to silver ratio at 15 to 1 with gold at $1,800 the silver price would be $120.00
-Silver rose to a recent nominal high $20.88/oz in March 2008. After an 18 month period of correction and consolidation, silver looks set to challenge that high in the coming weeks. We continue to be bullish on gold and particularly silver and believe that silver will likely surpass its non inflation adjusted high of $48.70 per ounce and its inflation adjusted high of some $130 per ounce in the coming years and probably sooner than even more bullish analysts expect. Goldcore.com
-Silver, ‘Bullion’s Bridesmaid,’ May Outpace Gold: Chart of Day. Silver may outpace gold through mid- 2010 as a recovering global economy increases industrial demand, said Citigroup Inc. The CHART OF THE DAY shows the ratio of gold to silver. An ounce of gold bought 59.4 ounces of silver on Oct. 14 when gold for immediate delivery jumped to a record $1,070.80 as investors sought an alternative to the weakening dollar and a hedge against inflation. That compares with 48.5 ounces when gold first exceeded $1,000 on March 13 last year and 43.6 on April 19, 2006, the lowest level in the past 10 years.
“Silver is set to benefit from stronger gold, but also the improving outlook for global industrial production,” said David Thurtell, a London-based analyst at Citigroup, in an interview. “I think the gold-to-silver ratio can get to the low 50s.”
When gold reached $1,000 for the first time, silver traded above $20 an ounce, compared with $17.82 now. Silver has already climbed 56 percent this year, more than double the 21 percent advance in gold. Gold is on course for its ninth straight annual gain while the U.S. Dollar Index, a gauge against six major currencies, has fallen 7.4 percent this year.
“The dollar’s decline has been pushing gold to a series of record highs,” Harjas Wadhwa, vice president for New Delhi- based AUM Capital Market Private Ltd., said. “If gold moves higher from here, you’d expect silver to outperform,” he said. “It has a lot of catching up to do” since “bullion’s bridesmaid” was more than $20 an ounce when gold first surpassed $1,000, he said in a report.
Industrial applications such as electrical switches and batteries accounted for 50.3 percent of silver demand in 2008, compared with 40 percent five years earlier and 51 percent in 2007, according to The Silver Institute. Use in jewelry comprised 18 percent, followed by photography with 12 percent. “Net investment” about doubled from 2007, to 5.7 percent of demand, according to the Washington D.C.-based institute. The world economy will expand 3.1 percent next year after shrinking 1.1 percent in 2009, the International Monetary Fund forecasts. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a8lUSwDoyfPs
-Record gold prices could turn Indian buyers onto silver. Current indicators suggest demand for gold in India is of late being driven by investment sentiment, where price is a factor. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=91133&sn;=Detail
-The next target for gold is 1130, with a midterm target of 1300. The next target for silver is 19 with a midterm target of 26. Jim Willie CB-Read more here-
http://www.321gold.com/editorials/willie/willie101609.html
-Ted Butler on King World News: Morgan holds 40% of Comex silver shorts. Listen here-http://www.gata.org/node/7909
-Gene Arensberg: Two U.S. banks still hold over half silver shorts. Read more here-http://www.gata.org/node/7904
-So where’s Yamashita’s silver? Read more here-http://www.gata.org/node/7914
-Fit for a king: Why edible gold and silver is the new glamorous culinary craze. Read more here-http://www.dailymail.co.uk/femail/food/article-1221444/Fit-king-Why-edible-gold-silver-new-glamorous-culinary-craze.html#ixzz0UV7vIVtT
CHART OF THE WEEK-QUOTES-QUICK HITS
-Chart of the week: The Next Leg Down In Housing. Housing bears have been warning for months that despite a seemingly good summer, the pain would resume come the fall. This may be the first sign of that. The NAHB’s builder confidence level slipped in October to a reading of 18, less than the expected 20. Specifically, it seems builders are seeing the effect of the end of the $8,000 homebuyer tax credit, which is why the organization is pushing for it to be extended.
“It comes as no surprise that after trending upward from an historic low in January, the HMI’s positive momentum now appears to have stalled,” said Joe Robson, chairman of the National Association of Home Builders (NAHB) and a home builder from Tulsa, Okla.
“Our economists have repeatedly warned that the approaching expiration of the $8,000 home buyer tax credit on Nov. 30, combined with the massive hurdles that builders face in obtaining construction financing and appropriate appraisals on new homes, could derail the fragile recovery in housing just as it is starting to take shape.
“Congressional action to expand the tax credit and extend it for one year would provide a critically needed boost to the employment market and economy, generating nearly 350,000 jobs, $28.2 billion in wages, salaries and business income and $11.6 billion in additional tax revenues. That’s an opportunity we can’t afford to pass up at this difficult time.” Read more here-
http://www.businessinsider.com/chart-of-the-day-housing-market-index-2009-10
-China is a sleeping dragon. Let it sleep. If it wakes, it will shake the world. Napoléon Bonaparte-Read more here-http://www.321gold.com/editorials/schoon/schoon102009.html
-What 10 years ago was a cheap stock-fraud scheme for second-rate grifters in Brooklyn has become a major profit center for Wall Street. Our burglar class now rules the national economy. And no one is trying to stop them. Matt Taibbi, rollingstone.com October 15, 2009-Wall Street’s Naked Swindle A scheme to flood the market with counterfeit stocks helped kill Bear Stearns and Lehman Brothers and the feds have yet to bust the culprits. Read more here-http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle/1
-”The days of reckoning will come” for all the fiscal and money stimulus; specifically, higher long-term inflation, higher interest rates and lower growth, said the chairman of Group of Thirty and former Bank of Israel governor. “You must articulate today how the book will be closed” on all the extraordinary government support. Dr. Jacob Frenkel-Read more here-
-Well, as we have said in the past, the stock market is expensive. According to Ned Davis, the median P/E ratio is 20x versus the average of 17x dating back nearly 40 years. Another nifty way to look at the situation (see page B2 of last Thursday’s NYT) is to go back to 1995 after the Fed had engineered the era of multi-year price stability and when Alan Greenspan hinted at the FOMC meetings that the stock market seemed to be fairly valued.
At that time, the Dow was trading around the 4,000 mark. If you were to inflate that figure by the increase in GDP since that time and tack on a little more to account for margin expansion, the Dow would be trading around 8,000. As the NYT concluded, “against that hypothetical level, the Dow appears to be in bubble mode.” David Rosenberg-Gluskin/Sheff
-We highly, very highly recommend that you take the time to read the only article on the weekend worth reading, which was “The View From Inside a Depression” on page B1 of the Saturday NYT. Have a read of the excerpts from Benjamin Roth’s diary of the roller coaster ride that came to define the economy and the financial markets during the 1930s.
How it was all over by 1930 but it wasn’t. How everyone was giddy from all the government stimulus in 1935 and 1936 and the sudden and dramatic reversal in 1937 and 1938. It resonates, especially at a time when all the mainstream economists focus so intently over the latest tick in the regional manufacturing indices or jobless claims or inventory-sales ratios.
You have to go beyond the confines of Wall Street to see what is really going on beyond the trees this was not a recession brought on by excessive inventories, or by inflationary pressures for that matter. David Rosenberg-Gluskin/Sheff
-At a series of client meetings this week, we stressed that there were fewer and fewer securities left in the market that were priced inexpensively. Ain’t that the truth. We re-ran our regressions with the latest tightening in spreads and breakout in equity valuation and found that U.S. investment grade credit is now priced for 2.5% GDP growth in the coming year (was 2.0% two-months ago) and the S&P; 500 is now de facto pricing in 4.8%, which, by the way, is now basis points shy of what it was discounting in the summer/fall of 2007.
And, backing out the fair-value P/E from the corporate bond market, and yields have been backing up sizably in recent weeks, we can see that the S&P; 500 is now pricing in $85 of operating earnings, which we think will be, at best, a 2013 story.
Commodities are priced for 2.7% ‘global’ growth and are at least one ‘asset class’ that is priced for a muted recovery; though I would still classify corporate bonds as being within the zone of fair-value but at the expensive end of that zone currently. As an aside, the consensus is looking for +2.4% real GDP growth in the U.S.A. for next year, and +3.1% for global growth.
David Rosenberg-Gluskin/Sheff
-Yesterday I spent some serious time with my stock broker of 25+ years. I asked him what he saw from where he sat. He said that a lot of his clients our age [that's 60+] have lost a bundle in the stock market and can’t retire on what’s left because interest rates are so low that the yearly income from any fixed-rate investment is many orders of magnitude less than what they’re making now.
I would say that applies to an unusually large portion of the leading edge of the ‘baby boomers’ of which I’m one. He went on to say that the entire global economic, financial and monetary system has been “Photoshopped” just to keep up the appearance that everything is fine. I guess that’s his way of saying that everything is rigged and you can’t believe anything you see anymore. He would be right about that. Ed Steer
-Billionaire hedge fund founder Raj Rajaratnam and executives from some of the most prestigious U.S. companies were charged on Friday with the largest hedge fund insider-trading scheme ever.
Investigators said they used court-approved telephone wire taps for the first time in a Wall Street insider trading case, sending shivers through the hedge fund industry which has traditionally picked up and shared trading tips to make big profits.
At the center of the case are Rajaratnam, his Galleon hedge fund and two executives from hedge fund New Castle, which was a unit of Bear Stearns Asset Management before Bears Stearns Cos collapsed in 2008, but is still in operation. Read more here-http://www.reuters.com/article/topNews/idUSTRE59F35L20091016
-Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms.
The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.
As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies.
These people are incredibly smart, they’re incredibly talented and they bring knowledge, said Bill Brown, a visiting professor at Duke University School of Law and former managing director at Morgan Stanley. The risk is they will further exacerbate the problem of our regulators identifying with Wall Street.
While it isn’t unusual for Treasury officials to come from the financial industry, President Barack Obama has been critical of Wall Street, blaming its high-risk, high-pay culture for helping cause the financial-market meltdown. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1255883260.php or http://news.goldseek.com/InternationalForecaster/1256145063.php
-Higher jobless rates could be new normal. Read more here-http://news.yahoo.com/s/ap/20091019/ap_on_bi_ge/us_vanishing_jobs
-More Americans than forecast filed claims for unemployment benefits last week, a reminder that the labor market will be slow to recover. Initial jobless applications rose by 11,000 to 531,000 in the week ended Oct. 17, from a revised 520,000 the prior week that were the fewest in nine months, the Labor Department said today in Washington. The number of people collecting benefits fell, while those receiving extended benefits increased. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aDqJg3YhYapo
-Dollar May Drop 20% More on Deficit, Harvard’s Ferguson Says. The dollar will extend its drop versus the euro over the next two to five years, falling as much as 20 percent to an all-time low under a widening U.S. budget deficit, Harvard University’s Professor Niall Ferguson said. Read more here-
http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZYblKZy9jTs
-Niall Ferguson: The Dollar Is Finished And The Chinese Are Dumping It. Read more here-http://www.businessinsider.com/niall-ferguson-the-dollar-is-finished-and-the-chinese-are-dumping-it-2009-10
-The U.S. dollar will extend declines as the global economy’s recovery prompts investors to shift away from U.S. assets, according to Pacific Investment Management Co., which runs the world’s biggest bond fund. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aCNsiX9n0upg
-A “disorderly decline” of the dollar, leading to the end of its reserve-currency status, cannot be ruled out, Pacific Investment Management Co. said. An orderly dollar decline is the “most likely scenario,” Richard Clarida, a Newport-Beach, California-based global strategic adviser at Pimco, wrote in a note to clients today. “A disorderly decline, while unlikely, cannot be ruled out.” Read more here-http://www.bloomberg.com/apps/news?pid=20601083&sid;=a83XY0Ek_Bvo
-Dollar decline draws international protest. Read more here-http://www.gata.org/node/7922
-Dollar’s Decline Makes Oil ‘Too Cheap’ at $80: Chart of the Day. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a7RLuC_XEZ4Q
-Canada Keeps Key Rate 0.25%, Warns About Currency. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aR0jNyWarwDA or http://www.bloomberg.com/apps/news?pid=20601082&sid;=aa3_B6RrYlxs or http://www.bloomberg.com/apps/news?pid=20601082&sid;=a25Qyxd3D4SA
-German ‘Wise Men’ fear credit crunch in 2010. Germany’s leading institutes have warned that the pace of economic recovery is “unsustainable” and that the country’s banks may face a fresh crisis over the next year as bad debts surface in earnest. Read more here-http://www.telegraph.co.uk/finance/financetopics/financialcrisis/6339144/German-Wise-Men-fear-credit-crunch-in-2010.html
-Hedge manager Sprott sees trouble when easing ends. When so-called quantitative easing by central banks ends, the world economy may slip back into trouble, Canadian hedge fund manager Eric Sprott warned on Tuesday.
Toronto-based Sprott called Citigroup, Fannie Mae, Freddie Mac, and General Motors “dead men walking” in late 2007. On Tuesday, he said the U.S. government is the new dead man walking, partly because it may struggle to keep borrowing enough money if the Federal Reserve stops buying Treasury bonds. Read more here-
http://www.marketwatch.com/story/story/print?guid=885E4B89-D5C2-4AF4-BD3E-B4F018847F39
-Conservatory Lot Sells at Tax Deed Sale for $15,185. Lots in this Ginn community sold originally for $329.9 thousand to $529.9 thousand. Read more here-
http://www.gotoby.com/news.php?id=831#null
-Swine Flu Deaths Take 90% of Toll Among Young People. Almost 90 percent of 292 deaths related to swine flu in the U.S. since Sept. 1 were in people younger than age 65, contrary to the pattern for seasonal flu, the U.S. Centers for Disease Control and Prevention reported. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a6hqMT775kY8
-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
-“Very Strong Price Appreciation” at Rio Tinto’s Pink Diamond Tender. Rio Tinto has celebrated the 25th anniversary of its iconic Argyle Pink Diamonds Tender with an exceptional result that belies the global financial crisis of the past 12 months. Titled Grand Passions, this year’s tender collection comprised 43 of the rarest and the best pink diamonds from Rio Tinto’s Argyle Diamond Mine in Western Australia, including four heart shaped gems. According to Jean-Marc Lieberherr, General Manager for the sales and marketing for all diamonds from Rio Tinto’s mines,
“This year’s collection was keenly contested by investors, collectors and diamond experts from around the world. All diamonds were sold and we were delighted to see strong representation from the growing markets of India and China, as well as the more established markets for rare coloured diamonds.” Whilst Rio Tinto does not release the prices of the pink diamonds sold at its tender, Josephine Archer, Business Manager for Argyle Pink Diamonds, commented that,
“The 2009 Pink Tender results have demonstrated a significant global reach with very strong price appreciation, on the back of a growing awareness of the rarity, exclusivity and uniqueness of the Argyle Pink Diamond brand.”
Referred to as the world’s most exclusive diamond sale, the Argyle Pink Diamonds Tender was showcased around the world from June to September with private viewings in Perth, London, Hong Kong, Sydney, and for the first time ever, Mumbai. All 43 diamonds were cut and polished in Perth, Western Australia by Rio Tinto’s master craftsmen, acknowledged globally for their expertise, precision and artistic flare. This year’s collection included a 2.61carat intense pink heart shaped diamond named Argyle Amour, a 1.25 carat purplish pink round diamond, Argyle Shalimar, and Argyle Scarlett, a 1.10 carat red oval diamond.
According to Josephine Archer, “The diamonds sold at this year’s Tender will go to a range of individual diamantaires, jewellery manufacturers and luxury retailers across all major markets. The ultimate consumers for these diamonds are likely to be investors, collectors, celebrities and high net worth individuals. “
Rio Tinto’s Argyle Diamond Mine (100% owned by Rio Tinto), in Australia, is the world’s only consistent supplier of rare pink diamonds and provides a large proportion of the world’s coloured diamonds. The Argyle Diamond mine produces more than 90 per cent of the world’s pink diamonds, which are sold in a broad range of colours and sizes to an international customer base. The best stones are reserved for the annual Argyle Pink Diamonds Tender. Read more here-http://www.diamondne.ws/2009/10/22/very-strong-price-appreciation-at-rio-tintos-pink-diamond-tender/ or http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28364 or http://www.idexonline.com/portal_FullNews.asp?id=33111
-Astounding Results for Christie’s New York Jewelry Sale. Besides the Annenberg Diamond, four other lots topped the $1 million mark. An Asian private scooped up a 16.33-carat, E internally flawless, round diamond for $1,583,300, or $97,000 per carat. A pair of ear pendants with a 7.18-carat, pear-shaped fancy blue and an 8.04-carat, pear-shaped fancy light pink sold to an Asian private for $1,426,500.
Also finding its way to an Asian private was a pair of earrings showcasing D internally flawless, pear-shaped diamonds weighing 7.51 and 8.18 carats, which sold for $1,202,500. The final lot that soared over the coveted million mark was a Belle Epoque Cartier diamond and rock crystal bow brooch, which sold for $1,082,500. Read more here-
http://www.diamonds.net/news/NewsItem.aspx?ArticleID=28371
-A square, 32.01-carat emerald-cut diamond that billionaire philanthropist Leonore Annenberg bought for her 90th birthday sold for $7.7 million at auction on Wednesday. About the size of a walnut, the flawless, colorless diamond sits on a ring designed by Manhattan jeweler David Webb. It is flanked by two pear-shaped diamonds, one of them 1.61 carats and the other 1.51 carats.
The ring was offered for sale by Annenberg’s estate. Christie’s auction house did not identify the buyer, who bid by phone. Annenberg died in March at the age of 91. She served as U.S. chief of protocol during President Ronald Reagan’s first term a position that carried the rank of ambassador. Her husband, Walter Annenberg, a billionaire publisher and ambassador to Britain under President Richard Nixon, died in 2002.
The big diamond “combines the best of the four C’s: top color, perfect clarity, ideal cut and excellent weight,” said Francois Curiel, international head of Christie’s jewels. With the “impeccable provenance of the Annenberg name, you have one of the finest gems to appear on the market for many years,” he said.
Annenberg purchased the ring for herself to mark her 90th birthday, Christie’s said. It was delivered by armed guards to her Rancho Mirage, Calif., home from the Beverly Hills jeweler’s store, it said. She was thrilled whenever someone came by to admire it, the auction house said. The ring’s pre-sale estimate was $3 million to $5 million. The previous auction record for a 30-carat square cut flawless, colorless diamond was $3.1 million, set at Christie’s in Geneva in May.
The record for any diamond or jewel at auction is $24.3 million for the 17th century cushion-shaped grayish-blue 35.56 carat Wittelsbach Diamond. It was sold at Christie’s in December 2008, topping the previous record of $16.5 million for a 100-carat diamond sold in 1995 in Geneva.
In May, a rare 7.03-carat blue diamond sold at Sotheby’s for $9.5 million the highest price ever for a gem of its kind. Walter and Leonore Annenberg donated $4.2 billion to cultural, educational and medical institutions through the Annenberg Foundation. In 2002, their collection of French Impressionist art was donated to the Metropolitan Museum of Art in New York, where Leonore Annenberg was a member of the acquisitions committee.
She was also a trustee of the Philadelphia Museum of Art and served on the Trustee’s Council of The National Gallery of Art in Washington, D.C. Her husband established the Annenberg School of Communications at the University of Pennsylvania and at the University of Southern California. Read more here-http://www.google.com/hostednews/ap/article/ALeqM5iuyNryIsSSn7zRZ6oM0uzAwUYYigD9BFM0000 or http://www.nbcnewyork.com/news/local-beat/Emerald-Cut-Diamond-Sells-for-76M-65208887.html
HYPERINFLATION
-Evidence continues to emerge that the US dollar is headed for hyperinflation. For example, consider why US stock markets are rising. The Dow Jones Industrials, S&P; 500 and other indices are not rising because the economy has started growing. That won’t happen until employment stops falling, and there are no signs that employment will turn around anytime soon.
Nor are the stock markets rising because the financial crisis of the past two years has ended. Banks failures are happening almost weekly in the US, with nearly 100 failures so far this year. A large Dutch bank collapsed last weekend, indicating that there are insolvent banks outside the US as well.
It is important to note that one of the early warning signs of hyperinflation is a rising stock market. The stock market rises because too much money is being created. That condition is now being repeated in the US, as explained by the following chart (I’m not sure who the source of this chart is, so I do not identify who to credit).
The above chart illustrates the close correlation between the price of the S&P; 500 and the Federal Reserve’s program of “quantitative easing”, which is a euphemism for creating dollars out of thin air. Note from the above chart how the stock market stopped falling in March almost to the exact day that quantitative easing began. Then follow the rise in the S&P; 500 along with the quantity of US government paper purchased by the Federal Reserve.
At its last meeting of the FOMC, the Federal Reserve indicated that its quantitative easing program would continue to March 31, 2010. The substance would change slightly because after October 31 it will be buying agency paper rather than Treasuries. But that change doesn’t matter.
The Fed is still creating money out of thin air, and it can be argued that this new program is even worse. Because agencies are not direct obligations of the federal government, agencies by definition are of lesser quality than Treasuries. So with this revised quantitative easing program, the Fed is also lowering the quality of the assets on its balance sheet.
Quantitative easing is a pernicious and harmful policy. The US government and the Federal Reserve are pursuing policies that are sending the US dollar in the wrong direction. The US dollar remains on the road to the fiat currency graveyard. Read more here-http://www.fgmr.com/hyperinflation-watch-october-21-2009.html
-Has the US Reached The Hyperinflation Tipping Point? Economist Peter Bernholz is an expert on the subject of national hyperinflations. He has studied all the major cases of hyperinflation since 1980. His conclusion: The tipping point occurs when a government’s deficit exceeds 40% of its expenditures. Guess what? The U.S. will hit the 40% mark in 2009.
There have been 28 episodes of hyperinflation of national economies in the 20th century, with 20 occurring after 1980. Peter Bernholz (Professor Emeritus of Economics in the Center for Economics and Business (WWZ) at the University of Basel, Switzerland) has spent his career examining the intertwined worlds of politics and economics with special attention given to money.
In his most recent book, Monetary Regimes and Inflation: History, Economic and Political Relationships, Bernholz analyzes the 12 largest episodes of hyperinflations all of which were caused by financing huge public budget deficits through money creation. His conclusion: the tipping point for hyperinflation occurs when the government’s deficit exceed 40% of its expenditures. Read more here-http://www.bearishnews.com/post/2420
U.S. 2009 DEFICIT SURGES TO $1.42 TRILLION
-What is $1.42 trillion? It’s more than the total national debt for the first 200 years of the Republic, more than the entire economy of India, almost as much as Canada’s, and more than $4,700 for every man, woman and child in the United States.
It’s the federal budget deficit for 2009, more than three times the most red ink ever amassed in a single year. And, some economists warn, unless the government makes hard decisions to cut spending or raise taxes, it could be the seeds of another economic crisis.
Treasury figures released Friday showed that the government spent $46.6 billion more in September than it took in, a month that normally records a surplus. That boosted the shortfall for the full fiscal year ending Sept. 30 to $1.42 trillion. The previous year’s deficit was $459 billion. As a percentage of U.S. economic output, it’s the biggest deficit since World War II.
“The rudderless U.S. fiscal policy is the biggest long-term risk to the U.S. economy,” says Kenneth Rogoff, a Harvard professor and former chief economist for the International Monetary Fund. “As we accumulate more and more debt, we leave ourselves very vulnerable.”
Forecasts of more red ink mean the federal government is heading toward spending 15 percent of its money by 2019 just to pay interest on the debt, up from 5 percent this fiscal year. Read more here-http://apnews.myway.com/article/20091017/D9BCHP5O0.html or http://www.reuters.com/article/ousiv/idUSTRE59F4K820091017
99TH U.S. BANK SHUTDOWN
-Regulators shut down San Joaquin Bank in California on Friday, marking the 99th failure this year of a federally insured bank. The Federal Deposit Insurance Corp. was appointed receiver of San Joaquin Bank, based in Bakersfield, Calif. It had $775 million in assets and $631 million in deposits as of Sept. 29.
The FDIC said the bank’s deposits will be assumed by Citizens Business Bank, based in Ontario, Calif. Its five branches will reopen Monday as branches of Citizens Business Bank.
San Joaquin Bank’s failure is expected to cost the FDIC’s insurance fund $103 million.
Depositors’ money is not in danger. The FDIC is backed by the government, and deposits are guaranteed up to $250,000 per account. But the deposit insurance fund has fallen into the red. The FDIC board recently proposed to have U.S. banks prepay about $45 billion of their insurance premiums three years’ worth.
That plan isn’t a long-term remedy for the depleted fund. But it would spare ailing banks the immediate cost of an alternative idea: paying an emergency fee for the second time this year. And the FDIC still has billions in loss reserves apart from the insurance fund.
The 99 bank failures this year compare with 25 last year and three in 2007. It’s the highest number in a year since 1992 during the savings-and-loan crisis, when 120 institutions collapsed. Closures peaked during that crisis in 1989, when 534 banks were shuttered.
The most severe financial crisis since the 1930s has hit banks large and small. With unemployment rising, consumer spending slack and businesses shuttered, experts say up to 400 more banks could fail in the next couple of years.
The 99 failures may not fully reflect the depth of banks’ travails. Many more banks – perhaps hundreds – are so weak they could have been shut down already, experts say. Many vulnerable banks are in limbo. Regulators have threatened to close them unless they shore up their balance sheets, but the recession has made it difficult to raise capital or sell assets.
The number of banks on the FDIC’s confidential “problem list” jumped to 416 at the end of June from 305 in the first quarter. That’s the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.
Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans. Read more here-http://apnews.myway.com/article/20091017/D9BCKOP81.html
-FDIC bank fund in the red until 2012. Even as regulators try to replenish deposit insurance fund, it will be over two years before it boasts a positive balance, warns agency chief. Read more here-http://money.cnn.com/2009/10/14/news/companies/fdic_deposit_fund/?postversion=2009101415
PAUL FARRELL-20 REASONS AMERICAN HAS LOST ITS SOUL AND COLLAPSE IS INEVITABLE
-Jack Bogle published “The Battle for the Soul of Capitalism” four years ago. The battle’s over. The sequel should be titled: “Capitalism Died a Lost Soul.” Worse, we’ve lost “America’s Soul.” And, worldwide, the consequences will be catastrophic.
That’s why a man like Hong Kong contrarian economist Marc Faber warns in his Doom, Boom & Gloom Report: “The future will be a total disaster, with a collapse of our capitalistic system as we know it today.”
No, not just another meltdown, another bear-market recession like the one recently triggered by Wall Street’s too-greedy-to-fail banks. Faber is warning that the entire system of capitalism will collapse. Get it? The engine driving the great “American Economic Empire” for 233 years will collapse, a total disaster, a destiny we created.
OK, deny it. But I’ll bet you have a nagging feeling that maybe he’s right, that the end may be near. I have for a long time: I wrote a column back in 1997: “Battling for the Soul of Wall Street.” My interest in “The Soul” what Jung called the “collective unconscious” dates back to my Ph.D. dissertation, “Modern Man in Search of His Soul,” a title borrowed from Jung’s 1933 book, “Modern Man in Search of a Soul.” This battle has been on my mind since my days at Morgan Stanley 30 years ago, witnessing the decline.
Has capitalism lost its soul? Guys like Bogle and Faber sense it. Read more about the soul in physicist Gary Zukav’s “The Seat of the Soul,” Thomas Moore’s “Care of the Soul” and sacred texts.
But for Wall Street and American capitalism, use your gut. You know something’s very wrong: A year ago, too-greedy-to-fail banks were insolvent, in a near-death experience. Now, magically, they’re back to business as usual, arrogant, pocketing outrageous bonuses while Main Street sacrifices, and unemployment and foreclosures continue rising as tight credit, inflation and skyrocketing federal debt are killing taxpayers.
Yes, Wall Street has lost its moral compass. It created the mess, but now, like vultures, Wall Streeters are capitalizing on the carcass. They have lost all sense of fiduciary duty, ethical responsibility and public obligation. Here are the Top 20 reasons American capitalism has lost its soul. Read more here-http://www.marketwatch.com/story/story/print?guid=47729BA0-933E-4299-92CC-EB41EEE671D2
REAL ESTATE-MORTGAGES-FORECLOSURES
-Buyers Sue Trump as Miami’s Condo Prices Plummet. Robert Cooper says he has found a way to make money in South Florida’s real estate bust. Cooper, an attorney in Aventura, Florida, sues for refunds on deposits in the nation’s largest condominium market. In the last two years, he filed lawsuits for about 1,500 buyers against companies and individuals including the Related Group of Florida, Dezer Development LLC, Corus Bankshares Inc., Donald Trump.
More suits seeking refunds under a federal law regulating condo sales have been filed in South Florida than in the rest of the country combined, according to a search of federal court records. Fueling the litigation is a price crash that makes buyers unwilling to pour more money into bad investments even if they can get financing. Condos on which they made deposits of up to $1,000 a square foot in 2006 are now selling for $125 to $350 a foot, said Jack McCabe, a real estate consultant in Deerfield Beach, Florida.
“If you’re thinking you can come here and buy and sell condos for a profit in less than five years, you’re sadly mistaken,” said McCabe, whose clients have included Credit Suisse Group AG and Pulte Homes Inc., the largest U.S. homebuilder. “You need a seven- to 10-year range.” Prices could fall to $100 a foot, less than half the cost of construction, and a value not seen in 20 years, he said. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a7s0rpuaOw50
-Deutsche Bank Offers Settlement to Cosmopolitan Condo Buyers. Deutsche Bank AG, owner of the $3.9 billion Cosmopolitan Resort & Casino in Las Vegas, is offering to partially refund deposits to some condominium buyers in the delayed project.
A Deutsche Bank unit that took over the Cosmopolitan in a foreclosure is offering buyers of West Tower units 74 percent of their deposit principal to walk away, according to a copy of the proposal provided by Sigal Chattah, a lawyer for some purchasers. The tower has 1,353 condo units, the documents show.
Germany’s biggest bank wrote down the value of Cosmopolitan by 500 million euros ($747 million) this year, and continues spending to complete the resort during the worst gambling and real estate slump in Las Vegas history. Neighboring CityCenter, a joint venture of MGM Mirage and Dubai World, offered existing condo buyers a 30 percent price cut this month to close sales.
Lawsuits filed by Cosmopolitan buyers and agents in district court in Clark County, Nevada, claim construction delays and plunging property values have made it impossible to finance the purchases. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a9gI8dAj1ue0
-The stretch from 1997 to 2007 was the helium-rich years of a multi-decade-long credit bubble, when buying and selling dot-com stocks was replaced with suburban houses as the path to riches. However, IRS data show that during these years, as Americans pocketed $5,312 billion in capital gains, they simultaneously shelled out $5,252 billion in mortgage interest and real estate taxes a difference so small as to be a rounding error.
Over the same period, homeowner costs rose 122% for mortgage interest and 112% for property tax, while personal income increased by a paltry 63%. The cost of home-sweet-home ownership was eating Mr. & Mrs. Suburbia alive. This 10,000-foot view is just a snapshot of the big-picture trend. There were obviously home flippers and stock market players that profited handsomely during the market’s boom.
And we haven’t factored in the balance between taxes saved from interest/taxes written off and taxes owed from capital gains. But as a whole, did the nation grow any wealthier as a result of Americans being obsessed with selling their houses to each other? At best it looks like a zero-sum, tax code-induced illusion. Read more here-http://caseyresearch.com/displayCcs.php?e=true
-Countrywide Mortgages Lead California in Defaults. Default notices on California home mortgages rose almost 19 percent in the third quarter from a year earlier as job losses and falling property prices deepened the state’s housing recession, MDA DataQuick said. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a4KiQ2.ooKW8
-Hotel Foreclosure Watch: Miami’s Swank Shore Club Goes Delinquent. Read more here-http://blogs.wsj.com/developments/2009/10/20/hotel-foreclosure-watch-miamis-swank-shore-club-goes-delinquent/
-Chart of the day: In Parts Of America, There’s Literally No Foreclosure Crisis. While the U.S. foreclosure rate hit an all-time high in Q3 according to RealtyTrac, some states are doing relatively fine, while others are simply a blood bath.
For example, in Nevada one out of 23 households had a foreclosure filing in the third quarter alone. Meanwhile, in picturesque Vermont foreclosures weren’t that bad; the rate was only one in 5,023. Here are the five best and worst states, by foreclosures per household. Overall, the national rate was one in 136. Note that higher is better and Nevada is ugly. Read more here-http://www.businessinsider.com/chart-of-the-day-foreclosure-rate-ten-best–worst-states-2009-10
Gold Blast-Off Starts Friday
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId;=8134
© 2012, Worldwide Precious Metals Canada Ltd.
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The Goldbugg Report – October 27, 2009
Posted by Worldwide Precious Metals on Tuesday, October 27, 2009
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