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The Goldbugg Report – February 23, 2010

February 23, 2010

February 19, 2010

The Week in Review

The Federal Reserve unexpectedly announced that they raised the Fed Discount rate from 0.50 percent up to 0.75 percent on Thursday. The interest rate in question is the one the Fed charges banks for rarely used emergency loans and they went to great lengths to try to reassure companies and consumers that the move would not raise borrowing costs for them, saying “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.” Despite the reassurances from the Fed, there is a growing fear that a hike in the federal-funds rate may be coming when the Fed meets next in March which will lead to higher interest rates for an already strapped consumer.

Initial claims for unemployment jumped far more than expected last week. Producer prices also had a larger than expected increase in January. The increase is being blamed largely on higher gasoline prices and greater energy costs due to unusually cold temperatures. Interesting that they should be blaming the PPI increase on these when Oil, Gas and energy as a whole are far from their highs at the start of the financial crisis. Even when they stripped out food and energy costs, the core producer prices still rose faster than expected. It will be amusing to watch the spin-doctors work on this one. Stripping out mandatory costs such as food and energy on claims that their volatility is skewing the numbers has never made sense. Now even that old smokescreen can’t hide the fact that prices are going up and inflation is beginning to loom ever closer.

Core consumer prices (prices after they stripped out energy and food costs, of course) fell for the first time in 28 years. The media immediately jumped on the data as a sign that inflation worries are overblown. Consumer prices, when you include food and energy, actually rose, but it was less than expected. In our view, the drastic measures that the retail sector took in the months of December and January, cutting prices just to try to move inventory, are the factors that moved the prices down. Retailers can’t keep that up and report a profit, especially since the cost to produce the goods they are selling has gone up according to the PPI numbers. Carrefour, the world’s second largest retailer next to Wal-Mart, reported their profit fell 74% and Wal-Mart’s own numbers were less than spectacular.

Foreign demand for US Treasury securities plummeted by the largest amount on record in December. China alone reduced its holdings by $34.2 billion, potentially moving it into second place behind Japan in ownership of US Treasuries. If the reduction in demand continues, the US government may be forced to make higher interest payments. This news comes right on the heels of president Obama creating a new commission, through an executive order, to come up with a plan to reduce the deficit.

The International Monetary Fund announced Wednesday that it will begin selling 191.3 metric tons of gold in the open market. The sales are to “be conducted in a phased manner over time.” The IMF said that they will still continue to sell gold to central banks, which could reduce some of what they have available to sell in the open market. Even though news of the upcoming sale was already widely known, there was an apparent knee-jerk dip in prices upon the announcement.

Crude oil prices came up this week, approaching $80 a barrel, boosted by the PPI numbers, despite an increase in inventory numbers that would normally have driven prices down.

The Fed’s Discount Rate announcement after markets closed on Thursday helped push the dollar to new highs against the euro, reaching levels not seen since May of 2009.

A South Carolina representative has introduced legislation banning “the unconstitutional substitution of Federal Reserve Notes for silver and gold coin.” The move would essentially mandate gold and silver coins as currency for the state. Representative Pitts said in an interview that “if the federal government continues to spend money at the rate it’s spending money, and if it continues to print money at the rate it’s printing money, our economic system is going to collapse.” Have you started to acquire your gold and silver coins yet? Have you started your precious metals portfolio to help protect against a collapsing dollar? No one expects the legislation to go anywhere, but it does bring to light an interesting point: at the state government level of at least one state, confidence in the US Dollar is collapsing.

Friday to Friday Close

Volatility should be expected to continue, especially in the wake of the Fed decision on Thursday. In an SEC filing made on Tuesday, George Soros showed that he doubled his bet on gold at the end of 2009. US Bank lending is falling at the fastest rate in history. Tim Congdon, from International Monetary Research said “It is absurdly premature to think of withdrawing stimulus while bank credit is still sliding. To have allowed this monetary collapse to occur a full 18 months after the financial cataclysm is extreme incompetence. They seem to have forgotten that the lesson of the 1930s was the falling quantity of money.” Commercial shorts (as in JP Morgan) have been rapidly reducing their short positions in precious metals as we get closer to the month of March, when the CFTC will be looking at setting position limits for precious metals. If the commercial bullion banks are forced to cover their short positions, which exceed the available supply (and have for years!), by the actions of the CFTC then the price of precious metals may literally explode. Now, more than ever, may be the time to add to or start your precious metals portfolio. Dave Paxton, CEO of Vatukoula Gold Mines said on Friday that the world’s supply of new gold is shrinking, saying that “The big open-pit mines, which were these massive units that produced lots of gold, are coming to the end of their lives.” World currencies are all losing their inherent value, even as debt around the globe is skyrocketing. Remember, the key to profitability through the ownership of physical precious metals is to own them and hold them for the long term. Never over-extend your ability to maintain ownership of your product over the long term.

Trading Department – Precious Metals International, Ltd.

This is not a solicitation to purchase or sell.

© 2010, Precious Metals International, Ltd.

GOLD

-Soros More Than Doubled Gold ETF Stake in 4th Quarter. Billionaire George Soros’s Soros Fund Management LLC more than doubled its holding in the biggest gold exchange-traded fund in the fourth quarter after bullion advanced 8.9 percent to a record.

The $25 billion New York-based firm became the fourth- largest holder in the SPDR Gold Trust, adding 3.728 million shares valued at $421 million, according to a filing with the U.S. Securities and Exchange Commission yesterday. Its investment was worth about $663 million, the fund’s largest single investment, as of Dec. 31.

Soros joined China Investment Corp. and central banks including those in China and India in acquiring gold. China Investment, the $300 billion sovereign wealth fund based in Beijing, took a 1.45 million-share stake in the SPDR Gold Trust worth $155.6 million, according to a SEC 13F filing posted on Feb. 5.

“The dollar is weak and people are just shifting their money into a safer haven,” Tetsuya Yoshii, vice president for derivative products at Mizuho Corporate Bank Ltd., said from Tokyo today. “Central banks are adding gold to their reserves and we’re going to see more people adding gold to their investment portfolio as they shift into safer stuff.”

India bought 200 metric tons from the International Monetary Fund in October, while China’s holdings have expanded 76 percent to 1,054 tons since 2003, it said in April. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid;=aKs0jaibTSmY&pos;=7 or http://www.reuters.com/article/idAFN1624135220100217?rpc=44

-George Soros buys gold despite dubbing it ‘ultimate bubble’. George Soros doubled his investment in the world’s largest gold fund just weeks before claiming investing in the precious metal is now the “ultimate bubble”. Read more here-http://www.telegraph.co.uk/finance/personalfinance/investing/gold/7259161/George-Soros-buys-gold-despite-dubbing-it-ultimate-bubble.html

-The ‘ultimate bubble’ meets the ultimate speculator. Read more here-http://www.gata.org/node/8339

-Gold May Advance to $1,400 in 12 Months: Technical Analysis. Gold may climb to about $1,400 an ounce in the next 12 months, according to technical analysis by Chartered Market Technician Daniel Bruno, who advises banks and hedge funds.

The attached chart shows gold is trading above a trend line that starts from the metal’s low in January last year. A climb to $1,419 an ounce would equate to a 150 percent projection of bullion’s rally from January 2009 to its record in December, according to a series of numbers known as the Fibonacci sequence.

Gold “remains robust above its rising trend line,” and the recent rebound from a three-month low on Feb. 5 is a “bullish” signal, Bruno said in an interview. “We project about $1,400 within 12 months as long as the $1,000 level holds,” he said. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=auBQnoSvlsEk

-Gold price will surge to $5,000 in two years. Gold Prices will climb to $5,000 within two years due to US dollar weakness and significant buying by players in the hedge fund industry looking to preserve the value of their funds.

That is the opinion of New Zealand market trading expert Welles Wilder, who has previously been highlighted by publications such as Forbes and Barron’s for his skill in the markets, stuff.co.nz reports. Read more here-http://www.commodityonline.com/futures-trading/technical/Gold-price-will-surge-to-$5000-in-two-years-14431.html

-The International Monetary Fund, which set out in September to sell about 13 percent of its gold reserves, said it will “shortly” expand sales to the open market after central banks bought 212 metric tons in private deals.

“In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time,” the Washington-based IMF said in an e-mailed statement today.

The institution has 191.3 tons left to sell after purchases by the central banks of India, Mauritius and Sri Lanka. Central banks still have the option to buy more of the metal, which would reduce the amount available on the market, the IMF said. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=alOoEXinykfo

-Gold market analyst Peter Grandich could not be more enthusiastic about tonight’s announcement by the International Monetary Fund that it will sell another 191 tonnes of gold. In commentary headlined “Even When Opportunity Knocks a Man Still Has to Get Up Off His Seat and Open the Door,” Grandich writes that the IMF announcement could actually hasten gold’s rise. Read more here-http://www.gata.org/node/8343

But then Grandich puts his money where his mouth is. In commentary headlined “An Open Challenge,” he offers gold bears a $50,000 bet that gold will see $1,200 per ounce before $1,000 per ounce. Read more here-http://www.gata.org/node/8343

-Why the IMF’s supposed gold sales don’t mean much. Read more here-http://www.gata.org/node/8340

-Asian central banks tagged as potential buyers for 191.3 tonnes of IMF gold. The International Monetary Fund says it will soon begin a planned sale of a remaining 191.3 tonnes of gold to raise funds for lending operations. Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page34?oid=98842&sn;=Detail&pid;=1

-James Turk-No Surprise in Gold’s Big ‘Bounce.’ Read more here- http://www.fgmr.com/no-surprise-in-golds-big-bounce.html

-James Turk: Gold at new euro record. Read more here-http://www.gata.org/node/8342

-Gene Arensberg: Gold, silver COT action best since 2009. Read more here-http://www.gata.org/node/8341

-1001 Reasons to own gold. The reason there are so many “reasons” is because gold is unlike any other asset. It responds to its own supply and demand, protects against short-sighted government actions and interventions, is a bellwether of market sentiment and economic outlook, protects against currency devaluation and inflation, is global, is one of the most beautiful metals ever found in the earth’s crust, is a store of value, is timeless, is money, How many assets can you say have all those characteristics?

In spite of gold’s recent correction, the reasons haven’t decreased. In fact, the case for holding gold is stronger than ever. And over the past two weeks, a few “reasons” have surfaced that have fallen mostly under the radar. These, I believe, portend of a higher gold price to come. In fact, it is catalysts like these that could end up in our children’s history books that, in retrospect, were obvious to see.

1. For the first time ever, China has invested in GLD, the gold exchange-traded fund. Their sovereign wealth fund, China Investment Corporation, recently invested $155 million in the ETF. The amount represents only .05% of the sovereign funds’ $300 billion, meaning there’s a lot more where that came from.

Those mainstream lemmings who predicted China was done buying gold now have to deal with the reality that this move more likely signals they are closer to the beginning – and not the end – of a long-term strategy to diversify into gold.

2. The Prime Minister’s Office in India is creating a stream-lined process so that the country’s state-owned corporations can “aggressively pursue the acquisition of strategic mineral resources.” The Indian government, normally known for thick-layered bureaucracy, has created a centralized body that will have “rapid strategic and decision making powers.” This is telling, both from the perspective that they see some urgency to the matter, and that the acquisition targets are minerals.

Given the country’s historic propensity to own gold, it’s not a stretch to think the yellow metal will be high on the list of “strategic investments.” Recall their government purchased almost half the IMF gold for sale last year in one fell swoop. The upshot? Don’t be surprised to soon hear of India following China’s lead to begin buying precious metal companies and resources.

3. “Iran is now a nuclear state,” declared President Ahmadinejad last week. The Islamic republic has produced its first batch of high-level enriched uranium, which they claim is solely for electricity purposes but can also be used to create material for atomic weapons if enriched to 90%. In response, the U.S. imposed new sanctions, and the U.N. is considering adding more of its own sanctions, too.

The West recently proposed that Iran export its uranium for enrichment and then have it returned as fuel rods for a reactor. Iran demanded changes to that plan, which were rejected, so claimed they had “no choice” but to start enriching to higher levels on their own. “God willing,” declared Ahmadinejad, “daily production will be tripled.” I’m sure this will all just blow over, right?

4. The U.S. government must inflate. Here’s another reason we think that sooner or later inflation trumps deflation by 2020, government economists project that entitlement benefits (Social Security, Medicare, etc.), along with interest payments on the national debt, will devour 80% of all federal revenues.

This assumes entitlement benefits don’t grow, which, of course, they are. The overall national debt, meanwhile, will rise to 100% of GDP within a few years, an alarming level by any measure. Even Moody’s warned that our credit status could lose its triple A rating if the nation’s finances don’t improve, an unheard-of prospect just a few years ago.

So, we’re abruptly fleeing our debt-adding habits, right? As you probably heard last month, Obama signed legislation that raised the cap on government debt from $12.4 trillion already close to being breached to $14.3 trillion to permit more borrowing. As Doug Casey has pointed out numerous times, this is the exact opposite of what the government should be doing, and will have serious inflationary ramifications.

There’s only one way out: devalue the dollar to reduce the debt burden. And the direct result of that is a rising gold price. We may very well see another round of deflation, but the end game is inflation.

What I would point out is that any one of these reasons would be sufficient for wanting to put some gold in your portfolio. It’s the cumulative effect that’s potentially scary, one that argues we should be overweight precious metals at this point in history. The reasons are numerous and, in my opinion, overwhelming. Jeff Clark, Senior Editor, Casey’s Gold & Resource Report-Read more here-http://www.caseyresearch.com/displayCdd.php?id=347 or http://news.goldseek.com/GoldSeek/1266521422.php

-Aden Sisters-Gold’s Bull Market Turns 9 Years Old. Read more here-http://www.321gold.com/editorials/aden/aden021710.html

-Brace Yourself For A Big Gold Shortage. Read more here-http://www.businessinsider.com/brace-yourself-for-a-big-gold-shortage-2010-2

-China and India the Asian gold-buying phenomenon. The ever growing purchasing power of the Chinese and Indian general populations throws bearish fundamental analyses of the gold market into disarray. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=98598&sn;=Detail&pid;=33

-Financial houses are now bigger than governments, Sinclair tells King World News. In a fascinating 50-minute interview with Eric King of King World News, JSMineSet.com’s Jim Sinclair remarks that the biggest financial houses of the world are now bigger than governments. He also tells some great market anecdotes and explains why real gold is going to defeat the tricks of the paper gold market. Listen here-http://www.gata.org/node/8331

-Gold is money again and has a long way to go, Lassonde tells King World News. Read more here-http://www.gata.org/node/8325

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,200 the silver price would be $15.00

Gold to silver ratio at 70 to 1 with gold at $1,200 the silver price would be $17.14

Gold to silver ratio at 60 to 1 with gold at $1,200 the silver price would be $20.00

Gold to silver ratio at 50 to 1 with gold at $1,200 the silver price would be $24.00

Gold to silver ratio at 40 to 1 with gold at $1,200 the silver price would be $30.00

Gold to silver ratio at 30 to 1 with gold at $1,200 the silver price would be $40.00

Gold to silver ratio at 20 to 1 with gold at $1,200 the silver price would be $60.00

Gold to silver ratio at 15 to 1 with gold at $1,200 the silver price would be $80.00

-You’ve Just Been Gifted A Huge Second Chance To Get Into Silver. Read more here-http://www.businessinsider.com/youve-just-been-gifted-a-huge-second-chance-to-get-into-silver-2010-2

-Why Silver Prices Are Safe from China’s Monetary Policy. Read more here-http://news.silverseek.com/SilverSeek/1266386640.php

-Big shorts covering, metals likely to rise, Ted Butler tells King World News. Listen here-http://www.gata.org/node/8324

-Cambridge House Phoenix Silver Summit 2010: Silver Review and Outlook from Ted Butler. Read more here-http://news.silverseek.com/SilverSeek/1266344983.php

-Will Silver Outperform Gold In 2010? Read more here-http://news.silverseek.com/SilverSeek/1265996412.php

CHART OF THE WEEK-QUOTES-QUICK HITS

-Today’s chart provides some long-term perspective in regards to the gold market. As today’s chart illustrates, gold has been in a strong bull market since 2001. The pace of that upward trend increased beginning in mid-2005. Following the financial crisis of late 2008, gold surged once again.

Recently, however, gold has pulled back from resistance (red line) of its upward sloping trend channel. In the end, with gold currently trading at just shy of $1,100 per ounce, gold has more than quadrupled in price during its nine-year bull market. Read more here-http://www.chartoftheday.com/20100212.htm?T

Source: chartoftheday.com

-”Sometimes your greatest asset is simply your ability to stay with it longer than anyone else.” Brian Tracy

-”We will receive not what we idly wish for but what we justly earn. Our rewards will always be in exact proportion to our service.” Earl Nightingale

-”The biggest mistake that you can make is to believe that you are working for somebody else. Job security is gone. The driving force of a career must come from the individual. Remember: Jobs are owned by the company; you own your career!” Earl Nightingale

-I place the economy among the first and most important virtues and public debt as the great danger to be feared. To preserve your independence, we must not let our leaders load us with perpetual debt. We must make our choice between economy and liberty or profusion and servitude. Thomas Jefferson

-Russian PM Putin plays down Greece’s economic woes, telling his visiting Greek counterpart the U.S. is no better than Greece in handling its debt and fiscal deficit. Read more here-

http://www.theglobeandmail.com/report-on-business/putin-calms-greece-says-us-debt-big-too/article1469868/

-China is a long-term growth story, and how well it manages that growth will have an impact on all of us. A little caution now should be seen as preventative maintenance, and we all know that when we’re talking about cars or economies, that’s a good thing. Frank Holmes-Read more here-http://news.goldseek.com/GoldSeek/1266163200.php

-“One would have to say that the relation of house prices to Canadians’ income is right at the high end of what one would think would likely be sustainable over time.” David Dodge-Former Bank of Canada Governor

-Fed Raises Discount Rate by Quarter-Point to 0.75%. The Federal Reserve Board raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent and said the move will encourage financial institutions to rely more on money markets rather than the central bank for short-term liquidity needs.

“These changes are intended as a further normalization of the Federal Reserve’s lending facilities,” the central bank said today in a statement. “The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=an77uUMXQUJU&pos;=1

-Bank lending in the US has contracted so far this year at the fastest rate in history, raising concerns that the Federal Reserve may have jumped the gun by withdrawing emergency stimulus.

David Rosenberg from Gluskin Sheff said lending has fallen by over $100 billion (L63.8 billion) since January, plummeting at an annual rate of 16 percent.

“Since the credit crisis began, $740 billion of bank credit has evaporated. This is a record 10 percent decline,” he said. Mr Rosenberg said it is tempting fate for the Fed to turn off the monetary spigot in such circumstances. “The shrinking in banking sector balance sheets renders any talk of an exit strategy premature,” he said. Read more here-http://www.gata.org/node/8344

-US bank lending falls at fastest rate in history. Bank lending in the US has contracted so far this year at the fastest rate in recorded history, raising concerns that the Federal Reserve may have jumped the gun by withdrawing emergency stimulus. Read more here-http://www.telegraph.co.uk/finance/economics/7259323/US-bank-lending-falls-at-fastest-rate-in-history.html

-James Turk-Higher Yields on US Government Debt Are Overdue. Read more here-http://www.fgmr.com/higher-yields-on-us-government-debt-are-overdue.html

-James Turk-US Government Debt is Not a Safe Haven. Read more here-http://www.fgmr.com/us-government-debt-is-not-a-safe-haven.html

-The final Pillar in the gold bull market is a bear market in US Treasuries. The increase in the discount rate to 0.75% is driven by market realities and a desire to be able to sell US Treasuries as foreign demand falls off.

The bull market in gold moved from $400 to $887.50 in the 1970s as interest rates rose from 3% to 14 7.8% on Ten Year money. Once again the knee jerk reaction is to sell gold and buy the dollar. Be assured this must happen.

Because the final Pillar is falling while Gold is over $1000, you can look at Armstrong’s $5000 prediction as a realistic possibility. Stay the course. Jim Sinclair

-It’s true stocks have fallen off somewhat recently. The S&P; 500 is down about 6% from where it was a month ago. But stocks are still quite expensive in historical terms. Birinyi Associates reports the current S&P; 500 P/E ratio (based on trailing twelve month as-reported earnings) to be 25.96, more than 60% above the long-term 15.98 average P/E ratio I calculated using Standard & Poor’s quarterly data.

-Government debt situation worse than it appears. As the WSJ noted, the focus now is not just on published fiscal statistics (as if that worked in Greece’s case) but the debt that includes all the bad stuff that resides off the balance sheet (all the contingent unfunded liabilities). If all the unfunded liabilities were consolidated onto one statement, the debt-to-GDP ratio would be 9x in Greece; 5x in Portugal; 4.5x in the U.K. and 3.5x in the U.S.A. (see page A16 of the WSJ). David Rosenberg-Gluskin/Sheff

-The big lie? Everywhere you look these days you can’t help but find a reference as to how nearly 80% of S&P; 500 companies have managed to surpass their earnings estimates and the current edition of Barron’s added that they “have beaten estimates by a staggering 11%, near the highest on record.” This, of course, is a reason to be bullish on the equity market.

But page B1 of the weekend WSJ exposes these earnings “beats” for what they are fraudulent, for lack of a more appropriate term see For Some Firms, a Case of ‘Quadrophobia’. A just-published study covering nearly 500,000 corporate results over 27 years found how companies “round up” their numbers to beat their estimates fractionally knowing that the fast-money momentum players will trade the stock price higher.

On average, it only takes $31,000 in quarterly net income to beat estimates by a penny, which can be handled easily by a tweak to inventory valuation. The report also showed that companies that find ways to “round up” are also the ones with the highest propensity for re-statements in the future. Well worth a read and hopefully ends the nonsense that we see in the media and Wall Street reports over the extent to which financial results are meeting or beating pre-conceived EPS projections. David Rosenberg-Gluskin/Sheff

-Commercial real estate still in trouble. According to the Congressional Oversight Panel, there is a high chance that we will see as much as $300 billion of losses in the commercial real estate mortgage market in the coming year. From 2010 to 2014, there is an estimated $1.4 trillion (!) of commercial real estate loans that come due for refinancing and yet property values in this space have collapsed 40% in the past two years.

According to the New York Times, almost half of these mortgages are “upside down” or in a negative net equity position. Vacancy rates are at 18% in the U.S. office real estate sector and rents have also plunged 40%. The era of bank failures is hardly behind us. David Rosenberg-Gluskin/Sheff

-It pays to note that usually at this stage of the cycle (we are talking here about life 2½ years after the Fed first started to ease policy and all the policy lags are allowed to percolate through) what is normal is that jobless claims are by now at or below 400k.

Payroll growth is unmistakably positive and averaging 150k per month. And at this stage, employment has typically risen to a new peak, not still over 8 million below the old one. David Rosenberg-Gluskin/Sheff

-Martin Armstrong financial commentary-the clash between two worlds. Read more here-http://www.martinarmstrong.org/files/The-Clash-of-Two-Worlds-2-7-10.pdf

-Canada looks to China to exploit oil sands rejected by US. Canada courts Chinese investment in Alberta oil projects as US firms boycott tar sands fuel. Read more here-http://www.guardian.co.uk/business/2010/feb/14/canada-china-investment-oil-sands

-U.K. Posts First January Deficit Since at Least 1993. Britain posted its first budget deficit for January since monthly data began in 1993 as the longest recession on record shriveled the nation’s tax take.

Government spending exceeded revenue by 4.3 billion pounds ($6.7 billion) last month, the Office for National Statistics said today in London. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aIoUcW9b8bS8&pos;=6

-U.K. Unemployment Claims Jump to Highest Since 1997. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid;=aBnXUou9D74c

-Cameron Should Mull U.K. Plea to IMF, Stelzer Says. Conservative leader David Cameron should consider a “profoundly unpopular” move such as calling for aid from the International Monetary Fund if his party wins this year’s U.K. election, economist Irwin Stelzer said.

“What would I do if I were David Cameron? I would look at the books” and “I would say: ‘Shock, horror, I’ve found it’s much worse than I thought and so Gordon Brown has forced me to call in the IMF,’” Stelzer said, speaking at an event in London late yesterday.

Such a move would be reminiscent of 1976 when then- Chancellor of the Exchequer Denis Healey sought an emergency loan from the IMF. Under Prime Minister Gordon Brown, the U.K. is now running the largest budget deficit since at least World War II, prompting Standard & Poor’s to lower its outlook on Britain’s AAA rating to negative from stable in May. Read more here-

http://www.bloomberg.com/apps/news?pid=20601068&sid;=acM.3r2xK6z8

-Buffett’s New CEO Shows Analysts, Hedge Funds to Door. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aH8_T4Lv2KVM

-Buffett Covers Dinner Tab for Fund Manager Who Shared Research. Read more here-http://www.bloomberg.com/apps/news?pid=20601108&sid;=aYWu1wIwp2vQ

-Top Earners Averaged $345 Million in 2007, IRS Says. The 400 highest-earning U.S. households reported an average of $345 million in income in 2007, up 31 percent from a year earlier, IRS statistics show. The average tax rate for the households fell to the lowest in almost 20 years. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=aqZ8baxbxqrA

-Beatles’ Abbey Road Studios for Sale to Cut EMI Debt. Read more here-http://www.bloomberg.com/apps/news?pid=20601088&sid;=atE1DoPOl6HA

-At $3,250, Olympic hockey tix trump the Super Bowl. Read more here-http://money.cnn.com/2010/02/12/news/economy/olympics_tickets/index.htm

-We all wish we’d bought Microsoft Corp. stock in the 1980s. But what if you’d tucked away a 1965 Shelby roadster like the one that just sold at auction in Scottsdale, Arizona for more than $1 million? Or garaged a pristine 1971 Dodge Challenger, which went for $187,000, or that rare 1970 Ford Mustang for $275,000?

More to the point, what should you buy now that will turn out to be the collectible car of tomorrow? Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aEeyGqvtlMl0

WWW.RARECOLOREDDIAMONDS.COM

 

-The Rare Colored Diamonds Historical Value Tracker system is the perfect tool for investors to view the potential future value of a rare colored diamond based on the current market trend of a particular type of diamond. Track the potential future value of colored diamonds here-http://www.rarecoloreddiamonds.com/HistoricalPriceTrackingsystem.html

 

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

-Rio’s Argyle mine supplies 90 percent of the world’s pink diamonds, used exclusively for jewelry. Those gems account for just 1 percent of total production at the mine. Much of the remainder is sold as rough, or uncut, diamonds.

Pink diamonds are more valuable than colorless diamonds because of their rarity. For every one colored diamond there are 10,000 colorless diamonds in existence, according to Rio. Bloomberg-

http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a4xAPW0NHhxo

-Pink Diamond Nets Record $10.8 Million in Hong Kong December 2 2009. A ring with a pink diamond the size of a chickpea sold last night for a record HK$83.5 million ($10.8 million) at a Hong Kong auction of art, gems and antiques that was fuelled by Chinese buying.

The 5-carat gem was set by London-based jeweler Graff Diamonds and given the second-highest rating of potentially flawless. The so-called fancy-vivid stone broke the per-carat record for a diamond established in May with Hong Kong property tycoon Joseph Lau’s purchase of a 7.03-carat blue diamond in Geneva for 10.5 million Swiss francs ($10.5 million). A carat is a fifth of a gram. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aC57am6edtD0

-Sotheby’s Sets Record For Green Diamond Nov 17 2009. Buyers set two world records for price per carat of green diamonds and intense blue diamonds, Sotheby’s said. A 2.52-carat vivid green diamond ring sold for 3.1 million francs and a 3.17 carat intense blue diamond ring sold for 2.5 million francs. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a5S9.x.HjoTE

-Blue Diamond Fetches Asian Record of $5.7 Million at Sotheby’s Oct 8 2009. 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.” Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aRQFbHxkoXpc

-”After the crisis from last year onwards, I found that more collectors are looking for top quality jewelry and diamonds for the investment to keep the value and also for sale. So for rare stones like this, even for pink, yellow, blue red, green these rare stones are very popular in this market.” Vicky Shek-Christie’s Hong Kong Jewelry Division

-“When times are tough, hard assets like diamonds are in greater demand because they will hold their value when inflation hits and it will hit.” “My clients have told me so. They are plugged into the international markets.

They feel it coming. They are buying up diamonds now to shore up for the future.” Myles Mindham-Marilyn was right: Diamonds are a girl’s best friend. Read more here-http://www.theglobeandmail.com/life/style/marilyn-was-right-diamonds-are-a-girls-best-friend/article1389569/

This 1.61-carat, radiant-cut, fancy purplish-red stone has an estimated worth of $2 million and has been dubbed the “Kimberley Red.”

-Diamond from ‘08 tender reborn as ‘Kimberley Red’. A 1.77-carat, radiant-cut, fancy deep purplish-pink diamond that didn’t attract a buyer at Rio Tinto’s 2008 Argyle Pink Diamond tender has been recut into a stone that has everybody seeing red, literally.

Joshua Sheby, a gemologist with New York-based Scarselli Diamonds who specializes in natural-color diamonds, said Scarselli purchased the diamond in partnership with a few other companies in the first half of 2009 after it went unsold in 2008.

Though Argyle pink diamonds are difficult to cut because they are heavily included, Sheby said they saw potential in this stone and took a chance. The result: a 1.61-carat, radiant-cut, fancy purplish-red stone worth an estimated $2 million. “It was a just a matter of readjusting some of the angles and bringing out that red component,” Sheby said.

The Gemological Institute of America (GIA) graded the stone, and Argyle Pink Diamonds, the marketing arm of mining company Rio Tinto, issued a letter of rarity signed by its business manager Josephine Archer stating that they’ve dubbed the diamond “the Kimberley Red.”

The letter notes that in the past 10 years, only one other diamond larger than 1.5 carats and graded by the GIA as “fancy purplish red” has been featured in the Argyle tender. “This is an important stone from Australia’s Argyle mine. Given the approaching end of mine life, this gem is a significant legacy of the rare and unique fancy colored diamonds produced in this remote part of the world,” the letter states.

As for what the future holds for this rare, red diamond, Sheby said that remains to be seen. The diamond could be sold through an auction house, retail outlet or to a collector and/or investor.

A museum also could decide to buy the stone or rent it for a specified amount of time, he said. “We haven’t ruled out anything,” Sheby said. Read more here-http://www.nationaljewelernetwork.com/njn/content_display/diamonds/supply/e3i55cc6046dcbcc6454a2b63789b1aa034

CHINA SELLS U.S. TREASURIES

-China Sells Treasuries as Obama Increases U.S. Debt. China sold a record amount of U.S. debt, raising speculation it is turning bearish as President Barack Obama increases borrowing to unprecedented levels to sustain economic growth.

The Asian nation’s investment in U.S. government securities dropped by $34.2 billion in December to $755.4 billion, the Treasury Department reported yesterday. The decline is the most since Treasury data start in 2000. Japan’s holdings rose 1.5 percent to $768.8 billion, making it America’s largest creditor.

China is reducing the amount of Treasuries in its record currency reserves after expressing concern about the amount the U.S. is borrowing to fund growing budget deficits. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said last month that investors should seek opportunities in “less levered” countries.

“If this scale of selling is sustained, then it would suggest that China is taking larger steps to diversify than it has in the past,” said Win Thin, a senior currency strategist in New York at Brown Brothers Harriman & Co., which manages about $40 billion.

China’s Treasury holdings peaked at $801.5 billion in May. Reserve assets climbed to a record $2.4 trillion in December. Read more here-http://www.bloomberg.com/apps/news?pid=20601080&sid;=aFJ57ZEjS0uM

-Japan May Not Be Biggest U.S. Creditor, Stone & McCarthy Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aZc3c9jdoW0s&pos;=5

-International Demand for U.S. Financial Assets Slowed. International demand for long-term U.S. financial assets grew in December at a slower pace than a month earlier, as China sold U.S. government securities, a U.S. Treasury Department report showed. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a1mKfP3W.Ang or http://finance.yahoo.com/news/Foreigners-cut-Treasury-apf-1402391707.html?x=0

GREECE-SOVEREIGN DEBT CRISIS

-Credit-default swaps on sovereign debt rose on investor concern that Greece may be unable to borrow unless it gets a pledge of financial support from the European Union. Greece needs to raise 53 billion euros ($72 billion) this year and faces about 16 billion euros of bond redemptions by May as it struggles to narrow a budget deficit that’s more than four times the EU limit.

A political ally of German Chancellor Angela Merkel said yesterday that “not a single euro” should go to help Greece. “It feels a bit like we are in the Twilight Zone,” Jim Reid, head of fundamental strategy at Deutsche Bank AG in London, wrote in a note to investors.

“We are left with a stand-off that probably has to be resolved before Greece next comes to the market.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=ao16IwhJcfMc&pos;=6

-Europe may need to stump up as much as 320 billion euros ($441 billion) if it decides to bail out Greece because it would open the door to rescuing other countries in financial distress, according to BNP Paribas.

“To come up with a bailout plan that would be reasonably certain of success, it would have to cover all the most likely candidates, and it would have to be big,” said Paul Mortimer- Lee, global head of market economics at BNP in London. “Size matters when you are trying to scare off speculators and to comfort nervy bondholders.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a.yAFN.xKOIg

-German and French banks’ “enormous” exposure to Portugal, Ireland, Greece and Spain explains why Europe’s biggest economies are moving to rescue their southern neighbors, Societe General SA said today in a report titled “Shotgun Greek Wedding.”

The chart of the day shows how much money German, French, Swiss and U.K. banks have at stake in the so-called PIGS countries. Banks in Germany and France alone have a combined exposure of $119 billion to Greece and $909 billion to the four countries, according to data from the Bank for International Settlements. Overall, European banks have $253 billion in Greece and $2.1 trillion in the so-called PIGS.

“The exposure is enormous,” said Klaus Baader, co-chief European economist at Societe Generale in London. “The crisis in Greece isn’t Greece’s problem alone but a concrete problem for Europe’s whole banking sector. That explains the interest of finance ministers in stabilizing the situation.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=aCrRNlbKtrss

-Collapse of the euro is ‘inevitable’: Bailing out the Greek economy futile, says French banking chief. Read more here-http://www.dailymail.co.uk/news/worldnews/article-1250433/Greece-debt-bailout-EU-leaders-split-euro-crisis.html

-Credit Suisse: This Is the Real List Of Countries Verging On A Sovereign Crisis (And, Yes, The US Is On It). Read more here-http://www.businessinsider.com/top-20-soverign-default-risks-2010-2

-Time running out for Dubai to pull itself out of danger, says Lord Mandelson. Time is running out for Dubai to restructure its debt and pull itself out of economic danger, Lord Mandelson has warned. Read more here-http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7238174/Time-running-out-for-Dubai-to-pull-itself-out-of-danger-says-Lord-Mandelson.html

-Italy Is Top Threat to Euro, Columbia’s Mundell Says. Italy, saddled with the euro region’s second-largest debt, is the “biggest threat” to the economy of the 16-member bloc, according to Nobel Prize-winning economist Robert Mundell.

“Italy has got to be worried,” Mundell, a professor at Columbia University, said today in a television interview in New York. “If Italy became a target then this would create a big problem for the euro. Whatever is being done to Greece, possibly to Portugal and maybe Ireland, has to also save Italy from that problem.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=a_iQsQLYuvSA

-Spanish intelligence probing debt “attacks” report. Citing unnamed sources, El Pais said the National Intelligence Centre (CNI) was looking into “speculative attacks” on Spain following the Greek debt crisis. Read more here-http://www.reuters.com/article/idUSLDE61D04V20100214?type=usDollarRpt

U.S. DEBT CRISIS-DOLLAR

-U.S. Federal Deficit at $430.69 Billion Through January. Federal deficit through 4 months is on track to break last year’s $1.42 trillion record. Read more here- http://abcnews.go.com/Politics/national-debt-budget-deficit-scary-forecast-taxpayers/story?id=9854459

-Drowning in Debt: What the Nation’s Budget Woes Mean for Americans. Economists Predict Cutbacks, Tax Increases That ‘Aren’t Even Imaginable.’ American political and economic leaders have sounded the alarm for years about the red ink rising in reports on the federal government’s fiscal health.

But now the problem of mounting national debt is worse than it ever has been before with potentially dire consequences for taxpayers, according to a report by the nonpartisan Peterson-Pew Commission on Budget Reform. Read more here-http://abcnews.go.com/Politics/national-debt-budget-deficit-scary-forecast-taxpayers/story?id=9854459

-U.S. debt will keep growing even with recovery. Read more here-http://www.gata.org/node/8328

-Hoenig Says Fed’s Objectives Threatened by U.S. Debt. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aKphOytGoQG4

-Obama Creates Bipartisan Fiscal Panel to Tackle Debt. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=a5ffEFiy0bUQ

-Pension Gap of $1 Trillion Is ‘Daunting’ Bill to U.S. States. U.S. states must contend with a more than $1 trillion gap between what they have saved and what they have promised to retired workers for pension and health-care benefits, the Pew Center on the States said in a report today.

States have saved $2.35 trillion of the $3.35 trillion owed to workers as of mid-2008, the center said. The Washington-based group expects the deficit to grow because of investment losses states sustained in the second half of 2008, the report said. Read more here-http://www.bloomberg.com/apps/news?pid=20603037&sid;=a5N852fTN2SE

-The bottom line is despite all the dollar enthusiasm and bullishness these days, so far all we’ve seen is a typical garden-variety bear-market rally. Throughout the dollar’s long secular bear, similar rallies have periodically erupted to erase oversold conditions and rebalance away excessively pessimistic sentiment.

These are merely technical events, they don’t herald new bulls. Until global dollar demand growth starts to exceed supply growth, the US dollar’s strong secular bear will continue grinding lower on balance. Adam Hamilton-http://www.321gold.com/editorials/hamilton/hamilton021210.html

REAL ESTATE

-Canada Housing Prices May Fall, David Dodge Tells Globe & Mail. House prices in Canada are more likely to fall than climb in the next few years, former Bank of Canada Governor David Dodge told the Globe & Mail newspaper in an interview.

Real estate prices “look pretty high by any conventional measure,” the Globe cited Dodge as saying in the interview. “So, the likelihood of house prices falling a bit over the next few years is probably somewhat greater than that they would rise over the next few years.”

Canada has probably entered “a fairly long period of relatively slow income growth,” which will hurt the housing market, Dodge told the Globe. He also expects mortgage rates to rise, the newspaper reported.

Dodge told the Globe it’s only possible to identify housing bubbles after the fact. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=alDXiVyBSgrY

-Jarislowsky ‘Convinced’ Canada Has Housing Bubble. Stephen Jarislowsky, chairman of Montreal-based investment adviser Jarislowsky Fraser Ltd., said he is “convinced” there’s a bubble in Canada’s housing market, fueled by government measures that encouraged consumers to take on debt.

“They have basically encouraged people to buy houses based on cheap mortgages,” Jarislowsky, 84, said in a telephone interview from Montreal. “That has created the opposite effect of what was desirable.” Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=az32TIe7q_NM

-Flaherty Tightens Mortgage Rules Amid Bubble Talk. Canada’s Finance Minister Jim Flaherty tightened rules in the country’s mortgage industry to ensure buyers can afford their homes when interest rates rise.

Under the changes for government-backed mortgages, which take effect April 19, buyers will have to meet standards for five-year, fixed-rate mortgages even if they opt for variable rates. Limits on refinancing will be stricter and people buying a home that they don’t occupy must make a down payment of 20 percent.

Flaherty, who reiterated he doesn’t see a housing bubble in Canada, today said the three measures will “moderate” the housing market. Flaherty said the changes will prevent borrowers from building up “unsustainable debt levels” and “help Canadians prepare for higher interest rates in the future.” Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a6vG5Eex7ezY&pos;=5

-Foreclosure ‘Overhang’ Will Cause Home-Price Decline, S&P; Says. Foreclosures will cause U.S. home prices to fall this year as lenders buck federal pressure to modify loans, according to a report from Standard & Poor’s Financial Services.

“The mortgage crisis may be far from over,” Diane Westerback, a managing director at the New York-based firm, wrote in today’s report. “The overhang of homes heading toward liquidation suggests more delinquencies and lower home prices are to come.”

Loan servicers that collect mortgage payments and oversee foreclosures will ramp up attempts to repossess properties after seeing about 70 percent of modifications fail in the last six months, according to Westerback’s study. It will take almost three years to sell all the properties that will be seized by lenders, even if no other mortgages become delinquent, S&P; said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ar_XUFkYnCAE

-New wave of foreclosures by end of 2010 is feared. About 4 million U.S. homeowners are 90 days or more delinquent on their loans or in foreclosure proceedings, Moody’s Economy.com says. A federal loan modification program is helping a relative few. Read more here-http://www.latimes.com/business/la-fi-mortgage-mods17-2010feb17,0,7373629,print.story

-Nearly 75% of all U.S. homes are affordable. Read more here-http://money.cnn.com/2010/02/17/real_estate/most_affordable_cities/index.htm

-Beijing Seen Vacant for 50% as Chanos Predicts Crash. Jack Rodman, who has made a career of selling soured property loans from Los Angeles to Tokyo, sees a crash looming in China. He keeps a slide show on his computer of empty office buildings in Beijing, his home since 2002. The tally: 55, with another dozen candidates.

“I took these pictures to try to impress upon these people the massive amount of oversupply,” said Rodman, 63, president of Global Distressed Solutions LLC, which advises private equity and hedge funds on Chinese property and banking. Rodman figures about half of the city’s commercial space is vacant, more than was leased in Germany’s five biggest office markets in 2009.

Beijing’s office vacancy rate of 22.4 percent in the third quarter of last year was the ninth-highest of 103 markets tracked by CB Richard Ellis Group Inc., a real estate broker. Those figures don’t include many buildings about to open, such as the city’s tallest, the 6.6-billion yuan ($966 million) 74- story China World Tower 3.

Empty buildings are sprouting across China as companies with access to some of the $1.4 trillion in new loans last year build skyscrapers. Former Morgan Stanley chief Asia economist Andy Xie and hedge fund manager James Chanos say the country’s property market is in a bubble.

“There’s a monumental property bubble and fixed-asset investment bubble that China has underway right now,” Chanos said in a Jan. 25 Bloomberg Television interview. “And deflating that gently will be difficult at best.” Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=a6i2PSZD.Jr4

GEOPOLITICAL NEWS

-Israel mulling a spring or summer war: Ahmadinejad. Read more here-http://uk.news.yahoo.com/18/20100216/twl-israel-mulling-a-spring-or-summer-wa-3cd7efd.html

-Netanyahu: Israel not planning war with Iran. Read more here-http://www.breitbart.com/article.php?id=D9DTF31O0&show;_article=1

-UN Says Iran Boosts Uranium Enrichment, Stockpile. Iran boosted its uranium stockpile and enriched the heavy metal used for nuclear power and atomic bombs to levels needed to fuel a Tehran research reactor, United Nations inspectors said today in a restricted report.

Iran’s stockpile of low-enriched uranium grew to 2,065 kilograms (4,553 pounds) from 1,700 kilograms in November, the International Atomic Energy Agency said today in a report obtained by Bloomberg News. Iran produced uranium enriched to 19.8 percent, said the report. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aPxTKdHk.hFU

-Clinton Says Iran Is Moving Toward a ‘Military Dictatorship’. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=a6h5RiKi85UE&pos;=8

-Clinton Says Iran Army Warning Was Message to Nation’s Leaders. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aGbLKeR93STg&pos;=8

-Afghan Offensive May Take a Month, U.K. General Says. A joint Afghan-NATO offensive against Taliban insurgents in southern Afghanistan will take “another 25 to 30 days,” the top coalition commander for the area said today.

British Major General Nick Carter said his forces are “very happy” with the pace of operations in northern Helmand Province and are making “slow but steady progress” in the area of the main target, the town of Marjah.

The operation by 15,000 U.S. Marines and Afghan and British troops aims to wipe out a Taliban stronghold whose opium crop has helped fund the guerrilla movement. It is the biggest operation against the Taliban since the 2001 U.S.-led invasion of Afghanistan.

“It will take us another 25 to 30 days to be entirely sure that we have secured” the Taliban haven, Carter told reporters at the Pentagon via satellite from Afghanistan. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aP9PlZjNrXXo

-Afghan Taliban’s Top Military Commander Is Captured. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=aGnELw4GSqew

-Saudis Arrest Al-Qaeda Militant on Most-Wanted Terrorist List. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aMVkr_9jVB4Y

-Obama-Dalai Lama Talks Show U.S., China Stay Rivals. President Barack Obama greeted the Dalai Lama in a private White House meeting today on notice that the talks will anger China’s leadership and add tension to an already strained relationship.

That isn’t likely to fray economic ties secured by $366 billion of mutual trade and $755 billion in Chinese-held U.S. Treasury bills, according to analysts. And the path to a more constructive overall relationship may lie in both sides dropping any pretence at friendship and acknowledging they are competitors as much as partners, said Yan Xuetong, director of the Institute of International Studies at Tsinghua University in Beijing.

“If China and the U.S. identified each other as rivals I don’t think they would be disappointed with each other,” Yan said. “Both sides pretend to be friends. Actually, they are not.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ab.PsGBVnpT0

-Cyber Warriors. When will China emerge as a military threat to the U.S.? In most respects the answer is: not anytime soon China doesn’t even contemplate a time it might challenge America directly. But one significant threat already exists: cyberwar.

Attacks not just from China but from Russia and elsewhere on America’s electronic networks cost millions of dollars and could in the extreme cause the collapse of financial life, the halt of most manufacturing systems, and the evaporation of all the data and knowledge stored on the Internet. Read more here-http://www.theatlantic.com/doc/201003/china-cyber-war

-U.S. Isn’t Prepared for Massive Cyber Attack, Ex-Officials Say. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aLM4UjMmmEFU

© 2010, Worldwide Precious Metals.
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The Goldbugg Report – February 23, 2010
Posted by Worldwide Precious Metals on Tuesday, February 23, 2010

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