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The Goldbugg Report – April 27, 2010

April 27, 2010

-DAVID ROSENBERG-NO FREE LUNCH

-IMF SAYS GOVERNMENT DEBT POSES RISK TO GROWTH

-JAMES TURK-HYPERINFLATION LOOMS

GOLD

-China should use more reserves to buy gold-researcher. China should use more of its massive foreign exchange reserves to buy gold to support its aim of raising the international role of the yuan currency, a senior government researcher said on Saturday.

Li Lianzhong, who heads the economic department of the Communist Party’s policy research office, said that Beijing should also encourage domestic enterprises to acquire foreign energy and natural resource assets by using part of the foreign exchange reserves.

“We can also consider buying some more gold because if we want to develop the RMB into an international currency, we must have some scale of gold reserves,” Li told a forum in Beijing. The yuan is also known as the renminbi.

China’s foreign exchange reserves, the world’s largest, rose to $2.4471 trillion by the end of March. China disclosed last April that its official gold holdings had risen to 1,054 tonnes from 600 tonnes in 2003, confirming years of speculation it had been buying.

But gold is still a small portion of its huge foreign exchange reserves, which are mostly invested in dollar-denominated assets. The tumbling U.S. dollar has threatened to weaken China’s buying power, fuelling a debate that the world’s third-largest economy should diversify into gold, oil and metals. Read more here-http://www.reuters.com/article/idUSTOE63G00P20100417?type=marketsNews

-John Embry will be surprised if gold not up $500 in 6 months. Investment strategist John Embry sees nowhere for the price of gold to go but up. “If gold isn’t up at least $500 in the next six months, I will be surprised,” says, John Embry, Chief investment strategist at Sprott Asset Management.

Speaking on the Mineweb.com Gold Weekly podcast, Embry said that the price of gold is on the rise for two main reasons. The first of these is the rapid increase in sovereign debt among many Western nations and the risks attached to it. Embry says while Greece is the one at the top of the page right now it is just one of many countries or states including the UK and many in the Mediterranean and the US which have equally as serious debt issues.

He adds “We are in the early stages of what I think might turn into some sort of a hyper-inflationary condition because there are not enough savings in the world to even remotely service the amount of sovereign debt that is going to be created in the next few years. So you are going to see the creation of paper money the likes of which we have seldom, if ever, seen in history.

So, as the value of the paper money goes down because of its proliferation, by definition, gold, which is in limited supply, the price of it will go up in these paper currencies. “We have gone through a period of disinflation, certainly since about 1980. It’s over. We are heading into a period the likes of which we have never seen certainly in our lifetimes but maybe the world has never seen before.”

The second significant factor for Embry is the difference between the paper gold market and the amount of physical gold around to cover it. “If you have short positions and paper gold to the extent that you have right now, the whole situation is distorted.

The fact is, and I think there has been some really good work done on this recently, I mean there is so many paper claims on each good delivery bar, that if everyone decided one day that they didn’t want their paper gold, they wanted the gold that was supposedly underlying it and they demanded it. It would just blow the top off the market and I think, before this is over, that will occur.”

He adds, “I think that North America and Europe are going to become less and less a factor in the market, right now the price is being controlled in the paper market on the LBMA and the COMEX. I think that is in the process of changing, if the physical market takes over, as I think it will, there is nowhere for the price to go but up.” Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=103033&sn;=Detail&pid;=33

-John Embry April commentary. Read more here-http://www.sprott.com/docs/InvestorsDigest/2010/MPLID_042310_pg124Emb.pdf

-Gold advocate Eric Sprott interviewed by CNBC. Watch interview here-http://www.cnbc.com/id/15840232?video=1469756672&play;=1

-The rising price of gold is far from over since paper money will continue to lose value, according to Marc Faber, editor and publisher of The Gloom, Boom & Doom Report. “If you have $100 today, you buy that much less in terms of a basket of goods and services then you did ten years ago paper money has already lost a lot of value and in my view it will continue to lose value.

The price of gold will adjust on the upside according to the loss of the purchasing power of money,” Faber said in an exclusive interview with Kitco News. Still bullish on gold, Faber views precious metals as currencies, not commodities. He said that precious metals are currently his currencies of choice.

Currently, stronger currencies such as the Canadian and Australian Dollar are still vulnerable to a slowdown in the Chinese economy, he said on the sidelines of the World MoneyShow in Hong Kong. Faber said that he continues to buy the yellow metal, “If someone is rich they should buy a ton every month. “

He also said that everyone should buy gold because of the low US interest rates, “At zero percent interest, I don’t see why someone would not have part of their money in gold and silver.” Faber said that “as far as the eye can see, interest rates under Bernanke will stay at zero and below.”

He noted that the current Vice Chairman of the Fed, “Janet Yellen, another totally, ignorant economist, removed from any reality, said herself six months ago, ‘if I could implement interest rates below zero, I would do it.’ So now you know what the policy in the US will be,” Faber said.

He also said that if gold prices substantially rise one day, there could be expropriation. “The Americans could force the Europeans to do the same once they have all the gold in the world they would re-value it at $10,000 an ounce,” Faber said.

On the subject of market manipulation talk, Faber said that if market manipulation exists then it is good for gold buyers since it keeps the price down. “If you have manipulation to keep the price down, it eventually goes ballistic.

So, all the people that are bitching about the manipulation of silver and gold should be happy that it is manipulated because it still gives them an opportunity to buy it at a depressed priced,” Faber said. Faber said he suspects that there may have been some efforts by Central Banks to keep the price down but wouldn’t go as far to call that manipulation.

“If someone talks about manipulation, well, I think the whole world through government intervention has become manipulated so it is very difficult to make forecasts,” said Faber. Read more here-http://www.kitco.com/reports/KitcoNews20100412J.html

-Gold boom has years to run, says $30 billion manager. BlackRock gold guru Evy Hambro believes central banks will power the gold price forward for years to come. Hambro says the supply and demand fundamentals of the precious metal are supportive of the current $1,150 price after some of the biggest central banks in the world became net buyers again.

Hambro manages around $30 billion in assets across a number of BlackRock funds, including the $13.3 billion World Mining and £2.1 billion Gold & General funds. But rather than focusing on metal prices in the short term, his investment strategy centres on analysing long-term supply and demand fundamentals. Read more here-http://www.citywire.co.uk/selector/-/news/fund-manager-interviews/content.aspx?ID=394123

-Since just above $300, gold has climbed a wall of worry and denial. You wouldn’t need more than your hands and maybe a few toes to count the number of “experts” who have stayed the bullish course along the way. The road is littered with former gold bulls and perma-bears, all of whom predicted gold’s demise (many more than once).

Once again we find ourselves at one of those speed bumps only this time the supposed land mine is one of those claims that just makes you laugh at the extent some go to in futile hopes of stopping the mother of all secular gold bull markets. The latest charade is the fear Paulson will have to sell his gold holdings because of the Goldman charges.

While I would expect such nonsense from the “Senior Analyst” (he ran out of legitimate excuses hundreds of dollars lower ago), I find it amusing (but not surprising) that this lame excuse has caused some real grief. Hello? Do you honestly think the rise in gold has been thanks even in part to Paulson?

Sure, he has purchased some credible positions in it, but I highly doubt without him having done so we wouldn’t be at this point anyway. Oh, and by the way, even if his fund was somehow force to sell (the chances of which I believe are slim and none), it’s my understanding that there’s a three-year freeze on redemptions.

If I told you once I told you a thousand times, the financial world and the media that covers it hate gold. It will never be widely accepted because ownership of it flies in the face of what makes their world go around stocks and bonds. This secular gold bull market takes no prisoners and this time will be no exception.

I believe the latest naysayers (not the permanent ones like you know who) will end up joining an ever-increasing list of bears who end up mauled by the big and bad gold bull. Peter Grandich-Read more here-http://www.grandich.com/2010/04/gold-update-3/

-Gold: safe haven from shrinking sterling and rising inflation. Read more here-http://blogs.telegraph.co.uk/finance/ianmcowie/100005122/gold-safe-haven-from-shrinking-sterling-and-rising-inflation/

-You’ve heard of peak oil. How about peak gold? Peak oil has a close cousin in peak gold. “I think it’s similar to oil,” says Ronald-Peter Stöferle, international equities analyst at Erste Group Bank, an Austrian-based bank.

“Peak gold is only one part of my really positive scenario” for the metal, Mr. Stöferle notes, adding that he believes gold could ultimately double from current price levels, to $2,300 an ounce, the inflation-adjusted high it attained way back during the inflationary days of early 1980.

Besides dwindling output, Mr. Stöferle is basing his bullish call on the traditional view among some investors that the yellow metal is a refuge in times of financial uncertainty over debt and paper currencies. Read more here-http://www.theglobeandmail.com/globe-investor/investment-ideas/youve-heard-of-peak-oil-how-about-peak-gold/article1532444/

-Clive Maund gold market update. Read more here-http://news.goldseek.com/CliveMaund/1271618448.php

-Ned Schmidt’s Gold Thoughts. Read more here-http://www.kitco.com/ind/Schmidt/apr192010.html

-Q1 gold price resilient on robust market fundamentals WGC. The latest edition of Gold Investment Digest from the World Gold Council attests to strong market fundamentals supporting the gold price during the first quarter. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=103231&sn;=Detail&pid;=34

-DGG gold price predictions experts cautiously optimistic. Expert speakers at the Denver Gold Group’s European Gold Forum, all seemed to agree on a cautiously optimistic outlook for the gold price during the current year. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=102794&sn;=Detail&pid;=33

-Three scenarios for the gold price. Is the price going to double in the next year or two or is there a greater chance of it falling back toward $600? Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=103151&sn;=Detail&pid;=33

-On the line with gold price forecast. Year-end $1226 predicted. Martin Murenbeeld’s gold price forecast for 2010/2011 as presented at the DGG’s European gold forum. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=102737&sn;=Detail&pid;=33

-Mines face high long-term sustainable costs GFMS. Total cash cost increases were well contained in 2009 but long-term sustainable costs are nowhere near as comfortable. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=102704&sn;=Detail&pid;=33

-Louise Yamada is legendary for her technical work on Wall Street and has made some amazing calls in her career including as an example; water all the way back in 1995 when no one was looking at water. In this interview Louise covers gold, silver, the stock market, U.S. Dollar, bonds and interest rates, oil and energy, leadership going forward and much more. Listen here-http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/4/17_Louise_Yamada.html

-GATA Chairman Murphy interviewed by GoldSeek Radio. Listen here-http://www.gata.org/node/8555

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,900 the silver price would be $23.75

Gold to silver ratio at 70 to 1 with gold at $1,900 the silver price would be $27.14

Gold to silver ratio at 60 to 1 with gold at $1,900 the silver price would be $31.67

Gold to silver ratio at 50 to 1 with gold at $1,900 the silver price would be $38.00

Gold to silver ratio at 40 to 1 with gold at $1,900 the silver price would be $47.50

Gold to silver ratio at 30 to 1 with gold at $1,900 the silver price would be $63.33

Gold to silver ratio at 20 to 1 with gold at $1,900 the silver price would be $95.00

Gold to silver ratio at 15 to 1 with gold at $1,900 the silver price would be $126.67

-Adam Hamilton on silver/gold ratio. Silver’s recent rallying action is starting to catch traders’ attention. Since the end of its latest correction in early February, this white metal has surged 23% higher. It has well outperformed gold, which only climbed 9% over this same 9-week span.

And based on silver’s strong historical relationship with gold, odds are today’s silver rally is only beginning. Silver’s gains should accelerate in the months ahead. The primary reason is silver remains seriously undervalued relative to gold.

The higher gold goes, the higher silver will ultimately go as well. When you plug higher gold prices into the recovery SGRs, the potential of silver is even greater. At $1200 and $1300, the 55 SGR yields about $21.75 and $23.50 while the 47 SGR yields around $25.50 and $27.50. The “normal” silver targets relative to gold quickly climb higher as gold rallies.

The bottom line is silver remains far too cheap relative to gold. 2008’s stock panic severed silver’s historical relationship to the dominant precious metal, and ever since silver has been recovering on balance. But despite silver’s great gains since the panic, its price still has a long way to go before it fully normalizes relative to gold. The reversion to its pre-panic relationship remains very much underway.

Thus the same anomaly that offered such amazing opportunities in silver and silver stocks over the past year and a half or so largely still exists. While the initial easy profits have already been won, silver still has big gains ahead of it. Its recovery relative to gold that had to be taken on faith emerging out of the panic is now established fact. Get deployed in silver and silver stocks and ride the rest of this reversion. Read more here-http://news.silverseek.com/Zealllc/1271439787.php

-Clive Maund silver market update. Read more here-http://news.silverseek.com/CliveMaund/1271618251.php

-Silver The Most Bullish Currency. Why is the case for silver so extremely bullish today? To get to this reason, one has to know what silver is. If one does not know what silver is then one will not understand what will drive the world’s great silver rush.

Silver has many uses, possibly superior to any metal or at least the equal of any. However, there is one use that makes the other uses virtually immaterial. That use is silvers’ use as money. Here we specifically refer to money’s feature called: store of value.

Now however, silver’s use as money is not quite as active as it used to be. Silver was demonitized many many years ago. Therefore the paragraph above, though true, is not quite an “active truth”. Silver’s investment demand, which is a measure of its demand as a store of value, is significantly smaller than demand for industrial and other application.

If silver has realised its true destiny as money, it should be the other way around; investment demand should be relatively much bigger than demand for industrial and other application. Read more here-http://news.silverseek.com/SilverSeek/1271684225.php

-Despite selloff, Ted Butler tells King World News he’s bullish, blasts LBMA. Listen here-http://www.gata.org/node/8553

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: Inflation. The latest annualized rate is 2.31%. The March 2010 Consumer Price Index for Urban Consumers (CPI-U) is 217.631. The annualized inflation rate computed from this number is 2.31%, which marks the fifth month of mild inflation after a streak of 8 consecutive months of deflation. The annualized inflation rate of the last five months, however, is well below the 4.1% average since the end of World War II.

The Bureau of Labor Statistics (BLS) began calculating the CPI in 1913 BLS historic data. Our chart now shows inflation back to 1872 by adding Warren and Pearsons’s price index for the earlier years. The spliced series is available at Yale Professor Robert Shiller’s website. This look further back into the past dramatically illustrates the extreme oscillation between inflation and deflation during the first 70 years of our timeline. Read more here-http://www.dshort.com/inflation/inflation-update.html

-Chart of the week: Alternate Inflation Data. The chart below includes an alternate look at inflation without the calculation modifications the 1980s and 1990s Data from www.shadowstats.com. The Alternate CPI puts the annualized inflation rate at 9.47%. Read more here-http://www.dshort.com/inflation/inflation-update.html

-Goldman Sachs has long been on our radar and the charges against them come as no surprise. We have had concerns about their trading/practices and are happy the SEC is finally looking into the “Giant Vampire Squids” actions.

This news temporarily dragged down the precious metals markets. Any dips such as the one we are currently experiencing should be looked at as a buying opportunity as situations like the Goldman fiasco are encouraging more people to get into physical precious metals such as Silver to protect their money.

Ted Butler stated on King World News this week, the SEC going after Goldman may open the door to the CFTC going after JP Morgan which could see Silver really take off. Lucas Bugg-World Wide Precious Metals-WWPMC.com

-Rolling Stone’s Matt Taibbi Discusses SEC’s Goldman Suit. Watch video here-http://www.youtube.com/watch?v=beb2jBijo-s&feature;=player_embedded#!

-I never lose sleep with my big gold position, but I do lose sleep when I have a big dollar position. I always see pullbacks in gold as buying opportunities. We’re now in a 10 year bull market in gold. We ran a twenty year bear market, so it might be a twenty year bull market. We may be only halfway through.

I’m not sweating $1100 gold as the top like so many others in this country. They see bubbles everywhere in gold. They never saw the bubble in real estate, never saw the bubble in stocks, never saw anything. However, all these people in the U.S. see a bubble in gold. I don’t see it. I sleep like a baby with my gold position. Fred Hickey-Read more here-http://www.zerohedge.com/article/guest-post-fred-hickey-if-we-continue-down-path-outlook-general-impoverishment-country

-The Fed and the Treasury are well aware that America is bankrupt and the only way it can continue to function is via the Fed’s ability to create endless amounts of money and credit. That is why credit spreads are at records.

As of late this year an additional $420 billion in additional interest expense will be added for this year and every other year, plus we are facing another $1.8 trillion deficit. Worse yet, the official projection is for an additional $1 trillion deficit annually for the next ten years.

Presently, as a result of policies of the Treasury and the Fed, real inflation is 8%, not the official number of 2.5% to 3%. All these parties, which include Wall Street, have no intention of allowing the reduction of spending and government. Read more here-http://news.goldseek.com/InternationalForecaster/1271599200.php and http://news.goldseek.com/InternationalForecaster/1271859927.php

-Equity market corrections of 10% or more occur every 11 months, on average, over the past 80 years and we are long overdue. While the Goldman file is dominating the news flow, it still pays to heed Bob Farrell’s’ market rules to remember that it is the market that makes the news, the news does not make the market.

And this is becoming a more discriminating marketplace than the tide-that-lift-all-the-boats backdrop of the past year. We saw that on Friday because even before the SEC lawsuit was announced. David Rosenberg-Gluskin/Sheff

-According to the Shiller P/E ratio, the S&P; 500 is now 35% overvalued a full one standard deviation event. The April data was just updated and showed the inflation-adjusted normalized P/E, premised on “bird-in-the-hand” (as opposed to consensus earnings forecasts, which is historically more than 20% higher than we actually get one reason why Wall Street banks are dubbed “the sell side”) 10-year trailing profits, expanded to over 22x from 21x in March.

This is not nosebleed territory, but it is expensive; the historical average is 16.4x. So, this implies that the market is currently 34.7% overvalued benchmarked against the historical norm. It would be nice to say that a higher-than-normal P/E is justified by low inflation and low interest rates.

But frankly, real bond yields are not that far from their long-run averages; however, equity valuation is, and something is going to give at some point. Valuation metrics are not meant to be timing devices. Assets, securities, and currencies can stay overvalued for extended periods of time, but inevitably Bob Farrell’s rule number one on the concept of “mean reversion” will come into play.

The operative strategy is to buy low and sell high, not the opposite; and to be paid to take on risk as opposed to be paying for taking on the risk. David Rosenberg-Gluskin/Sheff

-New York State May Run Out of Money Before July, DiNapoli Says. New York’s general fund may run out of cash in June and will for the first time in state history end the months of May through August with a negative cash balance, state Comptroller Thomas DiNapoli said.

The third-most populous U.S. state ended its past fiscal year on March 31 with $2.3 billion in its general fund after Governor David Paterson delayed disbursing $2.9 billion, mostly in tax refunds and school aid. Because those payments must be made in the first quarter of the current fiscal year, the general fund may run out of money before July, DiNapoli said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aCmKO_c7O.Ac

-California’s unemployment rate hit a modern record of 12.6 percent in March, though it rose only a fraction over the previous month, the state Employment Development Department reported Friday. Read more here-http://www.breitbart.com/article.php?id=D9F49LEO0&show;_article=1

-L.A. Mayor Axes Firefighters, Clerks to Fill Yawning Budget Gap. Los Angeles Mayor Antonio Villaraigosa called for eliminating more than 3,500 city jobs including 61 firefighters and 443 typists to help curb a deficit estimated to reach $485 million in the coming fiscal year. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=ahHlCYR5.f0I

-U.S. wholesale prices rose more than expected last month as food prices surged by the most in 26 years. But excluding food and energy, prices were nearly flat. The Labor Department said the Producer Price Index rose by 0.7 percent in March, compared to analysts’ forecasts of a 0.4 percent rise. A rise in gas prices also helped push up the index. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aYoxl2DbrZU0

-Bank of Canada Keeps Benchmark Interest Rate at 0.25%. Read more here-http://www.bloomberg.com/apps/news?pid=20601082&sid;=a3FlLV6bguUU

-Saudis Tighten China Energy Ties to Reduce U.S. Dependence. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=afA7qKyLK44s

-U.S. States Face ‘Staggered’ Recovery, Pew Center’s Urahn Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=aE.g8HmZ6Fwc

-Jim Rogers: Next Recession Is Coming and It Will Be Much Worse. The Great Recession that may have just ended will amount to nothing compared to the next one, says commodities expert Jim Rogers. The huge fiscal and monetary stimulus is what will cause the crisis, he says.

Rogers notes that the United States suffers a recession every four to six years on average. “When it (the next one) comes, it’s going to be much worse, because Washington can’t quintuple its debt again,” he told Newsmax.TV Money. Read more here-http://moneynews.com/Headline/jim-rogers-recession-worse/2010/04/20/id/356312

-Must Germany bail out Portugal too? Portugal, not Greece, poses the greater existential threat to Europe’s monetary union. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7604196/Must-Germany-bail-out-Portugal-too.html

-Now we know the truth. The financial meltdown wasn’t a mistake it was a con. Hiding behind the complexities of our financial system, banks and other institutions are being accused of fraud and deception, with Goldman Sachs just the latest in the spotlight. Read more here-http://www.guardian.co.uk/business/2010/apr/18/goldman-sachs-regulators-civil-charges

-500-Euro Bill Lifts Crime Risk, Bank of Italy Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid;=apbqDcYpHhdA

-U.S. Unveils New $100 Bill to Foil Counterfeiters. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aoLIQa4G1s9g

-New speed cameras trap motorists from space. A new type of speed cameras which can use satellites to measure average speed over long distances are being tested in Britain. Read more here-http://www.telegraph.co.uk/news/newstopics/howaboutthat/7608153/New-speed-cameras-trap-motorists-from-space.html

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 and

http://www.b-tv.com/features/watch-now.html?id=326

-Auction Results-Sotheby’s Magnificent Jewels Sale New York April 20 2010.

LOT 292-FANCY INTENSE YELLOW DIAMOND RING, 15,000-20,000 USD. Description-The marquise-shaped diamond of fancy intense yellow color weighing 2.32 carats, framed by round diamonds, mounted in gold and platinum, size 10¼. Lot Sold-Hammer Price with Buyer’s Premium: 23,750 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=292

LOT 293-FANCY INTENSE YELLOW DIAMOND RING. 20,000-30,000 USD. Description-The cut-cornered rectangular modified brilliant-cut diamond of fancy intense yellow color weighing 2.28 carats, framed by round and marquise-shaped diamonds weighing approximately 2.75 carats, mounted in 18 karat white gold, size 4¼. Lot Sold-Hammer Price with Buyer’s Premium: 25,000 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=293

LOT 305-FANCY DEEP BROWNISH GREENISH YELLOW DIAMOND RING. 20,000-25,000 USD. Description-The pear-shaped diamond of fancy deep brownish greenish yellow color weighing 6.04 carats, framed and flanked by round diamonds weighing approximately 2.75 carats, mounted in 18 karat gold and platinum, size 6¾. Lot Sold-Hammer Price with Buyer’s Premium: 48,750 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=305

LOT 442-FANCY BROWN-YELLOW DIAMOND AND DIAMOND PENDANT-NECKLACE. 70,000-90,000 USD. Description-The heart-shaped diamond of fancy brown-yellow color weighing 22.24 carats, framed by round diamonds weighing 3.70 carats, suspended from a graduated necklace set with round diamonds weighing approximately 14.00 carats, mounted in platinum and 18 karat gold, length 17 inches, pendant detachable. Lot Sold-Hammer Price with Buyer’s Premium: 200,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=442

LOT 443-FANCY PINK DIAMOND RING. 100,000-150,000 USD. Description-The pear-shaped diamond of fancy pink color weighing 2.09 carats, flanked by pear-shaped diamonds weighing .59 and .56 carat, mounted in platinum and 18 karat gold, size 3¾. Lot Sold-Hammer Price with Buyer’s Premium: 164,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=443

LOT 450-DIAMOND AND FANCY YELLOW DIAMOND RING. 80,000-100,000 US. Description-The cut-cornered square modified brilliant-cut diamond weighing 5.09 carats, flanked by cut-cornered rectangular modified brilliant-cut diamonds of fancy yellow color weighing 1.13 and 1.12 carats, mounted in 18 karat gold and platinum, size 6. Lot Sold-Hammer Price with Buyer’s Premium: 98,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=450

LOT 453-FANCY INTENSE YELLOW DIAMOND RING. 60,000-80,000 USD. Description-The emerald-cut diamond of fancy intense yellow color weighing 5.30 carats, flanked by marquise-shaped and tapered baguette diamonds weighing approximately 1.20 carats, mounted in 18 karat white and yellow gold, size 8. Lot Sold-Hammer Price with Buyer’s Premium: 80,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=453

LOT 458-FANCY YELLOW DIAMOND RING. 120,000-150,000 USD. Description-The square emerald-cut diamond of fancy yellow color weighing 14.00 carats, flanked by round diamonds weighing approximately .60 carat, mounted in platinum and gold, size 3¼. Lot Sold-Hammer Price with Buyer’s Premium: 260,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=458

LOT 514-FANCY LIGHT YELLOW DIAMOND RING. 50,000-75,000 USD. Description-The modified rectangular mixed-cut diamond of fancy light yellow color weighing 7.95 carats, flanked by trapeze-cut diamonds of yellow hue weighing approximately 1.30 carats, within a frame of small round diamonds of pink hue weighing approximately .70 carat, the shank set with near colorless round diamonds weighing approximately 1.75 carats, mounted in platinum and 18 karat white and pink gold, size 6¾. Lot Sold-Hammer Price with Buyer’s Premium: 98,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=514

LOT 516-PAIR OF FANCY YELLOW DIAMOND EARSTUDS. 60,000-80,000 USD. Description-The cut-cornered rectangular modified brilliant-cut diamonds of fancy yellow color weighing 3.68 and 3.63 carats, mounted in 18 karat gold. Lot Sold-Hammer Price with Buyer’s Premium: 76,900 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=516

LOT 532-PAIR OF DIAMOND AND COLORED DIAMOND EARCLIPS. 8,000-12,000 USD. Description-The flowerheads set with near colorless round diamonds weighing approximately 8.10 carats, set in the center with round diamonds of yellow hue weighing approximately 1.40 carats, mounted in 18 karat white gold. Lot Sold-Hammer Price with Buyer’s Premium: 12,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=532

LOT 543-UNMOUNTED FANCY YELLOW DIAMOND. 400,000-600,000 USD. Description-The cushion-shaped diamond weighing 25.62 carats. Lot Sold-Hammer Price with Buyer’s Premium: 494,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=543

LOT 557-RARE FANCY INTENSE PINKISH ORANGE DIAMOND RING. 2,500,000-3,500,000 USD. Description-The cut-cornered rectangular modified brilliant-cut diamond of fancy intense pinkish orange color weighing 7.67 carats, framed and flanked by round diamonds, mounted in platinum and 18 karat pink gold, size 5¾. Lot Sold-Hammer Price with Buyer’s Premium: 3,106,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=557

LOT 565-MAGNIFICENT FANCY VIVID YELLOW DIAMOND NECKLACE. 2,000,000-3,000,000 USD. Description-Set with cut-cornered rectangular modified brilliant-cut and cut-cornered square modified brilliant-cut diamonds of fancy vivid color weighing a total of 100.17 carats, mounted in 18 karat gold, length 16¾ inches. Lot Sold-Hammer Price with Buyer’s Premium: 3,554,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=565

LOT 579-FANCY INTENSE YELLOW DIAMOND RING. 400,000-600,000 USD. Description-The cut-cornered rectangular mixed-cut diamond of fancy intense yellow color weighing 27.80 carats, flanked by triangular-shaped diamonds weighing 3.50 carats, mounted in platinum and gold, size 7. Lot Sold-Hammer Price with Buyer’s Premium: 602,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=579

LOT 580-PAIR OF FANCY INTENSE YELLOW DIAMOND AND DIAMOND EARCLIPS. 300,000-400,000 USD. Description-The cut-cornered square modified brilliant-cut diamonds of fancy intense yellow color weighing 12.75 and 12.29 carats, framed by round diamonds weighing approximately 14.10 carats, mounted in platinum and gold. Lot Sold-Hammer Price with Buyer’s Premium: 488,500 USD. Read more here-http://www.sothebys.com/app/live/lot/LotDetail.jsp?sale_number=N08629&live;_lot_id=580

-Auction Results-Christie’s Jewels: The New York Sale April 22 2010.

Lot 57-A BELLE EPOQUE COLORED DIAMOND PENDANT NECKLACE. Lot Description-Set with a pear-shaped fancy dark gray-yellowish green diamond, weighing approximately 5.84 carats, to the collet-set old European and marquise-cut diamond surround and foliate link, from a platinum fine link neckchain, spaced by collet-set old European-cut diamonds, mounted in gold and platinum, circa 1910, 17 ins. With report 2115721015 dated 4 March 2010 from the Gemological Institute of America stating that the diamond is fancy dark gray-yellowish green, natural color, VVS2 clarity; accompanied by a working diagram indicating that the clarity may be potentially internally flawless. Estimate $20,000-$40,000. Price Realized $104,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307375&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 73-A COLORED DIAMOND RING. Lot Description-Set with a cut-cornered square-cut fancy intense yellow diamond, weighing approximately 10.17 carats, to the pavé-set yellow diamond prongs, gallery and tapered hoop, mounted in 18k gold, ring size 6¼. With report 2105821054 dated 1 February 2010 from the Gemological Institute of America stating that the diamond is fancy intense yellow, natural color, internally flawless clarity. Estimate $200,000-$300,000. Price Realized $242,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307391&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 120-A BELLE EPOQUE COLORED DIAMOND NECKLACE. Lot Description-Suspending a pear-shaped yellowish brown diamond, trimmed with single-cut diamonds, swinging within an openwork single-cut diamond circular pendant of foliate motif, from a single and old European-cut diamond foliate double swag, suspending a drop-shaped diamond pendant, to the single and old European-cut diamond foliate neckchain of similar design, mounted in platinum, circa 1910, 15¼ ins. Estimate $20,000-$30,000. Price Realized $43,750-Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307438&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 129-A COLORED DIAMOND RING. Lot Description-Bezel-set with a cushion-cut fancy intense yellow diamond, weighing approximately 4.66 carats, within an old European and single-cut diamond surround, mounted in platinum. With report 2115662754 dated 1 February 2010 from the Gemological Institute of America stating that the diamond is fancy intense yellow, natural color, VS2 clarity. Estimate $30,000-$50,000. Price Realized $116,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307447&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 130-A BELLE EPOQUE COLORED DIAMOND BROOCH. Lot Description-Centering upon a bezel-set pear-shaped fancy brownish pink diamond, weighing approximately 5.83 carats, within an old mine-cut diamond scalloped surround, topped by a bezel-set old European-cut diamond, the bottom suspending briolette-cut diamond drops with single-cut diamond foliate detail and and collet-set diamonds, mounted in platinum, circa 1910, (one briolette-cut diamond drop deficient). With report 1112662768 dated 1 February 2010 from the Gemological Institute of America stating that the diamond is fancy brownish pink, natural color, SI1 clarity. Estimate $80,000-$120,000. Price Realized $374,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307448&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 161-A SET OF COLORED DIAMOND JEWELRY. Lot Description-Comprising a bracelet, designed as a graduated series of oval-cut fancy intense yellow diamonds, each within a circular-cut diamond surround, spaced by marquise-cut diamond florets; and a pair of ear clips en suite, mounted in platinum, bracelet 7 ins. With eleven reports dated from 29 February 1996 to 12 September 2003 from the Gemological Institute of America, stating that the oval-cut diamonds are fancy intense yellow, natural color. The total weight of the eleven fancy intense yellow diamonds is approximately 16.89 carats. Estimate $40,000-$50,000. Price Realized $128,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307479&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 190-A PAIR OF COLORED DIAMOND EAR STUDS. Lot Description-Each set with a modified cut-cornered rectangular-cut fancy intense yellow diamond, weighing approximately 4.28 and 4.23 carats, mounted in gold. With reports 2115687693 and 1112687692 dated 8 February 2010 from the Gemological Institute of America stating that the diamonds are fancy intense yellow, natural color, VVS1 clarity; accompanied by a working diagram indicating that the clarity of the diamond, weighing approximately 4.23 carats, may be potentially internally flawless. Estimate $50,000-$70,000. Price Realized $134,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307508&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 192-A COLORED DIAMOND RING. Lot Description-Set with a cut-cornered rectangular-cut fancy vivid yellow diamond, weighing approximately 9.83 carats, flanked on either side by two graduated baguette-cut diamonds, mounted in platinum and 18k gold. With report 10655670 dated 24 February 2010 from the Gemological Institute of America stating that the diamond is fancy vivid yellow, natural color, internally flawless clarity. Estimate $700,000-$1,000,000. Price Realized $1,010,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307510&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 194-A COLORED DIAMOND RING. Lot Description-Set with a pear-shaped fancy intense yellow diamond, weighing approximately 8.68 carats, to the pear-shaped and baguette-cut diamond shoulders, mounted in platinum. With report 15882900 dated 24 May 2007 from the Gemological Institute of America stating that the diamond is fancy intense yellow, natural color, VS2 clarity. Estimate $60,000-$80,000. Price Realized $170,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307512&sid;=6a6b8fcc-91e9-4685-89e0-efbb29d6bbaa

Lot 247-A COLORED DIAMOND RING. Lot Description-Set with a marquise-cut fancy intense blue diamond, weighing approximately 1.84 carats, within a marquise-cut diamond surround, mounted in platinum. With report 5111720918 dated 3 March 2010 from the Gemological Institute of America stating that the diamond is fancy intense blue, natural color, VVS2 clarity; accompanied by a working diagram indicating that the clarity may be potentially internally flawless. Estimate $100,000-$150,000. Price Realized $386,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307565&sid;=e865df59-a85d-4479-aeae-224fc724805d

Lot 254-A COLORED DIAMOND RING. Lot Description-Set with a rectangular-cut very light pink diamond, weighing approximately 5.07 carats, flanked on either side by a tapered baguette-cut diamond, mounted in platinum. With report 5111510338 dated 21 December 2009 from the Gemological Institute of America stating that the diamond is very light pink, natural color, VS1 clarity. Estimate $100,000-$150,000. Price Realized $152,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307572&sid;=e865df59-a85d-4479-aeae-224fc724805d

Lot 282-A COLORED DIAMOND PENDANT. Lot Description-Bezel-set with a pear-shaped fancy light pink diamond, weighing approximately 7.02 carats, within a circular-cut diamond surround, to the circular-cut diamond bail, mounted in platinum and rose gold. With report 14863503 dated 8 May 2006 from the Gemological Institute of America stating that the diamond is fancy light pink, natural color, SI2 clarity. Estimate $300,000-$500,000. Price Realized $362,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307600&sid;=e865df59-a85d-4479-aeae-224fc724805d

Lot 292-AN EXCEPTIONAL COLORED DIAMOND RING. Lot Description-Set with a round-cornered rectangular-cut fancy vivid blue diamond, weighing approximately 3.43 carats, flanked on either side by a cut-cornered trapeze-cut diamond, mounted in platinum. With report 13287209 dated 1 March 2010 from the Gemological Institute of America stating that the diamond is fancy vivid blue, natural color, VS1 clarity. Estimate $1,500,000-2,500,000. Price Realized $3,106,500. Read more here-http://www.christies.com/LotFinder/lot_details.aspx?from=salesummary&intObjectID;=5307610&sid;=e865df59-a85d-4479-aeae-224fc724805d

JAMES TURK-HYPERINFLATION LOOMS

-There is an interesting article in Canada’s Globe & Mail about the lack of growth in the US money supply. Ignoring for the moment that the quantity of dollars in circulation is significantly underreported, it observes:

“The money supply in the United States is doing something that almost never happens: it’s shrinking, after taking into account inflation. Similar episodes in the past have usually been scary times for investors. Declines in the amount of money in circulation have coincided with recessions, and some analysts looking at the current trend say it is a harbinger of trouble. Despite signs that the U.S. is in recovery, they worry that the money supply numbers indicate the economy remains vulnerable to the feared double-dip downturn, or is close to experiencing deflation.”

I agree with the first half of this proposition about a renewed economic downturn, but not the second. In fact, rather than deflation, the dollar is moving ever closer to hyperinflation. How is deflation possible when crude oil prices have more than doubled since their post-Lehman crash low?

Or more broadly, how can there be deflation when the price index of 19 commodities compiled by the Commodity Research Bureau rose 47% during this same period? It cannot of course, which means there is no deflation. The ongoing decline in the purchasing power of the dollar has been masked by wealth destruction as over-priced assets like houses fall back to realistic levels.

There is also the problem that the mainstream media broadcasts only the government calculated CPI, which is an inaccurate measure of the dollar’s eroding purchasing power. As John Williams of www.shadowstats.com notes: “Over the decades, the BLS [Bureau of Labor Statistics] has altered the meaning of the CPI from being a measure of the cost of living needed to maintain a constant standard of living, to something that no longer reflects the constant-standard-of-living concept.”

John reports that his “SGS-Alternate Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies back to 1980, rose to about 9.5%” in March from a year ago. So the Globe & Mail article is wrong about deflation, but I am not drawing attention to it just because I agree that “the economy remains vulnerable to the feared double-dip downturn”. Instead, this article unintentionally offers compelling evidence that the dollar is approaching hyperinflation. Read more here-http://www.fgmr.com/hyperinflation-looms-dollar-arrives-at-its-havenstein-moment.html

8 MORE U.S. BANKS FAIL-50 FOR THE YEAR

-8 banks close in Calif., Fla., Mass., Mich., Wash. Regulators on Friday shut down eight banks three in Florida, two in California, and one each in Massachusetts, Michigan and Washington putting the number of U.S. bank failures this year at 50.

The Federal Deposit Insurance Corp. took over the three Florida banks: Riverside National Bank in Fort Pierce, with $3.4 billion in assets; First Federal Bank of North Florida in Palatka, with $393.3 million in assets; and AmericanFirst Bank in Clermont, with assets of $90.5 million. TD Bank Financial Group, a division of Canada’s TD Bank, agreed to acquire the deposits and nearly all the assets of the three Florida banks.

The FDIC also seized Innovative Bank, based in Oakland, Calif., with about $269 million in assets; Tamalpais Bank of San Rafael, Calif., with about $629 million in assets; City Bank, based in Lynnwood, Wash., with about $1.1 billion in assets; Butler Bank in Lowell, Mass., with $268 million in assets; and Lakeside Community Bank in Sterling Heights, Mich., with $53 million in assets. Read more here-http://apnews.myway.com/article/20100417/D9F4JQR00.html and http://www.bloomberg.com/apps/news?pid=newsarchive&sid;=aYAIaUFyiq2M

IMF SAYS GOVERNMENT DEBT POSES RISK TO GROWTH

-The International Monetary Fund cautioned that rising government debt has replaced financial industry stress as the biggest threat to the global economy and cut its estimate for asset writedowns by 19 percent. Banks reduced the value of loans and securities by $2.28 trillion since 2007, two-thirds of which had been realized by the end of 2009, down from the IMF’s October estimate of $2.81 trillion, the fund said today in its Global Financial Stability Report.

About 39 percent of the writedowns were in U.S. banks, 29 percent in the euro area and 20 percent in the U.K., the IMF said. While the global economic recovery has “gained steam” and risks to the financial system have subsided, concerns are rising for sovereign debt issued by advanced countries that bailed out banks, the IMF report said.

Governments need “credible, medium- term” plans to reduce deficits and some nations need to do more to revive the flow of credit and boost growth. “The deterioration of fiscal balances and the rapid accumulation of public debt have altered the global risk profile,” the IMF said. “Vulnerabilities now increasingly emanate from concerns over the sustainability of governments’ balance sheets.”

Pacific Investment Management Co., manager of the world’s largest bond fund, earlier this year identified the U.S., Italy, France, Greece, Japan and the U.K. as economies sitting in a “ring of fire.” Each has debt above 90 percent of gross domestic product or the potential for it to rise there soon, slowing economic growth, Pimco said. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid;=aSuHPieVHOII

DAVID ROSENBERG-NO FREE LUNCH

-It is truly amazing how investors are missing the forest for the trees. A nascent recovery and V-shaped bull market completely premised on rampant government stimulus is going to have a payback. The day of reckoning is coming and sooner than many think.

Fixing the fiscal mess will not be achieved through spending restraint because spending is increasingly being dominated by locked-in mandatory entitlement spending and interest costs on the rapidly rising stock of public debt.

Unlike the key propelling factors behind the onset of the secular bull market in 1982, which were tax reduction, less government and lower interest rates, we will see none of that going forward.

Not that the Fed will be raising rates any time soon, but they can’t exactly be cut like they were in the early and mid 1980s. But taxes are going higher and on the most productive parts of society.

The Bush tax cuts enacted in 2001 and 2002 expire on January 1st, 2011 and according to our friends at Hoisington, this will total $1.5 trillion in the ensuing decade or a 1% hit to GDP annually.

On that date, top marginal tax rates for individuals earning more than 200k and families making over 250k will see their tax rates rise to 39.6% from 35% (the current 15% rate on capital gains and dividends will also go back to 20% and 39.6%,respectively, on Jan 1, 2011).

A huge polarization is already emerging as the President’s policies have allowed 47 percent of households to avoid paying taxes up from 38% two years ago. Since the U.S. government got elected on a platform to redistribute income to the “have nots”, expect that ratio to rise even further in the future.

This is all reminiscent of how the New Deal was ultimately paid for the top marginal tax rate soared in the 1930s (before WWII) from 25% to 80%. Maybe that’s why the next secular bull market didn’t start until 1954. David Rosenberg-Gluskin/Sheff

REAL ESTATE

-Existing U.S. Home Sales Climb to 5.35 Million Rate. Sales of U.S. previously owned homes rose in March for the first time in four months as buyers took advantage of a government tax credit and the weather improved. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid;=auUPgKK88r0Q&pos;=2

-Goldman Real Estate Fund Lost 98 Cents on the Dollar. Whitehall Street International, Goldman Sachs’ international real estate investment fund, has lost almost all of its $1.8 billion of equity following soured property investments in the U.S., Germany and Japan, according to the fund’s estimates.

By the end of 2009, the fund was down to its last $30 million, a paper loss of about 98 cents on the dollar, an annual report sent to investors last month said. The report said that Goldman was Whitehall’s largest investor, with a commitment of $436 million. Last year, Goldman took a loss of $1.76 billion from all its real estate principal investments.

The Whitehall disclosure is the latest in a string of losses reported by bank-owned property funds that relied on debt, and it comes as the Obama administration is seeking to restrict banks’ investment in private equity funds. Read more here-http://www.cnbc.com/id/36591654

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The Goldbugg Report – April 27, 2010
Posted by Worldwide Precious Metals on Tuesday, April 27, 2010

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