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The Goldbugg Report – May 25, 2010

May 25, 2010

-Gold has been rising in all currencies, against bonds and against other commodities. All investors should own bullion in their portfolio. David Chapman

-Silver too has risen on average against all the currencies in double digit annual percentage increases, but with rather more volatility, as proof of this Turk points out the sharp fall silver experienced in 2008 and its subsequent strong recovery in 2009.

-”Silver has more uses than gold and is much more fundamentally bullish than gold”. However, gold has a safe haven appeal which silver does not have. Still, “silver is a highly undervalued commodity and whenever the valuation catches up with fundamentals, silver prices will zoom”. Karnani/Insignia Consultants

-Stock and currency fluctuations rose to the highest in a year this month as Europe pledged about $1 trillion to stop a debt crisis in the region.

GOLD

-Watch World Wide Precious Metals power point presentation on investing in precious metals. Watch video here-http://www.youtube.com/watch?v=qJ_cjvb-eMo&feature=youtu.be

-World Wide Precious Metals Live Metals Quotes. See quotes here-http://www.wwpmc.com/quotes.aspx

-Read Testimonial letters from World Wide Precious Metals clients. Read letters here-http://www.wwpmc.com/testimonials.html

-Follow Lucas Bugg from World Wide Precious Metals on Twitter. Follow Lucas here-http://twitter.com/TheGoldbugg

-Gold has been rising in all currencies, against bonds and against other commodities. All investors should own bullion in their portfolio. David Chapman-Read more here-

http://news.goldseek.com/UnionSecurities/1273852800.php

-The table below illustrates the total destruction of paper money against gold in the last 100 years and shows how many ounces of gold that $1,000 bought at various times. In 1910, $1,000 bought 40 oz of gold at $25 per oz. Today in 2010, $1,000 buys 0.80 oz of gold at $1,230 per oz. This is a massive decline of 98% in the value of the dollar measured in real terms in the last 100 years.

The next significant year is 1971 when Nixon abolished the convertibility of dollars to gold. It was this disastrous decision that opened the floodgates for the credit and money creation that we are experiencing currently.

The dollar is down 97% since then. But even if we take more recent years, the purchasing power of the dollar measured in gold has declined catastrophically. Since the 1999 gold low, the dollar has declined by 80% against gold and since 2002 by 76%. Read more here-http://matterhornassetmanagement.com/2010/05/18/alea-iacta-est/

-$1800-$2000 gold this year and $30 silver James Turk. With a prediction of a $1,800 to $2,000 gold price this year, and $8,000 by 2015, James Turk sticks to his earlier forecasts in presentation at London conference.

In the closing keynote on the first full day of the 2010 World Mining Investment Conference in London yesterday, James Turk, founder of Gold Money, opened by reaffirming his prediction made at the end of last year that gold could reach $8,000 an ounce by 2015, based on past patterns of surges in the gold price.

What may be even more encouraging for the general investor is that his forecast also suggests that the Dow Jones Index would rise to similar levels as the world finally pulls out of recession, with the gold price matching the Dow index number.

When asked at the end of his talk where he felt the gold price would be at the end of the current year, he reckoned around $1,800 to $2,000 and also predicted that the more volatile silver price would achieve a level of $30 this year.

Turk bases his forecasts very much on past performance but even as the prediction may seem extreme, to some, the sting in the tail is that he does not see these levels in the gold price, or Dow, as suggesting real increases in wealth.

Rather, such an increase would serve only as wealth preservation as the purchasing power of most currencies is devalued in a hyper-inflationary environment due to the huge volumes of fiat money being pumped into the market by governments in an attempt to stave off global recession. He affirmed that he felt it was folly for governments to think they could spend their way out of trouble.

Turk pointed out that over the past years gold has been rising at double digit percentage levels against all major currencies – or perhaps rather that all major currencies have been devaluing against gold which he feels represents the only real money.

Silver too has risen on average against all the currencies in double digit annual percentage increases, but with rather more volatility, as proof of this Turk points out the sharp fall silver experienced in 2008 and its subsequent strong recovery in 2009.

He calls gold the ‘canary in the monetary coal mine’ and he agrees with GATA that governments and Central Banks have been trying to limit gold price increases over the years, in the same way that they try to control currency fluctuations.

Turk illustrated his talk with charts and tables illustrating his key points and makes an impressive, but overall worrying, case for gold and silver given that despite the big increases he sees ahead, all he feels this will do is protect asset values, rather than increase them in real terms, which is really bad news for savers!

In other points during the presentation, Turk pointed out that there may be gains to be made in gold stocks as his charts show that the gold stock XAU index looks cheap, but cautions that gold mining stocks are not gold, but investments which brings both upside and downside risk into play in relation to the metal itself.

He also showed that over 60 years, the oil price which has risen sharply in all major currencies, has effectively been absolutely flat in terms of both gold and silver, apart from very minor short term fluctuations, as an indicator of the precious metals’ wealth preservation characteristics. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=105069&sn=Detail&pid=102055

-Gold still glitters. Here’s the deal on gold. When we had the post-Lehman collapse, gold fell from $900 to $720 an ounce but it still managed to outperform other commodities and rise in many other currencies, outside the U.S. dollar.

That post-Lehman collapse phase was a giant margin call where investors sold their winners, like precious metals, and on top that, there was insatiable appetite for dollars from the global banking system caught short of greenbacks. What is happening today is truly fascinating. Gold has broken out to the upside even as the U.S. dollar has done likewise on the back of a renewed flight-to-safety bid.

What this means, of course, is that gold has managed to hit new highs even as, (i) the U.S. dollar has risen, which means gold is breaking out against all major currencies; and, (ii) other industrial commodities, such as oil and copper, have slumped from their recent highs. So what this all means is that gold is no longer being considered as part of a resource complex that is outperforming the segment but is increasingly being viewed as a currency of its own.

Moreover, with the growth rate of fiat currencies globally being met with a skeptical eye by investors, especially now that we know that if the ECB, of all central banks, can engage in debt monetization (those clinging to the belief that this was modeled after the Bundesbank have been clearly duped), the one thing we do know about gold is that most of it is already above ground and that production peaked a decade ago.

In other words, investors have more faith in what the shape and direction of the supply curve for bullion looks like relative to individual country money supply growth. This is why deflation is good for gold the reflationary efforts provide a big boost. Even without the interventionist efforts to monetize the debts, as long as policy rates are near-zero, gold leasing rates will do likewise.

While FDR fixed the dollar price of gold in the 1930s, we know that bullion doubled in Sterling terms during that deflationary cycle. Gold is a hedge against instability of all kinds don’t think for a second that deflation does not engender instability whether it be financial, economic or political. To be sure, gold is also a hedge against inflation but that is going to come much, much later and will be the icing on the cake.

While I am concerned near-term that gold is overbought and could be ripe for a setback; however, unlike the equity market, bullion is in a secular bull market, which means dips, when they occur, are to be bought. Gold can trade down to $1,130 an ounce and none of the trendlines would be broken.

More to the point, secular bull markets usually end in parabolic blowoffs and we are nowhere near that point see the chart below for what long-term trough/peak moves across different asset classes looked like in the past and tell us that gold is now in a bubble.

Not a chance. And, as we have said in the past, if central banks were to ever be compelled to hold the same share of gold in reserves to back up their respective monetary aggregates, the gold price would rise to $3,000 an ounce.

Believe it or not, $3000 an ounce on gold may yet prove to be a conservative forecast. If the gold price to world GDP ratio were to ever scale up to the peak three decades ago, it would imply an ultimate peak of $5,300 an ounce. Even better if the relationship between gold and the M3 money measure where to revert to the 1990 high, gold would move to $5,700 an ounce.

A more cautious projection would merely put gold on the same footing as the CPI, and heading back to the previous peaks in this ratio would suggest $2,300 as the peak in gold only a double from here. Or perhaps the gold price-M1 ratio is one that should be considered and even here gold would go to $3,100 per ounce under the proviso that prior highs get re-established.

For more on this fun-with-figures analysis of how far gold can go, see Why We May See Gold Hit $5,000 on page B2 of the NYT. David Rosenberg-Read more here-http://www.zerohedge.com/article/david-rosenberg-part-2-gold-increasingly-being-viewed-currency-its-own

-Hedge Funds Bet Europe’s $1 Trillion Bailout Won’t Solve Crisis. Kyle Bass, who made $500 million in 2007 on the U.S. subprime collapse, is betting Europe’s debt crisis won’t be solved by the $1 trillion loan package the International Monetary Fund and European Union agreed on last week.

“The EU and the IMF effectively went all-in with a bad hand in the highest stakes game of financial poker ever played with the world,” wrote Bass, head of Dallas-based Hayman Advisors LP, in a letter to clients sent after the bailout was announced.

Bass bought gold last week and took other steps to position the fund for hyperinflation and a “competitive devaluation” by Europe, Japan and the U.S. that he is forecasting, according to the letter. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=a6z32SoJF1RM&pos=3

-Gold to Hit $2,000? Robert McEwen, chairman of U.S. Gold, a gold exploration company, tells CNBC he expects the precious metal to hit $2,000. Watch video here-

http://www.cnbc.com/id/15840232?video=1496256570&play=1 and http://www.cnbc.com/id/37189836?__source=yahoo|headline|quote|text|&par=yahoo

-With Local Gold Inventories Depleted, Panicking German Dealers Stage Run On Krugerrands. Read more here-http://www.zerohedge.com/article/local-gold-inventories-depleted-panicking-german-dealers-stage-run-krugerrands

-China loves gold. Watch video here-http://www.youtube.com/watch?v=SbUvvfJakfI and http://www.youtube.com/watch?v=XCs6QJMoqI4

-Goodman’s Cohen Says Gold May Rise for `Several Decades’. Watch video here-http://www.bloomberg.com/avp/avp.htm?N=av&T=Goodman%27s%20Cohen%20Says%20Gold%20May%20Rise%20for%20%60Several%20Decades%27&clipSRC=mms://media2.bloomberg.com/cache/vd.g.m.uKpc4.asf

-Just how high could gold go? Read more here-http://www.moneyweek.com/blog/just-how-high-could-gold-go-00183.aspx

-Jim Cramer: Six Reasons to Buy Gold Right Now. Watch video here-http://www.cnbc.com//id/37192473

-John Paulson still owns gold. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=105127&sn=Detail&pid=102055

-Ron Paul is bullish on gold. Watch Part 1 here-http://www.youtube.com/watch?v=PnGI9s2xyo0 Part 2 here-http://www.youtube.com/watch?v=AEZfyPHP47c

-Central banks have lost their battle against gold, Sprott tells King World News. Listen here-http://www.gata.org/node/8655

-You Better Read This, Gold & Greece: Not What You Think. Read more here-http://www.321gold.com/editorials/gerbino/gerbino052010.html

-Doubts about gold ETFs broadcast today on two major networks. Read more here-http://www.gata.org/node/8649

-Rick Santelli:: “There’s not enough physical gold.” Watch video here-http://www.youtube.com/watch?v=b6d3Oy6YMCI

-Jeff Nielson: The great debate, Part I. Read more here-http://www.gata.org/node/8660 Part 2 here-http://www.gata.org/node/8662 and http://www.gata.org/node/8659

-NIA believes Meltup is the most important economic documentary ever produced in world history. The Second American Revolution has begun! Please share this documentary with all of your friends and family members immediately! Watch here-http://www.youtube.com/watch?v=eb1n1X0Oqdw

-Gold sales for Indian festival rise 11 per cent. Read more here-http://www.business24-7.ae/companies-markets/commodities/gold-sales-for-indian-festival-rise-11-per-cent-2010-05-19-1.245978

-Wealthy Store Gold, Art Inside Singapore’s Tax-Free ‘Fort Knox’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aTk6rDD7xmA8

-Gulf Glitz: Gold-Dispensing Machine. Abu Dhabi’s top hotel is upping the ante in the race for Gulf glitz by adding a gold-dispensing machine. The ATM-style kiosk in the Emirates Palace monitors the daily gold price and offers small bars up to 10 grams or coins with customised designs. Watch video here-http://news.sky.com/skynews/Home/video/Gulf-Glitz-Gold-Dispensing-Machine-Abu-Dhabis-Top-Hotel/Video/201005215630790?lid=VIDEO_08290_Gulf+Glitz%3A+Gold-Dispensing+Machine&lpos=World+News_3&videoCategory=World+News

SILVER

Gold to silver ratio at 80 to 1 with gold at $1,400 the silver price would be $17.50

Gold to silver ratio at 70 to 1 with gold at $1,400 the silver price would be $20.00

Gold to silver ratio at 60 to 1 with gold at $1,400 the silver price would be $23.33

Gold to silver ratio at 50 to 1 with gold at $1,400 the silver price would be $28.00

Gold to silver ratio at 40 to 1 with gold at $1,400 the silver price would be $35.00

Gold to silver ratio at 30 to 1 with gold at $1,400 the silver price would be $46.67

Gold to silver ratio at 20 to 1 with gold at $1,400 the silver price would be $70.00

Gold to silver ratio at 15 to 1 with gold at $1,400 the silver price would be $93.33

-A new factor in the silver market to be considered is the Indian sub continents increasing appetite for silver. The price sensitive Indians are buying poor man’s gold as they realise it is cheaper than gold. This could potentially lead to a new source of very significant supply which contribute to higher prices and may even result in a floor being put under silver prices above $18 per ounce. Goldcore.com

-Gold’s ‘ugly sister’ gets a second look. Silver sparkles as gold plays fairy godmother. Investors are finally giving gold’s “ugly sister” a second look. Silver’s gains in recent months have significantly outpaced gold’s, with silver climbing around 30% since early February, compared with gold’s nearly 17% price gain.

And some analysts say silver hasn’t yet caught the attention it deserves. Investors “are not taking notice yet it looks like the world is far more focusing on gold,” said Gijsbert Groenewegen, a managing partner at Silver Arrow Capital Management.

That’s fair to say given that silver’s more than two-year high above $19 pales in comparison to gold’s highest-ever settlement price of more than $1,243 an ounce in New York for its most-active futures contract.

Groenewegen pointed out that the average gold-silver ratio is 52, but the ratio is currently around 63, “so silver has some catching up to do.” “While silver has outperformed gold in recent months, it has massively underperformed gold over the long term,” said Mark O’Byrne, a director at GoldCore, an international bullion dealer.

Gold’s nearly 50% above its nominal high in 1980 of $850, while silver remains at less than 60% of its 1980 high of around $50, he said. “Investors continue to view silver as gold’s ugly sister,” he said.

There has been no talk of pension funds, high net worth individuals, or large hedge funds investing in silver as of yet, O’Byrne said. “This will change in the coming months, and this is when silver is likely to really move up in price.”

For now, in the world of precious metals, gold remains the king. “Silver is ‘poor man’s gold’ and will ride on the coattails of gold, but gold is the true hedge against the demise of fiat currency,” said Mark Leibovit, chief market strategist for VRTrader.com.

Even so, it’s silver that’s poised to garner the attention in the months and years to come. “Silver will continue to follow gold moves in the short term and medium term but in the long term, silver will move on its own,” said Chintan Karnani, chief analyst at Insignia Consultants in New Delhi.

Silver’s “quality as money” is already starting to move into the picture as investment demand in the iShares Silver Trust exchange-traded fund (CONSOLIDATED:SLV) alone jumped 200 metric tons over the last seven days, said Julian Phillips, an editor at SilverForecaster.com.

As of Thursday, silver in the trust totaled 9,191.37 metric tons and the trust’s average one-year total returns, as of March 31, stands at 32.81%. “Silver’s price will be driven by physical demand, not by the futures market, so ETFs like the Silver Trust will be good indicators of that demand,” Phillips said.

Demand itself is certainly looking up. “The U.S. Mint and Canadian Mint continue to experience very high demand for silver eagles and silver maple leafs and premiums for these coins are beginning to move up again,” said O’Byrne.

And “even though silver production is rising, investment demand, alongside industrial demand, is growing quickly, eliminating what remains of lack of demand from photography,” Phillips said. He also pointed out that silver is consumed and not recovered from these sources.

So “until newly-mined silver grows in large volumes, we believe that silver demand will outpace production, thus pointing to a better future for silver than for gold,” said Phillips. Many analysts also agree that silver’s run is built to last. Phillips said it’s possible for silver to hit $29 “on this run alone.” There’s also potential feedstock for the rally on the horizon.

Prosecutors’ criminal investigation into J.P. Morgan Chase & Co. includes the company’s activities in the silver market, “where commentators have for years been accusing them of market manipulation,” said Phillips. J.P. Morgan has said that it hasn’t received any notice of a criminal probe.

“If these commentators are right, then J.P. Morgan has a massive short position which will have to be closed,” he said. “If that has to be done with physical silver, the silver price will leap to our target level if not higher and quickly.”

Against that backdrop, the upside for silver could “ultimately be to $100, though short-term I would be grateful to see it above its $22 2008 high,” said VRTrader.com’s Leibovit. Either way, “the waiting may be over and silver’s strength is likely to last for two or three years,” O’Byrne said.

But silver investors need to have patience because when silver prices fall, “it takes a few months to start a big and speedy bull run,” said Insignia Consultants’ Karnani, noting that whenever gold and silver prices fall together, silver has a tendency of falling more than gold.

“Silver has more uses than gold and is much more fundamentally bullish than gold,” he said. However, gold has a safe haven appeal which silver does not have, he said. Still, “silver is a highly undervalued commodity and whenever the valuation catches up with fundamentals, silver prices will zoom,” he said.

Karnani voiced confidence that silver will test $24 in 2010 and $30 in 2011. “For a long-term investor (3-4 years), silver is an attractive investment even at the current prices,” he said. Read more here-http://www.marketwatch.com/story/story/print?guid=14DE85B4-C99B-4E69-B5DC-9B4E5FFA7EF0

-Silver Price Projection: $1000 per Ounce This Decade. Read more here-http://www.shtfplan.com/precious-metals/silver-price-projection-1000-per-ounce-this-decade_05152010

-Silver About To Break $20 and Looking Better Than Gold. Read more here-http://news.silverseek.com/SilverSeek/1273936656.php

-Silver Investors Should Diversify, Too. Read more here-http://news.silverseek.com/SilverSeek/1274207186.php

-Sell in Early May and Lose On Average $1 per Ounce of Silver Each Year. Read more here-http://www.kitco.com/ind/Radomski/may142010.html

-Big commercial shorts cut silver positions, Butler tells King World News. Listen here-http://www.gata.org/node/8651

-Ted Butler: An impressive result. Read more here-http://www.gata.org/node/8647

-Gene Arensberg: Comex large commercials break ranks. Read more here-http://www.gata.org/node/8653

-Paper currencies ‘on last legs,’ Tocqueville’s Hathaway tells King World News. Listen here-http://www.gata.org/node/8656

-GGR: Large commercials backing off from shorting precious metals? Read more here-http://www.gata.org/node/8648

-CFTC whistleblower believes crash was attempted murder. Read more here-http://www.gata.org/node/8657

-Sears, Kmart to offer customers cash for their gold, silver jewellery. Read more here-http://www.financialpost.com/news-sectors/mining/story.html?id=3040110

-What may be America’s oldest silver dollar has become the world’s most expensive coin, with its owner saying it changed hands in a private transaction between coin collectors for nearly $8 million.

Steven L. Contursi, who has owned the mint-condition 1794 Liberty dollar for the past seven years, confirmed Thursday that he sold it to the Cardinal Collection Educational Foundation of Sunnyvale for $7.85 million.

The previous record price paid for a coin was $7.59 million for a U.S.-minted 1933 $20 gold piece, according to the American Numismatic Association. The U.S. began producing silver dollars in 1794, and this particular one remains in near-perfect condition 216 years later. Read more here-http://southflorida.sun-sentinel.com/news/custom/fringe/sns-ap-us-odd-pricey-dollar,0,2210306.story

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Chart of the week: Why The Gold Bull Market Is Just Getting Started. In his latest note, David Rosenberg makes the case that the bull run can continue in part by comparing it to other bull runs.

As you can see below, gold’s huge rally isn’t anything compared to what other markets have seen. If you think there’s a “bubble” now, you’re not even in the right ballpark, he argues.

His call is for $3,000 and argues that if gold were to reach its old “price to world GDP peak” it could go to $5300. Read more here-http://www.businessinsider.com/chart-of-the-day-putting-the-gold-rally-in-context-with-prior-secular-bull-markets-2010-5

Source: chartoftheday.com

-Chart of the week: The table below shows debt as a percentage of GDP for various OECD countries. The official debts (in red) are massive and unlikely to ever be repaid in real money. Total debts (grey bars) include unfunded liabilities such as pensions and health care. Spain has the lowest total debt to GDP of 250%.

Germany and the UK have around 400%, the US over 500% and Greece over 800% debt to GDP. These figures are absolutely astronomical and prove that most governments in the world will be totally incapable of repaying their debts or funding the pensions or medical care which they have committed to.

It doesn’t matter however much governments cut expenditure or raise taxes, all these countries are insolvent and nothing can save them. Read more here-http://matterhornassetmanagement.com/2010/05/18/alea-iacta-est/

-Chart of the week: Why Getting Out Of Debt Won’t Be So Easy This Time Around. Sovereign debt concerns are ripping apart the eurozone at the moment, but member states may be able to take inspiration from the previous success stories of the U.S. and UK, according to this chart from Niall Ferguson’s presentation on Sovereign debt.

Both the U.S. and UK were able to face up to their debt challenges and grow out of their debt crisis through the last century. But they also could take advantage of a period of global stability and high private and public growth.

Unless you envision a major global boom doubtful given demographic differences since then the only way out is austerity. Read more here-http://www.businessinsider.com/chart-of-the-day-uk-and-us-debt–2010-5

Source: chartoftheday.com

-Chart of the week: Why the depression is ongoing. There are classic signs indeed that the recession in the U.S. ended last summer output, sales, etc. But the depression is ongoing and the reason we say that is because real personal income, excluding handouts from the government, has barely budged.

In fact, real organic personal income is nearly $500 billion lower now than it was at the peak 16 months ago and this has never occurred before coming out of any technical recession. It is a depression, as the chart below attests that is the trendline for real household incomes, until the government comes in to top them off with handouts, subsidies and extended jobless benefits.

The share of U.S. personal income being derived from Uncle Sam’s generosity has risen above 18% for the first time ever. David Rosenberg-Gluskin/Sheff-Read more here-http://www.zerohedge.com/article/david-rosenberg-part-1-why-depression-ongoing

-Technicals run the short term, Fundamentals run the long term. Insurance (Gold) is not a day to day item. Jim Sinclair-Jsmineset.com

-Main Street is in the hands of a roulette wheel and it is not going to stop. The Western world is toast and there is no way out of the clutches of financiers that own Washington. China is the shining example of how to stop white collar crime make it a capital offense. Jim Sinclair-Jsmineset.com

-Richard Russell said, in a depression nobody really wins the winners are those who lose the least. I’m starting to think more of capital survival than capital gains, so when things do hit bottom, we’ll have the resources to buy great assets cheap and start accumulating a real fortune in a sound, sustainable recovery. Because there will be one. At some point. Doug Casey-Read more here-

http://news.goldseek.com/GoldSeek/1273817340.php and http://www.caseyresearch.com/editorial/3395?ppref=GLD178ED0510A

-The Dow is at the same level it was 10 years ago. View chart here-http://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1273867200000&chddm=997050&chls=IntervalBasedLine&q=INDEXDJX:.DJI&ntsp=0

-World markets are dysfunctional and stability doesn’t exist. Man set distortions and economic imbalances – a system that functions without regulation, derivatives and unbridled and unfettered speculation, surrounds us.

Leveraged speculation dominates the markets, particularly debt instruments. Unfortunately, this speculation is fostered by government and central banks perpetual willingness to bail out everyone in banking and finance just to keep the system afloat. Bob Chapman-Read more here-http://news.goldseek.com/InternationalForecaster/1274280672.php

-”China is going to blow up. The amount of currency the Chinese government has created to keep going is a potential time bomb. And they’re sitting on a potential US$2 trillion in worthless paper.” Doug Casey

-While I am concerned near-term that gold is overbought and could be ripe for a setback; however, unlike the equity market, bullion is in a secular bull market, which means dips, when they occur, are to be bought. David Rosenberg-Gluskin/Sheff

-Shiller P/E ratio pointing to a big correction. In the past 130 years, whenever the Graham/Dodd/Shiller normalized P/E ratio goes above 20.6x (it is 21x today), the market experiences a significant correction a correction of 31% on average over the next 16 months. It never fails. David Rosenberg-Gluskin/Sheff

-The S&P 500 is no higher today than it was on November 16. If you managed to get out at last month’s nearby high then God bless you. But through the interim peaks and valleys, the stock market has done nothing for six months (and mostly everyone still seems to believe we are in the throes of a new bull market!).

In Canada, the S&P/TSX index is actually practically unchanged since September 16 contemplate that for a second. This has been a meat grinder now for a good eight months north of the border.

You would have been better off just being long volatility, bonds and gold (a strategy, by the way, that has also worked for the past dozen years, since Alan Greenspan took the U.S. along the boom-bust path that typically follows periods of excessive policy ease and recurring financial bailouts). David Rosenberg-Gluskin/Sheff

-Stocks to Tumble Another 20%, Cash the Safest Place: Roubini. Read more here-http://www.cnbc.com/id/37259541

-U.S. Mutual Fund Investors Pull $14 Billion After Flash Crash. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=acD0zbECWu.s

-Martin Armstrong: The “Flash Crash” Was A Waterfall Event Like The One That Preceded The Fall Of Rome. Read more here-http://www.businessinsider.com/martin-armstrong-the-flash-crash-was-a-waterfall-event-like-the-one-that-preceeded-the-fall-of-rome-2010-5 and http://www.businessinsider.com/martin-armstrong-the-flash-crash-was-a-waterfall-event-like-the-one-that-preceeded-the-fall-of-rome-2010-5#this-is-what-a-market-waterfall-looks-like-1

-Big fiscal restraint coming. We had thought that 2011 was going to be a watershed year with the end of the Bush tax cuts and the onset of the Obama tax hikes draining at least two percentage points from GDP growth next year. But based on what a slate of cash-strapped State governments are about to do to close their huge fiscal gaps, we may not have to wait that long.

According to the USA Today, Arizona is on the precipice of hiking its sales rate from 5.6% to 6.6%; Kansas is set to raise its sales tax a full point too on July 1, to 6.3%; Alabama, the same move and a half dozen states as well. David Rosenberg-Gluskin/Sheff

-Scary Math from David Rosenberg-Gluskin/Sheff

1 in every 10 American homeowners missed a mortgage payment in Q1 (a record)

1 in 6 Americans are either unemployed or underemployed

Over 4 in 10 unemployed Americans have been out of work for at least six months.

1 in 4 Americans with a mortgage have negative equity in their homes.

1 in 10 Americans believe their income will rise in the next six months.

1 in 5 Americans see business conditions improving in the next six months.

1 in 50 Americans plan to buy a home in the next six months.

1 in 8 Americans believe that current government policy is actually helping the economy.

1 in 10 American small businesses have a job opening.

1 in 10 American’s credit card usage is being written off (a record).

There are 5 unemployed workers competing for every job opening (hence downward pressure on wage growth).

-CFO Thomas W. Schoewe, went on the record and said “more than ever, our customers are living paycheck to paycheck. They’re very concerned about their own personal finances.” David Rosenberg-Gluskin/Sheff

-Why Wal-Mart’s sales should have everyone worried. When Wal-Mart, an economic bellwether, notes that customers can’t afford the gas to get to the stores and that they’re increasingly using food stamps when they get there, things are bad. Read more here-http://money.cnn.com/2010/05/20/news/economy/consumer_retail_walmart.fortune/index.htm

-Why state pension funds may need a $1 trillion bailout. Read more here-http://money.cnn.com/2010/05/20/news/economy/state_pension_fund_crisis/index.htm

-Shockingly, Arnold Schwarzenegger Compares California To Greece, Ireland, And Spain. Read more here-http://www.businessinsider.com/arnold-schwarzenegger-compares-california-to-greece-2010-5

-Calif pension fund asks state for additional $600M. California pension fund, facing large losses, tells struggling state it needs an extra $600M. Read more here-http://finance.yahoo.com/news/Calif-pension-fund-asks-state-apf-4082852351.html?x=0&sec=topStories&pos=3&asset=e82f9073363b73a971493bb04ecdda60&ccode=mp

-Gates’s Dad Says Rich ‘Aren’t Paying Enough’ in Taxes. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a4YNFBDAXnKI

-Companies Dodge $60 Billion in Taxes Even Tea Party Condemns. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=a7td7E8_4EeI

-Morgan Stanley’s Doomed Baldwin CDOs Thwarted ‘Natural Process’. In June 2006, a year before the subprime mortgage market collapsed, Morgan Stanley created a cluster of investments doomed to fail even if default rates stayed low then bet against its concoction. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=ayj.MPUrLLE8

-Conspiracy of Banks Rigging States Came With Crash. A telephone call between a financial adviser in Beverly Hills and a trader in New York was all it took to fleece taxpayers on a water and sewer financing deal in West Virginia. The secret conversation was part of a conspiracy stretching across the U.S. by Wall Street banks in the $2.8 trillion municipal bond market. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=axH24KWxjVDE

-College Grads Flood U.S. Labor Market With Diminished Prospects. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a8f9A4GYLECE

-Pimco’s Gross Raises $1.6 Million for Doctor Fund in Stamp Sale. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ardc3JO_PEBI

-Mobile Phones, Cancer Not Firmly Linked in Study. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=ai4bnSIkWHFg

-Apple’s iPhone replaces BlackBerry for some bankers. Read more here-http://www.reuters.com/article/idUSTRE64G0SI20100517

-Google rolls out ‘the future of television’. Read more here-http://scitech.blogs.cnn.com/2010/05/20/google-rolls-out-the-future-of-television/?hpt=T2

-Found: genes that let you live to 100. Read more here-http://www.timesonline.co.uk/tol/news/science/biology_evolution/article7127753.ece

-Research on Light Brightens Outlook for Sleep Disorder Therapy. Read more here-http://www.bloomberg.com/apps/news?pid=20601124&sid=aCQNEQsMgoow and http://www.cnn.com/2010/TECH/05/13/sleep.gadgets.ipad/index.html?hpt=C1

-Dads Get Postpartum Depression Just Like Moms, Study Finds. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aTmIqo2sdLks

-Movie depicts seamy life of Facebook boss. Read more here-http://www.timesonline.co.uk/tol/news/uk/article7127721.ece

-Greed is going to be good at the box office! Wall Street: Money Never Sleeps wows at Cannes. Read more here-http://www.dailymail.co.uk/tvshowbiz/reviews/article-1278374/Cannes-2010-Wall-Street-Money-Never-Sleeps-review.html and http://www.bloomberg.com/apps/news?pid=20601088&sid=az5ZlVRflXEE

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

-The Sciens Coloured Diamond Fund formed this month. A London hedge fund that invests in coloured diamonds has formed a joint venture with U.S. giant Sciens Capital Management and aims to tap into China’s potentially huge luxury market.

Sciens Capital is one of the largest U.S. alternative hedge funds those that invest in assets other than stocks and bonds and it has more than $6 billion under management. It bought the hedge fund business of Swiss-based Partners Group earlier this year.

“For us, a small fund, to attract institutional investors, we looked to Sciens Capital to help create a strong platform for us to develop and grow,” Philip Baldwin, managing director of the newly formed Sciens Coloured Diamond Fund, told Reuters in an interview.

Its first target will be to have $25 million under management and to grow to $150 million, he said. Baldwin and co-managing director Mahyar Makhzani, who previously worked for jewellery house Bulgari, set up their Codiam Fund, which has now become the new venture, four days before the collapse of Lehman Brothers in 2008.

Makhzani and Baldwin expect diamonds to be used as a hedge against potential inflation, seeing an opportunity from the depreciation of the euro due to Greece’s sovereign debt crisis. He said there was liquidity in the market that was “always looking for alternatives, something which is not traditional, to invest to hedge against the inflation,” Makhzani said.

The fund invests in physical diamonds, of more than one carat, in colours such as red, purple, green, pink, blue, orange and yellow, which are sourced through the Kimberley Process to certify the stones have not come from conflict zones.

It uses short term arbitrage trading and buy-and-hold strategies for long term appreciation. Another strategy is to improve the value of stones by such means as finding a rare matching pair in the same colour, size and shape. The stones are eventually sold to buyers, such as jewellers and individual collectors. The fund’s sales channels include luxury goods retailer Asprey.

There is no price index or exchange for coloured diamond and each stone carries a unique price depending on shade, cut and carat size. The most transparent prices emerge at auctions. The fund takes advantage of arbitrage opportunities that arise from the opacity and inefficiency in pricing.

White diamond supply is relatively ample and many end up in engagement rings in the mass market. About 40 percent of rough diamond supply is controlled by the largest producer, De Beers. Rarity makes coloured diamonds distinct from white diamonds and they often have a big price tag.

The most expensive stone Makhzani and Baldwin have sold was a $3.4 million green diamond. “We cannot be specific about the carat or the client but it is where our business is coming from. Everybody today talks about the Chinese market. The Chinese market is growing,” Makhzani said.

The United States, however, remains the largest jewellery market in the world. The fund’s market will include Europe, the Middle East, Russia and other areas as coloured diamonds have global value, Makhzani and Baldwin said. Read more here-http://www.forexyard.com/en/news/London-funds-join-in-coloured-diamond-venture-2010-05-19T163809Z-INTERVIEW-US

-Mining Profit Tax ‘Contagion’ Set to Spread From Australia. Australia’s planned 40 percent tax on mining profits has set a benchmark for other countries weighing higher levies, reducing earnings forecasts for BHP Billiton Ltd. and Rio Tinto Group and the attraction of mining stocks.

“It could create what the miners are now describing at a global level as a type of tax contagion,” said Tom Price, commodities analyst with UBS AG in Sydney, in an interview. The Australian tax plan is “global financial markets suicide,” according to Charlie Aitken, the executive director of Southern Cross Equities Ltd.

Mining companies’ earnings may be cut by almost a third when the tax starts in 2012, Moody’s Investors Services said this week. The tax would be broadly credit negative for the sector and raise uncertainty for some companies over the short to-medium term, Moody’s said this month. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEVmLz1wyaGw

RICHARD RUSSELL-STOCK MARKET AT RISK OF A MAJOR CRASH

-‘Major Crash’ Likely If Stocks Break May 7 Lows, Russell Says. Investors should sell U.S. stocks because the market is at risk of a “major crash,” Richard Russell, editor of the Dow Theory Letters newsletter, said in a note to subscribers today.

The decline would follow should the Dow Jones Industrial Average and Dow Jones Transportation Average fall below their May 7 levels, he said. “If I read the stock market correctly, it’s telling me that there is a surprise ahead,” Russell wrote. “And that surprise will be a reversal to the downside for the economy, plus a collection of other troubles ahead.”

The market started showing signs of deterioration in early April, including a shrinking number of stocks reaching 52-week highs and falling stocks outnumbering rising ones, he said. Russell, 85, has published Dow Theory Letters every three weeks since 1958 and posts daily market commentaries on his website.

Dow Theory, which stems from observations made by Wall Street Journal founder Charles Dow during the late 1800s, holds that moves by the transportation average must be “confirmed” by the industrial measure, and vice versa, to be sustained.

The Dow Jones Industrial Average fell 6.9 percent during the four days that ended May 7, sinking to 10,380.43, the lowest level since Feb. 26. The transportation gauge closed at 4,298.12, down 11 percent in four days. Downgrades of Greece, Spain and Portugal helped trigger the decline as the prospect of a sovereign default in Europe undermined investor confidence.

“If the two averages violate their May 7 lows, I see a major crash as the outcome,” Russell wrote. With the exception of gold companies, Russell advised readers to “get out of stocks now, and I don’t give a damn whether you have paper losses or paper profits.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aQgsgpaKhdJ0

-Dow Theorist Richard Russell: Sell Everything, You Won’t Recognize America By The End Of The Year. Read more here-http://www.businessinsider.com/dow-theorist-richard-russell-sell-everything-liquid-you-wont-recognize-america-by-the-end-of-the-year-2010-5 and http://www.321gold.com/editorials/russell/russell051810.html

U.S. DEFICIT-DEBT CRISIS

-Ferguson: Debt Has Taken Down Empires Before, There Is No Reason Why It Won’t Happen Again. Read more here-http://www.businessinsider.com/niall-ferguson-empire-2010-5

-Volcker Says Time Is Running Out for U.S. to Tackle Fiscal Woes. Read more here-http://www.bloomberg.com/apps/news?pid=20601068&sid=a0.gpCNp2z8w

-US faces one of biggest budget crunches in world IMF. Read more here-http://blogs.telegraph.co.uk/finance/edmundconway/100005702/us-faces-one-of-biggest-budget-crunches-in-western-world-imf/

-IMF Says Rising Public Debt Risk ‘Cannot Be Ignored’. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a89PYcKILsM8

-US faces inflation or default. There are only two solutions to the sovereign debt crisis raise taxes or cut spending but the political gridlock may prevent either from happening. Read more here-

http://gulfnews.com/business/opinion/us-faces-inflation-or-default-1.622397

-Roubini Says U.S. May Face Bond ‘Vigilantes’ Within Three Years. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=aXv.FAdyLJDs

-The second debt storm. Who will bail out the countries that bailed out the world’s corporations? Read more here-http://www.marketwatch.com/story/story/print?guid=9DB111D2-956A-4690-878C-23198DC08634

PROBLEM BANK LIST JUMPS TO 775-FOUR MORE U.S. BANKS FAIL 72 FOR THE YEAR

-The government’s list of troubled banks climbed to its highest level since 1992 in the first quarter, although the pace of growth moderated, according to a government report published Thursday.

The numbers, published as part of a broader survey on the nation’s banking system by the Federal Deposit Insurance Corporation, revealed that the number of banks at risk of failing climbed to 775 during the first quarter. Read more here-http://money.cnn.com/2010/05/20/news/companies/fdic_list/index.htm

-Regulators on Friday shut down Midwest Bank and Trust Company in Elmwood Park, Ill., as well as three smaller banks in Georgia, Michigan and Missouri to bring the number of U.S. bank failures this year to 72. Read more here-http://www.google.com/hostednews/ap/article/ALeqM5gg9RS-ZvzlfzrcnujKaEDMXrYyYgD9FMUC0G0

-Midwest Banc’s Lender in Illinois Shut After Taking TARP Funds. Midwest Banc Holdings Inc., recipient of $84.8 million in bailout funds from the Troubled Asset Relief Program, had its Illinois lender seized by regulators as the count of failed U.S. banks this year rose to 72.

Midwest Bank and Trust, with $3.17 billion in assets and 23 retail branches, was closed yesterday by a state regulator, according to a statement on the Federal Deposit Insurance Corp. website. Firstmerit Bank of Akron, Ohio, assumed all the $2.42 billion in deposits. The U.S. Treasury Department’s stake is made up of convertible preferred shares, Midwest said in a statement on March 2.

Three other banks were seized yesterday, in Georgia, Michigan and Missouri. The closings cost the FDIC’s deposit- insurance fund a total of $301.7 million, the agency said. U.S. banks are collapsing amid losses on residential and commercial real estate loans, and the FDIC’s list of “problem” lenders is the longest since 1992, at 702.

FDIC Chairman Sheila Bair has said she expects failures to slow, yet still exceed last year’s total of 140. Read more here-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=arbGcjwghr20

EUROPE IN CRISIS

-Trichet: economy in deepest crisis since WWII. The President of the European Central Bank was quoted Saturday as saying that he still sees Europe’s economy in its deepest crisis since World War II, or even World War I. Read more here-http://finance.yahoo.com/news/Trichet-economy-in-deepest-apf-220968396.html?x=0&sec=topStories&pos=3&asset=&ccode

-Behind the drama in Europe lies a global crisis. The euro is under threat along with our entire free-market system, warns Edmund Conway. Read more here-http://www.telegraph.co.uk/finance/comment/edmundconway/7742164/Behind-the-drama-in-Europe-lies-a-global-crisis.html

-Sovereign Crisis Spurs ‘Lehman II’ Concern in Europe. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a61zOhEiesmk

-Greek Crisis Is ‘Tip of Iceberg’ in Euro Region, Roubini Says. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aC7W4JwWdbkM&pos=4

-Greece Considering Legal Action Against U.S. Banks for Crisis. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aDxF1YfeViEc

-‘Mummy’ Merkel battered as Germans lose faith in EU. After bailing out Greece and now the euro, Germany is fed up with being Europe’s paymaster. Read more here-http://www.timesonline.co.uk/tol/news/world/europe/article7127621.ece

-Euro rescue package ‘just buys time’: Merkel. Read more here-http://www.breitbart.com/article.php?id=CNG.cdc149211d17e9292605abc47c6a574f.721&show_article=1

-German Finance Minister: Markets Out of Control. Read more here-http://www.cnbc.com/id/37250960

-German Households Are More Indebted Than Greeks: Chart of Day. Read more here-http://www.bloomberg.com/apps/news?pid=20601109&sid=awnKMEx2eVqE

-‘There’s No Money Left,’ U.K. Minister Learns. Arriving for work at the U.K. Treasury last week, the incoming chief secretary, David Laws, found a note from his predecessor, Liam Byrne, offering advice on the job. “Dear Chief Secretary, I’m afraid to tell you there’s no money left,” Laws cited it as saying.

“Which was honest,” Laws, whose position is the No. 2 in the Treasury after the chancellor of the exchequer, told a press conference in London today. “But slightly less than I was expecting.” Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=a1cANRtpiiHw

GOLDMAN SACHS HANDS CLIENTS LOSSES

-Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse. Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday.

Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.

The struggles for analysts at Goldman Sachs, which is fighting a fraud lawsuit from U.S. regulators who accuse the company of misleading investors in a mortgage-linked security, show the difficulty of predicting market movements as widening budget deficits, a fragile global economic recovery and tighter financial regulations increase volatility.

Stock and currency fluctuations rose to the highest in a year this month as Europe pledged about $1 trillion to stop a debt crisis in the region. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aF5tV7uvY0FU&pos=4

REAL ESTATE

-One in 7 US homeowners paying late or in foreclosure. Read more here-http://www.reuters.com/article/idUSN1923337220100519?source=patrick.net

-Mortgage Foreclosures Hit Record as Job Losses Strain Budgets. A record share of U.S. mortgages were in foreclosure in the first quarter as job losses caused homebuyers to fall behind on monthly payments, thwarting government efforts to stem property seizures.

The inventory of homes in foreclosure rose to 4.63 percent from 4.58 percent in the fourth quarter, the Mortgage Bankers Association said in a report today. The combined share of foreclosures and mortgage delinquencies was 14 percent, or about one in every seven U.S. mortgages.

Job losses have strained budgets, making it difficult for households to pay monthly bills, said Jay Brinkmann, the Washington-based trade group’s chief economist. U.S. unemployment in the second half of 2009 when people now in foreclosure would have first fallen behind on their payments reached the highest levels since 1983, according to the Bureau of Labor Statistics.

The unemployment rate declined to 9.7 percent in the first quarter of this year from 10 percent in the last three months of 2009. “The unemployment rate is the major factor driving the numbers,” Brinkmann said today in an interview. “We’re seeing the states with the biggest unemployment problem, like Ohio, Illinois and Michigan, showing the biggest increases.”

Ten percent of U.S. mortgage holders had payments 30 days or more overdue, on a seasonally adjusted basis, up from 9.47 percent in the previous quarter, Brinkmann said. On a non- adjusted basis, the rate fell to 9.38 percent from 10 percent, possibly an early sign of improvement as job losses abated, he said. Read more here-

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahBIgAgVMwdg&pos=6 and http://money.cnn.com/2010/05/19/real_estate/quarterly_delinquency_report/index.htm

-”Strategic defaults” are on the rise as more borrowers who are underwater on their home loans decide it’s not worth it to stay current on their payments each month. That trend could have repercussions for the housing market, and for borrowers, in the future.

Strategic defaults are when borrowers who owe more on their homes than they’re currently worth choose to stop paying their mortgage but continue to meet other financial obligations, according to a definition by Morgan Stanley in a research report on the topic

In other words, these homeowners neglect their monthly principal and interest payments, but still pay other bills on time, including credit cards and auto loans. The Morgan Stanley report estimates that 12% of mortgage defaults in February were strategic. Other reports estimate an even higher proportion of this type of loan default.

Growing social acceptance of this behavior could have ramifications not only for personal credit histories and the health of neighborhoods, but also for the future of mortgage lending, according to those studying the issue.

For one, there’s a contagion effect: As more people watch their friends or neighbors choose to default, the more it becomes a viable option for homeowners who may otherwise wait years just to return to a positive equity position in their properties, said Sam Khater, senior economist for CoreLogic, a provider of consumer, financial and property information.

The volume of foreclosures on the market today is also chipping away at the stigma that used to come with defaulting on a home loan. “If you know someone who has defaulted strategically, you’re more likely to declare you’re willing to do it,” said Luigi Zingales, professor of entrepreneurship and finance at the University of Chicago’s Booth School of Business.

In areas where home prices are severely depressed, social acceptance of this decision could lead to pockets “where strategic default becomes the norm, versus the exception,” Zingales said. But look even farther in the future, and the repercussions of substantial strategic defaults could have a larger-scale effect.

“If it really does become a legitimate problem, the implications are pretty dramatic for anyone that wants to buy a home in the future,” said Rick Sharga, senior vice president of RealtyTrac, an online marketplace of foreclosure properties. “The lenders would have to build this into their risk models with either larger down payments or higher interest rates.” Read more here-

http://www.marketwatch.com/story/story/print?guid=7A6F64F7-7350-46A8-8C61-19135A514CF4&source=patrick.net

-Detroit Shrinks Itself, Historic Homes and All. Wrecking crews are preparing to tear down a landmark 5,000-square-foot house in the posh neighborhood of Palmer Woods in the coming weeks, a sign that Detroit is finally getting serious about razing thousands of vacant and abandoned structures across the city.

In leveling 1860 Balmoral Drive, the boyhood home of one-time presidential candidate and former Massachusetts Gov. Mitt Romney, Detroit is losing a small piece of its history. But the project is part of a demolition effort that is just now gaining momentum and could help define the city’s future.

Detroit is finally chipping away at a glut of abandoned homes that has been piling up for decades, and intends to take advantage of warm weather and new federal funding to demolish some 3,000 buildings by the end of September. Read more here-http://online.wsj.com/article/SB10001424052748703950804575242433435338728.html?mod=rss_US_News

-Why The ‘Second Housing Boom’ Is Nothing But Huckster Hype. Read more here-http://www.businessinsider.com/the-second-housing-boom-is-nothing-but-huckster-hype-2010-5?source=patrick.net

-Building Is Booming in a City of Empty Houses. In a plastic tent under a glorious desert sky, Richard Lee preached the gospel of the second chance. The chance to make money on the next housing boom “is like it’s never been,” Mr. Lee, a real estate promoter, assured a crowd of agents, investors and bankers. “We’re going to come back like you’ve never seen us before.”

Home prices in Las Vegas are down by 60 percent from 2006 in one of the steepest descents in modern times. There are 9,517 spanking new houses sitting empty. An additional 5,600 homes were repossessed by lenders in the first three months of this year and could soon be for sale.

Yet builders here are putting up 1,100 homes, and they are frantically buying lots for even more. Las Vegas is trying to recover by building what it does not need. It is an unlikely pattern being repeated in many of the areas where the housing crash was most severe. Read more here-http://www.nytimes.com/2010/05/16/business/16builder.html?hp=&pagewanted=print

-China Home Sales Down 50% In A Month. Read more here-http://www.zerohedge.com/article/guest-post-china-home-sales-down-50-month

-China’s property moves leave buyers in limbo. Read more here-http://www.breitbart.com/article.php?id=CNG.a29ca7c2ce6d834357d52147d21f41ee.2a1&show_article=1

GEOPOLITICAL NEWS

-US Begins Massive Military Build Up Around Iran, Sending Up To 4 New Carrier Groups In Region. Read more here-http://www.zerohedge.com/article/us-begins-massive-military-build-around-iran-sending-4-new-carrier-groups-region

-Clinton Says UN Powers Agree on Iran Sanctions Draft. Secretary of State Hillary Clinton said Russia, China, the U.S. and the other permanent members of the United Nations Security Council have reached a draft accord on sanctions designed to pressure Iran over its nuclear program.

The measure would bolster an arms embargo, enhance authority to seize Iranian cargo suspected of ties to nuclear or missile programs, restrict financial transactions and impose travel bans and asset freezes on Iran’s Revolutionary Guard Corps, said two UN diplomats who asked not to be identified. Read more here-http://www.bloomberg.com/apps/news?pid=20601087&sid=aYSKsbHfA06o&pos=8

-Iran says can destroy Israel in week. Ahmadinejad’s chief of staff says if Israel attacks, ‘Zionists will have no longer than week to live.’ Read more here-http://www.ynetnews.com/articles/0,7340,L-3891781,00.html

-Israel plays wargame assuming Iran has nuclear bomb. Read more here-http://www.alertnet.org/thenews/newsdesk/LDE64G0BQ.htm

-South Korea Demands ‘Stern’ Reply to North’s Attack. South Korea demanded a “stern” global response to the findings of an international panel that North Korea torpedoed one of its warships, killing 46 sailors. Read more here-http://www.bloomberg.com/apps/news?pid=20601110&sid=awNKOFirOfxk

-NKorea warns of war if punished for ship sinking. Read more here-http://apnews.myway.com/article/20100520/D9FQGC2G0.html and http://www.cnn.com/2010/WORLD/asiapcf/05/20/south.korea.sunken.ship/index.html?hpt=T2

© 2012, Worldwide Precious Metals Canada Ltd.
www.wwpmc.com

The Goldbugg Report – May 25, 2010
Posted by Worldwide Precious Metals on Tuesday, May 25, 2010

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