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The Goldbugg Report – July 13th, 2010

July 13, 2010

-The U.S. turned 234 years old Sunday, and yet over half of the nation’s money supply was created since Helicopter Ben took over the flight controls four years ago. No wonder gold is in a full fledged bull market.

-Gold has corrected to the 50-day moving average in recent weeks, which in the past has been a terrific entry point for the past six months, each low has been higher and each high has been higher too. Nice upward channel that is to be respected and to be bought. David Rosenberg-

-The wealthiest people will be those who bought silver today and indeed, while gold’s meteoric rise still has room to run, silver’s run is yet to get started. As such, it certainly appears evident that now is the time to buy all things silver…

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 and http://www.youtube.com/user/thegoldbugg

-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

-The U.S. turned 234 years old Sunday, and yet over half of the nation’s money supply was created since Helicopter Ben took over the flight controls four years ago. No wonder gold is in a full fledged bull market. The annual output of gold has declined 12% in the past decade while the marginal cost has more than doubled, to $500, according to David Hale.

Moreover, David points out in his recent report that since 1900, more than 80% of the world’s proven reserves have ready been mined. The marginal cost of pressing on Dr. Bernanke’s printing machine is basically zero, and, the prospects of a re-expansion of QE by the Fed as double-dip risks rise with each and every passing data-point are rather high.

Gold has corrected to the 50-day moving average in recent weeks, which in the past has been a terrific entry point for the past six months, each low has been higher and each high has been higher too. Nice upward channel that is to be respected and to be bought. David Rosenberg-Gluskin/Sheff

-Technicals have taken over the gold complex but the charts are still so firm that the price could correct another $50/oz from here and it still would not violate any of the bullish long-term trend lines. Nothing moves in a straight line whether it is in a secular bull market or not (and gold is). One of the current hurtles for gold is that central banks are monetizing their holdings through sales to the BIS (see page C14 of the WSJ on these latest “bank swap” arrangements). David Rosenberg-Gluskin/Sheff

-The gold market continues to digest the news of the 346 tonne gold swap with the BIS. There is a lot of uncertainty regarding the news which has not been confirmed or clarified by the BIS or the IMF. The Wall Street Journal said the swap was made by central banks while another respected financial newspaper said the sale was by commercial banks (see News below).

Speculation is that it was by central banks and may have been by one or a combination of three of the PIGS Portugal, Spain and or Greece. The news may have led to weakness in the gold market Tuesday and Wednesday as it created uncertainty and jittery traders may have sold until clarity is gained.

A central bank or central banks having to resort to swap their best performing monetary asset in order to raise funds is a further sign of the distressed state of the international financial and monetary system. The fact that the central banks swapped the gold rather than sold it is also an indication of their favourable view of gold and a sign that central banks are increasingly unlikely to liquidate gold holdings. Indeed, they look set to become net buyers of gold again in 2010.

While 346 metric tonnes of gold sounds like a lot, it is actually only worth some $13bn at current prices miniscule compared to wholesale money markets and to foreign exchange reserves of creditor nations such as India, Russia and China. The news has created uncertainty which may lead to further short term weakness but it is bullish for gold long term.

The role of gold itself as an important safe haven currency within international currency reserves and within the monetary system is being increasingly appreciated. Indeed it is not beyond the realms of possibility that we may see gold sharply revalued in the coming months (as was done by Roosevelt in the 1930s) in order to stave off a deflationary depression and provide stability to the international monetary system. Goldcore.com

-Gold demand in China, the world’s second-largest consumer, gained in the first half as government measures to cool the property market and falling equities spurred investment demand, the Shanghai Gold Exchange said.

The total volume of gold traded on the exchange jumped 59 percent in the first six months from a year earlier to the equivalent of 3,174.5 metric tons, said Song Yuqin, vice general manager at the exchange. Silver turnover soared more than fivefold, Song told a conference in Beijing today.

Gold surged to a record last month as investors sought to protect their wealth against the market turmoil caused by the European sovereign debt crisis, including declining currencies. Song’s remarks add to signs that investors worldwide are boosting holdings of the commodity.

“Gold- and silver-trading volume expanded sharply in the first half of this year because a declining stock market, the government’s efforts to cool the property market and the general volatility in the global financial market have all fueled the investors’ enthusiasm,” Song said. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aHEdob4hSNI8

-China’s big gold rush. Gold has a powerful ally in promoting it: the state. Consider a recent push by the Chinese government for its citizens to buy more gold as an investment. Industrial Commercial Bank of China recently signed an agreement with the World Gold Council to help promote domestic demand for gold through new investment products.

The country is also turning to television advertising to encourage its growing middle class to buy gold as an investment. State owned China Central Television has run spots urging citizens to buy gold, as well as silver, a major shift from only a few years ago when the country imposed strict controls on precious metals purchases for its citizens.

The World Gold Council estimates suggest China could exhaust its known gold mining reserves in six years from now. “This supply trend is only likely to reverse if China, which is still relatively undiscovered in terms of global exploration budgets, were to attract significant capital investment for exploration,” the council said in a recent report.

That would leave China scrambling for more gold imports, once again putting its mark on global commodity demand. In Chinese culture, gold is a symbol of wealth. It is a tradition to give gold as a gift after a baby is born, on birthdays, at Chinese New Year and as part of wedding jewellery. Read more here-http://www.theglobeandmail.com/globe-investor/chinas-big-gold-rush/article1626211/

-China’s gold output this year may gain 5 percent from about 313 metric tons last year, Song Quanli, deputy party sectretary general at China National Gold Group Corp., China largest gold producer, said in an interview today.

“But the output growth cannot keep up with the demand growth so far this year given investors’ enthusiasm for physical gold holdings such as gold bars,” Song said. “Our retail branches reported 30 percent to 40 percent growth in sales in the first half of this year.” Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=ax95PNLzKJKQ

-How does China really view gold? Chinese officials have been making contrasting statements on how it views gold? What is the true picture? Read more here-http://www.mineweb.co.za/mineweb/view/mineweb/en/page72068?oid=107396&sn=Detail&pid=102055

-Russia’s central bank said the value of its gold holdings advanced 2.8 percent last month to $28.2 billion, in an e-mailed statement today. That’s the highest level since Bank Rossii started reporting the value of its gold holdings in 1993. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aEt2AO1CV1u4

-Central Banks Push Up the Gold Price. Read more here-http://www.caseyresearch.com/editorial/3494?ppref=GLD178ED0710A

-Gold may rise to higher than $1,300 an ounce in the second half of this year, GFMS Ltd. Executive Chairman Philip Klapwijk said in slides prepared for delivery at a Beijing conference today.

“Investors will remain the principal driver of prices this year, with a breach of $1,300 in the second half a strong possibility,” he said in the slides. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aTLgCELSAVmI and http://www.miningweekly.com/article/gfms-says-gold-could-still-top-1-300oz-this-year-2010-07-07

-John Embry: U.S. dollar’s collapse inevitable. Read more here-http://www.sprott.com/Docs/InvestorsDigest/2010/MPLID_062510_pg204Emb.pdf

-China seen letting U.S. down gently as it prepares for dollar’s fall. Read more here-http://www.gata.org/node/8797

-All currencies have depreciated against gold and silver this year. Read more here-http://www.gata.org/node/8798

-Gold Better than Currencies. Read more here-http://www.cnbc.com/id/15840232?video=1537611706&play=1

-Gold to Hit $1,350 by Year-End: Expert. Read more here-http://www.cnbc.com/id/38052340

-Peter Grandich’s mid-year market update. Choosing to be heavily overweighed in precious versus base metals has been the right choice for quite some time now and I don’t see any change to that on the horizon. That doesn’t mean avoid base metals but instead have your main focus on the precious gold, silver, platinum and palladium. And within the precious, gold continues to be my favorite.

So not to be a broken clock and rehash over and over the same bullish factors, I invite anyone who isn’t familiar with my reasons to own the yellow stuff to visit the gold and precious metals categories to see what I’ve said in the past. I think I’ve been pretty “spot-on” when it comes to the metals.

Bottomline-I noted last week that with July and August being the two most seasonally-weak months for gold and the current price being quite above its 200-Day M.A., there was risk down to $1,185. I said I would welcome a base-building period and that’s what I think we’ll have for a few weeks. $1,300+ remains my 2010 target and as I already have noted, I don’t envision the end of the mother of all gold bull markets ending until gold has a “2” handle ($2,000+). Read more here-http://www.grandich.com/2010/07/2010-mid-year-update/

-Gold 75% Under owned In 20 Years, Or Exter’s Pyramid For Gen X/Y. Read more here-http://www.zerohedge.com/article/gold-75-underowned-20-years-or-exeters-pyramid-gen-xy

-Gold is not as expensive as it seems. For the past nine months, gold has been trading consistently over $1,000 an ounce. It reached a high of $1,259 on June 18th, up 35% from a year earlier. After adjusting for inflation, today’s heady prices are some way off the 1980s mania. The 2010 yearly average of $1,154 is still 29% below the inflation-adjusted price in 1980 of $1,623. Read more here-http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=7933596&story_id=16531196&fsrc=scn/tw/te/dc/goldrush

-Gold set to shine as dollar flood fuels double-dip recession. Read more here-http://blogs.telegraph.co.uk/finance/ianmcowie/100006809/gold-set-to-shine-as-dollar-flood-fuels-double-dip-recession/

-Jim Rickards: Gold is money and probably manipulated for its deadly power. Read more here-http://www.gata.org/node/8787

-European banks use gold reserves to raise cash. European commercial banks have begun using their holdings of gold to raise cash with the Bank for International Settlements, in a further sign of strains in the money markets on which many rely for funding.

The BIS, the so-called “central banks’ central bank,” took 346 tonnes of gold in exchange for foreign currency in “swap operations” in the financial year to March 31, according to a note in its latest annual report. In a gold swap, one counterparty, in this case a bank, sells its gold to the other, in this case the BIS, with an agreement to buy it back at a later date. Read more here-http://www.gata.org/node/8793

-Mysterious BIS gold swaps are likely a bullion bank bailout. Read more here-http://www.gata.org/node/8803

-Mystery around BIS gold swaps impugns them as market rigging. Read more here-http://www.gata.org/node/8799 and http://www.gata.org/node/8795

-With BIS gold swap, central banks throw the kitchen sink at gold. Read more here-http://www.gata.org/node/8792

-Izabella Kaminska: BIS gold swap intrigue continues. Read more here-http://www.gata.org/node/8802

-BIS gold swaps Bulls and Bears fight out the implications. The gold swaps with the BIS have both bullish and bearish meanings for the price of the metal and some of these are set out below. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=107626&sn=Detail&pid=33

-Paulson Hit With $2 Billion In Redemption Requests, Likely Source Of Recent Gold Market Liquidations. Read more here-http://www.zerohedge.com/article/paulson-hit-2-billion-redemption-requests-likely-source-recent-gold-market-liquidations and http://www.businessinsider.com/john-paulson-socked-with-2-billion-in-redemptions-at-the-end-of-june-2010-7

-Got Gold Report: Euro shorts cover, silver lame. Read more here-http://www.gata.org/node/8791

-Jeff Nielson: The seven sins of GLD. Read more here-http://www.gata.org/node/8794

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

-The price of silver is still stuck in a range between $17.50/oz and $19/oz. It seems to me that each time it trades at the high, selling comes in, and when it hits the lows of this range we see buying. The break above $19/oz seems to have been a false break to the upside.

However, prices at the bottom end of this range offer buying opportunities, and I believe that we will soon the break above the $19/oz. And, once the price has breached $19.50/oz then prices are set to trade towards $21/oz and then $25/oz. David Levenstein-Read more here-http://www.kitco.com/ind/Levenstein/jul072010.html

-Sell Bonds, Buy Precious Metals, Rice as ‘Refuge,’ Rogers Says. Investors should sell bonds and buy commodities like silver and rice as a “refuge” as the world economy may continue having problems, Jim Rogers, chairman of Rogers Holdings said.

“Bonds are not a good place to invest in,” Rogers said at a conference in Kuala Lumpur today. “You should own commodities because that’s your only refuge” whether it’s silver or rice, said Rogers, who predicted the start of the global commodities rally in 1999.

The best place to be is in commodities and other natural resources, including precious metals like silver, platinum and palladium, said Rogers, who co-founded the Quantum Hedge Fund in 1970. Commodities are good to buy as supply shortages are already developing, the Singapore-based investor said.

Gold prices will rise to more than $2,000 per ounce, said Rogers, without giving a timeframe. “I do own gold,” he said. “Gold has been extremely strong of late, but I’m not rushing out to buy gold. I don’t like to buy things that have been going straight up.”

While gold has been trading at all-time highs, silver remains 60 to 70 percent below its peak and is a better investment, he said. Silver reached an all-time high of $50.35 in New York in 1980. Read more here-http://noir.bloomberg.com/apps/news?pid=20601010&sid=amjjFTilt7Bg

-Why the gold rush may not be over. Jim Rogers says buy silver. Read and watch more here-http://money.cnn.com/2010/07/08/markets/gold/index.htm

-Historical Silver: Gold Ratio Suggests Parabolic Top For Silver of Over $100 per Ounce! Approximately 70 respected economists, academics, gold analysts and market commentators (see list below) are of the firm opinion that gold is going to go to at least $2,500 if not as high as $10,000 per ounce (or more) before the parabolic top is reached.

As such, just imagine what is in store for silver given its historical price relationship with gold. We’re looking at an extreme case scenario of a future parabolic top of perhaps as much as $714 per ounce for silver, the ‘poor man’s gold’. Let me explain.

The current price of gold and the price of silver the silver:gold ratio continues to hover around the 67:1 range which is way out of whack with the historical relationship between the two precious metals. It begs the question: “Is now the perfect time to buy silver instead of the much more expensive gold metal?”

It is critical to step away from all the noise and clutter that passes for knowledge and take the time to gain perspective on where the price of gold and silver are in terms of the ‘big picture’, i.e., where they are in their individual performance channels and in respect to their historical relationship with each other over the long, medium and short term and, based on those relationships, how they might perform in the future.

Silver-Silver has proven itself, time and again, to be a safe haven for investors during times of economic uncertainty and, as such, with the current economy in difficulty the silver market has become a flight to quality investment vehicle. The 49% increase in silver in 2009 attests to that in spades (albeit up only 10% in the first 6 months of 2010).

During the last parabolic phase for silver in 1979/80 silver went from a low of $5.94 on January 2nd, 1979 to a close of $49.45 in early January, 1980 which represented an increase of 732.5% in just over one year.

Such a percentage increase from the current price for silver would represent a future parabolic top price of $155. Frankly, such prices seem impossible in practical terms but that is what the numbers tell us.

Silver-Gold Ratio-How both gold and silver perform, in and of themselves, does not tell the complete picture by a long shot, however. More important is the price relationship – the correlation – of one to the other over time which is called the silver-gold ratio.

Based on silver’s historical correlation r-square with gold of approximately 90 – 95% silver’s daily trading action almost always mirrors, and usually amplifies, underlying moves in gold. With significant increases in the price of gold expected over the next few years even greater increases are anticipated in silver’s price movement in the months and years to come because silver is currently seriously undervalued relative to gold as the following historical relationships attests.

Let’s look at the silver-gold ratio from several different perspectives:

-Over the past 125 years the mean silver-gold ratio (i.e. 50% above and 50% below) has been 45.69 ounces of silver to 1 ounce of gold.

-In the last 25 years (since 1985) the mean silver-gold ratio has increased to 66.9:1

-The present silver-gold ratio is range-bound between 63:1 and 70:1 (66.77:1 at the end of June 2010).

-Interestingly, during the build-up to the parabolic blow-off in 1979/80 silver outpaced gold going up 732.5% vs. gold’s 289.3% causing the ratio to drop from 38:1 in January 1979 to 13.99:1 at the parabolic peak for both metals in January,1980.

Summary-History will look back at the artificially high silver to gold ratio of the past century as an anomaly, caused by the dollar bubble and the world being deceived into believing that fiat currencies are real money, when in fact they’re all an illusion. This fiat currency experiment will end badly in a currency crisis.

The wealthiest people will be those who bought silver today and indeed, while gold’s meteoric rise still has room to run, silver’s run is yet to get started. As such, it certainly appears evident that now is the time to buy all things silver. Read more here-http://www.kitco.com/ind/Wilson/july062010.html

-The identified new end use sectors that will come to determine the silver balance ahead are reliant on silver’s unique properties, which have been understood and utilised for millennia. Among these unique properties are the fact that silver is the best conductor of all metals, and that its antimicrobial properties offer perhaps excellent protection against infection and diseases.

These properties may see silver gain recognition as the greenest and cleanest of all metals, leaving it best placed to tackle certain important problems that face the world this century, such as improvements in security measures, climate change, health issues, and the aging Western population. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=106740&sn=Detail&pid=102055 Read Fortis silver report here-http://www.virtualmetals.co.uk/pdf/FBNSB0610.pdf

-The U.S. Mint reported 3,001,000 one-ounce bullion 2010 American Silver Eagles were sold during June, up from 2,245,000 sold in June 2009. The Mint also reported 97,000 one-ounce American Eagles gold bullion coins were sold during June 2010, down from 116,000 one-ounce coins during the same period of 2009.

So far this year, the Mint reported total American Eagle Bullion silver sales of 19,044,000 as of July 7th. However, the May 2010 total sales were reported at 3,636,500 one-ounce silver bullion coins. Total sales of the one-ounce silver bullion coins for the entire year of 2009 were a record 28,766,500 ounces. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=107634&sn=Detail&pid=34

-Rethinking the case for investing in silver. Read more here-http://news.silverseek.com/SilverSeek/1278422680.php

-How to Profit From the Gold to Silver Ratio. Read more here-http://goldmoney.com/how-to-profit-from-the-gold-to-silver-ratio.html

-Indian silver imports poised for strong recovery. Read more here-http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=107523&sn=Detail&pid=102055

-Patrick Heller: Massive drain of Comex silver inventories continues. Read more here-http://www.gata.org/node/8788

-Seriously Underpriced Silver. Read more here-http://news.silverseek.com/SilverSeek/1278565440.php

-Jeff Nielson: Inventory fraud increases in silver market. Read more here-http://www.gata.org/node/8786

-Metals smash down was just another paper affair, Butler tells King World News. Listen here-http://www.gata.org/node/8789

CHARTS OF THE WEEK-QUOTES-QUICK HITS

-Before the secular bear market in U.S. equities and the secular bull market in precious metals ends, both the Dow and the gold price will be sitting at 5,000. David Rosenberg-Gluskin/Sheff-Read more here-http://www.businessinsider.com/david-rosenberg-is-dow-5000-really-possible-2010-6

-Chart of the week: At gold’s bottom in April 2001, the Dow/Gold ratio (DJIA divided by gold price) was 41.2. It now stands at 7.9 (as of July 2). When gold peaked in January 1980, the Dow/Gold ratio reached “one,” meaning they were both selling for about the same price. To hit that same ratio today, gold will have to go higher and the Dow simultaneously lower.

The fundamental reasons gold will rise are far from over, and a second leg down in the broader markets seems almost locked in at this point. In this context, Doug Casey’s call for a $5,000 gold price doesn’t seem so farfetched. It also coincides with his call for a Greater Depression, an environment not exactly suited for higher stock prices. $5,000 gold = 5,000 Dow. Read more here-http://www.caseyresearch.com/displayCdd.php?id=475

-Every year as we approach the summer months we hear that markets will be dull and boring with little activity in either direction due to the summer vacation season. With all that is happening worldwide and the many surprises that will unfold in the months of July, August, and September we suggest to all those interested in acquiring physical precious metals and those who have been prudent enough to have already started their portfolios now is the time to get aggressive. Forget about the summer doldrums. If you don’t, you will miss out on the current opportunity and find yourself playing catch up at much higher prices at a later date. Precious Metals International

-Be sure to take advantage of the summer’s golden buying opportunities. Buying gold in June and July has been very profitable for years. Jonathan Kosares and Randall Strauss of Centennial Precious Metals in Denver have updated Centennial’s annual analysis of the success of buying gold during its summer doldrums, in June and July, a practice that over the last 39 years has averaged a gain of 7.5 percent by the end of the year and over the last nine years has averaged a gain of more than 11 percent by the end of the year. Read more here-http://news.goldseek.com/GoldSeek/1276201069.php

-Note to journalism students. When we celebrate investigative reporting, it’s for issues like war crimes, nursing home scandals or police corruption. It’s not to report that LeBron James has opened a Twitter account. Mitch Albom

-“A man who has committed a mistake and doesn’t correct it is committing another mistake.” Confucius-Bio here-http://en.wikipedia.org/wiki/Confucius

-As noted about a zillion times over the last couple of decades, I believe the vast majority of people who work in the financial industry are heavily tilted in their views to the “always positive” side of things. I truly believe you could toss them off the top of the Empire State Building and all the way down they would say the same thing: “so far so good!” Peter Grandich

-LeBron James, the National Basketball Association’s Most Valuable Player the past two seasons, should sign a short-term contract and plow his wealth into gold and silver to protect himself against hyperinflation, according to the National Inflation Institute.

“If LeBron wants his money to be worth anything he should sign a short-term contract, because the economic picture five years out looks pretty bleak,” says Gerard Adams, the founder and director of the group, in a telephone interview.

“LeBron James has said he wants to become a billionaire, but that will only happen if he takes his current wealth and invests it into gold and silver, in order to protect himself from hyperinflation.” Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aUYvD6Yv5nFU

-I was on Larry Kudlow’s show yesterday (with one of his bullish buddies I’ll call him Curly, but I think it was Donald Luskin) and I came to the conclusion that the market seems to embody his conviction or lack thereof to paraphrase: “I’ve got one toe in but am ready to take it out any time.” One toe in the market, not all 10, and with no conviction and this is from someone who normally has a bullish bent. David Rosenberg-Gluskin/Sheff

-China’s stock market is down 26% so far this year, which is an ominous signpost for the emerging market landscape. Davd Rosenberg-Gluskin/Sheff

-U.S. small caps are now in bear-market terrain Russell 2000 down 21% from its April high. Remember what they say about the generals once the troops retreat, and also recall that it was the small cap stocks that led the 2009 bear market rally. David Rosenberg-Gluskin/Sheff

-In terms of keeping score, the Dow, thus far, is down 13% from the nearby peak and the S&P 500 is off 15.5%. We should add that along with the small caps, the S&P Financials index is also down 20.3% from the nearby high, again, fractionally in bear market territory, and was also the leader through most of last year’s recovery.

Remember, this group led the 2007 top and turned in the 2009 bottom for the entire market is now woefully underperforming; not a constructive sign. Moreover, despite the gains in the major averages, winning stocks barely outnumbered losers, and not only that, declining stocks outnumbered advancing stocks by more than a two-to-one ratio yesterday. So call it a case of bad breadth. David Rosenberg-Gluskin/Sheff

-Since the April 23rd peak, a total of $2.4 trillion of paper wealth has been wiped out by the 16% correction in the stock market. Guidance is going to be the key in the coming earnings reporting season, and the very early indications are not rosy (according to Rosie). David Rosenberg-Gluskin/Sheff

-The reason why everyone bought into the V-shaped recovery view was because the equity market told them that this must be the case. Now, we have a situation where $1.6 trillion of wealth has been wiped off the books in the past three months from the stock market setback and so it’s no coincidence that at the margin, question marks are surfacing over the longevity of the recovery if not the longevity, then certainly its veracity. David Rosenberg-Gluskin/Sheff

-There is no doubt that the combination of lower prices and higher earnings estimates has enticed the bulls into claiming that the stock market has entered into deep undervalued zone at a 12.5x P/E multiple. However, history shows that trough multiples could get as low as 10x, so there is nothing to say that the market could not get cheaper still, especially with all the uncertainty overhanging the economic outlook. David Rosenberg-Gluskin/Sheff

-Quote of the day undoubtedly goes to Paul Krugman who said that “We are looking at what could be a very long siege here,” in terms of the U.S. economic outlook (in a Bloomberg interview). With regards to his debate in BusinessWeek with hedge fund manager John Paulson, our leanings are towards Krugman’s view that we are in the early stages of a classic debt deleveraging phase where recoveries are short and snappy and recessions take place with greater frequency than many are able or willing to realize.

But Krugman’s solutions that the government engage in a “kitchen sink strategy” assumes that the government is really the answer. The question he has to answer on behalf of the Administration is why their forecast of an 8% unemployment rate, given all the stimulus it was going to provide, never did materialize, and what exactly is the long-term benefit to the economy of paying people to be out of work for two years. That’s our jobs strategy? David Rosenberg-Gluskin/Sheff

-Here’s Why The Great Recovery Is A Big Fat D.U.D.D. Read more here-http://www.businessinsider.com/broyhill-dudd-2010-7#-1

-David Rosenberg: Here’s 9 Charts That Will Fool You Into Seeing A V-Shaped Recovery. Read more here-http://www.businessinsider.com/david-rosenberg-heres-9-charts-that-will-fool-you-into-seeing-a-v-shaped-recovery-2010-7#capacity-utilization-rate-and-the-year-over-year-change-in-nonfarm-payrolls-1

-24 Depressing Pieces Of Evidence That Difficult Economic Times Lie Ahead. Read more here-http://www.businessinsider.com/24-pieces-of-evidence-that-difficult-economic-times-might-lie-ahead-2010-7#treasury-yields-1

-EMU break-up risks global deflation shock that would dwarf Lehman collapse, warns ING. A full-fledged disintegration of the eurozone would trigger the worst economic crisis in modern history, devastate every country in Europe including Germany, and inflict a deflationary shock on the US. There would be no winners, warns the Dutch bank ING in a new report “Quantifying the Unthinkable”. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7877724/EMU-break-up-risks-global-deflation-shock-that-would-dwarf-Lehman-collapse-warns-ING.html

-U.S. Consumer Bankruptcies Rise 14% in First Half. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=aL6wTrijbVzQ&pos=4

-‘Consumer Hangover’ Threatens U.S. Retail Outlook. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=aS6JF0JmuRtA

-$100 Oil Is Coming Sooner Than You Think. Read more here-http://www.businessinsider.com/100-oil-is-coming-sooner-than-you-think-2010-7

-Obama’s ‘Presidency in Peril’ or ‘Failed President?’ 12 deadly signs Wall Street’s ‘Conspiracy of Weasels’ killed Obama’s reforms. Read more here-http://www.marketwatch.com/story/story/print?guid=A3604D3F-AF24-43A5-A355-E8CFEC4DCACB

-La Nina Expected to Form by August, May Mean More Hurricanes. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=aY33mfT9LuhI

-Peterson’s $1 Billion Bet Shows Return as Deficit Concerns Rise. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=aaZSHjKgh4Yk

-Buffett Donates $1.6 Billion to Gates Foundation. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=acHWFmuIPZs8

-Steven Perkins, a former broker with PVM Oil, has been banned at least five years and fined £72,000 ($137,000) after the financial watchdog ruled that he poses “an extreme risk to the market when drunk”. The alcoholic trader cost his firm £6million last summer after going on an unauthorized trading splurge after a drinking binge at a PVM golf weekend.

Perkins took the Monday, June 29, 2009 off work but continued to drink from around midday onwards, and in the early hours of the next day, he bought a net 7.13 million barrels of oil. The unusually high trading volume in the typically quiet overnight period sent prices surging, and pushed up the price of Brent crude by more than £1.30 to an eight-month high. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aYdtxRaGB2O8

-Former PVM Oil Futures Ltd. broker Steve Perkins will resume his trading career in Switzerland after being banned from working in the U.K., the Daily Telegraph said, without citing where it got the information. Read more here-http://noir.bloomberg.com/apps/news?pid=newsarchive&sid=aQ868TT9Cfbw

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

-New Publication Highlights Immense Appeal of Pink Diamonds. Rio Tinto today announced the launch of its new publication, Rare and Collectable, which focuses on the unique market position occupied by the rare pink diamonds from Rio Tinto’s Argyle Diamond Mine.

Timed to coincide with the 26th Argyle Pink Diamonds Tender, Rare and Collectable places the rarity of Argyle pink diamonds in the context of global supply and demand and the resulting strong price appreciation. This publication is considered timely given the increasing propensity for affluent investors and collectors to diversify their portfolios through acquisitions of rare diamonds.

Discovered in 1979, the Argyle Diamond Mine produces virtually the entire supply of the world’s pink diamonds. Rio Tinto very quickly realised that the rare quality of its pink diamonds would be valued and this resulted in careful marketing to reflect their uniqueness, exclusivity and glamour.

According to Tom Albanese, Chief Executive of Rio Tinto, “Thirty years ago there were very few people who believed Australia could hold the secret of diamonds even fewer could foresee the discovery of the rarest of all diamonds the Argyle pink diamond. Patience, diligence and the efforts of resource experts and investors have been rewarded, as events of the past three decades have unfolded.”

Rare and Collectable also provides an insight into the separate market position held by pink diamonds in comparison to its white counterparts, along with the compelling metrics that are driving the value of pink diamonds, even in times of economic uncertainty. According to Jean-Marc Lieberherr, General Manager for the Sales and Marketing of diamonds from all Rio Tinto’s mines,

“In the rarified world of Argyle pink diamonds we are continuing to see strong demand in both the mature and emerging markets. On the supply side there are no known pink diamond mines or deposits and even if another was found, it takes at least 10 years for a mine to proceed from discovery to production.”

These fundamentals are providing a catalyst for growth in investment demand and with only around a decade of remaining mine life at Argyle, these rare pink diamonds are becoming rarer. Read more here-http://www.argylepinkdiamonds.com.au/en/docs/Collectablerelease%20FINAL.pdf

U.S. HEADING FOR DEPRESSION

-Double-dip fears as US recovery falters. Fears that the US is about to drag the rest of the world into a double-dip recession gripped investors by the throat this week, plunging markets into a dark frame of mind. Read more here-http://www.telegraph.co.uk/finance/markets/7868977/Double-dip-fears-as-US-recovery-falters.html

-Krugman Says U.S. Economy Is Facing a ‘Long Siege.’ “We are looking at what could be a very long siege here,” Krugman said in an interview today in Princeton, New Jersey, with Carol Massar of Bloomberg Television’s “Street Smart.” “We really are at a stage where we should have a kitchen-sink strategy. We should be throwing everything we can get at this.”

At a time when European countries such as Germany are calling for austerity measures to rein in budget deficits, Krugman is calling for more stimulus to prevent a repeat in the U.S. of Japan’s decade of economic malaise in the 1990s.

“The most effective things you can do, in terms of actual bang for the buck, is actually having the federal government go out and hire people,” he said. “We are deep in the hole here, and you need to be unconventional to get out of it.” Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=ajsHBWT_hxvk

-Why The Greater Depression Still Lies Ahead. If policymakers do not understand the real cause of a problem, they will in all likelihood be unable to provide a genuine solution. Messrs. Barack Obama, Benjamin Bernanke and Timothy Geithner do not understand the real cause of this debt crisis.

They are politicians first and economists or students of the market second if at all. Therefore, it is not wise to count on them to tell us when the Great Recession is over, or to provide a plan to prevent another one in the future.

The cause of the Great Depression in the 1930s, and the Great Recession beginning in 2007, was one and the same: an overleveraged economy. Excessive debt levels are the direct result of the central bank providing artificially low interest rates and of superfluous lending on the part of commercial banks.

The easy money provided by banks eventually brings debt in the economy to an unsustainable level. At that point, the only real and viable solution is for the public and private sectors to undergo a protracted period of deleveraging. The ensuing depression is, in actuality, the healing process at work, which is marked by the selling of assets and the paying down of debt.

Unfortunately, our politicians today are focused on fighting this natural healing process by promoting the accumulation of more debt. During this latest economic contraction, the Federal Reserve took interest rates to near 0%, and the Obama administration is leveraging up the public sector to record levels in a bid to re-leverage the private sector.

The government’s philosophy is tantamount to sticking a frostbitten man in the freezer so he won’t have to suffer the pain associated with the thawing of his extremities. Read more here-http://www.forbes.com/2010/06/30/greater-depression-still-ahead-personal-finance-economy_print.html

-Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31.

Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses.

We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost to the world economy and, above all, to the millions of lives blighted by the absence of jobs will nonetheless be immense.

And this third depression will be primarily a failure of policy. Around the world most recently at last weekend’s deeply discouraging G-20 meeting governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. Read more here-http://www.nytimes.com/2010/06/28/opinion/28krugman.html?pagewanted=print

1932 ALL OVER AGAIN

-With the US trapped in depression, this really is starting to feel like 1932. The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7871421/With-the-US-trapped-in-depression-this-really-is-starting-to-feel-like-1932.html

-The Great Depression is a time that stands out as a time of great debate. During the Great Depression, FDR acted nearly exactly as we have in the Great Recession, expanding the size and scope of the government and pushing through new spending bills to incite economic activity. However, as the dust begins to settle from the first boom, investors are again looking for the bust.

The Dow Jones Industrial Average is repeating history all over again, forming the dreaded head and shoulders technical pattern that first sent stocks into a second bear market in 1932, following a few short years of stimulus-driven recovery. In 2007, the Dow Jones Industrial Average formed a head and shoulders pattern, and a bear market followed, just as it had 78 years earlier in 1929.

Today, the Dow Jones has formed another head and shoulders, just as it had following recovery in 1930 in which the stock markets prepared for another down leg. However, if those technical indicators aren’t enough to send you screaming sell, take a look at what traders like to call the “death cross.”

Known as the “death cross,” investors look for a very important technical indicator to point the future for the markets. The “death cross” is actually made up of the 50 and 200 day moving average. When the 200 day moving average crosses above the 50 day moving average, as it soon will, the market is said to go bearish. When the 200 day moving average is below the 50 day moving average, the market will soon rise.

Currently, the two moving averages are less than 10 points apart on the S&P 500 index, showing that with just a modest dip in the stock market, we can expect an even deeper plunge ahead. The death cross has become even more powerful as more investors trade more technically than they ever have before, and with just one little X, the whole market could enter into a massive selloff.

The most popular trade following a “Death Cross” is a flee from stocks and equities into hard assets and deflation-resistant debt obligations. Should the death cross come to bear, expect a selloff in equities, followed briefly by an increase in activity in the Treasury markets, and then eventually a move to hard assets like gold, silver, and other commodities.

Investors should expect that the physical markets will be the first to move, with a strong appetite for physical gold at $1,200 an ounce originating in Asia, as well as small time players gobbling up silver at near $17 per ounce. Both those prices, just ticks from today’s prices, are solid support levels, allowing for virtually no drop in either commodity before buying interest takes over selling interest.

Today’s prices may be the very cheapest that we’ll see for precious metals in quite some time, especially with demand nearly maxed out even at $17 for silver and $1200 for gold, two prices far higher than this time just one year ago. Dr. Jeffrey Lewis-Read more here-http://news.goldseek.com/GoldSeek/1278508609.php

STOCK MARKET-DOW REPEATS GREAT DEPRESSION PATTERN ACCORDING TO CHARTS

-The Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression, Daryl Guppy, CEO at Guppytraders.com, told CNBC Monday.

“Those who don’t remember history are doomed to repeat it there was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment,” Guppy said. Read more here-http://www.cnbc.com/id/38092759

-Prechter says Dow could fall to 1,000. Long time technical analyst Robert Prechter said on Tuesday he expects that as the U.S. economy sinks into a deflationary depression stocks will plunge. The Dow Jones industrial average stock index could fall to between about 1,000 and 3,000 points over the next five to seven years, he said in a telephone interview. Read more here-http://www.reuters.com/article/idUSTRE6653XM20100706 and http://www.nytimes.com/2010/07/04/your-money/04stra.html?pagewanted=print

-Biggs Cuts Stock Investments by Half as Risk of Recession Grows. Read more here-http://noir.bloomberg.com/apps/news?pid=20601010&sid=auMV9NaJR.tk

-Hussman: Inflation Is Coming, And The Market Is Only In The First Part Of A Big Decline. Read more here-http://www.businessinsider.com/hussman-big-inflation-is-coming-and-the-market-is-only-in-the-first-part-of-a-big-decline-2010-7

-CNBC Guest Says Absent Plunge Protection Team Stepping In, Market Would Fall; Wien, Kernan Disgusted. Read more here-http://www.zerohedge.com/article/cnbc-guest-says-absent-plunge-protection-team-stepping-market-would-fall-wien-kernan-disgust

BANKING CRISIS

-Europe’s ‘toothless’ bank tests making matters worse. RBS and other City institutions have warned that Europe’s stress tests for banks are almost useless and may further damage confidence if they fail to cover the risk of large losses on sovereign defaults by Greece and other Club Med states. Read more here-http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7873792/Europes-toothless-bank-tests-making-matters-worse.html

-EU Stress Tests Will Cover 91 Banks, Assume Bond Drop. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=aXxpvl3b5VEA&pos=2

-European Banks’ Hidden Losses Threaten EU Stress Test. Read more here-http://noir.bloomberg.com/apps/news?pid=20601109&sid=abl8IFKnuuaU

-Here Are The 6 European Banks That May Need A Bailout. Read more here-http://www.businessinsider.com/stress-test-losers-2010-7

JOBS

-As a sign of just how much slack there is in the U.S. labour market, and how much job insecurity there really is, the number of work stoppages (there were only five strikes in the past year at companies employing 1,000 workers or more) fell to the lowest levels since records began in 1947. David Rosenberg-Gluskin/Sheff

-U.S. Unemployment Insurance Tracker. Read more here-http://projects.propublica.org/unemployment/

-7.9 million jobs lost many forever. Read more here-http://money.cnn.com/2010/07/02/news/economy/jobs_gone_forever/index.htm

-Expect lots of government layoffs at state, local level. Read more here-http://www.usatoday.com/money/economy/employment/2010-07-06-jobs06_ST_N.htm

-Here’s The Real Reason Unemployment Is So High: Because The Government Makes It Impossible For Small Businesses To Hire Employees. Read more here-http://www.businessinsider.com/why-does-our-government-make-it-so-hard-for-small-businesses-to-hire-2010-7

Source: www.chartoftheday.com

-Chart of the week: The Scariest Job Chart Ever Gets Uglier. Read more here-http://www.businessinsider.com/chart-of-the-day-the-scariest-job-chart-ever-gets-uglier-2010-7 and http://www.chartoftheday.com/20100702.htm?T

-Chart of the week: Why Have the Jobs Gone Away? It’s no secret that the private sector in the U.S. has been shedding jobs at an alarming rate, while the public sector has grown fat milking the production of the private sector.

Just look at the chart below showing the most recent data from the Bureau of Labor Statistics on private employment (from January 2008 through June 2010) compared to the chart on federal government employment for the same period.

Since January of 2008, the private sector has shed 7.9 million jobs, reflecting a decline of 6.8% in total private employment over the past 30 months, while the federal government has added 469,000 jobs, indicating an increase of 17.1% over the same period. Read more here-http://www.caseyresearch.com/displayCdd.php?id=475

-Chart of the week: Young Americans Learn That Trying To Find Work Is Pointless. Read more here-http://www.businessinsider.com/chart-of-the-day-unemployment-by-age-young-americans-2010-7

Source: www.chartoftheday.com

U.S. DEBT-DEFICIT CRISIS

-U.S. marks 3rd-largest, single-day debt increase $166 billion jump spurs concerns over policy. The nation’s debt leapt $166 billion in a single day last week, the third-largest increase in U.S. history, and it comes at a time when Congress is balking over higher spending and debt has become a key policy battleground.

The one-day increase for June 30 totalled $165,931,038,264.30 – bigger than the entire annual deficit for fiscal year 2007 and larger than the $140 billion in savings the new health care bill will produce over its first 10 years. The figure works out to nearly $1,500 for every U.S. household, or more than 10 times the median daily household income.

Daily debt calculations jump and fall, and big shifts are common. But all three of the biggest one-day debt increases have occurred under the tenure of President Obama, and all of the top six have been in the past two years an indication of just how quickly the pace of deficit spending has risen under Mr. Obama and President George W. Bush.

“What matters is the overall trend line, and the overall trend line is shooting up,” said Robert Bixby, executive director of the Concord Coalition, a bipartisan deficit watchdog group, who said it is one more reason for a fiscal wake-up call. Read more here-http://www.washingtontimes.com/news/2010/jul/7/us-marks-3rd-largest-single-day-debt-boost/

-US Ends June With $13.2 Trillion In Debt, Adds $210 Billion In Total Debt, On Track To Breach Debt Ceiling In Under Six Months. Read more here-http://www.zerohedge.com/article/us-ends-june-132-trillion-debt-adds-210-billion-total-debt-track-breach-debt-ceiling-under-s

-Deficit hits $1 trillion in June for second year. Read more here-http://thehill.com/blogs/on-the-money/budget/107669-deficit-hits-1-trillion-in-june-for-second-straight-year

-IMF presses US to cut debt. Read more here-http://news.yahoo.com/s/afp/20100708/pl_afp/useconomyimf

-Niall Ferguson: The US Has 6 Years Before Debt Payments Surpass Defence Spending. Read more here-http://www.businessinsider.com/niall-ferguson-the-us-has-6-years-before-debt-payments-surpass-defense-spending-2010-7

-Illinois Stops Paying Its Bills, but Can’t Stop Digging Hole. Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo.

He picks the papers off his desk and points to a figure in red: $5.01 billion. “This is what the state owes right now to schools, rehabilitation centers, child care, the state university and it’s getting worse every single day,” he says in his downtown office.

Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.” Read more here-http://www.nytimes.com/2010/07/03/business/economy/03illinois.html?_r=2&partner=MYWAY&ei=5065

-Borrowing has been the answer to all economic troubles in the past 25 years. Now debt itself has become the problem, says Philip Coggan. Read more here-http://www.economist.com/node/16397110/print and http://www.economist.com/blogs/buttonwood/2010/06/indebtedness_after_financial_crisis

SOVEREIGN DEBT

-The 23 Countries Most Likely To Default. Read more here-http://www.businessinsider.com/here-are-the-23-countries-most-likely-to-default-2010-7#23-kazakhstan-1

-18 Charts That Tell You Everything You Need To Know About The World’s Sovereign Debt. Read more here-http://www.businessinsider.com/18-charts-sovereign-debt-cds-2010-7

REAL ESTATE-FORECLOSURES-MORTGAGES

-This is no time for complacency with regard to the outlook for house prices and mortgage defaults in the U.S. First, here are some numbers: Two-thirds of American homeowners have a mortgage 56 million in total. Around 50% are guaranteed by the GSEs, 35% are held directly on the balance sheets of the banks, and 15% are private label.

Estimates I’ve seen suggest that 14% of these 56 million mortgages are already in arrears or in the foreclosure process. This means that about eight million Americans have stopped paying their mortgage. Staggering.

Other estimates suggest that over 90% of these late-paying/non-paying debtors will never get back to being current. So what we are looking at is something like 7.2 million mortgages that will inevitably go into foreclosure in the near future.

Meanwhile, the pace of foreclosures has been slowed via loan modifications brought on by government pressure and the simple fact that banks do not want to take deflated property onto their books.

What does not get reported often enough is that the rate of non-foreclosure on delinquent borrowers is surging 24% of the people who have not made a single mortgage payment in the last two years have still not been foreclosed on. The banks don’t want to take the hit and in the meantime the foreclosure pipeline is completely clogged up.

(It has to be said that the banks are content in kicking the can down the road since homeowners are making good on their second lien $842 billion outstanding, most held at the big four banks, and they are holding these at par even as the first lien has already gone bad!) When this foreclosure pipeline gets unleashed, I fear that the wave of supply is going to precipitate another leg down in home prices.

Also, keep in mind that the loan modifications are not even working half of them are re-defaulting within 12 months (and this is happening even after monthly payments have been cut 50%). The principal reason is the negative net equity position most of the homeowners in arrears find themselves in (the amount by which mortgage balances exceed the true value of real estate for those in default or near-default could be as much as $2 trillion).

Currently, over 17% of homeowners are “upside down” on their mortgage and another 10% decline in home prices would take that share up to 27%. This, in turn, would dramatically lift mortgage default rates. If the banks ever do a “short sale”, which the Administration clearly wants them to do, then the entire second lien is wiped out cutting deeply into bank capital (if not wiping it out entirely).

I only bring this up because I heard Dick Bove (and other bank analysts) talk about how the banks are a huge buy now that the financial regulation bill is behind us and the uncertainty gone. Maybe that’s true for non-consumer, non-mortgage lenders, but we have to be aware that the problems with housing finance are very likely to remain a huge overhang for many U.S. banks in coming months and quarters. David Rosenberg-Gluskin/Sheff

-Luxury Vacation-Home Sales Fade With Pace of Economic Recovery. Read more here-http://noir.bloomberg.com/apps/news?pid=20601087&sid=aswl8_QJ1sjU&pos=5

-The U.S. real estate sector is still in massive excess supply we mentioned the runup in the office vacancy rate yesterday and today we cite another survey from Reis showing that in the shopping center space, the vacancy rate edged up to 10.9% in Q2 from 10.8% in Q1 and 10.0% a year ago a 20-year high.

Net effective rents dipped 0.5% QoQ and by 2.8% on a YoY basis. Moreover, residential property prices, especially in Florida, are still deflating against the backdrop of a lingering glut of supply (see page C6 of the WSJ ‘Bulk Sales’ of Condos Clear Supply, at a Cost. So, those who only see inflation because stamp prices are going to rise two cents are missing a big story across wide swaths of the economy. David Rosenberg-Gluskin/Sheff

-The housing bubble hangover, part 2. Read more here-http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/the-housing-bubble-hangover-part-2.aspx?page=all

-Bulk Condo Sales Reveal A Gut-Wrenching Property Price Collapse. Read more here-http://www.businessinsider.com/massive-us-property-price-declines-uncovered-in-bulk-sales-of-condos-2010-7

-Here’s Why Commercial Real Estate Hasn’t (Yet) Been A Disaster But Probably Will Be. Read more here-http://www.businessinsider.com/and-heres-why-commercial-real-estate-hasnt-yet-been-a-complete-disaster-but-will-be-2010-7

-The commercial vacancy rate in the U.S. continue to rise, now at 17.4% in Q2 from 17.3% in Q1 and 16.0% a year ago. David Rosenberg-Gluskin/Sheff

-US shopping center vacancy rates rose in 2nd qtr. Read more here-http://www.reuters.com/article/idUSN0610302020100707

-China’s property market braced for 30pc drop. Standard Chartered has told clients to prepare for a fall in property prices of up to 30pc in Beijing, Shanghai, Shenzen, and other large cities in China as the delayed effects of monetary tightening begin to bite. Read more here-http://www.telegraph.co.uk/finance/china-business/7875713/Chinas-property-market-braced-for-30pc-drop.html

-Rogoff Says China Property Starting to ‘Collapse’. Read more here-http://noir.bloomberg.com/apps/news?pid=20601010&sid=aA9Y5VxWh9lw

-Housing Shortage Makes Australian Home Prices Almost Twice U.S. Read more here-http://noir.bloomberg.com/apps/news?pid=20601110&sid=a4vbRYnAyv_A

© 2010, Worldwide Precious Metals.
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The Goldbugg Report – July 13th, 2010
Posted by Worldwide Precious Metals on Tuesday, July 13, 2010

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