The World Financial Report – May 15th, 2012
May 15, 2012
-”You have to normalize gold against something. It’s complexion has changed over time and it is trading less as a commodity and more as a currency. The peak in gold will peak at $3,000 per ounce before the cycle is out or until the time I change my name from Rosenberg to Goldberg. The biggest determining factor of gold prices is short-term interest rates.” David Rosenberg
-”There is only one way to protect wealth at this moment in time and that is to accumulate real assets which are not subject to the whims and foibles of politicians and central bankers. These are hard assets such as gold, silver, real estate, etc. I would also include mining shares because they are so incredibly undervalued.” Robert Fitzwilson
-Goldman Stands By Gold-Rally Forecast Even as Price Drops. Goldman Sachs Group Inc. stood by its forecast for a rally in gold this year, saying that the precious metal will advance to $1,840 an ounce over six months as the U.S. central bank embarks on a third round of stimulus in June. Gold remains the “currency of last resort,” according to analysts led by Jeffrey Currie. Read more here-http://tinyurl.com/cwvto42
-Richard Russell: Warren Buffett, Gold & My Secret Barometer. “It’s difficult to make people believe that there’s a difference between an investment for a possible profit and a store of wealth. But rich people know the difference. When a man has made as much money as he can, he starts worrying about losing that money. That’s the time when he wants to own “eternal stores of wealth.”
Recently ‘The Scream’, a painting by Munch, sold at auction for a record $119 million. I doubt if the buyer cares whether that painting will be worth $100 million, $50 million or $200 million ten years from now. The buyer knows that he owns a priceless work of art, something that will double in value in case of wild inflation or something that will be worth $60 million during the worst deflation.
Even if the dollar becomes worthless as a unit of exchange, the Munch painting will still be worth a fortune in whatever unit of money is in favor ten or fifty years from now. All of which tells us something about gold. For over five thousand years, gold has represented purchasing power. No matter what form of money was in existence at the time, gold possessed purchasing power, which is why many wise men own gold.
If I asked you to leave something for your great grandkids in a package to be opened one hundred years from now, would you leave them a wad of hundred dollar bills or one hundred gold coins? If you had any brains you would pick the gold coins. I’d venture that Warren Buffett would also pick the coins. Why? Because we know that one hundred years from now the gold coins would represent value and purchasing power and the dollar might not exist. End of story. Read more here-http://tinyurl.com/7wnxujn
-China’s gold imports jump as country may become biggest user. Mainland China’s gold imports from Hong Kong surged more than sixfold in the first quarter, adding to signs that the country may displace India as the world’s largest consumer of the precious metal on an annual basis. Read more here-http://www.gata.org/node/11336
-Indian central bank challenged in court to repatriate country’s gold. Read more here-http://www.gata.org/node/11348
-John Embry: There Is a War Going on Because Fiat Money Is Dying. I was particularly offended by Charlie Munger’s statement suggesting the only people that bought gold were the Jewish people in pre-war Vienna, to sew it in their garments, and that no civilized person would buy gold. That was one of the most disgusting statements I’ve ever heard in my life, on any subject.
I mean he denigrated the brave, oppressed Jewish people of pre-war Europe. At the same time, he disrespected anybody who was doing the right thing, which is buying gold in an attempt to protect themselves from a failing fiat currency system. That’s hardly uncivilized, it’s highly intelligent.
“There is a lot of discouragement, and justifiably so, just by the price action in the shares. I was thinking about this last night. When I was managing a dedicated gold and silver equity fund for fifteen years, between 1994 and 2009, there were three or four occasions in that period when my fund was up over 100% in less than twelve months.
If I still had a fund, I know this would be near the beginning of one of those 100%+ up-years. As I look at what’s going on here today, I think this is the greatest opportunity I have ever seen. It’s just a matter of when it activates. I believe it begins when gold and silver make a very dramatic turn higher, and that’s probably more imminent than most people realize on a day like this. My only advice is don’t lose the faith now.” Read more here-http://tinyurl.com/888k95c
-John Hathaway: Complete Flush in Gold & Savers to Get Screwed. “I just think we’ve had a complete flush. You know they’ve been hitting stops for the last couple of days. I feel like the worst is past. People are shunning this area and this is going to be the place to be going forward.” Read more here-http://tinyurl.com/8×828rh
-Caesar Bryan: The Federal Reserve Is Under The Gun & Gold. “There is a difference between the underlying fundamentals on gold and current sentiment. The fundamentals for gold are still very solid. We are going to move from an austerity program in Europe to more of a political program in Europe.”
“So, we are going to see a move away from these austerity programs when the new politicians take power. This will put more pressure on Germany. Meanwhile, here in the United States, the economy is growing, but very slowly. So the Federal Reserve is under the gun to step in when further data warrants it.
With all of that as the backdrop, gold looks very attractive. People also have to remember that sentiment is extremely negative. “We may be coming to a point where gold, which has been pretty quiet in terms of volatility, begins to move. I’m not sure what the catalyst will be, but there will be something.” Read more here-http://tinyurl.com/88mjxa3
-James Dines: Paper Money Addicts, Major Uptrends & Anarchy. I ponder about gold having risen for eleven straight years and what kind of clue that might be? These fanatics (central planners) have perpetrated QE1, QE2, they are now considering QE3.
These paper money addicts, who remain trapped in the fallacies of Keynesianism, are revealed as a vast intellectual Sahara. Won’t somebody inform them that overprinting caused this mess. More overprinting is obviously the wrong remedy. If a little arsenic is bad for you, then maybe a lot more is not good either.
Meanwhile, gold and silver are in long-term ‘Super Major Uptrends.’ That’s one way to protect yourself, and that’s for survival purposes, not for capital gains. Whatever happens next, sooner or later the world must return to wealth in the ground. So, I think that mining stocks deserve a place in all farsighted portfolios.” Read more here-http://tinyurl.com/bwk42ej
-Leeb: We Will Now See a Gold Standard Imposed in Europe. “Gold is reacting to what’s going on in Europe. It’s the last resort of liquidity for a lot of people. It’s been the best performing major asset over the last 12 years. You have a lot of chaos in Europe and no one knows what’s happening, so there has been a lot of reflex selling of gold.”
Once this correction ends, you are going to have a barnburner to the upside. Gold will just vault. I don’t think investors will even remember these frustrating days. I had been warning we could see this drop in gold because of the problems in Europe, but investors should take advantage of it.
Look at what China is doing. China is buying gold hand over fist right now. They are going to move the yuan forward as the world’s reserve currency and it’s going to be partially backed by gold. The world can also expect to see a gold standard imposed on Europe in the next 12 to 18 months.
“Prospects for QE3 are rising. I think the stock market will make some sort of eventual top and just be range bound. This is what happens when you have inflation taking hold. We saw this in the 70s when stocks went nowhere for that entire decade, but gold and silver had massive gains.
The only place to be is going to be hard assets and commodities. Incidentally, both Glencore and Mitsubishi, two of the largest commodity companies in the world, have come out in the last day or so and stated that “commodity markets are tight.” Once this is liquidation is over, commodities will go crazy.” Read more here-http://tinyurl.com/87rgqsm
-Pierre Lassonde: Here is What I’m Doing With My Own Money. “In terms of gold, the two largest buyers continue to be China and India. For the gold market, what matters most are these two countries. Are they growing? If they do, then the uptake in the gold market will continue, and that’s what’s happening.”
When asked about Swiss gold refiners working ‘round the clock’ because of massive demand, Lassonde responded, “That is correct. They are probably about 90 days booked for kilo bars. The minute they are done (the gold bars), they are shipped out and they go to China or whatever. So, yes, they are running at full capacity.” Read more here-http://tinyurl.com/6n8xh3d
-James Turk: Gold & Silver Bottoming as Euro Troubles Re-emerge. “Remember, back in the beginning of the year, the first week of January, the sentiment was very similar to what it is at the moment. I stuck my neck out and said the low for gold and silver were being made right then and there. The fact that sentiment feels like we are at the same level again, it may not turn this week, it may be next week, but we’re very, very close to a bottom. I still believe the lows for both gold and silver were made earlier in the year.” Read more here-http://tinyurl.com/6stajph
-Egon von Greyerz: Investors Need To Be Positioned For More Chaos. The 2008 correction lasted about the same amount of time, seven or eight months, but that correction was 30%. Stepping back and looking at this minor correction, in this massive uptrend, where gold has risen twelve consecutive years, this reaction barely registers on the longer-term chart. If investors have cash, they should buy physical gold and silver because they will be a lot higher in the next few years. Read more here-http://tinyurl.com/6m663fc
-Citibank: Stocks to Crater 27%, Bonds to Rally & Gold to Remain Firm. Read more here-http://tinyurl.com/7oee7u6
-Nigel Farage: There Will Be an Attempt to Install a Dictatorship. Read more here-http://tinyurl.com/77an3b9
-Michael Pento: Economic Storm Intensifies. Read more here-http://tinyurl.com/7qy96nu
-Paul Mladjenovic: Warren Buffet vs. Gold and Silver and the Winner is. Yes there will come a day when I am not bullish on gold and silver. However, given that politicians, government bureaucrats and central bankers have not stopped their massive financial and economic mismanagement, that day is still very far away. Read more here-http://tinyurl.com/cprdg8y
1) Berkshire Hathaway class A stock started at $54,800.00/share and closed on April 30, 2012 at $120,800.00 for a total percentage gain of 120.44%.
2) Berkshire Hathaway class B stock started at $35.40/share and closed on April 30, 2012 at $80.45 for a total percentage gain of 127.90%.
3) Gold started January 2000 at $282.05 (Kitco.com closing price 1/4/2000) and closed on April 30, 2012 at $1,651.25 for a total percentage gain of 485%.
4) Silver started January 2000 at $5.30 (Kitco.com closing price 1/4/2000) and closed on April 30, 2012 at $31.20 for a total percentage gain of 488%.
-Warren Who? Gold bugs still think they have right idea. Read more here-http://www.gata.org/node/11335
-Bill Fleckenstein: Stock Market to Tank, Buffett’s Ego & Gold. Why they (Buffett and Munger) act like you have to be a moron to own gold, I don’t know. He could just say, ‘It’s not my cup of tea, I prefer businesses that spit out cash,’ instead of talking about it as though as it was something only a fool would have.
“Is Munger trying to imply that only Jewish people in Vienna, before World War II, it was only suitable for them? Does that mean if he was Jewish, he wouldn’t have seen the problems coming and he wouldn’t have owned any? It’s just idiotic. But then so is Buffett’s stance on tax policy. Maybe guys get to the point where they have so much money, their ego gets the best of them and they just like to hear themselves talk. I don’t know.” Read more here-http://tinyurl.com/7z7xm79
-New York Sun: The Munger Games. One would think that a man as wealthy, as smart, and as old as Charles Munger would have known better than to suggest that people who buy gold are uncivilized. “Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939,” Mr. Munger told Rebecca Quick of CNBC, “but I think civilized people don’t buy gold, they invest in productive businesses.”
The fact is that people who bought gold a decade ago were far better positioned than those who put their money in Mr. Munger’s company, Berkshire Hathaway. For the value of a share of Berkshire Hathaway has collapsed over the past decade to barely more than 74 ounces of gold from the 238 ounces it was worth a decade ago. Read more here-http://www.gata.org/node/11332
-GATA: Gold has changed overnight, and likely will again. Read more here-http://www.gata.org/node/11339
Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00
Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00
Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67
Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00
Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33
Gold to silver ratio at 50 to 1 with gold at $2,500 the silver price would be $50.00
Gold to silver ratio at 40 to 1 with gold at $2,500 the silver price would be $62.50
Gold to silver ratio at 30 to 1 with gold at $2,500 the silver price would be $83.33
Gold to silver ratio at 20 to 1 with gold at $2,500 the silver price would be $125.00
Gold to silver ratio at 15 to 1 with gold at $2,500 the silver price would be $166.67
-”Remarkably, at least to me, the frantic turnover in metal coming into and out from the COMEX silver warehouses continued this week. In fact, it was one of the most active weeks in memory, even though total inventories remained largely unchanged at 142 million ounces. I can’t help but be fascinated by the continued high movements of COMEX silver inventories over the past year.
I keep searching for a more plausible explanation than it means tight wholesale physical conditions, but I have been unable to find that explanation. Increasingly, I have the suspicion that some large entity or entities may be acquiring silver in a determined fashion. I can’t prove it, but the movements suggest it. Yesterday’s 1.5 million oz deposit in the big silver ETF, SLV, leaves it ahead almost a million ounces net deposited for the week.
This is very much in contrast to expectations of net withdrawals for the week, given the weak price action and adds to my suspicions of major accumulation.” “The big surprise in[the Commitment of Traders for silver] was the composition of the change among two of the commercial categories. Whereas the big 4 (read JPMorgan) reduced their net short position as much or more than anticipated, the raptors (the smaller commercials apart from the big 4 and the big 5 thru 8 ) sold 4,700 contracts from their net long position, reducing that net long position to 13,600 contracts.
I don’t recall the raptors ever selling like this into a notable price decline. It could be that there was some type of reporting error, but an analyst has to take the data as it comes. If there is some type of adjustment in the next COT, I’ll deal with it then; for now, I’ll consider the numbers as being accurate as reported.”
“The big 4 (read JPMorgan) reduced its net short position by 3,500 contracts, one of the largest weekly reductions ever. As a result, the listed percentage of total open interest held net short by the big 4 was, at 26.3%, the lowest in many years, even lower than the extreme lows seen this past December.
In terms of the number of contracts held net short by the big 4, while not the lowest number ever, at 29,157 contracts, it is one of the three smallest short positions on record. In simple but accurate terms, the recent takedowns in the price of silver were designed and executed to get this concentrated short position reduced.” Ted Butler via Ed Steer Casey Research-Read more here-http://tinyurl.com/7aamlq6
-”You want shocking change? This US turndown in business will bring on QE to infinity sooner that anyone anticipates. Consider the Golden Dawn political party in Greece originally expected to draw about 3% of the vote. It now appears to have gone above 8%. Austerity runs politicians out of office in the election following the austerity initiative, and can bring in some strange replacements as did the Weimar situation. This US downturn in business will bring on QE to infinity, which is debt monetization on steroids.” JimSinclair-Jsmineset.com
-”Silver is my second largest holding. The value of this metal is extraordinary at these levels from a long term perspective. From a trading perspective, I see the strongest performance unfolding during the fall season this year. The silver short is almost technically perfect, in my opinion. There’s a large flag pattern, and the volume pattern confirms the price action.
Commercial traders went to 63,000 long positions according to the latest COT report, and they may have accumulated even more longs this week. I believe that 63,000 longs is a record, but the main point is that is very bullish for silver prices. The Fibonacci 50% retracement line sits at about $29.28, and we are very close to that support level now. The “Fib 50” support area is exciting because large rallies can begin from this level!” Morris Hubbartt
-Nik Kalsi: Silver, the greatest investment of this decade. Read more here-http://tinyurl.com/c48agos
-Michael Kilbach: The Silver Bull Market Is Over? In our opinion the bull market in precious metals is far from over, Why do we want to hear others talk about the bull market being over? We know that the best buying opportunities come when investors feel negative and very pessimistic, because if investors are pessimistic they are not investing, and if they are not investing the market is cheap.
When everyone is excited and jumping in with both feet, wet think a wise investor should be cautious and take money out of the market. It is our expectation that a great buying opportunity in precious metals is marked with commentary about the end of a bull market. In our view it is positive news to read stories about the end of the precious metals bull market. Read more here-http://tinyurl.com/883×2nq
-Silver Forecasters Bullish as Funds Retreat From Slump. At a time when hedge funds are reducing bullish silver bets by the most in two years, analysts predict a rally as manufacturing expands from China to the U.S., boosting demand for the precious metal most used in industry.
Options traders are more bullish, with the three biggest contracts conferring the right to buy metal at prices higher than now, Comex data show. The most widely held gives owners the right to purchase silver at $40 by the end of June.
“The long-term bull market is still very strong,” said Charles Morris, who oversees about $2.5 billion at HSBC Global Asset Management in London. “Silver spends more time going nowhere than it does going up, but when it goes up it tends to do it very quickly.” Read more here-http://tinyurl.com/bls2wog
-Shanghai Futures Exchange starts a silver futures trade. Read more here-http://www.gata.org/node/11331
-All the gold and silver roads now leading to China. With the opening of silver futures trading in Shanghai, China could rapidly become a major player in silver trading given its position as now almost certainly being the world’s largest silver consumer. Read more here-http://tinyurl.com/bofum3t
-David Morgan: Silver Market Update. Listen here-http://tinyurl.com/bsupc6m
-Smelting the Family Silver. Watch more here-http://tinyurl.com/cl3whhx
-Ted Butler: Silver Update, Knowing the game. Read more here-http://www.gata.org/node/11344
-Experts see demise of dollar as world currency. Read more here-http://www.gata.org/node/11327
-Iran accepts Chinese renminbi for crude oil. Read more here-http://www.gata.org/node/11337
-James Turk: From government to ‘robberment.’ Read more here-http://www.gata.org/node/11328
-Alasdair Macleod: Keynesian vs. Austrian debate heating up. Read more here-http://www.gata.org/node/11326
-Lessons from the Paul vs. Paul Debate. Read more here-http://tinyurl.com/cjqyzqx
-At KWN, weekly metals review. Listen here-http://www.gata.org/node/11329
-So much for Australia’s constitution. A Queensland driver has tried in vain to argue it is “impossible” for him to pay a speeding fine because the Australian constitution states the government can accept only coins made of gold or silver as payment for debts. Read more here-http://www.gata.org/node/11343
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: Poll, Americans Now Think Gold Is The World’s Safest Investment. For the second straight year, an annual Gallup poll has found that a plurality of Americans believe gold is the single safest long term investment option. Safer than savings accounts. Safer than real estate. Safer than stocks. Read more here-http://tinyurl.com/7ay6wew
-18 U.S. veterans commit suicide every day; 29 percent of veterans are unemployed; 20 percent of the homeless in New York City are veterans. Bloomberg
-“We could have a bigger selloff. There’s a lot of reasons for the market to go down. QE3 is coming, so I think that ultimately puts a floor under the market. I wouldn’t be surprised to see stocks selloff from current levels, but I don’t think the market is going to crash. You have a lot of people saying the Fed is on hold, that they are done easing.
There is no way they are done easing. They should be tightening, but they won’t do it. They understand this is all that is keeping this phony recovery going is the cheap money, and they are going to supply as much as they need to. The Fed will continue to do that, the market just hasn’t figured that out yet.” Peter Schiff
-”My investing model is ABCD: Anything Bernanke Cannot Destroy: flashlight batteries, canned beans, bottled water, gold, a cabin in the mountains.” David Stockman, Former Congressman and director of the U.S. Office of Management and Budget
-Inevitable Inflation. Few investors may be worried about inflation now, but ultimately it’s inevitable. So says, John Brynjolfsson, managing director of the global hedge fund Armored Wolf. Brynjolfsson knows a thing or two about inflation, he also spent 19 years at PIMCO directing their inflation-protected assets. Although Brynjolfsson concedes in the near-term the environment is deflationary, he thinks it’s just a matter of time before inflation rears its ugly head.
That’s because in an effort to drive the global economy out of its malaise, “The Fed, the ECB, the Bank Of Japan and other central banks are injecting as much money in the system as possible,” he says. Although they’re trying to drive wages, stock prices and housing prices to stimulate growth, at the end of the day they’re driving inflation. Read more here-http://tinyurl.com/dxjfnbl
-Global Economy Faces a ‘Perfect Storm’ in 2013: Roubini. A “global perfect storm” looms for 2013 in which the U.S. economy could fall back into recession and the euro zone will begin to break up, according to the latest gloomy forecast from economist Nouriel Roubini.
Four primary factors will come together, according to the famed “Dr. Doom,” to create worldwide turbulence: In addition to the troubles in the U.S. and Europe, Roubini sees military conflict in Iran and a slowdown in emerging markets, particularly China, as the added elements to create the storm. “You put it together the euro zone troubles with the US slowdown, China you could have a train wreck next year,” Roubini said.
In particularly, Roubini sees nothing but problems ahead for Europe, where peripheral nations are struggling with inability to pay their debts. Fears are growing that the fiscal problems in Greece, Portugal, Spain and elsewhere will spread to the global economy. “Greece is going to be the first country that’s going to restructure and exit,” he said. “Others will leave also.” Read more here-http://tinyurl.com/cja7uxo
-Marc Faber Sees Crash Like in 1987 If U.S. Stocks Climb Higher. U.S. stocks may plunge in the second half of the year “like in 1987” if the Standard & Poor’s 500 Index climbs without further stimulus from the Federal Reserve, said Marc Faber, the publisher of the Gloom, Boom & Doom report.
“I think the market will have difficulties to move up strongly unless we have a massive QE3,” Faber told Bloomberg, referring to a third round of large-scale asset purchases by the Federal Reserve. “If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987. The Dow Jones Industrial Average plunged 23 percent on Oct. 19, 1987 in the biggest crash since 1914, triggering sharp losses in stock-market values around the world.
The Standard & Poor’s 500 Index plummeted 20 percent. “If the market makes a new high, it will be a new high with very few stocks pushing up and the majority of stocks having already rolled over,” Faber said. “The earnings outlook is not particularly good because most economies in the world are slowing down.” Read more here-http://tinyurl.com/bv7t2rr
-Ross Says Looming ‘Freak Show’ May Threaten U.S. Economy. The U.S. economy is at risk of slipping back into recession in 2013 because of likely impasses in Washington over taxes and mandatory spending cuts, said Wilbur Ross, the billionaire investor. “That’s too big a hit for the economy to take,” Ross said in New York.
“We’re going to have another freak show at the end of the year.” Ross said he’s worried that President Barack Obama and Congress won’t be able to agree on extending tax cuts passed under former President George W. Bush that expire at the end of 2012, or on mandatory spending cuts tied to the extension of the country’s debt-ceiling agreement. Read more here-http://tinyurl.com/cuvtjhs
-Fed Worries ‘Fiscal Cliff’ Is as Big a Threat as Europe. Federal Reserve officials are increasingly concerned about the coming “fiscal cliff,” putting it on par with the European financial crisis and the housing market as among the biggest potential threats for the U.S. economy. Read more here-http://tinyurl.com/c2jyx8s
-Don Luskin: One Element Of The ‘Fiscal Cliff’ Should Cause Stocks To Plummet 30%. It’s all about how dividends are taxed and the reality that we are facing the biggest single hike in dividend tax rates in history. The market sets the price of a dividend-paying stock so that it will pay the after-tax yield required to attract capital. When the tax rate on dividends goes up, the after-tax yield necessarily goes down to restore the after-tax yield to its required level, the stock price has to fall. Read more here-http://tinyurl.com/bswjle9
-We Just Witnessed The Slowest April For Retail Sales In 3 Years. Not since 2009 have retail sales in April been as slow as they were last month. Nine of the 20 retailers tracked by Thomson Reuters missed their sales estimates, and their same-store sales index rose just 0.8 percent compared to 1.5 percent estimates. Read more here-http://tinyurl.com/cbaa3m2
-Japan Will Follow Europe With a Debt Crisis: Kyle Bass. Read more here-http://tinyurl.com/cvgbcc8
-Malawi devalues kwacha by 33%, leading to panic-buying. Shoppers in Malawi have been scrambling to buy basic goods, fearing huge price rises after the currency was devalued by 33%. Read more here-http://tinyurl.com/6m33hpq
-Australia Heading for ‘Mother of All Hard Landings’: Pros. Australia is headed for the “mother of all hard landings,” according to Société Générale strategist Albert Edwards, who says the country’s “credit bubble” could burst if China’s economy suffers a sharp slowdown. Read more here-http://tinyurl.com/72fkbpm
-Fed clears China’s first US bank takeover. The United States on Wednesday opened its banking market to ICBC, China’s biggest bank, for the first time clearing a takeover of a US bank by a Chinese state-controlled company. It will buy up to 80 percent of the US unit of the Hong Kong-based Bank of East Asia, which operates 13 branches in New York and California. Read more here-http://tinyurl.com/cyayxa4
-JPMorgan Loses $2 Billion in Chief Investment Office. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the firm lost about $2 billion on synthetic credit securities after an “egregious’” failure in its chief investment office, which the bank says focuses on hedging. “This portfolio has proven to be riskier, more volatile and less effective as an economic hedge than the firm previously believed,” the New York-based company said. Read more here-http://tinyurl.com/7ozdeqw
-Bernanke Gets 75% Approval From Investors in Global Poll. Global investors give Federal Reserve Chairman Ben S. Bernanke his highest approval rating since 2009 and expect him to take further action this year to accelerate a revival in the U.S. economy and financial markets. Read more here-http://tinyurl.com/bp6mq39
-Canada Is World’s Biggest Oil Loser With Price Spread. Canada buys high and sells low when it comes to crude oil, costing the world’s 10th largest economy billions in lost revenue as it expands production from one of the world’s largest energy deposits. The gap between Alberta’s exported Western Canada Select and Brent oil imported into Ontario and Quebec was about $30.50 a barrel and that difference is creating a drag on growth according to Bank of Canada Governor Mark Carney. Read more here-http://tinyurl.com/carod2e
-UN Sees Risk of Unrest From Food Costs Above 10-Year Average. Food prices may stabilize at high levels and keep government import bills near a record, increasing the risk of social unrest in the world’s least developed countries, the United Nations said. Read more here-http://tinyurl.com/7gtgkpl
-49% of Americans saving zilch for retirement. America has a serious problem saving for retirement. About 49% of Americans say they aren’t contributing to any retirement plan, according to a new survey conducted by LIMRA, a trade association for the financial services industry. Read more here-http://tinyurl.com/ch3vnjt
-Elderly at Record Spurs Japan Stores Chase $1.4 Trillion. Read more here-http://tinyurl.com/d39ahvj
-Madoff Sons’ Wives Sued by Trustee for $57.5 Million. The trustee liquidating Bernard L. Madoff Investment Securities Inc. revised a lawsuit to add the spouses of Bernard Madoff’s two sons as defendants on $57.5 million in claims. The new claims, filed May 4, are part of Irving Picard’s existing $255 million complaint against the Madoff family seeking to recoup money taken out of the Ponzi scheme. Read more here-http://tinyurl.com/cxxu7j2
-Canada Stops Making Cents as Flaherty Lets Penny Drop. Canada minted its final penny today as Finance Minister Jim Flaherty said the coin was too expensive to produce and no longer needed for business. Read more here-http://tinyurl.com/7cmys2u
-’Three topless women and the Twin Towers’: Canadians baffled by picture of WWI memorial on their new $20 dollar bill. Read more here-http://tinyurl.com/84z64r3
-Ferrari Joy Rider Burns Rubber on 600-Year-Old Wall. A Ferrari SpA dealership employee took a spin on Nanjing’s 600-year-old city wall, leaving tire marks on the Chinese relic and prompting an apology from the automaker. Read more here-http://tinyurl.com/7asrhqj
-Earliest Known Mayan Calendar Found in Guatemalan House. A 1,000-year-old house in Guatemala, its interior adorned with paintings of people, numbers and astronomical symbols, has yielded the earliest known Mayan calendar ever found, archaeologists said. The mural, covering three walls and a ceiling, is also the first Mayan art discovered in a building thought to be a house, according to the report, published in the journal Science. Read more here-http://tinyurl.com/crpvofx
-The 11 Most Expensive Watches Ever Sold. Read more here-http://tinyurl.com/c7mo3fj
-Rothko, Richter Set Records in $389 Million Auction. Mark Rothko’s fiery “Orange, Red, Yellow” sold for a record $86.9 million at Christie’s in New York last night in the biggest-ever postwar and contemporary art auction. Artist records were also set for Jackson Pollock, Gerhard Richter, Barnett Newman, Alexander Calder and Yves Klein, among others, in last night’s $388.5 million, 59-lot sale. It exceeded Christie’s $384.7 million tally in May 2007, the previous contemporary auction champ, as well as the high $330 million presale estimate. “Billionaires have gone global,” New York dealer Jack Tilton said upon exiting the midtown salesroom. “It’s very healthy for the market, obviously.” Read more here-http://tinyurl.com/c3owpgm
-Space weather expert has ominous forecast. Mike Hapgood, who studies solar events, says the world isn’t prepared for a truly damaging storm. And one could happen soon. Read more here-http://tinyurl.com/84l6eyg
-Rarecoloreddiamonds.com Featured Diamond of the Week. This Week’s Diamond is a 1.34 Round Brilliant Cut D Flawless White Internally Flawless Diamond. Harold Seigel-See video of the Featured Diamond here-http://tinyurl.com/6g37q2r
-”Martian Pink” Diamond May Fetch over $8 million at Auction. The largest pink diamond ever auctioned is expected to fetch over $8 million U.S. dollars at Christie’s Hong Kong spring auction May 29th. Christie’s jewellery specialist May Lim talks about the history of the 12.04-carat brilliant cut pink diamond.
“It’s the largest pink diamond, round pink diamond, ever to appear in auction history. So why is this pink diamond so out of the ordinary? Because in 1976 the collector that actually bought the diamond, bought it from Harry Winston and that was the same year the United States launched the Martian Exhibition and to commemorate this event, Harry Winston decided to name this diamond the Martian Pink.”
“Colored diamonds are very rare, and especially pink diamonds, they don’t usually appear, and in order for a pink diamond to be this intense in color is extremely out of the ordinary. And it for it to be this saturated, for it to become a round brilliant diamond is exceptional, you rarely find it in the market at all.”
The “Martian Pink” diamond is one of two famous pink diamonds in the world. The other is the 23.60-carat Williamson Pink diamond that belongs to Britain’s Queen Elizabeth II. It was given to her as a wedding gift in 1947. Read and watch more here-http://tinyurl.com/d4u4rk4
-Next Auction is May 22 2012, 8pm Eastern-6pm Mountain. See more here-http://tinyurl.com/cdf4tl8
-Gross Says QE3 Getting Closer as Goldman Sees Easing. Pacific Investment Management Co.’s Bill Gross and Jan Hatzius at Goldman Sachs Group Inc. say investors should prepare for additional bond purchases by the Federal Reserve to combat a slowing U.S. economy. A decision to buy more debt is “getting closer,” Gross, who runs Pimco’s Total Return Fund, the world’s largest mutual fund, wrote on Twitter. Hatzius, the chief economist at New York-based Goldman Sachs, predicted in a report that the Fed will announce additional monetary easing when it meets in June. Read more here-http://tinyurl.com/c992kjv
-Citi’s Buiter: Time for Helicopter Money Drops. Read more here-http://tinyurl.com/76ewhec
- Bruce Krasting: The Fed Will Hold Off On Another Round Of QE Until At Least December. A friend sends me the following chart to support his conclusion that another round of QE is coming from the Fed sometime in June. The chart tracks the ten-year bond and the performance of the S&P since 2009. Read more here-http://tinyurl.com/7j94qlg
-BOE Halts Stimulus as Inflation Threat Outweighs Slump. Bank of England officials halted stimulus expansion after seven months of bond purchases as the threat of inflation trumped concerns about an economy that’s succumbed to a double-dip recession. Read more here-http://tinyurl.com/8yrt7ak
-This Is What You Need To Know About The Crisis In Greece. Read more here-http://tinyurl.com/bte67le
-Euro Global Poll Shows More Than 50% Predicting an Exit. The 17-nation euro area is on the verge of losing one of its members, with more than 50 percent of investors predicting an exit this year as Greece’s election impasse threatens to push the debt crisis to new depths, according to the Bloomberg Global Poll. Read more here-http://tinyurl.com/cwjeqdz
-Greece Euro-Exit Debate Goes Public. From the monetary fortress of the European Central Bank to the pro-European duchy of Luxembourg, policy makers are beginning to air their doubts that Greece can stay in the euro. Post-election tumult in Athens has put the once-taboo subject of an exit from the 17-country currency union on the agenda, lifting the veil on possible scenario planning afoot behind the scenes. Read more here-http://tinyurl.com/7exsxsp
-Greece Likely to Exit Euro This Year, FX Concept’s Taylor Says. Greece will probably leave the euro as soon as next month as the government runs out of cash and European institutions fail to lend more to the nation, according to John Taylor of hedge fund FX Concepts. “This summer I think is very likely.” “The Europeans aren’t going to give them the money, the International Monetary Fund’s not going to give them an OK. They will be out of money in June.” Read more here-http://tinyurl.com/c544boa
-EFSF Confirms Release of 5.2 Billion Euros for Greece. The European Financial Stability Facility’s Board of Directors confirmed the release of 5.2 billion euros ($6.7 billion) from a first installment of 39.4 billion euros by the end of June, the EFSF said in a statement. An amount of 4.2 billion euros will be disbursed May 10 and the remaining 1 billion euros aren’t needed before June and will be disbursed depending on Greece’s financing needs. The 4.2 billion euros will be transferred into a segregated account to be used for debt service payments. Read more here-http://tinyurl.com/d9uq4mu
-Greeks May Hold $510 Billion Trump Card in Renegotiation. Greece’s next government may hold a trump card worth more than $510 billion if it heeds voters’ demands to renegotiate its bailout with the European Union. The nation owes about 400 billion euros ($517 billion) to private bondholders, public bodies such as the International Monetary Fund and European Central Bank and other creditors, according to data compiled by Bloomberg. About 252 billion euros of that’s due to official organizations that used their status to avoid the losses suffered by ordinary bondholders when Greece restructured its debt two months ago. Read more here-http://tinyurl.com/d9rl5xr
-Lagarde Urges Gradual Deficit Cut as Austerity Rejected. International Monetary Fund Managing Director Christine Lagarde called on developed nations to push through “gradual” fiscal cuts as voters in France and Greece rejected austerity as the sole fix to Europe’s debt crisis. “Austerity versus growth is very much the debate of the hour,” Lagarde said in a speech. “I would argue it is not ‘either/or.’ We can design a strategy that is good for today and good for tomorrow.” Read more here-http://tinyurl.com/cvo7j27
-Merkozy End Means Franco-German Gulf; Greek Voters Rebel. Voters in Greece and France challenged austerity as Europe’s sole prescription for the financial crisis, adding pressure on German Chancellor Angela Merkel to broaden her focus from debt reduction to save the euro region. Greek elections left the two biggest parties short of the clear majority to keep bailout efforts there on track. In France, Socialist Francois Hollande defeated President Nicolas Sarkozy, Merkel’s preferred partner for enforcing fiscal rigor. Read more here-http://tinyurl.com/d8bat8n
-Merkel Rejects Stimulus in Challenge to Hollande’s Growth Plans. German Chancellor Angela Merkel rejected government stimulus as the way to spur economic growth in Europe, setting up a clash with French President-elect Francois Hollande before he’s even taken office. Read more here-http://tinyurl.com/cefbn9z
-China Stops Buying Europe Government Debt on Crisis Concern. China Investment Corp. has stopped buying European government debt because of an economic crisis on the continent, though it continues to look for new investments there, said CIC President Gao Xiqing.
“What is happening in Europe right now is of course of concern,” Gao said in an interview in Addis Ababa, Ethiopia, during the World Economic Forum on Africa. “We still have our people looking at opportunities in Europe, even though we don’t want to buy any government bonds.” Read more here-http://tinyurl.com/ckbadgk
-Norway Dumps Ireland, Portugal Bonds on Euro Crisis Concern. Norway’s sovereign wealth fund sold all its Irish and Portuguese government bonds after rejecting the Greek debt swap and warned that Europe faces considerable challenges. Read more here-http://tinyurl.com/76cn5po
-Spain takes over Bankia to fight crisis. Spain took over Bankia, the country’s fourth biggest lender, on Wednesday, trying to dispel concerns over the government’s ability to clean up the financial sector four years after the banks were hit by a property market crash. In a deal that will give the state a 45 percent indirect stake in Bankia, the government will take control of its parent company BFA by converting into equity a 4.5 billion euro loan it had given the financial group previously, the central bank said.
The economy ministry pledged to do all it takes to clean up Bankia, which has more than 30 billion euros of exposure to troubled loans to property developers and repossessed land and buildings. The government is expected to lend or give Bankia up to 10 billion euros in additional aid, though some bank analysts say it will need more. Read more here-http://tinyurl.com/d93mo7o
-Spain Underplaying Bank Losses Faces Ireland Fate. Spain is underestimating potential losses by its banks, ignoring the cost of souring residential mortgages, as it seeks to avoid an international rescue like the one Ireland needed to shore up its financial system. Read more here-http://tinyurl.com/d9db6ku
-Italian Banks’ ECB Borrowings Increase to Record High in April. Italian banks’ borrowings from the European Central Bank reached a record high in April, as the country’s lenders took up almost one-fourth of the funds offered to lenders amid revived concerns about Europe’s debt crisis. Total borrowing by Italian banks rose to 271 billion euros ($353 billion) from 270 billion euros in March, the Bank of Italy said on its website. Read more here-http://tinyurl.com/bu6hskm
-Dutch With Food Aid Shows New Economic Reality Engulfing Europe. It’s just after lunchtime on a drizzly day in the Amsterdam suburb of Bos en Lommer and the line of people waiting to fill their bags with free rice, juice, potatoes and bread is lengthening. The market is one of 135 food banks in the Netherlands bailing out people trying to survive on less than 180 euros ($234) a month, the threshold to qualify for the aid. Organizers say demand for the service rose 20 percent in the first quarter. Read more here-http://tinyurl.com/ceg8tvo
-U.S. Posted Budget Surplus of $59.1 Billion in April. The U.S. government posted a budget surplus in April, the first in more than three years, as tax revenue climbed and spending dropped. Receipts topped outlays by $59.1 billion compared with a deficit of $40.4 billion in April 2011, the Treasury Department said. It was the first surplus since September 2008 and the biggest since April 2008. “The total federal budget deficit is slowly shrinking,” said Steven Wood, president of Insight Economics in Danville, California. “However, this improvement has been halting, due largely to erratic economic and employment growth.”Read more here-http://tinyurl.com/cxf2pks and http://tinyurl.com/cloz5wm
-Trade Gap in U.S. Widens More Than Forecast as Imports Jump. The trade deficit widened more than forecast in March as American demand for crude oil, computers, automobiles and televisions propelled imports to a record. The gap grew 14 percent to $51.8 billion, the Commerce Department reported. Read more here-http://tinyurl.com/8×4wggq
-U.S. Postal Service Loses $3.2 Billion as Cash Runs Low. The U.S. Postal Service said it lost $3.2 billion in the quarter ended March 31 and will temporarily run out of cash in October, adding urgency to its pleas for Congress to let it make changes including ending Saturday delivery. The services forecast a $9.1 billion loss for the 12 months ending Sept. 30, not counting a required $5.5 billion payment for future retirees’ health benefits, Chief Financial Officer Joe Corbett said. Read more here-http://tinyurl.com/bp4lt84
-Too broke to go bankrupt. This year, hundreds of thousands of Americans are expected to be too broke to file for bankruptcy. The average cost to file for Chapter 7 bankruptcy protection, the most common form of consumer bankruptcy, is more than $1,500, according to recent research submitted to the National Bureau of Economic Research. As a result, anywhere between 200,000 and one million consumers are estimated to be unable to afford that steep cost this year. Read more here-http://tinyurl.com/c2xclym
-Cash-Strapped NY Town Cancels July 4 Fireworks. A cash-strapped New York town has had to cancel Fourth of July fireworks and is appealing for donations to save its celebration of America’s birthday. New Rochelle town officials say the Independence Day display costs $75,000, and was eliminated from the city’s 2012 budget, along with the Memorial Day parade and Thanksgiving parade, which both cost $30,000 to put on. Read more here-http://tinyurl.com/7l5jmk8
-CHART OF THE WEEK: The Scariest Jobs Chart Ever. As always, the infamous chart from Calculated Risk. It compares the pace of this jobs recovery vs. every other one since WWII by looking at the trajectory of jobs lost and gained since the recession began. Read more here-http://tinyurl.com/7ptzw9e
-CHART OF THE WEEK: Labor Force Participation Falls To Lowest Level In Over Three Decades. The U.S. unemployment rate fell to 8.1 percent in April, but investors are quick to point out that much of this decline could be generated by a drop in labor force participation, not true jobs growth. In fact, labor force participation hit 63.6 percent in April, down from 63.8 percent in March. That’s the lowest rate since 1981. From expert Reuters chartist Scott Barber, this is what’s happened to labor force participation over the years. Read more here-http://tinyurl.com/d679e2j
-CHART OF THE WEEK: A Surprising Statistic About The Long-Term Unemployed. Pew is out with a new study about the long-term unemployed in America. The long-term unemployed are people who have been unemployed at least a year, and as you can see (and as you should know by now), the scale of the problem these days is way bigger than it has been during any other period over the last half a century. Read more here-http://tinyurl.com/7y7z38q
-CHART OF THE WEEK: Labor Force Shrinks As Jobless Swell Disability Ranks. The civilian labor force shrank in April by 342,000 workers and remains below where it stood when the economic recovery started 34 months ago, according to data released Friday by the Bureau of Labor Statistics. Had the labor force not declined, unemployment would have been 8.3% in April, instead of the 8.1% reported. That same month, more than 225,000 workers applied for Social Security disability benefits, and nearly 90,000 were enrolled, according to new data from the Social Security Administration. Read more here-http://tinyurl.com/btms6fn
-Employers in U.S. Added Fewer Jobs Than Forecast in April. American employers added fewer workers than forecast in April and the jobless rate unexpectedly fell as people left the labor force, adding to concern the economic expansion is cooling. Payrolls climbed 115,000, the smallest increase in six months, the jobless rate fell to a three-year low of 8.1 percent, and earnings stagnated. Read more here-http://tinyurl.com/bp3264j
-Unemployment Drops, but Fewer Americans Are Working. By one measure, last Friday’s jobs report is particularly disappointing: It marks the second month in a row that the employed share of the U.S. population has fallen. The Labor Department reported that as of April, 58.4 percent of the U.S. population was gainfully employed.
That’s down from 58.6 percent in February, and exactly where the employment-to-population ratio stood a year ago. The decline reflects the fact that job gains aren’t keeping up with population growth. It also demonstrates the illusory nature of April’s reduction in the unemployment rate, to 8.1 percent from 8.2 percent in March.
The Labor Department, in its monthly household survey, counts people as unemployed only if they’re in the labor force, meaning they’re actively looking for work. In April, the estimated number of people in the labor force fell by 342,000. So the unemployment rate fell, too, even though the survey counted 169,000 fewer people with jobs. Read more here-http://tinyurl.com/bunpxyc
-324,000 Women Dropped Out of Labor Force in Last Two Months As Number of Women Not in Labor Force Hits Historic High. 324,000 women dropped out of the nation’s civilian labor force in March and April as the number of women not in the labor force hit an all-time historical high of 53,321,000, according to the Bureau of Labor Statistics. Read more here-http://tinyurl.com/co9cmcb
-Gross Says U.S. Economy Suffering From ’Structural’ Unemployment. Bill Gross, manager of the world’s largest mutual fund, said U.S. unemployment is now a structural, and not cyclical, problem stemming from technology advances and the lack of retraining. “Jobs are being structurally destroyed,” Gross said in an interview. Read more here-http://tinyurl.com/d9wbrdt
-Mark Buchanan: Two years after the frightening spring day when the Dow Jones Industrial Average lost and regained about 600 points in a matter of minutes, we still don’t really know why. This is a problem, because it means something similar or worse could happen again. The Flash Crash of May 6, 2010, was more than a mere technical glitch. Read more here-http://tinyurl.com/bv2j5ao
-Berkshire Profit Doubles on Insurance Results, Derivatives. BerkshireHathaway Inc. said first quarter profitdoubled as insurance units and Chairman Warren Buffett’s derivative bets posted better results. Read more here-http://tinyurl.com/c8tyjje
-Home Prices Rise in Half of U.S. Cities as Markets Stabilize. Prices for single-family homes climbed in half of U.S. cities in the first quarter as real estate markets stabilized. The median sales price increased from a year earlier in 74 of 146 metropolitan areas measured, the National Association of Realtors said in a report today. In the fourth quarter, only 29 areas had gains. The national median existing single-family home price was $158,100 in the first quarter, down 0.4 percent from the first three months of 2011, according to the Realtors group. Read more here-http://tinyurl.com/8652nbf
-Ranieri Says Housing Market in U.S. Is Reaching Bottom. The U.S. housing market is reaching a bottom, according to Lewis Ranieri, the mortgage-bond pioneer. While “broad” concern that home prices have further to fall is restraining sales, “many, myself included, think we are at a bottom,” Ranieri said. Read more here-http://tinyurl.com/bptpg3p
-Pimco Housing Bear Kiesel Says It’s Time to Start Buying. Mark Kiesel, the Pacific Investment Management Co. managing director who sold his home in 2006 when he deemed the market a bubble, says it’s time to buy. “I was one of the most negative on housing,” Kiesel said in a interview. “I finally came to the conclusion housing is looking pretty decent.”
Kiesel said he bought a house in Newport Beach, California, where Pimco is based. He published a credit market note titled “Back In” on the firm’s website in which he writes, “I’m not sure U.S. housing prices have bottomed only time will tell but there are many more positives today than there were six years ago when I sold my house.”
Home prices that have fallen 35 percent from their mid-2006 peak and mortgage rates of less than 4 percent are helping make it a good time to buy, said Kiesel, who is global head of the corporate bond portfolio management group at Pimco. Other signs the housing market is turning around include foreclosure filings dropping to levels last seen in 2007 and sales of new and existing homes that have begun to increase as rising rents boost the relative affordability of purchasing, he said. Read more here-http://tinyurl.com/86vc4av
-Look Who’s Pushing Homeowners Off the Foreclosure Cliff. One of the more confounding aspects of the U.S. housing crisis has been the reluctance of lenders to do more to assist troubled borrowers. After all, when homes go into foreclosure, banks lose money. Now it turns out some lenders haven’t merely been unhelpful; their actions have pushed some borrowers over the foreclosure cliff. Lenders have been imposing exorbitant insurance policies on homeowners whose regular coverage lapses or is deemed insufficient. The policies, standard homeowner’s insurance or extra coverage for wind damage, say, for Florida residents, typically cost five to 10 times what owners were previously paying, tipping many into foreclosure. Read more here-http://tinyurl.com/6lrcah9
-Canada Housing Bubble Talk Dismissed. The head of Canada’s biggest bank and one of the country’s leading developers said the housing market is not in a bubble, even as one economist said Toronto is caught in a “condo craze.” Read more here-http://tinyurl.com/7mo754y
-France faces 40 percent house price slump. France faces a property slump of Anglo-Saxon proportions as the frothiest boom in French history finally tips over, threatening the country with an economic shock just as austerity hits. Read more here-http://tinyurl.com/c7lerc9
© 2013, Worldwide Precious Metals Canada Ltd.
The World Financial Report – May 15th, 2012
Posted by Worldwide Precious Metals on Tuesday, May 15, 2012
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