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The World Financial Report – July 24th, 2012

July 24, 2012

GOLD

-CHART OF THE WEEK: Gold Beats Lafite as Wine Tracks China Stocks. Prices of the most-traded wines and Chinese stocks have moved mostly in tandem the past year, a path that has left investors worse off than those who bet on gold or U.S. equities. The chart compares the Liv-ex 100 Fine Wine Index, compiled monthly, with daily moves of gold, the Shanghai Composite Index and the Standard & Poor’s 500 Index normalized from April 18, 2011, when the Chinese stock measure reached its high for the year. Gold and the U.S. benchmark index rose 5 percent and 2 percent through July 12, respectively, compared with losses of 29 percent for China stocks in the period and 26 percent for wine through June, data compiled by Bloomberg show. Read more here-http://bloom.bg/SIWQfA

-Dan Norcini: You are basically seeing, in gold, a move that is noteworthy. The swap dealers, a category of relatively large traders and big banks, for the first time on my records, are actually net longs in the gold market. Even back in 2008, at the height of the credit crisis, when there was a huge change of ownership in the gold market and traders were just jettisoning positions, the swap dealers never made it onto the net long side in the gold market.

Well, as of this week, they (swap dealers), they’re net longs. That’s significant because we’re witnessing a very slow, but very important transition in the gold market, where this accumulation we’ve mentioned is certainly occurring. You are getting a very significant change of ownership in the gold market.

This kind of dovetails with that interview we did earlier this week on KWN, where we talked about value based buyers, larger buyers doing some accumulation in gold during this particular phase of the market, where it’s been in a range or a consolidation.

If we do get some kind of upside spark, something to kick this thing out of the top of this trading range, you have a very good base of support with an awful lot of accumulation by value based buyers that has a tendency to set this thing up for an extended or protracted move higher. China seems to have put a floor under this (gold) market. Whether it’s China, India, or other Asian players, whoever is doing the buying out of the East, it’s very large in size.

And it’s sufficiently large where, once again, when gold dipped down below that $1,580 level this week, those buyers were present again. We went right down to $1,565, and there again were those buyers. They surfaced, and picked it right back up again, and they pushed it up to about $1,600 (on Friday), with some short covering in there.

These swap dealers, I think they are well aware of the amount of (physical) buying that’s taking place down at those lower levels, below $1,580. So they are moving themselves into position, expecting that buying to put a floor of support underneath their ownership of gold. The hot money crowd has lost interest in gold for the time being, but the value based crowd is definitely accumulating, they are buying. Read more here-http://bit.ly/Q8YiJ9

-Gene Arensberg notes unusual bullish development in gold futures. Read more here-http://www.gata.org/node/11575

-Egon von Greyerz: Why Gold Will Erupt. The minor consolidation in gold is likely to end soon. The next move could be explosive and take gold to $3,500 to $5,000 in the next 12-18 months. My long term target, set several years ago, that gold is likely to exceed $10,000 could be reached within the next 3-4 years. Read more here-http://bit.ly/M9VlDj

-John Embry: Economic Deterioration, Gold & Market Manipulation. As the global economy continues to deteriorate, which I believe it will, the natural reaction to that (by central planners) is to create as much money as humanly possible, to make sure that it (the economy) doesn’t implode. To me, that’s enormously supportive of higher gold prices.

More importantly, the very fact that, in the last two years, collectively central banks have moved from being sellers of gold to being considerable accumulators, who in the world would know better about what’s coming than these guys? They created the problem. We’ve got a real great opportunity here to buy gold and silver at great prices.

Those are the two assets that I’m totally comfortable with in what I see unfolding. And that is an economy that can’t get out of its own way, which will require massive amounts of liquidity. I can’t think of a better environment in which to own (physical) gold and silver, as opposed to all of these paper assets that people are clinging to. Read more here-http://bit.ly/NAS0gI

-John Embry: Precious Metals Markets are Heating Up. Read more here-http://bit.ly/NB3v7P

-Jean-Marie Eveillard: To their benefit the Chinese are sitting on extraordinarily large foreign exchange reserves. The last time they had a problem with their banking system, the already enormous amount of foreign exchange reserves helped to act as a cushion. Those foreign exchange reserves, they include gold, but to a level that nobody knows. Again, nobody knows how much gold China has because the statistics are probably lying.

And we all know they can still turn quite a few Treasury Bills into gold. Frankly I don’t think the accumulation of gold by mainland China, as a state, is absolutely necessary for the price of gold to continue to go higher. There are other buyers such as India, which bought 200 tons a couple of years ago. So there are other central banks, in various countries, that will buy gold.

The reality is that gold has been up for eleven straight years, so it was entitled to a major correction. And maybe that’s what we’ve had over the past nine months or so. There is so much money, including some leveraged money, which is playing in the short-term. This could overwhelm things for a little while, but my suspicion is that we are not far from the end of this correction in gold. Read more here-http://bit.ly/SIW4io

-Robert Fitzwilson: Why is the system now becoming untenable? The answer is that the demands of debt are vastly outstripping the supply of labor and resources. This system will eventually fail. It is likely that a new version of the same thing will take its place. Alchemy does not come in many forms. The bottom line here is this is about the control of a 250 year old wealth gathering machine. As investors, the only way to protect ourselves is to convert assets out of that system and into hard assets such as gold, silver and other resources.” Read more here-http://bit.ly/ObqnM0

-Michael Pento: This Major Fed Move Is About To Create An Explosion In Gold. I believe the cyclical period of deflation that I warned about several months ago is now close to an end. The Fed, foolishly, feels compelled to stop the rise of the U.S. dollar, and will soon opt to follow the lead from the ECB and stop paying interest on excess reserves.

That move will not increase bank lending to the private sector, as much as it will force banks into purchasing even more sovereign debt. If the Fed does indeed go down that road, I would expect to see U.S money supply growth increase significantly. This will cause gold and commodity prices to soar and the dollar tank. I would also expect to witness the global economy sink ever further into the stagflationary abyss. Read more here-http://bit.ly/LtImL8

-John Hathaway: All of us look at the fundamentals and say, ‘How can gold not be $2,500?’ I remember back in 2008, and I asked myself, how can gold not be at a much higher number? What I learned then is the causes for gold to be trading higher are there, but you don’t get instant gratification in this game. Read more here-http://bit.ly/NR71tw

-Mark Hulbert: Intelligent bet remains on gold. Read more here-http://on.mktw.net/ObB4hr

-MineWeb: Indian central bank wants people to exchange gold for paper. Read more here-http://www.gata.org/node/11572

-Peter Brimelow: Radical gold bugs vindicated? Theory is getting mainstream media attention. Read more here-http://www.gata.org/node/11578

-Why would governments ever stop trying to rig the gold market? Read more here-http://www.gata.org/node/11577

-U.S. probably manipulates gold through ESF, Ron Paul tells GoldSeek Radio. Read more here-http://www.gata.org/node/11588

-MineWeb’s Lawrence Williams: It would be surprising if gold market wasn’t manipulated. Read more here-http://www.gata.org/node/11587

-Paul Craig Roberts and Nomi Prins: The real LIBOR scandal. Read more here-http://www.gata.org/node/11576

-Rob Kirby: LIBOR rigging is just the tip of the iceberg. Read more here-http://www.gata.org/node/11573

-YouTube Is Rewarding Its Most Popular Users With Gold. Read more here-http://read.bi/NJUqxA

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SILVER

Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33

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 60 to 1 with gold at $2,500 the silver price would be $41.67

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

-”The gold-silver ratio chart suggests that silver is a very strong buy at current prices.” Morris Hubbartt

-“The big picture is there is slack in the global economy, and I would add there is substantial pressure on the monetary authorities to spur growth. So expect, in the fall, more accommodative action from the major central banks. This will, of course, by extremely bullish for gold and silver and the underlying equities.” Caesar Bryan, Gabelli & Company

-Rick Rule: The Physical Silver Market Is Getting Dangerously Tight. Rule had to say about Sprott’s very successful offering in the Sprott Physical Silver Trust, “I think it’s evidence of two things, One, we felt we had reasonably good chances of buying the silver if we raised the money. Second, this points to the continuing strength of the high end retail investment market for silver in North America.”

“The offering was well received. It was sold out. This is also evidence of the fact that while some of the more leveraged institutions have been forced sellers of silver, there is still very strong high end retail demand. These are individuals who don’t feel financial stress, and who feel better owning physical silver.

I think this is the kind of thing you will see Sprott do, from time to time, when there is demand in the market, and also when supplies can meet that demand. As you know, with regards to the Sprott Trust, unlike some of the ETF’s, we own physically our silver. There are no deposit receipts and our silver is never hypothecated.

Although supplies might be adequate for us to buy that silver, the fact is that the physical market continues to get tighter. “Eric Sprott has pointed out that on a daily basis, the paper markets (futures markets) in silver trade about 100 million ounces, while the physical market produces less than 3 million ounces each day. That’s an indicated 97 million ounce shortfall on a daily trading basis.

I would also like to add that 90 to 120 days ago, Eric Sprott was saying to me that the amount of silver available for good delivery, on the various metals exchanges in the world, was about 40 million ounces. So if you think about the fact that there were 40 million ounces available for good delivery, but 100 million ounces a day are traded, this would suggest that all of the available silver was traded before lunchtime.

I would also say that if this market begins to move to the upside, it would appear from the disparity of silver available to trade and the amount that actually does trade, that there is the strong case for some very substantial upside.” Read more here-http://bit.ly/Q6WtxC

-Egon von Greyerz: Silver Market Update. I think silver will outperform gold. It looks like the upward correction in the gold/silver ratio is finishing here, which means that silver will start going up a lot faster than gold in the next few months. I don’t think it will be long before silver goes back to $50, and in the next 12 to 18 months we will be well above $50. In a world where most assets will rot, it’s critical to hold assets that won’t decay and that is gold and silver. And they have to be held in physical form. Read more here-http://bit.ly/OI8Sks

-James Turk: Silver Market Update. The bears and central planners have had every opportunity to break support under $1600 and under $27, even if just to gun for stops under these levels. But the precious metals have held firm. It is an impressive performance, but I am more impressed by the rally in gold and silver that started last week.

There is a new factor at work that is about to light a fire under the precious metals that few people recognize food inflation. It was one of the key drivers in the summer of 2010 which launched the huge rally that eventually took silver near $50 and gold to a new record over $1900. Food inflation was also a factor in the big run-up of the precious metals in 2007, and early 2008, when food riots broke out around the globe because of high prices.

The worsening drought in the midwest means that food inflation will again become one of the drivers sending gold, silver and the mining shares much higher from here. The summer doldrums are over. Gold and silver are ready to get exciting once again. We can expect a rally from here that will take our breath away. Read more here-http://bit.ly/OpspJT

-Stephen Leeb: Silver Market Update: Silver is going to explode higher as well, and everyone should be accumulating physical silver at these discounted prices. Just buy it and put it away. It’s been money for thousands of years, it’s like having a silver bank account. Read more here-http://bit.ly/OpCwOV

-Dr. Jeffrey Lewis: Pitfalls of Silver Price Technical Analysis. Read more here-http://bit.ly/Lzmq6j

-WWII Shipwreck Yields $38 Million of Silver From Atlantic. Odyssey Marine Exploration Inc., a deep-ocean exploration company, said it recovered about 48 tons of silver from a World War II shipwreck three miles (4.8 kilometers) beneath the Atlantic Ocean. The company retrieved 1,203 silver bars, or about 1.4 million ounces of the metal, from the SS Gairsoppa, a 412-foot (126-meter) British cargo ship that sank after being torpedoed by German U-boat in February 1941, Tampa, Florida-based Odyssey said today in a statement. The metal, worth $38 million at today’s prices, is being held at a secure facility in the U.K. Read more here-http://bloom.bg/MIw9mS

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CHARTS OF THE WEEK-QUOTES-QUICK HITS

-CHART OF THE WEEK: David Rosenberg’s Brilliant Demographics Chart That Explains Why Treasuries Are Surging And Stocks Are Going Nowhere. Read more here-http://read.bi/NP0HTe

-CHART OF THE WEEK: Americans Joining Disability Now Outpacing Americans Finding Jobs. Read more here-http://bit.ly/LsfKC2

-CHART OF THE WEEK: Oil’s Center of Gravity Shifts Toward Asia. Emerging economies will use more of the world’s oil than advanced nations next year for the first time, underscoring the growing industrial dominance of Asian consumers such as China. Read more here-http://bloom.bg/MlMIs4

-Abu Dhabi Exports First Pipeline Oil Bypassing Hormuz Strait. Abu Dhabi started exporting its first crude from a pipeline that bypasses the Strait of Hormuz, shipping the fuel from the neighboring sheikhdom of Fujairah to a refinery in Pakistan. Read more here-http://bloom.bg/MwOKHL

-CHART OF THE WEEK: Gulf Oil Less Crucial in Storms as Shale Grows. Oil from the Gulf of Mexico as a proportion of U.S. output has fallen to a 14-year low as the shale boom shakes up traditional production patterns, reducing the impact of hurricanes on national supplies. Read more here-http://bloom.bg/Ltlbkn

-”In the beginning of a change, the patriot is a scarce and brave man, hated and scorned. When his cause succeeds however, the timid join him, for then it costs nothing to be a patriot.” Mark Twain

-”I think that we need a reckoning. Hopefully we have a slow reckoning. But we need to deal with the fact that we owe more money than we can service, and that we have been consuming more than we have been producing. Until we recognize the nature of our problem, I don’t think we will be able to deal with it.” Rick Rule

-“This is the time to cut back on needless expenses get rid of all the debt you can, and prepare for tough times. I don’t like the utter calm and complacency that I see today. The last few generations can’t conceive of drastic changes and hard times.” Richard Russell

-“The reality is there are now tens of millions of people in Europe who feel absolutely desperate and without hope. And I still feel if they stay trapped inside this eurozone, in the end this could have disastrous social consequences.” Nigel Farage, MEP (Member European Parliament)

-How Close Are We to New Great Depression? The risk of a new depression a sustained, severe recession has struck fear into the heart of markets and driven monetary policy in developed economies since the current financial crisis began. “We’re in a very unfortunate position to be here,” Richard Duncan, author of The New Depression, warned on CNBC. “When we broke the link between money and gold, this removed all constraints on credit creation.

This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it has already, and if credit begins to contract, there’s a very real danger that we will collapse into a new Great Depression,” he argued. “If this credit bubble pops, the depression could be so severe that I don’t think our civilization could survive it.” Read more here-http://bit.ly/NyONkJ

-‘Fiscal Cliff’ Could Trigger US Recession: IMF Economist. Going over the fiscal cliff could cause a U.S. recession next year, Olivier Blanchard, the International Monetary Fund’s chief economist, told CNBC. “If the fiscal were to happen, it would be a major macroeconomic event,” Blanchard said. The fiscal cliff is when a host of tax cuts expire and automatic spending cuts kick in at the end of the year. Read more here-http://bit.ly/NFYn6q

-Dollar Could Fall Off Fiscal Cliff Into Euro Abyss. As the fiscal cliff approaches in the United States and the euro zone crisis drags down global growth rates, central banks across the world have been delivering more and more stimulus. The problem, according to David Bloom, head of global foreign exchange strategy at HSBC, is that central banks are having less and less impact on the global economy. Read more here-http://bit.ly/Mt56NL

-Americans Hold Dimmest View on Economic Outlook Since January. The most Americans in six months said the economy in July was getting worse, indicating the slowdown in hiring is dimming moods as the third quarter begins. Read more here-http://bloom.bg/NJVm54

-UBS: The Risk Of Hyperinflation Is Largest In The US And The UK. Read more here-http://read.bi/NAlXiv

-Treasury Sells $15 Billion of TIPS at Record Low Negative Yield. The Treasury sold $15 billion in 10- year inflation-indexed notes at a record negative yield as investors sought a hedge against rising consumer prices amid speculation the Federal Reserve will add more stimulus. The Treasury Inflation Protected Securities, or TIPS, were sold at a so-called high yield of negative 0.637 percent, the fourth consecutive auction of the securities where investors were willing to pay the U.S. to hold their principal. Five-year TIPS have also been sold at negative yields at the past five auctions of the securities. Read more here-http://bloom.bg/NJM5d6

-Jack Welch: ‘This Movement Afoot That Hates On Business Is Craziness It Will Destroy America As We Know It.’ “It will destroy America as we know it because very few jobs get created in an environment that’s outright hostile to business. And without jobs, the whole thing falls down. It becomes a welfare state. We become a welfare state.” Read more here-http://read.bi/MJIhTK

-Bank of Canada Keeps Higher Rate Bias in Slower Rebound. The Bank of Canada kept its main interest rate at 1 percent and said an increase remains possible, while adding the domestic recovery will be slowed by weaker global demand for exports. Read more here-http://bloom.bg/MwKjwL

-Canadians Richer Than Americans. On July 1, Canada Day, Canadians awoke to a startling, if pleasant, piece of news: For the first time in recent history, the average Canadian is richer than the average American. According to data from Environics Analytics WealthScapes published in the Globe and Mail, the net worth of the average Canadian household in 2011 was $363,202, while the average American household’s net worth was $319,970. Read more here-http://bloom.bg/LsSsvU

-Sofia Vergara Tops Forbes’ Highest-Paid TV Actresses Of 2012. Read more here-http://read.bi/LyiyCh

-How Dynamic Pricing Is Changing Sports Ticketing. Read more here-http://bit.ly/Nf9Daa

-Manchester United Said to Seek $300 Million in August IPO. Read more here-http://bloom.bg/NXQffS

-Woods Is Passed by Mayweather as Top-Earning Athlete on SI List. Read more here-http://bloom.bg/OaeVAj

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RARECOLOREDDIAMONDS.COM

-Rarecoloreddiamonds.com Featured Diamond of the Week. This week’s Diamond is a 2.71 Radiant Cut Fancy Yellow Internally Flawless. Harold Seigel-See video of the Featured Diamond here-http://bit.ly/LIsp98

-“Supply of diamonds is growing at low to mid-single digits and demand is growing at 7 to 15 per cent, which is a nice structural trend for the long-term pricing of diamonds.” Oliver Chen, Citigroup Analyst

-”Diamonds are a way of storing wealth and moving money around easily. The best part of diamonds as an investment is enjoying it while you wait for it to appreciate.” CNBC

-“Exceptionally fine colored diamonds have no fixed price, and, as with fine paintings, set rules do not hold.” S.H. Ball

-Diamonds Trump Gold as Investor’s Best Friend. Read more here-http://bit.ly/Nbde8E

-For the Rich, Diamonds are the New Stocks. Read more here-http://bit.ly/K9wJsz

-Diamonds Are ‘Great Safe Haven,’ Alan Landau, chief executive officer of Novel Asset Management, talks about investment opportunities in diamonds. Watch more here-http://bloom.bg/KxngtB

-Diamonds Are a Great Way to Diversify. Read more here-http://bit.ly/SKeqzF

-Colored diamonds becoming investors’ best friend. Yellow, pink and blue diamonds are catching the eye of investors around the world, according to dealers and industry insiders. Read more here-http://reut.rs/Myl5Oi

-Rare 8-Carat Pink Diamond Unveiled in Australia. Visitors to the Melbourne Museum in Australia can now catch a glimpse of a rare gem. One of the country’s largest discovered pink diamonds has gone on display there. The eight carat rock was found in a mine last year and was donated by owner Rio Tinto. The diamond was originally destined for sale, but could only be partially cut and polished. Watch more here-http://buswk.co/MnSpG1

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QE-FED

-Strong Possibility of Further Fed Easing by September: Goldman. The U.S. Federal Reserve could ease monetary policy when policymakers meet in August or September, although a large move is more likely to come only after the elections later in the year, Goldman Sachs said in a report. Read more here-http://bit.ly/MsXfje

-Senator Schumer Tells Bernanke: ‘Get To Work, Mr. Chairman.’ It appears that Democrats may be taking a more aggressive stand in urging the Fed to do more easing. After 5-minute discussion of the economy, and the ongoing disappointing recovery, Chuck Schumer ended his query of Ben Bernanke at the Senate with this memorable exchange. His conclusion: “Get to work, Mr. Chairman.” Read and watch more here-http://read.bi/OZiWqd and http://bit.ly/Piqmsd

-Bernanke Predicts Slow Progress on Unemployment. Federal Reserve Chairman Ben S. Bernanke told lawmakers that progress in reducing unemployment is likely to be “frustratingly slow” and repeated that the central bank is ready to take further action to boost the recovery, while refraining from pledging any new policies. Read more here-http://bloom.bg/LXFhZY

-Bernanke Says Inflation to Remain Near Fed’s 2% Target. Federal Reserve Chairman Ben S. Bernanke said inflation will probably remain at or below the central bank’s 2 percent target after energy prices reversed their gains from earlier this year. Read more here-http://bloom.bg/MJ4MIz

-Fed Beige Book Says Growth Was ‘Modest to Moderate’ in June. The Federal Reserve said the economy expanded at a “modest to moderate” pace in June and early July, as retail sales and manufacturing cooled in some regions. Read more here-http://bloom.bg/NzBSfx

-Ron Paul: Federal Reserve a Fallacy, Flawed System. Watch more here-http://bloom.bg/NzAucM

-Opposing Paul’s audit bill, Bernanke guards secret transactions with foreign banks. Read more here-http://www.gata.org/node/11586 and http://www.gata.org/node/11580

-China Has Massive Firepower to Battle Global Slowdown: Stephen Roach. Read more here-http://bit.ly/NPuMSL

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SOVEREIGN DEBT

-Buffett Says Euro Destined for Failure Without Rule Changes. Billionaire Warren Buffett said the euro is destined for failure and must be reworked if the 17 countries that share the currency are to keep their monetary union. Read more here-http://bloom.bg/Ny3F2B and http://bloom.bg/OmP9KC

-Greek unemployment rate at new record of 22pc. Greek unemployment hit a record 22.5pc in April and may keep edging higher, with even the key tourism sector unlikely to provide more than fleeting support over the summer as visitors stay away from the recession-hit country. Read more here-http://bit.ly/LZ8y6C

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U.S. DEBT-DEFICIT

-27 Things That Every American Should Know About The National Debt. Read more here-http://bit.ly/Q7jf7u

1) It took more than 200 years for the U.S. national debt to reach 1 trillion dollars. In 1986, the U.S. national debt reached 2 trillion dollars. In 1992, the U.S. national debt reached 4 trillion dollars. In 2005, the U.S. national debt doubled again and reached 8 trillion dollars. Now the U.S. national debt is about to cross the 16 trillion dollar mark. How long can this kind of exponential growth go on?

2) If the average interest rate on U.S. government debt rises to just 7 percent, the U.S. government will find itself spending more than a trillion dollars per year just on interest on the national debt.

3) If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

4) Since Barack Obama entered the White House, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.

5) Barack Obama will become the first president to run deficits of more than a trillion dollars during each of his first four years in office.

-U.S. Public-Pension Shortfall $4.6 Trillion, Budget Group Says. U.S. public pensions are $4.6 trillion short of the amount of assets needed to cover projected liabilities, an advocacy group said, more than twice what Moody’s Investors Service estimated this month. The average plan is 41 percent funded, State Budget Solutions said in a report.

“Without government actions, states, counties, cities and towns all over America will go bankrupt,” said Bob Williams, president of State Budget Solutions. “Failing to understand the scope of the pension crisis sets taxpayers up for a bigger catastrophe in the future.”

Moody’s, which rates debt in the $3.7 trillion municipal market, said in a July 2 report that unfunded liabilities of state and local pensions are $2 trillion, which it said was three times the total reported by governments. Read more here-http://bloom.bg/NFGeFK

-Treasuries Doomsday Is Four Years Away for Vanguard. Vanguard Group Inc., whose $148.2 billion of Treasuries makes it the largest private owner of U.S. debt, says the nation has until 2016 to contain its borrowings before bond investors revolt and drive up interest rates. Read more here-http://bloom.bg/Obm4QK

-California Public Employee Pension Earns 1% on Investments. he California Public Employees’ Retirement System earned 1 percent in the past fiscal year as slumping global stock prices dragged down the largest U.S. pension. The return for the 12 months through June 30 marks the third time in the past five years that it has failed to reach the 7.5 percent threshold needed to meet projected obligations. When Calpers underperforms, the state and its municipalities must make up make up the difference. The state will see its costs rise next year and local governments the following year, the fund said in statement. Read more here-http://bloom.bg/M9roTT

-California City Under Investigation Drained Reserve Funds. Law enforcement officials are investigating possible crimes in San Bernardino’s city government, which almost drained special funds to prop up its budget. Read more here-http://bloom.bg/LsvV2n

-City of Compton may declare bankruptcy by September. The City of Compton, a city of 93,000 people located on the outskirts of Los Angeles, must decide by September 1 whether to seek bankruptcy, according to its two most senior financial officials. Such a move would see it join a growing number of deficit-hobbled California cities that have used the filing to restructure onerous debt loads.

Compton, which has an accumulated $43 million deficit and has depleted what had been a $22 million reserve, will run out of cash to make its payroll on September 1 at its current cash consumption rate, city comptroller Steven Ajobiewe told the city council during a July 17 meeting.

“I have $3 million in the bank and $5 million in warrants due in the next 10 to 12 days,” said city treasurer Doug Sanders. “By then, the council will have a decision to make: don’t pay the bonds, default on them, or have a serious talk about bankruptcy.” Read more here-http://yhoo.it/NzW6Y8

-Nebraska, Not California, is King of Municipal Collapse. Busted land deals and empty subdivisions bankrupted more governmental entities in Brian C. Doyle’s home state than anywhere in America. With the recent financial collapse of three of its cities, it might be easy to assume he’s from California. Doyle, however, lives in Nebraska. Read more here-http://bloom.bg/Mx3vKI

-Buffett Says Muni Bankruptcies Set to Climb as Stigma Lifts. Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., said municipal bankruptcies are set to rise as there’s less stigma attached after three California cities opted to seek protection just weeks apart. Read more here-http://bloom.bg/MJmA66

-Colorado Housing Hangover Saps Taxes as School Obligation Grows. While housing prices in the Denver area bottomed out last year and are now posting modest gains, thousands of homeowners are still trapped in homes worth less than they paid, and foreclosures continue to sap property-tax revenue in hard-hit Denver suburbs, forcing the state to raise its share of funding for public schools in those areas and statewide. Read more here-http://bloom.bg/Lyojjv

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FINANCIAL SCANDAL-FRAUD

-Wasendorf Fraud at Peregrine Lasted 20 Years, U.S. Says. Peregrine Financial Group Inc. Chief Executive Officer Russell Wasendorf said in a signed statement linked to his suicide attempt that he perpetrated a fraud at his Cedar Falls, Iowa-based company that stretched back two decades, according to a federal complaint. Peregrine filed for bankruptcy a day after the National Futures Association said it identified a shortfall of about $200 million in customer funds on deposit. Read more here-http://bloom.bg/NNZCLB and http://bit.ly/Nija01

-Peregrine’s Fraud Went Undetected in Two U.S. Agency Reviews. The U.S. Commodity Futures Trading Commission reviewed operations at Peregrine Financial Group Inc. at least twice since 2006 without detecting the fraud that led to the collapse of the futures broker and a $200 million shortfall in client funds.

The Washington-based agency conducted examinations at Peregrine in 2007 and 2008, according to a list of CFTC reviews obtained through a public records request. The list, which includes reviews between 2006 and Nov. 9, 2011, does not detail what records or procedures examiners evaluated. Read more here-http://bloom.bg/NzWl5u

-WSJ: CEO Of Collapsed Brokerage: ‘Mean-Spirited Regulators’ Made Me Commit Fraud And Spend All Of The Customer Money. Read more here-http://read.bi/Lsfmne

-New York Times Reports Prosecutors Are Building LIBOR-Related Criminal Charges Against Several Banks. Read more here-http://read.bi/NiO3l5 and http://bloom.bg/SIg5pv

-Banks’ Libor Costs May Hit $22 Billion. Twelve global banks that have been publicly linked to the Libor rate-rigging scandal face as much as $22bn in combined regulatory penalties and damages to investors and counterparties, according to Morgan Stanley estimates. Read more here-http://bit.ly/Ml1G1k

-Geithner Sent BOE’s King Libor Revamp Recommendations in 2008. Timothy F. Geithner sent Bank of England Governor Mervyn King recommendations in 2008 to revamp the London interbank offered rate, now at the center of a scandal over allegations the benchmark was manipulated. Read more here-http://bloom.bg/NGAgEv and http://bloom.bg/SIgNTF

-Was the petrol price rigged too? Concerns are growing about the reliability of oil prices, after a report for the G20 found the market is wide open to “manipulation or distortion.” Traders from banks, oil companies, or hedge funds have an “incentive” to distort the market and are likely to try to report false prices, it said. Read more here-http://www.gata.org/node/11579

-HSBC Executive Resigns at Senate Money Laundering Hearing. HSBC Holdings Plc head of group compliance, David Bagley, told a Senate hearing he will step down amid charges the bank gave terrorists, drug cartels and criminals access to the U.S. financial system by failing to guard against money laundering. Read more here-http://bloom.bg/NXC7mT

-BofA Profit Rebound Marred by $22.7 Billion in Mortgage Claims. The bank said demands for buybacks from mortgage-bond investors and insurers surged more than $6 billion in three months to $22.7 billion. Read more here-http://bloom.bg/NX6cTG

-Visa, MasterCard Settle Merchants’ Swipe-Fee Lawsuit. Visa Inc., MasterCard Inc. and some of the biggest U.S. banks agreed to a settlement of at least $6.05 billion in a price-fixing case brought by retailers over credit-card swipe fees. Read more here-http://bloom.bg/MlRxlc

-Capital One to Pay $210 Million in First CFPB Enforcement. Capital One Financial Corp. will pay a total of $210 million to settle charges of deceptive marketing of credit card “add-on” products such as payment protection and credit monitoring. Read more here-http://bloom.bg/Q6ddVV

-JPM Admits CIO Group Consistently Mismarked Hundreds Of Billions In CDS In Effort To Artificially Boost Profits. Read more here-http://bit.ly/MnITTe

-JPMorgan’s Botched Trades May Generate $7.5 Billion Loss. Botched trades by a JPMorgan Chase & Co. unit that Jamie Dimon had pushed to boost profit were masked by weak internal controls and may ultimately saddle the bank with a $7.5 billion loss. Read more here-http://bloom.bg/LXPmGr

-JPMorgan Trader ‘London Whale’ Leaves. Bruno Iksil, the JPMorgan Chase trader known as the “London Whale” has left the bank in the wake of a trading scandal, a person familiar with the situation said. Read more here-http://bit.ly/Q6lSra

-Madoff Sons’ Greenwich and Manhattan Homes Targeted by Trustee. The trustee liquidating Bernard L. Madoff Investment Securities Inc. is laying claim to four homes owned by Bernard Madoff’s two sons and their spouses as he seeks to recoup money lost in the Ponzi scheme. Read more here-http://bloom.bg/M9mNRG

-Iceland Has Hired An Ex-Cop To Hunt Down The Bankers That Wrecked Its Economy. Read more here-http://read.bi/P1hIL9

-Many Wall Street executives says wrongdoing is necessary. A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released. Read more here-http://reut.rs/NFyEeb

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U.S. DROUGHT

-Worst-in-Generation Drought Dims U.S. Farm Economy Hopes. Cloudless skies seldom look so ominous. A worst-in-a-generation drought from Indiana to Arkansas to California is damaging crops and rural economies and threatening to drive food prices to record levels. Agriculture, though a small part of the $15.5 trillion U.S. economy, had been one of the most resilient industries in the past three years as the country struggled to recover from the recession.

“It might be a $50 billion event for the economy as it blends into everything over the next four quarters,” said Michael Swanson, agricultural economist at Wells Fargo & Co. in Minneapolis, the largest commercial agriculture lender. “Instead of retreating from record highs, food prices will advance.”

The U.S. Department of Agriculture declared July 11 that more than 1,000 counties in 26 states are natural-disaster areas, the biggest such declaration ever. The designation makes farmers and ranchers in affected counties about a third of those in the entire country eligible for low-interest loans to help manage the drought, wildfires or other disasters. Read more here-http://bloom.bg/Q6wjtL

-Corn Seen Rallying to Record $8.50 as Drought Kills Crops. Corn may rally to a record $8.50 a bushel as the worst U.S. drought in decades cuts production in the world’s biggest exporter, driving global stockpiles lower, according to broker Newedge USA LLC. Read more here-http://bloom.bg/NFpC0X and http://bit.ly/Okt2of

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REAL ESTATE

-In the U.S. housing market, recovery or Lost Decade? The worst U.S. housing crisis since the Great Depression has been declared over. But is it? Read more here-http://reut.rs/OkUsKA

-Amy Hoak: The top 10 threats facing real estate. CRE outlines biggest concerns for next three decades. Read more here-http://on.mktw.net/NzbZfM

-’Shadow REO’: As Many as 90% of Foreclosed Properties Held Off the Market. Read more here-http://bit.ly/OYGImq

-10 Million Underwater Mortgages And Shadow Inventory Worth $246B Mean Housing Trouble. Read more here-http://onforb.es/NWFdHM

-Sales of Existing U.S. Homes Fell to Eight-Month Low in June. Sales of previously owned U.S. homes unexpectedly declined in June to an eight-month low, showing the recovery in residential real estate will take time to develop. Purchases decreased 5.4 percent to a 4.37 million annual rate last month from a revised 4.62 million in May, figures from the National Association of Realtors showed in Washington. Read more here-http://bloom.bg/OuyYuM

-Home Starts in U.S. Rise to Highest Level Since 2008. Read more here-http://bloom.bg/MwzJ8L

-Calif. cities eye plan to seize mortgages. In the foreclosure-battered inland stretches of California, local government officials desperate for change are weighing a controversial but inventive way to fix troubled mortgages: Condemn them. Read more here-http://yhoo.it/OH7ONE

-Wealthy Homeowners Brace for ‘Mansion Cliff’. Realtors to the rich have started getting a strange new kind of phone call. Wealthy homeowners with properties for sale are suddenly demanding that the brokers get them a deal in the next five months. The reason, they say, is the fiscal cliff. Read more here-http://bit.ly/NzTr0v

-Plan to Raze Detroit Empty Homes in Final Stages. As the next step in an April deal between financially strapped Detroit and the state of Michigan, Governor Rick Snyder is finalizing a plan to tear down thousands of abandoned houses in a bid to make the city safer. Read more here-http://bit.ly/Lsncgy and http://bloom.bg/MwJsvU

-Zuckerberg’s Loan Gives New Meaning to the 1%. Billionaire Mark Zuckerberg is giving new meaning to the term “the one percent.” The Facebook Inc. founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. Read more here-http://bloom.bg/Nxhhez

-China’s June Home Prices Rebound as Sentiment Improves. China’s new home prices in June rose in the most number of cities tracked by the government in 11 months as buyer sentiment improved after the central bank cut interest rates. Read more here-http://bloom.bg/Picm1G and http://bloom.bg/SII4FC

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© 2013, Worldwide Precious Metals Canada Ltd.
www.wwpmc.com

The World Financial Report – July 24th, 2012
Posted by Worldwide Precious Metals on Tuesday, July 24, 2012


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