The World Financial Report – July 31st, 2012
July 31, 2012
-”So it really all comes back to gold. The issues for paper currencies are not isolated to the euro or the dollar, it’s the whole system that’s based on unanchored paper currencies. We are at the end game for all of that, and over the next three or four years I think we will see gold reintroduced in an official monetary role. That can only be done at substantially higher valuations in terms of paper currency.” John Hathaway
-”It is the height of stupidity and hubris to believe that the entire globe will not find an alternative to the US dollar and US debt. We will reach a point where it becomes totally apparent to the world that the US cannot service its debt. This is why every time you see gold sell off, there is a bid coming from certain entities which is supporting the gold price. The bottom line is we have a world which has been dominated by fiat currencies, and we are now experiencing the end, the final throes of that failed global experiment in a purely fiat money based system. And the primary beneficiary of this collapse will be gold.” Michael Pento
-“My biggest black swan, is that I think I’ll be right one day. My worry is that one day they just shut everything down. They say, ‘You know what, we just can’t keep this up anymore, the whole Ponzi (scheme), we just can’t do it and we shut it down.’ All of the markets freeze, and the stocks that you are short are never allowed to go where they were. They might cease gold trading, in the normal sense, or maybe they will even outlaw gold trading. But that’s my biggest worry. Because everything else, everything that one would theorize and watch, in practical terms, all (of it) argues for gold and silver to win the day. So just stay the course.” Eric Sprott
-”Prices of hard assets will go into the stratosphere, and this, of course, includes gold and silver. Last time we talked about my target on gold of $3,500 to $5,000 over the next 12 to 18 months, and then over $10,000 in 3 years. But with all of the money creation we are talking about, the world will experience massive inflation. We already know that gold went from 100 marks to 100 trillion marks, from 1919 to 1923, during the Weimar Republic. With world debt at much greater levels today vs that time period, the gold price will eventually have lots and lots of zeros after it. But people who are still holding paper money may very well find it is worthless. At least gold will protect your purchasing power.” Egon von Greyerz
-“China is taking over that role from India as the biggest gold cash buyer. If the monsoon arrives in India, and if it’s a strong monsoon, then I would expect India to re-enter the gold market. But at the moment we need that Chinese buying or gold would be struggling to stay above $1,500.” Donald Coxe
-“I’m in gold for the long haul. Gold is going up today because the European debt crisis is back in the news and the economic data coming out of the United States stinks. Now they are talking about QE3. QE3, more like flooding the markets with cheap money.” Gerald Celente
-”Not much changes. In 1974 I placed an advertisement in Barrons saying gold would go to $900. That made for good laughs amongst the establishment then at Domonicos Steak House in the financial district. When in early 2000 I suggested gold would go to $1650 there were great laughs amongst the newbies. Now we are going to and through $3500. Whatever drama occurs along the way is meaningless.” Jim Sinclair
-“The gold market has been in this consolidation pattern, and building a base for a long time now. The bigger the base, the larger the move out of that base. If we get a breakout from this very large base that gold has been in, and gold is able to take out $1,700 on the upside, that is where you will really see the shorts panic.
If gold breaks $1,700, it will be absolutely devastating to the gold shorts. With a break above $1,700, I would expect gold to move very quickly to the $1,800 level because of the amount of energy that’s going to be unleashed in that market.” Dan Norcini
-Jim Rickards: “I expect a gold price of 7,000 dollars by the next several years.” Investor and gold expert Rickards believes that the gold price won´t fall below 1.500 dollar per ounce. The loss of confidence in currencies will lead to a new gold standard. Read more here-http://bit.ly/PwZi80
-John Embry: Expect Shortages Of Gold As Soon As Next Month. “We are moving toward a fundamental shortage of gold, and I believe it may start as soon as next month. I think the bottom is being put in right now. You see once again with the stock market trading lower, they just turn the algorithms on and grind the price down.
But this action is all just building a massive base in gold. I think the big issue going forward is this growing shortage of available physical gold. I strongly believe one of the reasons for the shortage is a lot of it is headed East. The last four or five months of the year gold should challenge and easily take out its all-time high.
For what it’s worth, there is an enormous amount of interference in the gold and silver share market. I think that will end as soon as gold and silver break their highs. When that happens, I think it’s going to unleash a rally in these stocks that is absolutely going to stun people. People will be shocked that don’t understand the full extent of the manipulation and how cheap these stocks have become as a result of it.” Read more here-http://bit.ly/P1Sonl
-Aden Sisters: Gold Lows In The Making. The markets have become demanding (or should we say, desperate). In spite of the stimulus by four central banks, and the Eurozone bailing out their banks, the markets want more. More interesting, the gold price has held above its December lows. It’s holding firm, in spite of it all and especially considering the Summer months are seasonally slow months for gold. It’s also not breaking down while the dollar strengthens. This in itself is a bullish sign. It seems to be telling us that more stimulus is coming.
SUMMER: Likely bottom
The June months tend to historically see the most lows for gold. The next popular low month is August. So again, we’ll be watching the $1536 lows carefully during these lazy days of Summer. On the upside, if gold breaks above $1650 and stays there, the worst will be behind us. Then $1700, $1800 and $1900 will be the next stepping stones in the renewed rise. Record high territory would confirm the making of a strong leg upward.
How high is anyone’s guess. It all depends on the explosive stage in the bull market. That phase is still to come and Chart 1 provides a good example of this.
As you can see, gold has been moving within a mega upchannel since 1970. The gold rise since 2001 still has a ways to go before reaching the top side of this mega uptrend. Note on the top chart that gold moved into the upper side of the mega channel when it burst into record territory in September 2009. This was just six months after QE first started in March 2009.
When gold reached the $1900 record level last September, the leading indicator (below) rose to the normal high area and it’s been declining since then, now approaching the uptrend and zero line. This is the meat of the matter, the bottom line. The indicator is telling us that even though gold has risen in a clear consistent bull market for 11 years now, it has yet to reach bubble explosive levels.
Those moves would be more like what we saw in the 1970s. In those days, the full bull market rose 2300%. The current bull market since 2001 has only gained 660%, a far cry from the 1970s level. Chart 2 shows this comparison well. You can see that today’s bull market hasn’t yet begun to move in bubble explosive conditions.
It’s getting closer though and the timing suggests we could see the start of the bubble phase by next year. There really is no fever like gold fever, and the fever hasn’t started yet. For example, for this bull market to gain 2300%, we’d see a $6000 gold price, which would blow the gold price well above the mega upchannel.
Today, however, the mood is down. Many are discouraged by the decline of the last almost 11 months. It’s really not because of the 19+% decline, it’s the length of time that’s taken the enthusiasm out of the bull market. But don’t be discouraged. If this sluggishness lasts another month or even two, it’s fine and new positions should be bought on weakness. Buy on weakness and hold, a good strategy. Read more here-http://bit.ly/Qkk0LH
-London Trader: The LBMA Gold Price Fixing Scheme Is Over. “It is now beginning to be discussed, openly, that the unallocated gold is not at the banks. This is definitely the case with many of the allocated accounts as well. The reason I’m pointing this out is you have a more ‘open’ disclosure that’s taking place with regards to this.”
“As this scandal is brought to light, that the unallocated gold and silver are not there, and much of the allocated gold and silver is not at these banks either, and as you see these naked short positions unwound, the world will witness a massive price rise in in both gold and silver. The move in gold and silver, at that point, will literally frighten most people. They simply won’t understand what is happening.”
I would also add that you see a great deal of negative press regarding gold. Many are saying, ‘Look at 2008, they are going to sell gold along with everything else and it’s going to crash.’ What people don’t understand is gold is on its way back into the financial system.
We had the recent proposal to have gold categorized as a Tier-1 asset. This moves the risk weighting from 50% to 0%. Most people have not grasped the full significance of this proposal. This will change the entire mechanics of the gold market when there is a time of stress, such as the one we witnessed in 2008.
This is one of the major reasons why those calling for a collapse in gold are going to be proven wrong. Yes, in 2008/2009 we did see a significant correction in the price of gold, and that was a result of the liquidity drying up. But in 2008, because gold was not considered a Tier-1 asset, it forced the banks to sell their only remaining liquid asset in order to raise cash. This was done to meet margin requirements.
There was so much gold hitting the bid all at once that it was like a huge bottleneck. This instigated a $200, waterfall-type decline, that amounted to a roughly 20% correction in gold in just 30 days. This took place against tremendous fundamentals for gold. In fact, the fundamentals for gold were so strong, that when gold bottomed in 2009, it only took just over 30 days for gold to break back above the level where the waterfall decline first began.
The difference this time around is that gold may be considered a Tier-1 asset, and what that means is that it will be equal to cash or Treasuries. So there will be no need for banks to liquidate gold in order to meet margin requirements. You may, instead, see fresh new money entering the gold market. It’s going to provide a bid where there was no bid in 2008.” Read more here-http://bit.ly/LP068K
-Stephen Leeb: It Is Absolutely Shocking How Much Gold China is Acquiring. The bottom line is the weak hands are out of gold and China is creating a floor in the market. So if your downside is around $1,520 and your upside is many thousands of dollars, I would buy. Read more here-http://bit.ly/PL44Q4
-Hong Kong’s Largest Bullion Vault Signals Region’s Rising Wealth. Hong Kong’s largest gold-storage facility, which can hold about 22 percent of the bullion now in Fort Knox, will open in September to meet rising demand from banks and the wealthy, according to owner Malca-Amit Global Ltd. Read more here-http://bloom.bg/PKk4Sw
-LME Shareholders Approve HKEx’s $2.2 Billion Takeover Bid. London Metal Exchange shareholders approved the $2.2 billion takeover offer from Hong Kong Exchanges & Clearing Ltd., ending a 10-month contest. Read more here-http://bloom.bg/Qk44cp
-John Hathaway Predicts Gold Will Now Move Substantially Higher. This year long consolidation is in its final stages, and I don’t think gold is going to creep higher when that gets resolved. I think gold is going to move very explosively and not give all of the people who sold it a chance to get back in. Once you have that (turn in the gold price), I think the mining stocks are going to be terrific.
If gold went from $1,600, where it is today, to $2,000, that’s a 25% move. That to me is not a very big deal. It would confirm the next leg is going, but I don’t think the next leg will start off meekly. It will start off with a bang. So could we see gold over $2,000 by year end? I wouldn’t be surprised.” Read more here-http://bit.ly/ObCn3u
-Lawrence Williams: Surprising that gold’s safe haven appeal not more attractive, but this will change. The ‘gold is in a bubble’ merchants reckon that gold has already had its day, but in this writer’s view gold’s day is yet to come this year, next year, sometime but definitely not never! And every increase in sovereign debt brings this time closer. It’s a question of how long governments can keep on muddling through by printing more and more money, thus debasing their currencies, and keep the populace on side, as to when this day will actually come.
When it does come some respected observers think that gold price growth could be explosive, but in reality one hopes not too much so as this would truly signal global financial Armageddon has arrived. Let’s hope and pray some of the prophets of doom have miscalculated, and by some miraculous means we are all guided into a soft landing. But prayer may not be enough. Read more here-http://bit.ly/OIfH5I
-Fed has destroyed money and capital markets, Stockman tells Casey Research. Read more here-http://www.gata.org/node/11608
-GATA files new gold records requests with State, Treasury, Fed, and FOMC. Read more here-http://www.gata.org/node/11606
-Jim Sinclair: A call for an international real investors spring. Read more here-http://www.gata.org/node/11590
-MineWeb notes Jim Sinclair’s call to arms against market manipulation. Read more here-http://www.gata.org/node/11592
-Paul Craig Roberts interview: All investment avenues are rigged. Read more here-http://www.gata.org/node/11609
-Paul Craig Roberts: World financial system now can be sustained only by fraud. Read more here-http://www.gata.org/node/11599
-Ben Davies: Seeking value in a world of financial repression. Read more here-http://www.gata.org/node/11607
-Andrew Hepburn: Market rigging by central banks is gaining respectability. Read more here-http://www.gata.org/node/11603
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
-Adam Hamilton: Silver Undervalued, After being sucked into the general commodities correction, silver has been relentlessly drifting lower since late February. But this weakness has forced the white metal down to a very bullish place technically. Silver is now quite undervalued compared to prevailing gold prices, its primary driver. Thus it has great potential to rally mightily in the coming months to regain much lost ground relative to gold.
The bottom line is silver is now quite undervalued relative to gold. It has been losing ground compared to its primary driver for over a year now following a massive mini-mania spike. But the selling in recent months has been excessive, driving silver too low relative to prevailing gold prices. So silver is likely to outperform gold in this year’s upcoming strong season for the precious metals, which is due to start soon.
Brave contrarians willing to fight the crowd have a great opportunity today to buy silver and silver stocks cheap ahead of this rally. As usual the summer doldrums have frightened the weak hands into selling low. And with silver cheap relative to gold, and silver stocks trading near panic levels thanks to the gold-stock capitulation, the bargains today are amazing. Seize the day and load up before the autumn rally. Read more here-http://bit.ly/Qlfmgr
-Eric Sprott: Silver Market Update. Sprott had this to say regarding the latest Sprott Silver Trust offering: “We thought the timing was good in the sense that the silver price has been in the doldrums and there would be some underlying interest in the metal. We were happy the announced offering reached the target of $200 million because the issuing market is not very robust these days. So we were quite happy with the results. And initially it will allow us to buy seven million odd ounces of silver, which we haven’t bought yet, but it will certainly help the silver market.” Read more here-http://bit.ly/NKDGUD
-Clive Maund: Silver Market Update. Read more here-http://bit.ly/ObMm8P
-CFTC’s Chilton expects silver investigation to finish by October. A four-year probe of potential price manipulation in the silver market may be completed as early as September, according to Bart Chilton, a member of the U.S. Commodity Futures Trading Commission. “I am hopeful and expect the silver investigation to conclude in the not-too-distant future, hopefully in September or October,” Chilton, a 52-year-old Democrat, said in an e-mail. “It has already taken way too long.” Read more here-http://www.gata.org/node/11600
-Ted Butler: U.S. government is part of the war on silver. Read more here-http://www.gata.org/node/11601
-Eric McWhinnie: Silver, A Metal of Sunken Treasure and Champions. Read more here-http://bit.ly/NYwbdZ
-Will This Year’s Olympic Medals Be the Most Expensive in History? Read more here-http://bit.ly/OpWHuB
CHARTS OF THE WEEK-QUOTES-QUICK HITS
-CHART OF THE WEEK: The US Garbage Indicator Is Sending An Ominous Sign For The Economy. Among the 21 categories of items shipped by rail, none have a tighter correlation to GDP than waste. According to a 2010 piece on Bloomberg, economists Michael McDonough and Carl Riccadonna note that waste has an 82 percent correlation to US economic growth. This should be pretty intuitive. The more you produce, the more you throw out. McDonough, a Bloomberg BRIEF economist, tweeted out an update on the indicator. And frankly, it stinks. Waste carloads are way down. Read more here-http://read.bi/OdPYqQ
-CHART OF THE WEEK: Sell-in-May Stock Strategy Survives Scrutiny. “Sell in May and go away” has persisted as a profitable market-timing strategy for stock investors, according to a new study. Read more here-http://bloom.bg/NV9asz
-UBS: Pressure Is Building And We Could See A Big Stock Market Sell-Off Before The Year’s Over. Read more here-http://read.bi/Q6GU3w
-Richard Russell: Bear Market in Stocks to Last Another 15 Years to 2027. Read more here-http://bit.ly/SV840t
-Harry Dent: The ‘Baby Bust’ Is Sending The Dow To 3,000. Read more here-http://read.bi/NvG2te
-CHART OF THE WEEK: Corn-Crop Damage From Drought Poised to Worsen. Read more here-http://bloom.bg/SUEYhG
-Food prices on the rise as drought worsens. Consumers can expect to pay more for beef, poultry and milk, as the worst drought in 50 years spreads across the Midwest, destroying crops and sending corn and soybean prices spiking. The U.S. Department of Agriculture said Wednesday that meat prices would rise significantly, with the consumer price index for beef and veal expected to gain between 3.5% and 4.5% this year. Read more here-http://cnnmon.ie/MIYAEI
-”The original Dallas series started in 1978. Back then, America was very different. We had an ineffective, one-term president, gas prices were through the roof, and we were in a standoff with Iran. I’m glad those dark days are over.” Craig Ferguson
-Bill Gross, who runs the world’s top bond fund at Pacific Investment Management Co., wrote on Twitter that real assets are a “better bet” amid negative real interest rates. Investors may be able to maintain purchasing power with real assets. Bloomberg
-Coming: The End of Fiat Money. Stephanie Pomboy, founder of MacroMavens, sees the world hurtling toward a day in which money will again be backed by gold or other hard assets. Until then, she also sees plenty of trouble. Read more here-http://on.barrons.com/PpYWjv
-House passes Ron Paul’s ‘audit the Fed’ bill. In a move that serves as a capstone to Rep. Ron Paul’s colorful career, the House on Wednesday approved a bill that would let Congress’s chief investigators conduct a full audit of the Federal Reserve’s shrouded decision-making process. The overwhelming 327-98 vote sends the bill to the Senate where Majority Leader Harry Reid, Nevada Democrat, has previously expressed support for an audit though it’s unclear he’ll carve out time for the legislation this year. Read more here-http://bit.ly/OEWhii
-Bridgewater Sees ‘Dangerous Dynamic’ as Largest Economies Slow. Bridgewater Associates LP, the hedge fund founded by Ray Dalio that manages about $120 billion in assets, said the global economy is facing the threat of a self- reinforcing decline after the world’s largest economies slowed in recent months.
Bridgewater said the European debt crisis has been poorly managed, bringing Europe closer to a “debt implosion” or a currency collapse. “The breadth of this slowdown creates a dangerous dynamic because, given the inter-connectedness of economies and capital flows, one country’s decline tends to reinforce another’s, making a self-reinforcing global decline more likely and a reversal more difficult to produce,” Bridgewater said in the report. Read more here-http://bloom.bg/Q7sNL9
-Bob Janjuah: ‘You Have Been Warned!’ Read more here-http://read.bi/Ok22FM
-LIBOR scandal: What is it and why you should care. One bank caught trying to rig an interest rate may be tip of an iceberg. With an estimated $300 trillion in loans or derivative contracts around the world pegged to the interest rate, the scandal is again shaking faith in major international banking centers like Wall Street and London City. Read more here-http://bit.ly/OjVw1u
-In PFG Scandal, JPMorgan Chase Had Surprising Role: It Held Customer Accounts. The investigation into the collapse of Iowa brokerage firm Peregrine Financial Group is notable for one name that has not yet turned up: JPMorgan Chase. Read more here-http://huff.to/P1nlbm
-Canada Shifts Toward China With $15 Billion Nexen Deal. Cnooc’s $15.1 billion cash takeover bid for Nexen Inc. signals a Canadian shift toward China and away from the U.S. as the nation’s traditional oil and natural-gas partner and main export market. Read more here-http://bloom.bg/NKoh6Q
-How America Lost Canada To The Chinese. Chinese oil producers have turned more frequently to Canada after political opposition in the U.S. derailed Cnooc’s $18.5 billion bid for Unocal Corp. in 2005, and after TransCanada Corp. Keystone XL pipeline route south to Texas was blocked by President Barack Obama’s administration last year. Read more here-http://read.bi/NvJ40D
-Iran Pledges to Deploy Warships in the Atlantic. For the second time in less than a year, Iran’s top naval commander has said Iranian Navy vessels will soon be plying the Atlantic Ocean, having made great strides in recent years in expanding its presence beyond Iranian waters. Read more here-http://bit.ly/MMnOQw
-Map: Strategic Oil Reserves Around The World. Read more here-http://read.bi/MJn7HQ
-Iran Nuclear Plants Hit By Virus Playing AC/DC, Website Says. Iran’s nuclear facilities have suffered a cyber attack that shut down computers and played music from the rock band AC/DC, the F-Secure Security Labs website said.
A new worm targeted Iran’s nuclear program, closing down the “automation network” at the Natanz and Fordo facilities, the Internet security site reported, citing an e-mail it said was sent by a scientist inside Iran’s Atomic Energy Organization. The virus also prompted several of the computers on site to play the song “Thunderstruck” by AC/DC at full volume in the middle of the night. Read more here-http://bloom.bg/N2rueC
-Former FBI cyber cop worries about a digital 9/11. In April, an obscure U.S. government agency slipped a hair-raising disclosure into its monthly newsletter: Hackers had successfully penetrated the networks of several natural gas pipeline operators. Here was a rare public acknowledgement that hackers are currently laying the foundation for a critical-infrastructure attack the nightmare scenario that keeps cyber-security pros up at night. Read more here-http://cnnmon.ie/PNY9dh
-China Hackers Hit EU Point Man and D.C. With Byzantine Candor. The hackers clocked in at precisely 9:23 a.m. Brussels time on July 18 last year, and set to their task. In just 14 minutes of quick keyboard work, they scooped up the e-mails of the president of the European Union Council, Herman Van Rompuy, Europe’s point man for shepherding the delicate politics of the bailout for Greece, according to a computer record of the hackers’ activity.
Over 10 days last July, the hackers returned to the council’s computers four times, accessing the internal communications of 11 of the EU’s economic, security and foreign affairs officials. The breach, unreported until now, potentially gave the intruders an unvarnished view of the financial crisis gripping Europe. And the spies were themselves being watched. Working together in secret, some 30 North American private security researchers were tracking one of China’s biggest and busiest hacking groups. Read more here-http://bloom.bg/QM8yri
-Infographic: Comparing The Great Depression To The Great Recession. Read more here-http://read.bi/OjB9l8
-These Manhattan Prices Will Shock The Rest Of America. Read more here-http://read.bi/MmwRaf
-Gun Sales Spike After 12 Killed in Colorado Movie Theater. Background checks for gun purchases spiked 41 percent in Colorado after 12 people were killed inside a suburban Denver movie theater, according to state data. Read more here-http://bloom.bg/QhD4Ky
-Americans Would Rather Save for Vacation Than Kids’ College. Despite the economic slowdown, more Americans are saving up for a new car or big vacation than putting money away for their kids’ college education, according to a survey released this week by America’s financial planners. Read more here-http://bit.ly/LOk57B
-Living Paycheck To Paycheck Is Reality For Two In Five Households. Read more here-http://huff.to/M9219J
-US Poverty On Track To Reach Highest Level Since The 1960s. Read more here-http://read.bi/QG0WXe
-Cash-strapped Argentine town pays employees by raffle. A raffle will determine which civil servants in a small Argentine town will receive their pay first, due to insufficient funds, its mayor announced Monday. “We will draw lots to decide the (order) of payment,” said mayor of Bialet Masse, Gustavo Pueyo, in a broadcast from Buenos Aires private radio station Radio Mitre. Read more here-http://yhoo.it/OH5mHq
-These 21 Sports Franchises Have Been The Worst Investments Since 2000. Read more here-http://read.bi/MIbz9E
-The Coolest Things Ever Found With A Metal Detector. Read more here-http://read.bi/Q5dcfk
-Going Inside the Vault of the Pawn Shop to the Rich. Watch more here-http://bloom.bg/NZ8X4J
-Rare Ferraris May Fetch $20 Million at Auction. It’s only four cars, but together they may fetch upwards of $20 million when they go on the auction block next month at Pebble Beach, near Monterey, Calif. Read more here-http://bit.ly/SUxVFG
-Rarecoloreddiamonds.com Featured Diamond of the Week. This week’s Featured Diamond is a 0.33 Carat Marquise Cut Fancy Intense Pink Diamond. More than 90 per cent of the world’s pink diamonds come from the Argyle mine in the East Kimberley region in the far northeast area of Western Australia. At Argyle, pink diamonds making it to the annual tender are literally one in a million.
For every one million carats of rough diamonds produced from the mine, only one polished carat is offered for sale in the tender. In terms of global diamond production, pinks make up only 0.03 percent. Large pink diamonds tend to go to museums, are gifted to royalty or end up at auction houses such as Christie’s. Christie’s has auctioned only 18 polished pink diamonds over 10 carats in its 244 year history.
Experts agree that prices for colored diamonds, pinks in particular, are on the rise, noting that a barrier was broken in recent years that thrust pinks previously selling for $500,000 to $600,000 a carat into the $1 million-a-carat realm. Buying a pink diamond today is like buying a Picasso painting while he was still alive. Harold Seigel-Watch video of the Featured Diamond here-http://bit.ly/LIsp98
-A five-carat fancy yellow diamond increased in value by 180 percent from 2001 to 2011. Compared that to Berkshire Hathaway stock, which increased by 52 percent for that 10-year period and Coca Cola, which grew 42.5 percent. A $600,000 investment in a five-carat fancy pink diamond would yield about $3 million today. Forbes
-”Natural colored diamonds make up only 1 percent of global production, which gives them unquestionable value. There is a tremendous demand for yellow diamonds, but also blue and pink. There are not enough diamonds to satisfy one-tenth of the new billionaires that every month are created in China.” Bruno Scarselli
-BofA: Here’s What QE3 Will Look Like And What It Will Mean For Markets. Read more here-http://read.bi/SW77VI
-Fed Leaning Closer to New Stimulus if No Growth Is Seen. A growing number of Federal Reserve officials have concluded that the central bank needs to expand its stimulus campaign unless the nation’s economy soon shows signs of improvement, including job growth. Read more here-http://nyti.ms/SUK4dN
-Raskin Says Fed to Debate Benefit of New Bond Buying Plan. Federal Reserve Governor Sarah Bloom Raskin said the Fed next week will debate whether to begin a program to speed economic growth and reduce unemployment through large-scale purchases of bonds. Another round of Treasury purchases “is something that will be debated in the upcoming FOMC meeting,” Raskin said in response to audience questions after a speech in Boulder, Colorado, referring to the Federal Open Market Committee.
“It will be debated against the backdrop of the dual mandate” to ensure stable prices and maximum employment. The FOMC plans to meet July 31-Aug. 1 as reports point to sputtering growth in the world’s largest economy. The Fed’s options to promote faster job gains include expanding its balance sheet, reducing the interest rate paid to banks for reserves held at the central bank and altering communications on the outlook for interest rates, Chairman Ben S. Bernanke said in testimony to Congress last week.
“The road back has been a slow one,” Raskin said at the Graduate School of Banking at Colorado. The Fed has held its benchmark interest rate to near zero since December 2008 and purchased $2.3 trillion in bonds in two rounds of quantitative easing. It has also extended the duration of the average bond on its balance sheet through a program known as Operation Twist. Read more here-http://bloom.bg/M95LrN
-Central Banks Search Toolbox for Ideas as Growth Slows. Central banks are digging deeper into their tool kits in search of innovative ways to unclog bank lending and keep a weakening world economy afloat. With the fifth anniversary of the financial crisis approaching in August, policy makers from the Federal Reserve, the European Central Bank and the Bank of England all meet within 24 hours next week.
Central banks, facing a global recovery that’s sputtering even after they delivered trillions of dollars of liquidity and near-zero interest rates, are having to consider fresh strategies to combat the slowdown. Among the options up for consideration by the monetary authorities in addition to potentially doubling-down on previous policies: taking some of the credit risk of new lending onto their own balance sheets and forcing commercial banks to pay for parking cash in central banks’ coffers. Read more here-http://bloom.bg/Opvgku
-Der Spiegel: The IMF Will Pull The Plug On Greek Aid. According to Der Spiegel, the IMF Wants to Stop Aid to Greece as soon as the ESM is up and running in September. At that time Greece would become bankrupt. Read more here-http://read.bi/Q5OWti
-Citigroup Sees 90% Chance That GreeceLeaves Euro. Citigroup Inc. raised its estimate of the chances Greece will drop the euro in the next 12 to 18 months to about 90 percent, with prolonged economic weakness and spillover for the euro area. Read more here-http://bloom.bg/NZqKJ6
-Niall Ferguson: A Greek Exit Announcement Would Probably Come On A Sunday Night. So, what you would be talking about would be an announcement, presumably on a Sunday night, along the lines of “news just in, those euros that you have in your bank from tomorrow, will be drachma. There’ll be a little bit of a teething problem because the ATMs won’t work for a few days while we get the drachmas into place, but don’t panic. There’s going to be a bank holiday until, let’s say, Thursday.” Read more here-http://read.bi/OnAyx3
-Debt crisis: Greek economy is in a ‘Great Depression’ says Samaras. Greece is in a “Great Depression” similar to the American one in the 1930s, according to the country’s Prime Minister Antonis Samaras. Read more here-http://bit.ly/OGxVEL
-Draghi Says ECB Will Do What’s Needed to Preserve Euro. European Central Bank President Mario Draghi said policy makers will do whatever is needed to preserve the euro, suggesting they may intervene in bond markets as surging yields in Spain and Italy threaten the existence of the 17-nation currency bloc. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” he said, adding: “believe me, it will be enough.” Read more here-http://bloom.bg/OpuDYd
-Spain at 7% Stresses Inadequacies of Rescue Options. Money managers with more than $800 billion are betting European policy makers can only offer Spain a temporary respite from record borrowing costs. “This crisis is unprecedented so the responses need to be unprecedented,” said Arif Husain, the London-based director of European fixed-income at AllianceBernstein, which oversees $407 billion. “Anything the ECB can do would prove temporary. The whole problem is that anything that’s happening at the moment is unconvincing, and markets hate uncertainty.”
Read more here-http://bloom.bg/PN1ARc
-Spain slump deepens as bailout fears grow. Spain’s economy sank deeper into recession in the second quarter, its central bank said on Monday, as investors spooked by a funding crisis in its regions pushed the country ever closer to a full bailout. Economic output shrank by 0.4 percent in the three months from April to June having slumped by 0.3 percent in the first quarter, the Bank of Spain said in its monthly report. Economy Minister Luis de Guindos ruled out a full-scale financial rescue on top of the 100 billion euros already earmarked for the country’s banks, but Spain’s sovereign bond yields stayed mired in the danger zone. Read more here-http://reut.rs/M92wQS
-Spain Postpones Recovery as Valencia Seeks Bailout. Spain said its recession will extend into next year as the region of Valencia prepared to seek a rescue from the central government and European finance ministers approved the bailout of Spanish banks. As the government set out the spending limit for next year’s budget amid a surge in borrowing costs, Valencia said it would tap an emergency-loan fund created last week.
Regions face about 15 billion euros of debt redemptions in the second half, with Catalonia and Valencia the most indebted states. “Like other regions, Valencia is suffering the consequences of liquidity restrictions in markets as a result of the economic crisis.” Read more here-http://bloom.bg/QGDbye
-Spain, Italy Ban Short Selling to Slow Market Turmoil. Spain and Italy reinstated a short-sale ban on stocks as bank shares plunged to record lows, bond yields rose and the euro traded below its lifetime average against the dollar on concern the debt crisis is growing. Read more here-http://bloom.bg/LOTtPd
-Ten Italian cities at risk of bankruptcy, schools may not reopen. Italy’s financial outlook darkened on Monday amid warnings that 10 cities are at risk of bankruptcy and schools may not be able to open in the autumn because of drastic spending cuts. Read more here-http://bit.ly/NYwgvw
-Federal Government’s Debt Jumps More Than $1T for 5th Straight Fiscal Year. By the end of the third quarter of fiscal 2012, the new debt accumulated in this fiscal year by the federal government had already exceeded $1 trillion, making this fiscal year the fifth straight in which the federal government has increased its debt by more than a trillion dollars, according to official debt numbers published by the U.S. Treasury.
The federal fiscal year begins on Oct. 1 and ends on Sept. 30. At the close of business on Sept. 30, 2011 the last day of fiscal 2011 the total debt of the federal government was $14,790,340,328,557.15. By June 29, the last business day of the third quarter of fiscal 2012, that debt had grown to $15,856,367,214,324.44 an increase for this fiscal year of $1,066,026,885,767.29. Read more here-http://bit.ly/Q6LHly
-Cost of debt ceiling fight: $1.3 billion. Turns out there’s a price to pay for incessant fighting in Congress and political grandstanding. The federal government spent an extra $1.3 billion to borrow last year because of the showdown over the debt ceiling, the Government Accountability Office reported Monday. Republicans in Congress and the Obama administration were locked in battle for months over how to raise the country’s legal borrowing limit. Read more here-http://cnnmon.ie/LPfiOs
-New Report Details Threats to State Finances. The State Budget Crisis Task Force, led by Richard Ravitch and Paul Volcker, determines most states “face significant threats to fiscal sustainability.” Read more here-http://bit.ly/MJ6dJl
-GM: Still $42B in the Hole. Despite President Barack Obama’s stories about a resurgent GM ready to repay its bailout tab, the automaker and its former bank still owe taxpayers nearly $42 billion, according to an inspector general’s report. GM owes $27 billion on the nearly $50 billion it received from the auto bailout and Ally Bank, the company’s lending arm, owes $14.7 billion of the $17.2 billion taxpayer-funded bailout it received. Read more here-http://bit.ly/QlBh7o
-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
-Private Pension Plans, Even at Big Companies, May Be Underfunded. After years of poor investment returns, the pension funds of the United States’ largest companies are further behind than they have ever been. The companies in the Standard & Poor’s 500 collectively reported that at the end of their most recent fiscal years, their pension plans had obligations of $1.68 trillion and assets of just $1.32 trillion. The difference of $355 billion was the largest ever, S.& P. said in a report. Read more here-http://nyti.ms/PO7p0L
-The Real Unemployment Numbers. ShadowStats.com Creator John Williams argues the unemployment rate could actually be as high as 22%. Watch more here-http://bit.ly/QjBl7y
-Unemployment rates rise in 27 states as more look for work. Nevada recorded the highest unemployment rate, at 11.6%, same as the previous month. It was followed by Rhode Island at 10.9% and California at 10.7%. North Dakota had the lowest unemployment rate at 2.9%, followed by Nebraska at 3.8%. Read more here-http://usat.ly/LOC6Oi
-8,753,935: Workers on Disability Set Another Record in July; Exceed Population of 39 States. The number of workers taking federal disability insurance payments hit yet another record in July, increasing to 8,753,935 during the month from the previous record of 8,733,461 set in June, according to newly released data from the Social Security Administration. Read more here-http://bit.ly/OEOReV
-Companies Say 3 Million Unfilled Positions in Skill Crisis. Read more here-http://bloom.bg/NY810s
-Former Citigroup CEO Weill Says Banks Should Be Broken Up. Sanford “Sandy” Weill, whose creation of Citigroup Inc. ushered in the era of U.S. banking conglomerates a decade before the financial crisis, said it’s time to break up the largest banks to avoid more bailouts. “What we should probably do is go and split up investment banking from banking,” Weill, 79, said in a CNBC interview. “Have banks do something that’s not going to risk the taxpayer dollars, that’s not going to be too big to fail.” Read more here-http://bloom.bg/NKgV33
-Don’t Force Banks Into ‘Draconian’ Breakups: Whitney. US banks are already starting to separate commercial and investment banking operations, so there’s no need for the radical breakup suggested by former Citigroup chairman Sandy Weill, banking analyst Meredith Whitney told CNBC. “You don’t have to have a draconian move to split up the banks,” Whitney, founder of the Meredith Whitney Advisory Group said. Read more here-http://bit.ly/OjBHrj
-Regulators close 5 small banks in Ga., Fla., Kansas, Ill. for total of 38 US failures in 2012. Regulators closed two small banks in Georgia on Friday and one each in Florida, Kansas and Illinois, bringing to 38 the number of U.S. bank failures this year. Read more here-http://wapo.st/OFTR2K
-CHART OF THE WEEK: David Rosenberg Points To One Indicator That’s Showing No Sign Of A Housing Recovery. Read more here-http://read.bi/Qh4Ml5
-Sales of New U.S. Homes Decrease From Two-Year High. Sales of new U.S. homes unexpectedly dropped in June from a two-year high, a sign the market is being held back by a lack of inventory after builders curtailed projects. Purchases fell 8.4 percent to a 350,000 annual rate, the weakest since January, the Commerce Department reported in Washington. Read more here-http://bloom.bg/NV9J5r
-Pending Sales of U.S. Homes Unexpectedly Fell 1.4% in June. Contracts to purchase previously owned homes unexpectedly dropped in June for the second time in the last three months, a sign of limited momentum in housing. The index of pending home resales decreased 1.4 percent to 99.3 after a revised 5.4 percent gain in May that was less than initially reported, figures from the National Association of Realtors showed today in Washington. Read more here-http://bloom.bg/QKoaeK
-Home Values Post First Year-Over-Year Increase Since 2007. Home values posted their first year- over-year increase since 2007 in the second quarter as the U.S. property market began to lift off a bottom, Zillow said. The Zillow Home Value Index rose to $149,300, a 0.2 percent increase from the second quarter of 2011, according to the property-data company. Read more here-http://bloom.bg/LOvAf5
-Student Loan Debt Tied to U.S. Home Sales Lag, Soss Says. U.S. student loan debt totaling more than $900 billion may be hurting home sales, said Neal Soss, chief economist at Credit Suisse in New York. Higher requirements for down payments and rising debt of college graduates are preventing younger potential buyers from entering the housing market.
“We are trying to migrate towards a much safer underwriting standard, with let’s say 20 percent down payments required,” Soss said. “It takes a certain amount of time for people to save that up, and the more they’re burdened with student loans the less possible it is for them to accumulate that chunk of liquid capital that allows them to make that.” Read more here-http://bloom.bg/P0Ov1X
-Millions of older Americans at risk of foreclosure. A growing number of older Americans are falling into serious mortgage debt, with more than three million borrowers over the age of 50 at risk of losing their homes to foreclosure, according to a recent report from the AARP. Read more here-http://cnnmon.ie/NvtpOF
-Ireland Bulldozes Ghost Estate in Life After Real Estate Bubble. Ireland is opting for bulldozers rather than bankers as it starts to clear the legacy of the housing boom whose collapse brought the economy to its knees. About 1,850 housing developments, unfinished after the bubble burst in 2008, pockmark the Irish landscape, according to government figures. This week, Ireland’s National Asset Management Agency, the state agency set up in 2009 to purge banks of their most toxic commercial property loans, started the destruction of an apartment block for the first time. Read more here-http://bloom.bg/OnFuSG
© 2013, Worldwide Precious Metals Canada Ltd.
The World Financial Report – July 31st, 2012
Posted by Worldwide Precious Metals on Tuesday, July 31, 2012
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