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The World Financial Report – August 7th, 2012

August 7, 2012

GOLD

-CHART OF THE WEEK: Frank Holmes, Challenging the Paradigms of Investing. While Warren Buffett bashed gold, did you know that Berkshire Hathaway has underperformed the metal over the last 10 years? Read more here-http://bit.ly/Nd2UZM

-CHART OF THE WEEK: Casey Research, U.S. Federal Debt After Going Off The Gold Standard. Read more here-http://bit.ly/OJdc8G

-”I’m on record as saying we’re going to $5,000 to $10,000, but gold may go even higher. Civilizations have come and gone, paper money has come and gone, but gold and silver have remained money for 5,000 years. Gold and silver are in very strong bull markets and should remain so for many years to come.” Stephen Leeb, Chairman of Leeb Capital Management

-”All of the assets which have been inflated by the credit bubble will implode. This means tens of trillions of dollars of wealth will disappear out of the world economy. As an example, stocks still have to decline 90% vs. gold. We also know the bond market is a massive bubble, and I believe interest rates are headed to 15% to 20% in the next few years. Bonds will absolutely implode. So we are back to physical gold, which is the only investment that eliminates counterparty risks. We are talking here about physical gold held outside of the banking system.” Egon von Greyerz

-“Talk of a gold bubble is nonsense. There is no sign of the price surge you saw with the Nasdaq bubble or oil stocks in the late 70s, or the jump in the gold price from $380 an ounce to $800 between November 1979 and February 1980.” Marc Faber

-”You must be ready to deploy a good proportion of your assets in the precious metals, energy and agricultural sectors, once the Fed and the ECB follow through on their threats to take even greater steps to destroy their currencies. From all available evidence, that day cannot be far away.” Michael Pento-Read more here-http://bit.ly/RiXFsX

-Alf Field: What Happened to Gold? Part 2. There are no certainties in the investment universe. Investors are forced to weigh up the various risks and assess the probabilities involved before committing themselves to a course of action. Current Elliott Wave and technical studies suggest that the probabilities now favor a strong rise in the gold price.

It may be helpful to consider my personal assessment of the various probabilities at different points in the recent gold market correction. On 23 August 2011 when gold pushed above $1910 my guess was that there was a 90% probability of a severe correction. The target for the decline, as given in my keynote speech at the Sydney Gold Symposium in November, was circa $1480, the point at which the explosive extension in the gold price had started.

The bottom line is that we now have a really strong probability that the correction which started at $1913 on 23 August 2011 has been completed both in terms of Elliott waves and also in terms of time elapsed. If this is correct, the gold price should soon be expressing itself in violent upside action as it moves into the third of third wave which is still targeted to reach $4500. Read more here-http://bit.ly/N1RaKQ

-Gold May Rise to $3,000 an Ounce in 2 Years, Agnico Says. Gold may reach $3,000 an ounce in the next two years as governments pursue economic stimulus programs, Canadian mining company Agnico-Eagle Mines Ltd. said. “I think we are going to still see liquidity, we are still going to see debasement of paper currencies,” Chief Executive Officer Sean Boyd said in a telephone interview yesterday. “That’s going to be reflected in a higher gold price.” Read more here-http://buswk.co/NMtH3U

-John Hathaway: We Are About To See $100+ Up Days In Gold. When asked if central planners are preparing people for more printing, Hathaway responded, “Yes, they definitely are. There was a pretty good article in the FT the other day where the writer said the worst thing would be for the Fed to go half way, and do these things in a luke warm way, because there is nothing worse than having an activist Fed which is ineffectual. That would just destroy confidence.

The implication here is that if they are going to do something it has to be on a very big scale. The economic numbers have been very lackluster, so there is not much to cheer about. I suppose the Fed is starting to feel some real pressure to act on their dual mandate, (one of) which is to get the economy going.

My view is that the gold market has been receiving this fairly cautiously because they (players in the market) have been burned so many times. I know it’s great to see gold up $30 or $40 in the last couple of days, but once the Fed casts the die and it’s clear which way they are going, I think we should see triple digit ($100+ up-move) kinds of days.” Read more here-http://bit.ly/NcW3zi

-Robert Fitzwilson, This Chart From The 70s Gold Bull Market Will Shock People. Going forward we will see massive moves to the upside in the metals and the mining stocks. It is extremely important that KWN readers globally have the proper knowledge and conviction so they are not shaken out of their positions.

As we can see in the chart above, it is impossible to know the exact timing of the explosion in price. The reality is these are chaotic times and anything can light a fire under these markets at any given moment. What is important to remember is that you are attempting to preserve and enhance your capital and your future. Many investors overcomplicate things and fall into the trap of second guessing the course they have set.

Investors simply need to take their positions in real assets, and trust their convictions. They also need to exercise patience. Remember, in the end we are all spectators watching this great tragedy unfold. The key here is to protect yourselves and your family by properly positioning your portfolio.” Read more here-http://bit.ly/NWahqK

-John Embry: Gold To Explode, But Europe Is In Terminal Condition. Read more here-http://bit.ly/M6gkKK

-Louise Yamada: Gold & Silver at Critical Points in This Cycle. Read more here-http://bit.ly/PoRaCM

-Richard Russell: Brutal Times, Here Is The Key Going Forward. Read more here-http://bit.ly/OtzXfC

-South Korean central bank says it bought 16 tonnes of gold in July. South Korea’s central bank said today it bought 16 tonnes of gold in July as easing financial markets after a turbulent June allowed it to push ahead with efforts to diversify its massive foreign exchange reserves. Read more here-http://www.gata.org/node/11626

-Has the BIS gold pool succeeded the London Gold Pool? Read more here-http://www.gata.org/node/11622

-Swiss gold repatriation movement leader interviewed. Read more here-http://www.gata.org/node/11628

-Jan Skoyles: Vietnam’s new war against gold. Read more here-http://www.gata.org/node/11627

-Infographic: Global Gold Mines and Deposits Ranking 2012. Read more here-http://bit.ly/Rhuarc

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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

-”If silver can get some momentum going to the upside, then we would look at the possibility of testing the top of this triangle again, around $32.70, and most importantly just below $38. If silver can clear $38, that would give us the dynamic to see a move to the September high, from 2011, near $50. We believe this is going to happen.” Tom Fitzpatrick, Citi Analyst

-”Silver is my favorite asset to hold for the long term. Seasonally, this an excellent time of the year to add to your positions, especially so at these price levels. Commercial investors have bought this market heavily five times since the correction started. They clearly have incredible confidence that the price of silver is going higher.” Morris Hubbartt

-Dan Norcini: An Absolutely Stunning Development In The Silver Market. “One of the things I’ve noted here is the hedge fund outright short positions, we’re just talking about the number of outright short positions that the hedge funds have in the silver market, it is the largest position that I’ve got on my records going back to the beginning of 2007. We’re talking about a five and a half year period. What this shows you is that the hedge funds have been making some pretty decent size bets on the short side of silver.

And, again, if they get caught on the wrong side of that market, and all of the sudden you get a round of QE coming, you are going to have an awful lot of potential for some (big) buying in (that market) because all of those shorts are going to head to the exits at the same time. (This will also) bring in some new money on the long side of the market. If that’s the case, you’ll see upside resistance levels on silver get violated very quickly (because of the short squeeze).” Read more here-http://bit.ly/Mmc5fy

-Got Gold Report: Most important silver COT chart for 2012. Over at the Got Gold Report, Gene Arensberg’s assistant, Colette Chapman, reports that traders who constitute what’s called “managed money” are hugely short silver now, which Arensberg considers bullish since those traders will be especially quick to cover and go long on any rally. Arensberg thinks the key price is between $28.50 and $29. Read more here-http://www.gata.org/node/11620

-James Turk: Silver Market Update. “A huge base is now in place for gold and silver at $1600 and $27. We just need a spark to get a rocket launch in precious metal prices. It would be an upside explosion from here, meaning that this bull market would be taking along with it as few people as possible, which I always see as a key characteristic as to how bull markets work.

An upside explosion would mean a lot of the money that is now on the sidelines would remain on the sidelines because there would be little opportunity to buy on pullbacks, which is what I mean by an explosion. The market will relentlessly keep going higher. We have probably missed the last chance to buy gold at $1580 and silver under $27. So readers need to get ready for the big summer rally I have been expecting.” Read more here-http://bit.ly/OE14Cg

-Silver needs gold’s coat tails to rise further. According to David Morgan, while silver prices are likely to move higher over the rest of 2012, a move up in gold will be needed as a catalyst. Read more here-http://bit.ly/QyD88S

-Dr. Jeffrey Lewis: Silver Price Psychology. Read more here-http://bit.ly/RjzZob

-Dr. Jeffrey Lewis: Stock to Flow Silver Supply in a Fiat Depression. Read more here-http://bit.ly/PG2YkH

-Steve St. Angelo: Why Is The Future Silver Supply More at Risk than Gold? Read more here-http://bit.ly/N5LQpT

-WWII Wreck Photos: 48 Tons of Silver Recovered 3 Miles Down. Row after row of silver bricks lie stacked aboard the sunken S.S. Gairsoppa, torpedoed in the North Atlantic by a Nazi U-boat in 1941. The Odyssey Marine Exploration salvage company this month announced it had retrieved 48 of the 240 tons of silver in the British merchant steamship’s hull. Read more here-http://bit.ly/RfR9TK

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CHARTS OF THE WEEK-QUOTES-QUICK HITS

-CHART OF THE WEEK: Casey Research, U.S. Dollar Since The Founding of The Fed. Read more here-http://bit.ly/OJdc8G

-CHART OF THE WEEK: Big Mac index, The Economist’s latest Big Mac index. Read more here-http://econ.st/NzJHpL

-”This year in Canada 1,000 people will reach age 65 every day. This will continue every day until the year 2029. This aging tsunami sweeping over Canada will bring changes that we cannot even envision today.” Financialpost.com

-“I think this rally we have seen in the US stock market is somewhat preposterous. It’s all premised on more QE, and I don’t think QE is going to do anything for the state of the economy. But it will eventually create a great deal more inflation. I think at some point we will see a violent correction in the stock market. A lot of people invest in the general stock market because they think everything is fine, but they will be disabused of that notion, and as I said, I think the correction could be violent.” John Embry

-“The fundamental problem in Europe is that the economies [there] are not generating enough taxable revenues to meet current bills, let alone growing future entitlements and let alone the huge stack of already molding debt that exists,” he said. “In the face of that, I don’t know what else they can do but talk.” Charles Biderman, Chief Executive and Founder of TrimTabs Investment Research

-”The 800-pound gorilla in the room is the US government’s horrendous deficits and addiction to debt. The Fed is keeping interest rates low to sustain the illusion that the US government is solvent, while hoping that low rates will also jump-start the US economy and thereby increase federal tax revenue to service the mountain of debt. But despite all of the money printing by the Fed from buying government paper, the economy remains in the doldrums, so the US government’s financial position is becoming increasingly precarious. That’s why the US lost its triple-A status. We should expect another downgrade soon, just like is happening with the serial downgrades in Europe.” James Turk

-Jon Hilsenrath: World Central Banks On “Red Alert.” Jon Hilsenrath, the world’s best central bank reporter, says that the conclusion from this week is that the world’s big central banks (the Fed and the ECB, natch) are on ‘red alert’ over the state of the US economy.

Ben Bernanke and Mario Draghi, with words but not yet actions, demonstrated this week that they are on red alert about the global economy. Expectations are now high that Mr. Bernanke’s Federal Reserve and Mr. Draghi’s European Central Bank will act soon to address those worries. But both face immense tactical and political challenges and neither has a handbook to follow. Read more here-http://read.bi/OJKK6w

-The Best Fed Source There Is Says More Stimulus Is On Its Way. The best Fed source there is WSJ’s Jon Hilsenrath says the Fed is ready to roll on more stimulus. Read more here-http://read.bi/Np4jLL

-Art Cashin: Current Liquidity In System Risks Hyperinflation. “By standards, the amount of liquidity that’s around the globe should be hyperinflationary. It is not. It is because when Bernanke flies over your house and drops millions of dollars in fresh cash on your lawn, you are so terrified you pick it up and store it in the garage. They’ve got to find a way to unlock all of that liquidity in the garages around the globe. This is a very, very different time than virtually anything we’ve seen before.” Read more here-http://bit.ly/N1pt73

-Are Fiat Currencies Headed for a Collapse? As the investment world eagerly awaits more stimulus, a debate on a previously unthinkable topic has started to emerge can fiat currencies survive round after round of debasement? Some heavy hitters say the answer is no.

A fiat currency derives its worth from the issuing government it is not fixed in value to any objective standard. That means central banks can print as much money as they want. If an economy is struggling, injecting more notes into the system juices activity but lowers the value of the currency in question.

With major central banks all desperate to stimulate their economies, some say currencies have entered a dangerous new phase often described as a race to the bottom. Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, says investors will soon start to demand fiat currencies be backed by gold or other hard assets.

“It’s already happening, you’re beginning to see that trend with central banks stocking up on gold. The estimate is that at least half of the buying is central bank buying. They are looking to the day when they can say okay, our currency is backed by gold and therefore we’re a strong country,” Mobius told CNBC Asia. Read more here-http://bit.ly/OFZJyn

-Paul B. Farrell: The Real Crash is dead ahead as 2008 is forgotten. “Facebook will become the poster child for the current social-media bubble,” warns economist Gary Shilling in his latest Forbes column, “just as Pets.com was for the dot-com bubble.” Yes, Wall Street is repeating the 2000 dot-com crash as today’s social-media bubble crashes and burns. Read more here-http://on.mktw.net/T3Au8C

-Al Lewis: The depression is here it’s just invisible. The Great Depression that Federal Reserve Chairman Ben Bernanke claims to have averted has been part of the background radiation of our economy since at least 2008. It’s just that like radiation it’s invisible. Read more here-http://on.mktw.net/McFB1b

-Pimco’s El-Erian Says World in Serious Slowdown. Pacific Investment Management Co.’s Mohamed El-Erian called recent declines in purchasing manager indexes in Europe and Asia “frightening” and said the world economy is suffering its severest slowdown since the global recession ended in 2009. “This is a serious, synchronized slowdown,” El-Erian said in an interview. Read more here-http://bloom.bg/Ouh5×6

-Two Large Corporations Just Borrowed At The Cheapest Rates In History. Unilever, the large European food conglomerate, just sold $550 million worth of 5-year notes with a coupon of just 0.85 percent. According to Bloomberg, this is the lowest ever borrowing cost for U.S. debt. Read more here-http://read.bi/NUT4hc

-Libor Crime Probe in U.K. Starts as U.S. Readies Indictments. The U.S. Justice Department is preparing to file charges this fall against traders from several banks in the global probe of interest rate-rigging. Meanwhile, U.K. prosecutors haven’t even decided whether they have a case. Read more here-http://bloom.bg/Nn9Q5C

-At least three banks seen central to LIBOR rigging. Read more here-http://www.gata.org/node/11616

-Douglas Keenan: My thwarted attempt to tell of LIBOR shenanigans. Read more here-http://www.gata.org/node/11615

-Former UBS Strategist Says He Was Pressured to Mislead. UBS AG was sued by a former senior commercial mortgage-backed securities strategist who claims he was terminated for telling supervisors that he was being pressured to publish misleading reports. Read more here-http://bloom.bg/OMco19

-Iran Sentences Four People To Death By Hanging For Their Part In A $2.6 Billion Bank Fraud. Read more here-http://read.bi/T3YSai

-The US Drought Is So Bad People Are Painting Their Lawns Green. Read more here-http://read.bi/R93X2A

-Richest Retirees Settle for Seattle Rain as Florida No. 2. The U.S.’s richest retirees are spurning Florida’s sun in favor of Seattle’s rain and the company of Steve Ballmer. Read more here-http://bloom.bg/Mca933

-Asian Millionaires Firing Banks Take Charge of Own Wealth. Clinton Ang, the grandson of a gunny- sack seller who emigrated last century from China to Singapore, oversees a fortune valued at almost $80 million for himself and three siblings. Read more here-http://bloom.bg/PsWQvX

-Zuckerberg Fortune Falls $1.6B as Facebook Shares Drop. Facebook’s co-founder and chief executive officer, Mark Zuckerberg, continued his fall down the ranks of the world’s billionaires as the company’s shares plummeted to a record low. Read more here-http://bloom.bg/R60oWv

-Facebook admits millions of accounts are fake. In a quarterly filing with the Securities and Exchange Commission, the social media company said that as many as 83 million of its accounts are fake. It also reported that as many as five percent of its active users have duplicate accounts. Facebook members grew to 955 million this year. Read more here-http://bit.ly/NMvuGi

-Europe’s Richest Woman Sells Island for $60 Million. Liliane Bettencourt, Europe’s richest woman, sold her private island in the Seychelles to a marine conservation organization for $60 million. Read more here-http://bloom.bg/MjKlIh

-Mystery Billionaire Builds World’s Largest Yacht. The mega-yacht wars have escalated, with a Middle-Eastern billionaire building a 590-foot ship that’s expected to be the largest yacht in the world when it launches next year. Read more here-http://bit.ly/N3ip87

-Used Lamborghinis Linger on H.K. Lots Amid China Lull. Waiting lists for ultra-luxury cars in Hong Kong are getting shorter and used-car lots are cutting prices on Lamborghinis, Ferraris and Bentleys in the latest sign of China’s slowdown. Read more here-http://bloom.bg/QqQq4o

-Holyfield Sells Gloves From Tyson Ear-Bite Fight After Home Sale. Evander Holyfield is selling the boxing gloves from the heavyweight bout in which Mike Tyson bit off part of his ear, auctioning medals, championship belts and other memorabilia after losing his home to foreclosure. Read more here-http://bloom.bg/PnD3Oj

-Infographic: This Is How Much It Would Cost The Average Person To Be Iron Man. Read more here-http://read.bi/N2blsd

-9 Unforgettable Quotes From Milton Friedman. Read more here-http://read.bi/T3grXO

-Jim Chanos’ Recommended Read For Every Wall Streeter. Read more here-http://read.bi/Orj99g

-Missile Defense Staff Warned to Stop Surfing Porn Sites. The Pentagon’s Missile Defense Agency warned its employees and contractors last week to stop using their government computers to surf the Internet for porn sites, according to the agency’s executive director. Read more here-http://bloom.bg/Mzo6tx

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RARECOLOREDDIAMONDS.COM

-Rarecoloreddiamonds.com Featured Diamond of the Week. This week’s Featured Diamond is a 1.23 Round Brilliant Cut D Flawless White Internally Flawless Diamond. Harold Seigel-See video of the Featured Diamond here-http://bit.ly/LIsp98

-Henri Barguirdjian CEO of Graff’s: Diamonds becoming a Part of the Ultra Rich’s Investment Portfolio.

LL: You recently mentioned to me you are seeing an interesting trend developing on Wall Street where diamonds are now be considered an investment. Can you please explain?

HB: This is something that has never happened before. We are being approached by money managers of very wealthy clients, or the wealthy clients themselves who are all considering investing a small percentage of their portfolio in diamonds. This is something we have never seen in the past. These people never considered diamonds as an investment.

They considered them as something very beautiful and nice to own, it made their wife happy and its gorgeous to look at but they always neglected the financial aspect of the transaction. And now when they see what has happened with the price of diamonds and they realize it is not so much a silly idea.

This is why financial institutions are seriously studying the diamond market. We have been getting lots of calls by people who are doing reports on this and they want charts and price history so they can formulate their research.

LL: What kind of price range are these investors looking at?

HB: You are talking about people in the Forbes 400 and they all invest $50-100 million in diamonds which is a small percentage of their net worth but in our business 50 to 100 million dollars is a very large transaction. These transactions are enough to push up the price of diamonds up very, very high. Read more here-http://bit.ly/QkydWE

-$7.8 Million, 12-Carat Pink Diamond On Display In Person And Online. Significant pink diamonds are still in great demand and a new one has just entered the market and it’s available for purchase outside of an auction format. A 12.27 fancy pink diamond is being offered by M.S. Rau Antiques in New Orleans. Known as the “Majestic Pink Diamond,” it has characteristics that are among the most desirable and rare in fancy colored diamonds, including VVS1, Type IIa designation.

Type IIa colored diamonds are among the most desirable by collectors because they rarely contain internal imperfections and are famous for their color. The VVS1 designation translates to “Very, Very Slightly Included,” denoting very high clarity rare for a colored diamond of this size. The cushion-cut diamond is mounted on an 18k rose gold and platinum ring. The asking price is $7.85 million. Read more here-http://onforb.es/Ot858E

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QE-FED

-Fed Signals More Steps to Spur Economy Amid Slower Growth. The Federal Reserve said it will ease policy further if necessary to boost the weakening expansion and reduce unemployment. The Federal Open Market Committee “will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability,” it said in a statement at the end of a two-day meeting in Washington. “Economic activity decelerated somewhat over the first half of this year.” The Fed left unchanged its statement that economic conditions would likely warrant holding the benchmark Fed funds rate near zero “at least through late 2014.” Read more here-http://bloom.bg/M4cGkz

-BofA: This Is What Needs To Happen For The Fed To Announce QE3. Read more here-http://read.bi/NVhE1v

-Treasury prepares for negative-rate bidding in bond auctions. The U.S. Treasury Department said today it is developing a floating-rate note program that could be operational in a year or more, while it is preparing for possible negative-rate bidding. Read more here-http://www.gata.org/node/11624

-Ron Paul: Don’t End Fed, Just End Secrecy. Texas Republican Ron Paul said his efforts to audit the Federal Reserve were less about “ending the Fed” and more about making its actions more transparent, he told CNBC in an interview. The former Republican presidential contender, whose “Audit the Fed” bill received wide Congressional backing last week but is expected to languish in the Senate, conceded that his legislation’s chances of passage “were not all that great.” Still, he vowed to continue highlighting what he insists is Fed Chairman Ben Bernanke’s penchant for secrecy with taxpayer dollars. Read more here-http://bit.ly/MkHfUw

-China prepares vast stimulus as slump threatens Asia. China has ditched its reform strategy and prepared a vast stimulus package as the country’s soft-landing turns uncomfortably hard, with recession warnings flashing across East Asia. Read more here-http://bit.ly/NMsR7g

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SOVEREIGN DEBT

-Draghi Says ECB Working on Bond Plan Amid Bundesbank Concern. European Central Bank President Mario Draghi signaled the ECB intends to join forces with governments to buy bonds in sufficient quantities to ease the region’s debt crisis, while conceding that Germany’s Bundesbank has reservations about the plan.

ECB bond purchases would likely focus on shorter-term maturities, would be conducted in a way to soothe investors’ concerns about seniority, and wouldn’t breach European Union rules prohibiting the financing of government deficits, Draghi told reporters in Frankfurt. ECB officials are working on the plan and details will be fleshed out in coming weeks, he said. Read more here-http://bloom.bg/MAPCqy

-IMF Predicts Euro Crisis Resolution Will Be Prolonged. The International Monetary Fund said today that the euro-area debt crisis has exacerbated global financial instability and an orderly adjustment process is likely to be prolonged and costly. Read more here-http://bloom.bg/QgTtNa

-John Taylor: The Euro Crisis Has Only Just Begun. Taylor said the world has only seen the “second or third inning” of the euro crisis because Europe is still only dealing with liquidity problems not to mention the solvency problems and the “structural issues that are even beyond solvency” that must be addressed in order to turn things around. To illustrate just how twisted the economic dynamics in Europe are right now, Taylor used an interesting analogy:

Germany has to realize that every time they sell a Mercedes to somewhere in southern Europe, [southern Europe] is only borrowing German money in order to do it, and they’re never going to pay for that Mercedes. Either Germany is going to have to write off the Mercedes because [southern Europe is] never going to pay for it, or Germany shouldn’t sell that Mercedes, but they don’t want to admit that. It’s just the fact of life.

[Germany is] either going to write the check or they’re going to go through a very, very severe recession because nobody’s going to buy Mercedes, because they haven’t got any money, because Germany’s not writing a check. So, it’s just like, you can’t get out of that fact. Read more here-http://read.bi/NV4Nwr

-Eurozone break-up would trigger £1 trillion of QE, see banks nationalised and deep recession, warns Fathom. A Eurozone break-up would plunge the UK into an even deeper recession than the last one, force the Government to nationalise the banks, and trigger a £1 trillion bout of money printing, leading economic consultancy Fathom has warned. Read more here-http://bit.ly/NKBxLs

-Euro-Area Unemployment Rate Reaches Record 11.2%. The jobless rate in the euro area reached the highest on record as the festering debt crisis and deepening economic slump prompted companies to cut jobs. Unemployment in the economy of the 17 nations using the euro reached a revised 11.2 percent in May and held at that level in June, the European Union’s statistics office in Luxembourg said. That’s the highest since the data series started in 1995. In Germany, unemployment climbed for a fourth straight month in July, a separate report showed. Read more here-http://bloom.bg/MdGEOs

-Spain Jobless Reaches Post-Franco Record Amid Austerity. Spanish unemployment rose to the highest on record after Prime Minister Mariano Rajoy made it easier to fire workers while implementing the steepest budget cuts in the country’s recent democratic history.

Unemployment, already the highest in the European Union, rose to 24.6 percent in the second quarter from 24.4 percent in the prior three months, the National Statistics Institute said in Madrid today. That was the largest proportion since at least 1976, the year after dictator Francisco Franco died, prompting the transition to democracy. Read more here-http://bloom.bg/Pv8nen and http://bit.ly/T3FRVi

-New U.K. Strategy Urged as Triple-Dip Recession Predicted. Chancellor of the Exchequer George Osborne was urged by businesses and his political opponents to reconsider the U.K.’s austerity strategy, as economists warned the nation could face a “triple-dip” recession. Read more here-http://bloom.bg/NbOCZm

-Greek Banks Follow Euripides to Help Borrowers. Greek banks faced with mounting mortgage delinquencies are following the advice of 5th-century BC playwright Euripides: Time heals. Banks restructure loans rather than foreclose, extend terms to as long as 45 years, grant payment holidays of up to a year when borrowers are only required to make interest payments, or add guarantors to loans, often children who will eventually inherit the property. Read more here-http://bloom.bg/OqiiTs

-IMF Warns Government Debt Holdings Risk Bank Stability in Japan. Japanese banks are placing the financial system at risk by putting too much of their money in government bonds, the International Monetary Fund said, echoing comments by Bank of Japan Governor Masaaki Shirakawa. Read more here-http://bloom.bg/Mf3s0q

-Swiss National Bank overwhelmed in desperate campaign to devalue franc. There is a “new China” active in the currency markets, according to analysts, as Switzerland’s battle to weaken the franc inflates its stockpile of foreign currency reserves. The Swiss National Bank was forced to buy tens of billions of euros in May and June after the eurozone crisis worsened, creating strong haven demand for the franc and threatening the ceiling the central bank set for its currency last September.

The SNB is prepared to buy as many euros as it takes to hold the franc at SFr1.20 against the euro to protect the country’s exporters. As a result, Switzerland’s foreign currency reserves have leapt more than 40 per cent this year to SFr365 billion ($375 billion), propelling it to the sixth largest holder of foreign exchange in the world from ninth last year, behind China, Japan, Saudi Arabia, Russia, and Taiwan. Read more here-http://www.gata.org/node/11623

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U.S. DEBT-DEFICIT

-San Bernardino, California, files for bankruptcy with over $1 billion in debts. San Bernardino filed for bankruptcy protection on Wednesday citing more than $1 billion of debts and making it the third California city to seek protection from creditors. Read more here-http://reut.rs/MdsexO

-Obama Advisers Project $1.2 Trillion Deficit for 2012. The Obama administration forecast the federal budget deficit will be $1.21 trillion this year, down from $1.33 trillion projected in February, as gridlock in Congress slows government spending. Read more here-http://bloom.bg/OpPzAV

-Federal Deficit Highest Since 1940s. The federal deficit is higher than it has been since the 1940s, in the years immediately after World War II. In every second of 2011, for example, the government spent $114,253 even though it was only taking in $73,043 in revenue. According to Face the Facts, that means the federal government spent $41,210 every second that it didn’t actually have. Read more here-http://bit.ly/R9NQNG

-U.S. Post Office Nears Historic Default On $5-Billion Payment. The U.S. Postal Service affirmed it won’t make a required $5.5 billion payment due Thursday to the U.S. Treasury for future retirees’ health care, an obligation the agency said must end for it to become financially viable.

The service has said for months it couldn’t afford the payment, which was initially due last September, nor a $5.6 billion payment required by Sept. 30 for this year. Postal legislation passed by the U.S. Senate on April 25 would slow the schedule for those obligations. Read more here-http://bloom.bg/NJKWTA and http://read.bi/PmG1CF

-Congress Leaders Agree on Stopgap U.S. Spending Plan. An agreement reached by congressional leaders and President Barack Obama to fund the U.S. government through March will give lawmakers time to debate $607 billion in spending cuts and tax increases scheduled to start in January. The House and Senate haven’t come up with a plan to avert the spending cuts, which total $1.2 trillion over 10 years.

Unless Congress acts, the George W. Bush-era tax cuts and other tax breaks will expire Dec. 31. Congressional leaders said they will vote in September on a $1.047 trillion, six-month stopgap measure that would keep the government operating after the start of the fiscal year on Oct. 1. The funding level is consistent with an August 2011 law that raised the federal debt ceiling. Read more here-http://bloom.bg/PmTtXd

-John Williams: The US Is Essentially Bankrupt. Perpetual QE needed to service massive debt load and $5 trillion per year in unfunded liabilities. Read more here-http://bit.ly/QF6CyY

-CHART OF THE WEEK: S&P 500 Pension Cuts May Ease Competition Risk. Efforts by General Motors Co. and other companies to reduce pension obligations to employees may be essential for them to prosper worldwide, according to Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist. Read more here-http://bloom.bg/MS0uER

-Police Chief’s $204,000 Pension Shows How Cities Crashed. Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago. He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries. Read more here-http://bloom.bg/Op1BYu

-U.S. loves cops and firefighters but not their pensions. The average annual pension for Suffolk County cops who have retired since 2007 was $86,702, according to figures from the Manhattan Institute, a public policy think tank, against $37,270 for other county employees, excluding teachers. The county, facing a three-year deficit of $530 million, declared a fiscal emergency in March. Read more here-http://reut.rs/T3y5e8

-Infographic: How Taxmageddon Will Crush The American Family. Read more here-http://read.bi/QBs08v

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STOCK MARKET

-Latest Market Glitch Shows ‘Trading Out of Control.’ Wednesday morning’s stock snafu had a familiar ring to it mysterious volume in trades that simply could not have been made by a human comes surging out of nowhere, causing brief but acute market mayhem. By now, many players on trading floors have gotten used to the disruptions that can come from the highly automated new world of high-frequency trading.

But that doesn’t mean they like it. “This algorithmic trading is kind of out of control,” Phil Silverman, managing partner at Kingsview Capital, said as officials at the New York Stock Exchange tried to make sense of what happened. “It seriously hurts investor confidence.” By mid-afternoon, no one still quite knew exactly why about 150 stocks experienced a blinding surge in market volume, causing momentary disruptions in the prices of nine Dow components and a slew of others across various categories. Read more here-http://bit.ly/Mkn9d4

-Knight Explores Options on $440 Million Trade-Error Loss. Knight Capital Group Inc. said losses from Wednesday’s trading breakdown are $440 million, almost quadruple its 2011 net income and more than some analysts had estimated, and the firm is exploring strategic and financial alternatives. Its stock has lost 66 percent in two days. Read more here-http://bloom.bg/Os1GKS

-UBS: NASDAQ’s ‘Gross Mishandling’ Of The Facebook IPO Cost Us $356 Million. Read more here-http://read.bi/R9z0qs

-In His Best Letter In A Long Time, Bill Gross Explains Why Stocks Are Going To Be Horrible Investments. Read more here-http://read.bi/OpYMGI

-Bill Gross: ‘Expect Less’ From Fear-Addled Market. Pimco bond maven Bill Gross tempered his dour outlook for stocks, telling CNBC on Wednesday that equity bulls “should expect less” from a market bound to be undermined by slowing global growth that will lower returns. Read more here-http://bit.ly/OqGat1

-David Rosenberg: The Equity Cult Is Clearly Dead. U.S. investors withdrew a net $11.5 billion out of equity funds last week (according to the Lipper data including ETFs) the sharpest outflow in two years. Taxable bond funds attracted over $3 billion and that brings the year-todate tally to $151 billion as the secular shift in investor behaviour towards income-generation continues apace. For those who are willing to dip some toes into the equity risk pool and get paid a rent while they await the next bull run, hybrids (“income equity”) took in a solid $586 million of fresh inflow last week. Read more here-http://read.bi/NbObyf

-Why TrimTabs’ CEO is 100% Bearish. Despite Mario Draghi’s reassurance that the ECB will do everything in its power to save the euro zone, Europe is not going to do anything meaningful and central bank action will not save the equity markets on the contrary, they’ll “implode”, Charles Biderman, Chief Executive and Founder of TrimTabs Investment Research, told CNBC.

“We see no chance that Europe is going to do anything meaningful. Mario Draghi and the other officials have been talking a good game for many years now but nothing has actually happened,” he said. Biderman defended his 100 percent bearishness on equity markets, saying that central bank interference in the markets would not last, and could do permanent damage.

“I’m not saying that the world is going to zero, I’m saying that the companies that have been profiting from the central bank rigging of the equity and bond markets, will suffer as those markets implode.” “You can’t fix markets forever without fixing the underlying problem of income and spending on a societal and governmental basis.” Read more here-http://bit.ly/OqBV0j

-Hedge Fund Titan Louis M. Bacon Plans to Return $2 Billion to Investors. Bacon has decided to return a large sum of money to investors, a revealing illustration of how dried-up markets, vicious volatility and a paralysis of ideas all borne of the crisis in Europe have been particularly hard on the traders who swing for the fences on currencies, stocks and bonds all over the world. Read more here-http://bit.ly/NbMIYx

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OIL-NAT GAS

-The Case for China’s Canadian Oil Grab. China’s $15.1 billion bid to acquire Canada’s Nexen oil company threatens to turn China into an owner rather just a major buyer of Canadian oil, and prompts a surge in nationalist rhetoric that is attempting, misguidedly, to bring up the question of sovereignty. Read more here-http://bit.ly/Mk6OVR

-Gas Liquids ‘Bloodbath’ Brings Shale Pain to Oil Market. The shale boom that sent natural-gas prices to a 10-year low is being felt for the first time in the oil markets. Read more here-http://bloom.bg/MlS0G1

-China Keeps Buying Iran’s Oil as U.S. and EU Intensify Sanctions. Oil tankers able to haul at least 20 million barrels of Iranian crude signaled for China in July, highlighting one of the challenges the U.S. and Europe face as they pressure the Persian Gulf state over its nuclear program. Read more here-http://bloom.bg/McREvn

-Iran Loses $133 Million a Day From Sanctions. U.S.-led sanctions against Iran are costing OPEC’s third-largest producer $133 million a day in lost sales without raising global crude prices. Read more here-http://bloom.bg/MSbmTj

-EU may criminalize commodities price distortion. Manipulating international commodity benchmarks such as Brent crude oil would be a criminal offence, punishable by jail, under a set of reforms the EU Commission has proposed in response to the rigging of a major interest reference rate. Read more here-http://www.gata.org/node/11614

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REAL ESTATE

-CHART OF THE WEEK: We’re About To Hit A Pivotal Moment In The Housing Recovery. Read more here-http://read.bi/M4cbqH

-Home Prices in U.S. Fell Less Than Forecast in Year to May. Residential real estate prices declined less than forecast in the year ended May, another sign that the housing market is on the mend. The S&P/Case-Shiller index of property values in 20 cities decreased 0.7 percent from May 2011, the smallest 12-month fall since September 2010, after dropping 1.8 percent in the year ended April, the group said in New York. Read more here-http://bloom.bg/MSnljy

-Robert Shiller Senses Housing Bubbles Forming In Two US Cities. Read more here-http://read.bi/PpNVuN


www.chartoftheday.com

-CHART OF THE WEEK: Home-Price Gains Make Mortgage Rates a Bargain. Single-family home prices are increasing fast enough in the U.S. to justify taking on debt for purchases, according to Liz Ann Sonders, Charles Schwab Corp.’s chief investment strategist. Read more here-http://bloom.bg/OpxuTu

-U.S. Housing Recovery Tested as Economy Tempers Optimism. Rob Gray moved his family of four from Massachusetts to Texas, where he bought a new five-bedroom, five-bath, two-fireplace home built by Toll Brothers Inc. Read more here-http://bloom.bg/OBYMnm

-3 Million Of America’s Most Vulnerable Homeowners Are On The Brink Of Foreclosure. As many as 3 million American seniors, arguably the most vulnerable consumers in the country, are on the brink of losing their home, according to a recent AARP study. In its report “Nightmare on Main Street,” the group looked at the mortgage crisis’ effect on the over-50 sect for the first time. As the title suggests, the outlook is far from bright. Americans over the age of 50 accounted for 3.5 million underwater home loans as of December 2011 about 16 percent of all loans issued to that age group. Read more here-http://read.bi/OoGjgs

-Foreclosure Filings Increase in 60% of Large U.S. Cities. Foreclosure filings rose in almost 60 percent of large U.S. cities in the first half of 2012, indicating many areas will have more distressed homes on the market later this year, RealtyTrac Inc. reported. Read more here-http://bloom.bg/OpGchV

-FHFA Rejects Treasury Request for Mortgage Debt Writedowns. Fannie Mae and Freddie Mac won’t forgive principal on delinquent mortgages they guarantee even as the U.S. Treasury Department offers them incentive payments for writedowns, the companies’ regulator said. Read more here-http://bloom.bg/OrttxY

-Manhattan Penthouse Listed for $100 Million. What will $100 million buy you in New York City’s real estate market? Apparently, a really good view. An exclusive listing is offering an octagon-shaped penthouse in midtown-Manhattan that boasts three floors of living space, panoramic views of the city, six bedrooms, nine bathrooms and a wine room for 1,000 bottles.

And that’s not all. The 8,000-square-foot apartment on West 56th Street has its own elevator and wraparound terraces on three floors. It is possible to see nearly all of the city’s bridges from its 135 windows. The penthouse is being sold by Long Island real-estate developer Steven Klar, who purchased it for 4.5 million in 1993 and spent at least as much renovating it. Read more here-http://bit.ly/Pwf0gs

-After 2 Years, Tech Entrepreneur Gideon Gartner Finally Sold His NYC Penthouse At A 40% Discount. Read more here-http://read.bi/N64RZp

-Backseat Sex Ads Urge Young Spaniards to Get a Room. Idealista.com’s pitch to Spaniards in their 20s still living with mom and dad is simple: Rent your own place or end up having sex in the back of a cramped car for years to come. The new 20-second TV advertisement by Spain’s biggest real estate website features still shots of couples and threesomes caught naked in cars with looks of surprise. It’s aimed at 20-to 29-year-old Spaniards, seven in 10 of whom still haven’t left home as Spain’s unemployment rate soars to a record. Read more here-http://bloom.bg/Mcvdqr

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GEOPOLITICAL

-The President Of Iran Is Calling For The ‘Annihilation Of Israel.’ Read more here-http://bit.ly/MeY7pP and http://read.bi/MlX6SW

-Israeli PM says time running out to stop Iran’s nuclear programme. Binyamin Netanyahu tells visiting US defence secretary that sanctions and diplomacy have so far failed to end standoff. Read more here-http://bit.ly/OrjF77

-U.S. and Israel Intensify Talks on Iran Options. “If I were an Iranian, I would be very fearful of the next 12 weeks,” said Efraim Halevy, a former chief of Israel’s intelligence agency and national security adviser. Read more here-http://nyti.ms/MlVIQa

-Russia wants naval bases abroad. Russia hopes to establish its first naval base abroad since the 1991 collapse of the Soviet Union and is looking at Cuba, Vietnam and the Seychelles as possible locations, state-run RIA news agency quoted the navy chief as saying. Russia has been increasing the reach of its navy in recent years, sending warships further afield as part of an effort to restore pride project power in a world dominated by the U.S. military. Read more here-http://yhoo.it/Pn7hAX and http://bit.ly/OFcNEc

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

The World Financial Report – August 7th, 2012
Posted by Worldwide Precious Metals on Tuesday, August 7, 2012


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