Newsroom
The GoldBugg Report - Gold Rebounds on Weak Dollar
March 25, 2008
In this week's GoldBugg Report:-Gold Rebounds on Weak Dollar
-Paul urges gold standard, abolition of Fed on CNBC
-Ted Butler: All into silver now
-Gold Rebounds on Weak Dollarhttp://ap.google.com/article/ALeqM5jND4r3B-VBZu2Ogg2_yzjYnPIP8gD8VKJFNO0
-Paul urges gold standard, abolition of Fed on CNBC
-Ted Butler: All into silver now
-Chart of the Day. Gold has been in a strong bull market since 2001 and picked up the pace in mid-2005 and then again in mid-2007. In fact, gold has gone parabolic and today briefly crossed the $1000 per ounce level for the first time. Today's chart illustrates how the price of gold has nearly quadrupled during its seven year bull market. Chartoftheday.com
-Greenspan: Economy worst since WWII. U.S. financial crisis to continue for months, says former Fed chairman. Today's economic condition could likely be seen as "the most wrenching since the end of the second world war," wrote former Federal Reserve chairman Alan Greenspan in the Financial Times on Monday. The U.S. financial crisis won't end until housing prices stabilize, but that won't happen for months, wrote Greenspan.
The models used by the finance industry to determine risk and measure economic strength are too simple to fully account for human responses, he said. "We cannot hope to anticipate the specifics of future crises with any degree of confidence," he wrote. However, Greenspan said that he hoped the fallout would not take away the finance industry's ability to regulate itself.
Market flexibility and free competition are the most reliable safeguards against economic trouble, he said; the system which is supposed to guard against unanticipated losses will need to be overhauled. Cnnmoney.com-Read more at-http://www.france24.com/en/20080317-current-crisis-most-wrenching-1945-greenspan-financial-global-economy&navi=ECONOMIE
-Deflation. A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression.
Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind. Investopedia.com
-Dead Cat Bounce. A temporary recovery from a prolonged decline or bear market, after which the market continues to fall. Ever heard the saying, "Even a dead cat will bounce if dropped from high enough!" Investopedia.com
-Ignore the siren call of the complacent as this looks more than likely to be another dead cat bounce in equity markets and another brief sojourn of financial calm prior to the next act in the epic unfolding global financial crisis. Unfortunately, the drama looks soon to increase, intensify and degenerate from high farce to tragedy. Gold.ie
-Stock Veterans Granville, Stovall Predict More Losses. Joseph Granville and Robert Stovall, octogenarians who've seen every financial market downturn since the 1950s, say the current one may be the worst and is far from over. Granville, born in 1923, remembers his banker father's bad moods following the stock-market crash of 1929.
The younger Granville began his career at defunct brokerage E.F. Hutton in 1957, quit in 1963 to begin publishing a weekly newsletter and wrote nine books on investing. ``We're in a crash,'' Granville, 84, said in a telephone interview from Kansas City, Missouri, where he lives and works. ``This is the worst I've seen, and I've studied every bit of history all my life.''
``I don't see an end to this thing until sometime in 2009,'' Granville said of the current market slump. ``It's going to get a lot worse before it gets better.'' Read more at-
http://www.bloomberg.com/apps/news?pid=20601087&sid=awGilvqsJv7M&refer=home
-Insurer Losses From Subprime Approach Katrina Claims. Read more at-
http://bloomberg.com/apps/news?pid=20601206&sid=aH4bWZasxTUo&refer=realestate
-Canadian economic growth seen at only 1.1% this year: TD. Read more here-http://www.cbc.ca/money/story/2008/03/19/canadianeco.html or http://www.bloomberg.com/apps/news?pid=20601082&sid=aSdi5Vd9fj58&refer=canada
GOLD
-Spot gold could face further profit-taking in the short term but the prospect of lower U.S. interest rates in the mid-to-longer-term paints a negative picture for the dollar and a bullish one for the precious metal, said TheBullionDesk's James Moore. This supports the view that gold will challenge $1,250/oz in 2008, Moore added. Dow Jones
-Although traditionally a safe haven against volatile stock markets, inflation and a hedge against a weak US dollar, Ross Norman, director of TheBullionDesk.com, explained that when "things are very, very bad, gold suffers too." He added: "There has been a sharp sell off in all metals. It is a case of selling off the good to make up for the bad." Gold prices have risen 20pc to date this year, and 50pc since last August, leaving investors sitting on a handsome profit. Mr. Norman said: "Investors are just taking money off the table."
Mr. Norman anticipating a further rise of 25pc for gold probably in the third or fourth quarter. He said: "I wouldn't bail out. This is quite a healthy correction it's the first dip in an awfully long time. "All the fundamentals are still there: the market fear factor, the subprime disaster, the ongoing dollar weakness, the supply/demand balance. "It's an opportunity to get in." Telegraph.co.uk
-$2,000 an ounce gold is in the cards. Frank Holmes, chief executive officer at U.S. Global Investors, says that gold will hit $2,000 an ounce and that while the move won't be straight there from current levels investors should not be surprised by it. Holmes noted that virtually all commodities have gone through their "inflation-adjusted 1980 price levels," with the notable exception of gold, and that to get to that range the price of gold would have to top $2,000 an ounce.
Holmes said he expects a short-term pull-back in gold based on a correction he sees coming in oil and a short rally in the dollar, both of which will impact gold prices but that the long-term trend will be strongly upward. In a radio interview with Chuck Jaffe, MarketWatch senior columnist, Holmes noted that gold correlates to the price of oil 90% of the time meaning it moves with oil prices almost all the time and has an inverse relation to the dollar 70% of the time.
With oil prices on the rise and the dollar weakening, it's a market condition that bodes well for gold, especially because gold is "not at astronomical levels yet, when compared to other commodities. There's a lot more room." Holmes also noted that he's more concerned with the market entering a "big deflationary cycle" than he is about Federal Reserve rate cuts sparking inflation, noting that "inflation is easy to stop." Marketwatch.com
-Analyst: Faltering market conditions could push gold to $1,800/oz within year. Gold could reach $1,800 an ounce within the year as investors turn to the yellow metal for shelter amid deterioration in capital markets, an analyst said Monday. In the shadow of Sunday's "bailout" of Bear Stearns "conditions in the major financial markets have deteriorated further, which we believe increases the probability of a sharp upward spiral in the gold price," analyst Paradigm Capital Analyst Don MacLean said.
MacLean said he now believes there is a 40% to 50% chance that gold will reach $1,800/oz within a year, up from a previous estimate of a 25% chance back in January. April gold futures were last trading up 60 cents at $1,000.10 an ounce, after reaching a record high of $1,033.90 in intraday trading. In a note to clients MacLean cited the emergence of a confluence of factors that, historically, have pushed the price of gold upward, such as high amounts of liquidity provided by central banks, record high risk spreads, declining interest rates in major economies and a weakening U.S. dollar.
Soaring gold prices also have the effect of drawing more interest in the gold sector, he noted. If the gold price spirals upwards, gold stocks should rise with the metal's price, MacLean said. However, gold stocks are still equities, and broad downward pressure on equities will probably hinder their performance, he said. "Past experience suggests that gold equities will lag, viewing the spiral as unsustainable. In this case the metal is liable to outperform. It would make sense for investors to hold a meaningful portion of their gold position in ETFs for the metal." AFXNews.com
-Gold's fundamentals are as strong as ever as this, the worst financial crisis since the Wall Street Crash and the Great Depression, continues to worsen and deepen. Although Weimar Germany might have more parallels than the deflationary Gold Standard constrained 1930s America. Systemic risk has not been as great as this since after the crash in 1929 and the new fangled massively leveraged global financial system is in danger of unraveling.
While talk of ‘contagion' might be considered alarmist, so would talk of nationalization of Northern Rock and bankruptcy of Bear Stearns some 6 short months ago. Global financial contagion (with its epicentre on Wall Street and in the U.S.) is now a real possibility as acknowledged by Anoop Singh, IMF director for the Western Hemisphere Department. He said yesterday that the mounting global credit crisis could result in financial "contagion" that could wipe $800 billion of value from the books of U.S. and global financial institutions.
He cited a high likelihood of a U.S. recession and said he sees losses from the U.S. subprime mortgage market crisis resulting in widening losses for European banks. That is putting it mildly. Traders and analysts are now looking at the next dominoes to fall with Citigroup and Lehman Brothers in the U.S. and HBOS, Alliance and Leicester and Bradford and Bingley in the UK looking vulnerable.
Unfortunately, financial contagion looks increasingly likely and this would result in many more Northern Rocks and Bear Stearns and the value of many assets becoming worth fractions of their previous worth. A worst case scenario is a massive financial panic resulting in stock and bond market crashing, many runs on banks and the collapse and nationalization of much of the banking system in the western world.
Gold remains the ultimate safe haven and has retained and will retain its value throughout history. Particularly with history having a terrible habit of repeating itself. Blind fate in central bankers and politicians miraculous powers to rectify this situation is dangerous and delusional. Given the current financial crisis, all investors should have an allocation to gold bullion and the allocation should be at least 20% of a properly diversified portfolio. Holding 25% in gold, 25% in cash would be appropriate as an extremely cautious, defensive and prudent investment strategy is merited now more than ever. Gold.ie
-Gold finally accomplished a close above the psychologically-important $1000/oz. mark, leaving investors to ponder the equally psychologically-important question: What now? That's one for which there are probably as many answers as there are people who care enough to offer one. While the tanking dollar and soaring price of oil are playing their parts, few would any longer disagree that the flight into precious metals is being fueled in large part by uneasiness over the disintegration of the world financial sector.
"Gold's assault on $1,000 is happening for a good reason," says James Turk, of GoldMoney.com. "Gold is not only an inflation hedge, it's a catastrophe hedge. Gold is becoming increasingly important as the credit crunch continues to spiral out of control." The latest blow has been the collapse in liquidity at Bear Stearns, one of the biggest names on Wall Street.
"Bear is the first, who is next? That question is haunting investors right now and they are looking for a flight to quality," said Zachary Oxman of Wisdom Financial. That flight is now so furious that it's battering down barriers such as that noted by James Burton, CEO of the World Gold Council, who wrote that the price escalation has "posed a short-term problem in regard to consumer purchases of jewelry, gold bars and coins, acting as a disincentive to some buyers." Kitco Daily Resource
-John Embry says sit tight, don't let gold's volatility bother you. Read more at-http://www.sprott.com/pdf/investorsdigest/digest.pdf
-Gold hits $1,000, John Embry comments on BNN. Watch video here-http://broadband.bnn.ca/bnn/?vid=38106
-John Embry's address to the Vancouver Resource Investment Conference. Read more here-http://www.sprott.com/pdf/news/2008_Vancouver_Speech.pdf
-Jay Taylor on gold. Watch video here-http://broadband.bnn.ca/bnn/?noad=1&vid=38273
-What the Price of Gold Is Telling Us. Dr. Ron Paul, U.S. Congressman-Read more at-http://news.goldseek.com/RonPaul/1205726520.php
-India's mutual fund firm Benchmark expects its gold exchange-traded fund's (ETF) collection to grow over 10 times to 15 metric tonnes in the next five years, a top official said on Wednesday. "We have grown substantially in terms of tonnage and number of investors," Rajan Mehta, executive director of Benchmark Asset Management said in an interview with Reuters. Read more at-http://in.reuters.com/article/businessNews/idINIndia-32581220080319?rpc=401&
-Torontonians clear out jewelry boxes as gold prices rise. Read more at-http://www.cbc.ca/money/story/2008/03/17/gold-prices.html
SILVER
-Silver is the investment of the century. It will move with gold, but further, as has already been demonstrated. Gold is up about 200%, and silver is up more than 300% over the last couple of years. We will eventually find that silver at today's $15 to $20 is the bargain of the century. Howard Ruff-Read full story at-http://www.kitco.com/ind/ruff/ruff.html
-There is now more reason than ever to own gold and silver. They are continuing to fulfil their function as an inflation hedge, but those who own physical gold and silver are also benefiting in another way they are protected from counterparty risk. In other words, gold and silver are a hedge against financial catastrophe, and more of that is probably on the way. James Turk
-The Telegraph in the UK says: "In the coming few weeks, financial markets face their biggest test since the 1930s. This is not hyperbole." "Given what happened in 1974, there is one piece of advice that I can recommend. If history is any guide and I really do believe that it is then the current banking and counterparty crisis is going to get much worse before it gets better. Years of imprudent reckless lending is taking its toll on the global banking system. There is one last point worth noting. In 1974 gold rose 72.8%, while silver jumped 84.1%." Read full James Turk story at-http://goldmoney.com/en/commentary-print.html
-Importance of Silver and Gold. David Morgan-Read full story at-http://news.silverseek.com/SilverInvestor/1205474400.php
-Why Silver is better than Oil as an Investment. Read more at-http://news.silverseek.com/GoldIsMoney/1205600326.php
-Silver institute news for Q1. Read more here-http://www.silverinstitute.org/news/1q08.pdf
-Ted Butler silver commentary for March 11. Read more at-http://www.investmentrarities.com/03-11-08.html
-Ted Butler silver commentary for March 18. Read more at-http://www.investmentrarities.com/03-18-08.html
-When Do I Sell My Silver? People are always asking me, "When should I sell my silver?" Well that question is much easier to ask than to answer. I often times tell them whenever the government starts acting responsibly and not only balances the budget but finally decides that it has grown too fat and announces they are going on a fiscal diet. Many people want an actual dollar target to write down so that they will know exactly when to get out.
Well since the dollar is shrinking that target number keeps getting bigger. That is exactly the problem with a shrinking yardstick. It is hard to measure something today and for it to have any meaning in the future. So what can we use instead of dollars to measure when to sell our silver? Because make no mistake, there will be a time to sell sometime in the future. Robert Kiyosaki, author of "Rich Dad, Poor Dad" recently stated that he has a large position in silver and plans to exit when his target is met.
He says when the cost of a median priced single family home in the US sells for 500 oz of silver (or 40 oz of gold) he believes it will be time to exit the silver market. Of course he says he will not go back into dollars but most likely trade his silver for undervalued income producing real estate. So in other words he believes silver is still VERY undervalued at this point. As a matter of fact since the average existing single family home is now $218,000 it would take a silver price of $436/oz in today's money for 500 oz of silver to purchase it.
So he is looking for another x 20 rise in silver value before the top is reached ($21 x 20 = $420/oz). Of course do not write $420/oz on the wall as your exit point because by the time we get there in the next 5 to 15 years that amount of federal reserve notes will not mean the same thing. You just have to stop thinking in terms of FRNs or dollars and start thinking in terms of value or what your silver will purchase. Perhaps you may want to think in terms of how much oil your silver will purchase.
In 1980 the average price of a single barrel of oil was equal to a single oz of silver or 1:1. After the 1980 silver price spike for the next 25 years the average price of a barrel of oil was just under 4.5 oz of silver (with a high of 2 to a low of 10). Today it is around 5 oz of silver for one bbl of oil. In the past 3 years the extremes have been a high of 4 to a low of 9 oz of silver per barrel of oil. Even though there has been a lot of volatility in both the oil and silver markets the average has remained around 4 to 6 oz of silver per barrel of oil.
So perhaps the next drop to par with oil or 1:1 it may be time to sell your silver and trade for oil. Currently that would represent an increase of 5 times its current value. Another consideration is the gold / silver ratio. The gold / silver ratio has been between 12 and 17 throughout most of recorded history. Only in my life time has the ratio gotten so out of balance. The high was reached in 1991 when it went up to 91 (1 oz of gold = 91 oz of silver). Since that time it has been trending downward.
Currently the ratio is around 48:1 (1 oz of gold = 48 oz of silver). It is my opinion that the ratio will come back to its traditional value of 15 or 16. Since it has been so far above its ratio it may even overshoot it and drop down somewhere below 10 before it settles back to 15 or so. Therefore a ratio of 10:1 would put silver at $102.50/oz in today's dollars. A ratio of 15:1 would set silver's current price at $68/oz. Another value would be the dow jones industrial average priced in oz of silver.
The low for the DJIA / silver was 18:1 in 1980 (18 oz of silver could buy the DJIA). During the 2000 stock market peak the DJIA / silver was 2,500:1 (yep, it took 2,500 oz of silver to buy the DJIA). Currently it is about 570:1. So if it approached the extreme low of 18:1 then silver would currently have to sell for $665/oz (or 30 times higher). So maybe you should consider selling when the DJIA / silver ratio gets near 20:1. So whether it is 20 times, 5 times or 30 times higher than it is right now I feel fairly confident telling anyone that the time to sell is NOT YET! Buy more and hang on for the ride of your life. Larry LaBorde
PLATINUM-PALLADIUM
-World platinum deficit to surge on production woes. The global platinum market is likely to witness a huge deficit this year and in 2009 as a power crisis in top producer South Africa hits output, while industrial demand remains strong, a Reuters survey showed. The poll of 11 analysts and traders forecast on Wednesday that the median deficit for platinum, used in jewellery and to clean vehicle exhaust fumes, is likely to widen to 470,000 ounces by the end of 2008.
The deficit is seen at 422,500 ounces in 2009. In 2007, total global platinum demand of 6.925 million ounces surpassed supply of 6.660 million, leaving a market deficit of 265,000 ounces. The market had a surplus of 65,000 ounces in 2006 after seven successive years of deficits. Analysts said tight market conditions were expected to put an upward pressure on the price, which hit a record high of $2,290 (U.S.) on March 4. It was quoted at around $1,933 on Wednesday.
"Electricity supply problems in South Africa have altered the outlook for platinum dramatically," said Walter De Wet, precious metals analyst at Standard Bank. "The electricity deficit will be wiped out but, unfortunately, additional capacity doesn't expand in a smooth line, but rather step-wise. For now, demand will outstrip supply," Johannesburg-based Mr. Wet said. South Africa accounts for 80 per cent of the global output. Read more at-http://www.theglobeandmail.com/servlet/story/RTGAM.20080319.wplatinum0319/BNStory/energy/home
COMMODITIES
-Goldman Sees `Explosive' Commodity Rallies, $175 Oil. Read more at-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aUmQ3MBOkx_0
OIL-GASOLINE
-IEA: Non-OPEC output decline rates lower than believed. Read more at-http://www.ogj.com/display_article/323394/7/ONART/none/DriPr/1/IEA:-Non-OPEC-output-decline-rates-lower-than-believed/
-U.S. Gasoline price spike has only just begun. Motorists should expect to pay upwards of $3.75 a gallon in the coming weeks as prices at the pump catch up with record crude, but relief may arrive by summer. Read more at-http://money.cnn.com/2008/03/10/news/economy/gas_prices/index.htm?cnn=yes
-Exxon's $12 Billion Venezuela Asset Freeze Overturned. Read more at-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ahEO3V_lPHKQ
INFLATION
-Behind Cheaper Credit, Inflation Fears Loom. Read more at-http://www.washingtonpost.com/wp-dyn/content/article/2008/03/18/AR2008031803479.html
-Inflation is Americans' top economic concern. Read more at-
http://money.cnn.com/2008/03/18/news/economy/cnn_poll_inflation/index.htm?postversion=2008031813
-Canada's Annual Inflation Rate Falls to Six-Month Low. Read more at-http://www.bloomberg.com/apps/news?pid=20601082&sid=a57xwz2IBojo&refer=canada
-U.S. Producer Prices Rise 0.3%, Core Measure Climbs. Read more at-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aOBtOOloppt4&refer=home
-Vive La France the Road to Hyperinflation. Peter Schiff-Read more at-http://www.321gold.com/editorials/schiff/schiff031408.html
-In light of the cause and effect between monetary inflation and price inflation, and given the clear findings in our Global Inflation Survey, we can only conclude that inflation in both its commonly understood forms is now baked into the proverbial cake.
As investors, that keeps us focused on gold, the world's longest-serving form of money and an investment we have been profitably beating the drum about since 1999. Importantly, a quick scan now finds that gold is rising against a large number of currencies.
This is a very useful view of the current inflation trend in that it demonstrates that the trend has expanded considerably beyond just a weakening U.S. dollar, and is now affecting fiat currencies around the world, almost without exception. Are we seeing the end of the experiment in fiat monetary systems? It's too early to say one way or another, but it's not too late to shift at least some percentage of your portfolio into gold. Read more at-http://news.goldseek.com/DougCasey/1205820360.php
FINANCIAL CRISIS HITTING WORLDWIDE
-Can't Grasp Credit Crisis? Join the Club. Raise your hand if you don't quite understand this whole financial crisis. It has been going on for seven months now, and many people probably feel as if they should understand it. But they don't, not really. The part about the housing crash seems simple enough. With banks whispering sweet encouragement, people bought homes they couldn't afford, and now they are falling behind on their mortgages. Read more at http://www.nytimes.com/2008/03/19/business/19leonhardt.html?_r=1&ei=5088&en=b9d59d01316751bf&ex=1363665600&partner=rssnyt&emc=rss&pagewanted=print&oref=slogin
-Global crisis deepening: IMF Chief. Read more at-
http://money.cnn.com/2008/03/17/news/international/bc.apfn.imf.globaleconom.ap/index.htm
-US economist calls financial crisis worst since 1930s. Read more at-http://economictimes.indiatimes.com/International_Business/Financial_crisis_worst_since_1930s/articleshow/2881608.cms
-Avoid financials says analysts. Friedman Billings Ramsey says investors should forsake shares of most financial institutions until the industry raises $1.2 trillion. Read more at-
http://money.cnn.com/2008/03/17/markets/avoid_financials.ap/index.htm
-Foreign investors veto Fed rescue. Read more at-
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/17/ccview117.xml
-End of Cheap Credit Hits Homes, Businesses. Read more at-
http://www.washingtonpost.com/wp-dyn/content/article/2008/03/17/AR2008031702616_pf.html
-Wall Street turmoil ripples across Main Street. Read more at-http://www.reuters.com/article/idUSN1763551620080318
-Lehman borrows from new Fed facility: report. Read full story at-
http://money.cnn.com/2008/03/17/news/companies/FGIC_earns.ap/index.htm
-Canadian Lawmakers Likely to Review Commercial Paper Collapse. Read more at-http://www.bloomberg.com/apps/news?pid=20601082&sid=aCl.oRRnpszY&refer=canada
BEAR STEARNS COLLAPSE
-March 14-Bear Stearns Gets Emergency Funds From JPMorgan, Fed. Bear Stearns Cos., teetering on the brink of collapse from a lack of cash, got emergency funding from the Federal Reserve and JPMorgan Chase & Co. in the largest government bailout of a U.S. securities firm. After denying earlier this week that access to capital was at risk, Bear Stearns Chief Executive Officer Alan Schwartz said today that the 85-year-old company's cash position had ``significantly deteriorated'' in the past 24 hours.
The central bank agreed to provide financing through JPMorgan for up to 28 days, the bank said in a statement today. A person close to JPMorgan said the bank, led by Chief Executive Officer Jamie Dimon, would be interested in buying Bear Stearns's prime brokerage unit, which provides loans and processes trades for hedge funds. The Fed acted to prevent the failure of the second-biggest underwriter of U.S. mortgage bonds and forestall a potential market panic as losses by banks and brokers reached $195 billion and stocks plunged for a third day this week.
JPMorgan, which has suffered fewer losses than rivals during the credit crisis, may end up owning all or part of Bear Stearns, analysts speculated. ``I don't think they can afford to let Bear go,'' said Charles Geisst, the author of ``100 Years on Wall Street,'' referring to the New York Fed bailout. ``At this particular moment in time, it would be a devastating blow to the markets.'' Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=arOurF_ov.pk&refer=home
-March 14-Fed Invokes Little-Used Authority to Aid Bear Stearns. Federal Reserve Chairman Ben S. Bernanke invoked a law last used four decades ago to keep Bear Stearns Cos. from collapsing after the securities firm sought emergency funding from the central bank. The loan to Bear Stearns required a vote today by the Fed's Board of Governors because the company isn't a bank, Fed staff officials said.
The central bank is taking on the credit risk from Bear Stearns collateral, lending the funds through JPMorgan Chase & Co. because it's operationally simpler to accomplish than a direct loan, the staff said on condition of anonymity. Bernanke took advantage of little-used parts of Fed law, added in the 1930s and last utilized in the 1960s, that allow it to lend to corporations and private partnerships with a special board vote. The Fed chief probably sought to stave off a deeper blow to the financial system from a Bear Stearns collapse, former Fed researcher Keith Hembre said.
``The Fed really doesn't have any obligation to help a non- bank aside from its role or responsibility to keep the financial markets functioning,'' said Hembre, who helps oversee $107 billion as chief economist at FAF Advisors Inc. in Minneapolis. ``They made a judgment, probably an accurate one, that they're not going to function very well if you've got a full-blown crisis with a major Wall Street firm.'' Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=abl8CI.8oF8U&refer=home
-JPMorgan Chase to Buy Bear Stearns for $240 Million. Read more at-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a4qrSYRFeOgI
-JPMorgan scoops up troubled Bear. The deal values Bear Stearns at just $2 a share. Regulators hope purchase will stave off wider chaos in financial markets. Read more at-
http://money.cnn.com/2008/03/16/news/companies/jpmorgan_bear_stearns/index.htm
-How the Bear Stearns deal got done. Without the Fed's $30 billion, JPMorgan Chase couldn't have bought Bear Stearns without writing down its own mortgage holdings. Read more at-
http://money.cnn.com/2008/03/17/news/companies/boyd_bear.fortune/index.htm
-Billionaire Lewis moves to block JP Morgan. Read more at-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/18/cnlewis118.xml
-Bear bailout can't save shareholders. Monday's plunge shows investors can lose their shirts even when the feds decide a firm is 'too big to fail.' Read full story at-
http://money.cnn.com/2008/03/17/news/toobig.fortune/index.htm
-How subprime killed Bear Stearns. A problem with risky mortgages has led to a global financial crisis. The bigger issue: Experts don't know when it will end. Read more at-
http://money.cnn.com/2008/03/17/news/economy/gothere/index.htm
-End of Wall Street as we know it. Financial firms have relied on a highly flawed business model for years. The time has come to fix it. Read more at-
http://money.cnn.com/2008/03/17/magazines/fortune/investing/Tully_WallStIsBroken.fortune/index.htm
-Oops CNBC's Cramer Said 'Don't Move' From Bear a Week Before Collapse. 'Mad Money' host drastically underestimated the investment bank's trouble surrounding the mortgage crisis. Read more at-http://www.businessandmedia.org/articles/2008/20080317110946.aspx
INTEREST RATES
-Canada's Flaherty `Monitoring' U.S. Interest Rates. Read more at-http://www.bloomberg.com/apps/news?pid=20601082&sid=aYmIRUxaWwAw&refer=canada
-Fed Cuts Main Rate to 2.25%, Says Outlook `Weakened'. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=ahgKoMxfdLIA&refer=home
-March 17-Fed Cuts Discount Rate, Lends More to Avert Meltdown. Read more at-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aWEuJN_P2JpM&refer=home
-The Bank of Japan may cut borrowing costs next month to revive the economy even if the political dispute over the selection of a replacement for Governor Toshihiko Fukui isn't resolved, Goldman Sachs Group Inc. said. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=a4XOny5zafYM&refer=home
U.S.-EURO-AU-NZ DOLLARS
-Dollar's Clout Sinks Worldwide. Read more at-http://biz.yahoo.com/ap/080313/diving_dollar.html?.v=3&printer=1
-Dollars tough to sell on streets of Amsterdam. Read more at-
-U.A.E. to Keep Dollar Peg After U.S. Pressure, Official Says. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aG3fFPVb6w4Y&refer=home
-The Australian and New Zealand dollars rose after the Federal Reserve cut its benchmark interest rate for the sixth time since September, encouraging investors to buy higher-yielding assets. Read more at-http://www.bloomberg.com/apps/news?pid=20601110&sid=aAgyQn83O4Uo
U.S. RECESSION-DEBT PROBLEMS
-Poll: 71 percent think Iraq spending hurts economy. Read more at-http://www.cnn.com/2008/POLITICS/03/18/poll.iraq.economy/index.html
Story Highlights
Only 36 percent polled said the situation in Iraq was worth going to war over
Washington Post: Iraq war will wind up costing the U.S. government about $3 trillion
President Bush disputed notion that the war was negatively affecting the economy
-America's Money: In their own words. Everyday folks tell their stories about hard economic times. Read full story at-
http://money.cnn.com/galleries/2008/news/0803/gallery.real_stories/index.html
-Recession is here poll. 71% of economists questioned by The Wall Street Journal say the economy is contracting. Read more at-
http://money.cnn.com/2008/03/13/news/economy/recession/index.htm
-Three out of four say it's a recession survey. CNN poll of American adults sees growth in those with dim view of the economy. Read more at-
http://money.cnn.com/2008/03/17/news/economy/cnn_recession_poll/index.htm
-Social Security's running out of time. Because the trust fund is invested in Treasuries, the real problem starts not in 2040, but a decade or so from now. Read more at-
REAL ESTATE
-Home Prices Plunge Across California Read more at-http://biz.yahoo.com/ap/080313/california_homes_prices.html?.v=3&printer=1
-Homebuilder sentiment still low. Expectations for new home sales remains near third-lowest level, according to report from the National Association of Home Builders. Read more at-
http://money.cnn.com/2008/03/17/news/economy/homebuilder_sentiment.ap/index.htm
-U.S. Economy: Housing Starts, Permits Decline as Slump Deepens. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=a2YnE7Q6fhE0&refer=home
-How bad is the mortgage crisis going to get? What started in subprime is likely to continue cascading into the markets and keep the economy down until 2010, economist Paul Krugman forecasts. Bottom line for homeowners: An average drop of 25%. Read more at-http://money.cnn.com/2008/03/14/news/economy/krugman_subprime.fortune/index.htm
-CBS News reports from Florida. Read more at-http://thehousingbubbleblog.com/?p=4276
MORTGAGES-FORECLOSURES
-Canadian homebuyers rush to pay down mortgages. Read more at-http://www.globeinvestor.com/servlet/story/RTGAM.20080319.wcmhc0319/GIStory/
-Three Los Angeles-based mortgage lenders were shut down and seven people were arrested for running a ``predatory lending scheme,'' California Attorney General Jerry Brown said today. Read more at-http://www.bloomberg.com/apps/news?pid=20601110&sid=aXDbfX6UuV28
-More in foreclosure choose to walk away. Read full story at-http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/03/16/MNFFVI036.DTL&type=printable
-The Naples News reports from Florida. Read more at-http://thehousingbubbleblog.com/?p=4284
GEOPOLITICAL
-Ahmadinejad's Nuclear Mandate Reinforced by Election. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=ayzIO0rDRzuE&refer=home
-'Death to Ahmadinejad,' Iranian crowds cry. Read full story at-http://www.breitbart.com/article.php?id=upiUPI-20080319-113404-3794&show_article=1
-Retaining his tough stance against Iran, Vice President Dick Cheney said Wednesday that Tehran may have restarted the nuclear weaponization program that a U.S. intelligence report said was halted in 2003. Read more at-
http://www.breitbart.com/article.php?id=D8VGJH980&show_article=1
-Five years later, Bush says Iraq war must go on. Read more at-http://www.cnn.com/2008/POLITICS/03/19/bush.iraq/index.html
Story Highlights
NEW: President Bush says victory in Iraq necessary to demonstrate U.S. resolve
Bush says removing Saddam Hussein from power was the right decision
Bush marks the fifth anniversary of the Iraq war with a speech at Pentagon
The president praises the so-called surge of U.S. troops in Iraq
-Bush defends Iraq record amid protests, five years on. Read more at-http://www.breitbart.com/article.php?id=080319134205.368w8zul&show_article=1
-Five years after launching the invasion of Iraq, President Bush strongly signaled Wednesday that he won't order troop withdrawals beyond those already planned because he refuses to "jeopardize the hard-fought gains" of the past year. Read more at-http://www.breitbart.com/article.php?id=D8VGJT8G1&show_article=1
-McCain: Don't Pull Troops From Iraq. Sen. John McCain, the Republican presidential nominee-in-waiting, said Tuesday that any hasty pullout from Iraq would be a mistake that would favor Iran and al-Qaida. McCain, who has linked his political future to U.S. success in Iraq, was in the wartorn country on Monday for meetings with Iraqi and U.S. diplomatic and military officials. Read more at-http://www.breitbart.com/print.php?id=D8VFSCIG0&show_article=1
-In the face of a possible escalation with Syria and Iran's efforts to obtain a nuclear weapon, parts of the country will shut down next month in what security officials say will be the largest emergency exercise in Israel's history. Read more at-http://www.jpost.com/servlet/Satellite?cid=1205420704459&pagename=JPost%2FJPArticle%2FPrinter
© 2008, Worldwide Precious Metals.
www.wwpmc.com
The GoldBugg Report - Gold Rebounds on Weak Dollar
Posted by Worldwide Precious Metals on Tuesday, March 25, 2008
The GoldBugg Report March 18th
March 18, 2008
In this week's GoldBugg Report:
- How Subprime Killed Bear Stearns.
- Gold breaks $1000, but Silver could be an even better buy!
- Fed cuts rates by 3/4 of a point as it risks lower dollar in effort to ward off recession.
How subprime killed Bear Stearns
A problem with risky mortgages has led to a global financial crisis. The bigger issue: Experts don't know when it will end.
http://money.cnn.com/2008/03/17/news/economy/gothere/index.htm?postversion=2008031716
-Gold touches $1,000 once more into the breach! Silver rising even faster. With gold touching $1,000 before pausing for breath, it seems the psychological barrier breach is upon us at last but silver could be an even better buy! Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=49334&sn=Detail
Fed cuts rates by 3/4 of a point
Central bank lowers key rate to lower borrowing costs for consumers, businesses, as it risks lower dollar in effort to ward off recession. http://money.cnn.com/2008/03/18/news/economy/fed_rates/index.htm?postversion=2008031814
-Consumer Price Index (CPI). A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living. Sometimes referred to as "headline inflation".
The U.S. Bureau of Labor Statistics measures two kinds of CPI statistics: CPI for urban wage earners and clerical workers (CPI-W), and the chained CPI for all urban consumers (C-CPI-U). Of the two types of CPI, the C-CPI-U is a better representation of the general public, because it accounts for about 87% of the population.
CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation. Investopedia.com
-Producer Price Index (PPI). A family of indexes that measures the average change in selling prices received by domestic producers of goods and services over time. PPIs measure price change from the perspective of the seller. The PPI looks at three areas of production: industry-based, commodity-based, and stage-of-processing-based companies. Investopedia.com
-"Regardless of the dollar price involved, one ounce of gold would purchase a good-quality man's suit at the conclusion of the Revolutionary War, the Civil War, the presidency of Franklin Roosevelt, and today." Peter A. Burshre
-30 years of gold highs and lows. Read full story at-http://news.bbc.co.uk/1/hi/business/7284184.stm
-Precious Gold 101: As Reliable as Ever. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41179
-Mortimer Zuckerman, co-founder of Boston Properties Inc., the largest U.S. office real estate investment trust, said the U.S. economy is in a recession and there's no sign of a recovery.
``We are looking at the worst set of macroeconomic conditions since the Great Depression,'' Zuckerman said in an interview with Bloomberg Television. ``I don't know where the bottom is. The federal government's going to have to do a lot more to contain what I think is the potential of a perfect storm.'' Read full story at-http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHLKk89J4tW8
-Bank of Canada Governor Mark Carney said an end to the turmoil in financial markets ``is not yet in sight,'' though regulators should use their new understanding of the problems to craft a careful response. Read full story at-http://www.bloomberg.com/apps/news?pid=20601082&sid=aSd1i6N7PHjg&refer=canada
-If anyone still has money in any stocks or mutual funds, it's time to exit. The sooner the better, because the longer people wait, the less they get for their paper. And then, guess where they are going to put it? Got gold? Alex Wallenwein
-"Mr. Bernanke, with his monetary policies, he will destroy the U.S. dollar,'' Marc Faber, with $300 million under management at Hong Kong-based Marc Faber Ltd., said in an interview with Bloomberg Television. The publisher of the Gloom, Boom & Doom report predicted U.S. rate cuts will spur inflation. Bloomberg
-Marc Faber remains a long-term gold bull. With prices hitting $1,000 (U.S.) an ounce this week, gold has risen so high in price he says some other bullion lovers he knows have already returned to cash. He has not. He thinks the metal could pass $3,000 an ounce, if only temporarily, like in the spike of the early 1980s. Thestar.com-Read more at-
http://www.thestar.com/printArticle/326371
-IMF's Lipsky warns of 'unthinkable' in global credit crisis. The International Monetary Fund today warned authorities worldwide to "think the unthinkable" in planning to cope with a mounting crisis in the global financial system. Read more at-
http://www.iht.com/articles/2008/03/12/europe/france.php
-Miners Top MBAs as Metal Boom Makes Geologists Scarce. Read more at-http://www.bloomberg.com/apps/news?pid=20601109&sid=aa9YCwmKdSKA&refer=home
-Crisis in mining deepens. Read full story at-http://working.canada.com/toronto/resources/story.html?id=faf9b33d-f118-4622-92bb-9c4ccafd70e1
-Consumer confidence lowest on record. RBC Cash Index surpasses the previous low set in February, sinks to the lowest point in data going back to 2002. Read more at-
http://money.cnn.com/2008/03/07/news/economy/consumer_confidence.ap/index.htm
GOLD
-Gold at $1,000 on Weak Dollar, High Oil. Read more at-http://biz.yahoo.com/ap/080313/gold_record.html?.v=7 or http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aBg.5gK.T.78 or http://money.cnn.com/2008/03/13/markets/gold/index.htm
-Sprott Sees Financial Turmoil Pushing Gold to $2,000 an Ounce. Read more at-http://www.bloomberg.com/apps/news?pid=20601082&sid=aVMsmS.ikYd4&refer=canada
-Yamana sees gold at $1,500 this year. Soaring gold prices are likely to breach $1,500 an ounce in 2008, the chief executive of Canada's Yamana Gold Inc said on Tuesday. "There is a good chance we will see it before the end of this year," Peter Marrone told the Reuters Global Mining Summit in London. Marrone said the current environment formed "a perfect storm" for higher gold prices, which would need to rise to more than $2,000 in adjusted dollars to match the previous nominal peak of $850 set in 1980. Reuters
-Goldcorp Inc expects the price of gold to top $1,000 an ounce and stay there for a long time, a development that will allow the company to improve operating margins, Chief Executive Kevin McArthur said on Monday. In a wide-ranging interview at the Reuters Global Mining Summit, McArthur, who is also president of the Canadian gold producer, said he thinks the price of gold is not "anywhere near a bubble." "We are not replacing the reserves that we're mining, and yet demand continues to grow worldwide. We're going to run out of gold," he said of the global gold industry. Reuters
-Important to Focus on Long Term. Those who call a top in gold or think it is overvalued or a bubble simply because it has reached record nominal highs in the dollar (nearly the weakest currency in the world) show a fundamental lack of knowledge of markets and long term financial and economic history. Gold today is akin to the Dow Jones Industrial Average in 1954 when it had recovered to the same price that it had been prior to the Wall Street Crash in 1929 and the subsequent Great Depression.
The DJIA fell from over 400 in 1929 to as low as 50 in 1933 prior to increasing in value by some 800% in the next 20 years. Those who called a top in the DJIA in 1954 were very wrong despite the DJIA having risen some 800%. Subsequently it rallied from 400 in 1954 to over 1000 on 1966. Gold too is likely to double or treble in value from its record nominal highs of $850 set some 28 years ago.
Simply because a market has surpassed a very old nominal high or reached a new record high does not mean it is overvalued. Witness the DJIA in recent years. Was it overvalued when it reached new record highs in the 1980s (after the brutal bear market of the 1970s) and then again reached new record highs in the 1990s.
Calling a top in gold today and calling it a bubble is akin to calling a top in the DJIA in 1990 (DJIA was at 2,600) or earlier. All markets experience long term cycles of bull markets and bear markets and periods of undervaluation followed by periods of growth and then overvaluation. Gold is likely in the intermediate stage of its new secular bull market. Gold.ie
-Oil has again surged to new record highs above $110 confounding the usual 'don't worry be happy' pundits who declared that oil was a bubble at $50 through to $100 per barrel. Gold will do the same thing in the coming weeks. Analysts who are either uninformed or would prefer not to face reality will say gold is overvalued and due for a correction (for the umpteenth time - as the same thing was said when gold was at $500, $600, $700, $800 and $900).
They will be proved wrong again as gold is more than likely to surpass it's inflation adjusted dollar high of $2,300 per ounce in the next 3 to 7 years. Unfortunately misguided and dangerous prognostications will have lulled many investors into a continuing false sense of security. Thereby resulting in the majority of investors being exposed to the coming serious recession in the UK, US and much of the western world.
Over optimism and irrational exuberance loses investors money. Paying lip service to diversification is particularly dangerous in the current times. Individual, pension and institutional investors are not diversified simply by allocating to cash, property and equities. Every portfolio also should have an allocation to commodities to protect against the ravages of inflation and an allocation to the finite currency of gold which is the essential financial insurance of a truly properly diversified portfolio.
The confluence of a possible energy and inflation crisis, monetary crisis (centered on the current global reserve currency the dollar), credit crisis and likely coming solvency crisis is a classic perfect financial storm. A 'hear no evil, see no evil' approach to finance and economics can be extremely injurious to an individual, company and nation's financial health.
While we all hope for a benign outcome to this the most serious financial and economic crisis since the Great Depression, it is important to deal in reality and be prudently prepared for any likely fallout from this economic crisis. As ever, paying down debt, avoiding extravagant and unnecessary consumption, risk aversion and real diversification should be the order of the day. Gold.ie
-A Super-Dangerous Dow-Gold Divergence. Gold's been going up and the Dow has been dropping for months, now. If this persists for more than maybe two more months, it can spell utter doom for global equities markets and will cause a huge explosion in precious metals prices and shares. Alex Wallenwein-Read more at-http://www.small-business-goldmine.com/dow-gold-divergence.html
-Potential targets for the Dow & Gold. Read full story with charts here-http://www.financialsense.com/fsu/editorials/2008/0307.html
-South Africa's mine industry body confirmed the end of more than a century of dominance as the world's biggest gold producer as ageing ore bodies and safety- related mine stoppages slashed output by 7.4 percent last year.
The country, where three of the world's six biggest gold producers are based, produced 254.7 metric tons (8.19 million ounces) of the metal last year, the Chamber of Mines of South Africa said, pushing it below China's 276 tons, according to estimates by London-based researcher GFMS Ltd. Read more at-http://www.bloomberg.com/apps/news?pid=20601116&sid=aRK_iG4wmyzU&refer=africa or http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=49132&sn=Detail
-CPM forecasts new gold supply, increased demand and mine production. CPM Group said Tuesday that the gold market is in disarray with 2008 expected to be more extreme as far as the economic and political conditions that affect gold prices, market trends and development. Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=49237&sn=Detail
-Investment Demand Surges in Gold. While 2007 was a banner year for gold investors, the just released 200+ page CPM Gold Yearbook sees the potential for further strength for the yellow metal in years to come so as long as investor demand remains at historically elevated levels.
The CPM Group, which has been publishing its annual analysis of the gold market for over three decades, today unveiled its latest offering, which especially highlights the role of investment demand in driving the mammoth seven year bull market. Read more with charts here-
http://www.resourceinvestor.com/pebble.asp?relid=41116
-Clive Maund-Gold/Silver Market Updates. For story and charts click here-http://www.321gold.com/editorials/maund/maund031308.html
-Record gold prices spawn new lightweight jewellery trend. The era of bling and, in particular, big, heavy gold chains may be waning as record gold and platinum prices are forcing consumers to seek lightweight or hollow jewellery pieces. Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=49075&sn=Detail
-So, will gold play catch-up with oil in inflation-adjusted terms? Will we see gold at $2300 per ounce? My guess is that we will. Clearly OPEC is not in the mood to carry the burden of competitive currency devaluations further.
The historic relationship between oil and gold is likely to reassert itself, and it is unlikely that it will be because crude oil took a fall. Gold, when viewed in inflation-adjusted terms, looks like quite the bargain. Michael J. Kosares-Will Gold Catch-Up with Crude? Read full story with charts here-http://news.goldseek.com/GoldSeek/1205263969.php
-Germany's central bank Bundesbank will hold on to gold reserves. For the present, the president of Germany's Bundesbank said Tuesday the central bank will hold on to the majority of its gold reserves until bank officials meet in September. Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page67?oid=49215&sn=Detail
-The World Gold Council wants to cross-list its New York-listed StreetTRACKS Gold Shares GLD.P, a gold exchange-traded fund (ETF), in Japan and Hong Kong by September, the industry body's chief executive said on Tuesday. James Burton also said that the global demand for gold was likely to have fallen in the March quarter owing to high prices and volatility, but did not give an estimate of the change.
"I am pretty confident that in the next two quarters we will be able to cross-list our ETF in Japan and Hong Kong," Burton said after a board meeting of the WGC in Mumbai. Greg Wilkins, president and chief executive of Barrick Gold Corp, the world's largest gold producer, was appointed as the WGC's new chairman in the meeting. Wilkins said he would focus on developing ETFs and enhancing the reputation of the gold mining industry.
The WGC was looking at markets such as Dubai to sponsor new ETFs, but it had no plans to start such a fund in India, which has a nascent ETF market where five players collectively hold less than four tonnes of gold. "We have chosen not to launch our own product in India to compete with existing ETFs as we would like to see how the market develops," Burton said.
For now, the trade body funded by producers was content to promote gold jewelry in India, the world's largest consumer of gold, said Pierre Lassonde, the outgoing chairman of WGC. "We have increased our budget by six times in the last three years in India," Lassonde said. Demand in India, which imports over 700 tonnes of the yellow metal, has taken a hit from soaring gold prices.
In the fourth quarter of 2007, global gold demand dropped 17 percent from a year earlier to 843 tonnes due to a sharp drop in jewelry buying by India, WGC data showed, and Burton said demand was likely to have eased in the current quarter. "There are some positives and some negatives," but overall it would be a "down quarter", he said. Reuters
SILVER
-Continue to watch silver, whose ratio with gold will surely improve. In other words, silver gains will outpace those of gold. The desperate central banks have no silver to dump on the market. Jim Willie CB-Dollar-Gold: A Perfect Storm-Read full story with charts here-http://www.321gold.com/editorials/willie/willie030708.html
-Is Silver the Sleeper? "The major monetary metal in history is silver, not gold." Coming back to forecasting the price of silver, we need to define a methodology. One way is to use what I call the classic, or monetary, ratio. This is based upon a bimetallic standard, which was exercised when both gold and silver were used daily as money.
The ratio was fixed between 15-16 to 1. In other words, one ounce of gold bought 16 ounces of silver. If we use our gold price of $2900 derived in last week's column, and divide by 16, that puts silver at $181.25 per ounce. Is this possible? Under our current financial conditions I am reluctant to rule out anything, but I am also a practical investor.
Before we ever get to even $100, which I have forecast as a price I do expect silver to achieve, we must move above $30, then $40, and take out the old nominal high of $50. I think you see my point, and the ultimate high price is impossible to determine, because only the market knows. But in my view, silver has way too many things going for it not to continue higher over the next several years. Consider the following points:
•Silver has every monetary attribute of gold and is far more affordable to the general public
•Monetary worry was primarily U.S.-based in 1980; today it is a worldwide concern
•The U.S. was in far stronger financial condition in 1980 than today
•The Silver ETF did not exist in 1980
•Silver is a much smaller market than gold, and therefore any new buying (or selling) has much more effect on the price
•In 1980, silver hit $50 per ounce when there were at least two billion ounces of silver in bullion form; today there is less than one-fourth that amount. David Morgan-Read full story at-
http://www.ibtimes.com/articles/20080307/is-silver-the-sleeper.htm
-Three Pictures of Silver. Short-Term Picture, 36 Months. There are two things to notice on this chart: The Upper bound of the Up-Channel has not been reached yet; so there is a potential here. Ascending triangle (grey area on the chart) places the up-side target at $25.00.
Mid-Term Picture, 7 years.
So far so good - the pattern proves persistent rate of growth and almost identical time span for subsequent consolidations, each consolidation lasted two years. However, we expect increased volatility and ascent of silver price to accelerate. We're five years into this bull market and there is no cycle top in sight yet.
-Longer-Term Picture, 28 Years. This chart is for those who thinks it's "too late" to buy Silver. As you can see below, Silver just broke out from a 28 year base formation. On a time basis, this cycle is just getting started. SilverStratetgies.com team
-One of the most important aspects of investing is that it is genuinely hard work. There are no shortcuts. Taking it easy for a while simply isn't an option if you strive to make a decent return every year. One has to stay focused, in order that they will be able to anticipate and then take advantage of great opportunities, things which are rare. And yet, we are now being handed a great opportunity on a silver platter.
This is an opportunity that could be life changing for many. I know that I have said it before, and that to some of you may think I sound like a broken record, but it is crucial for investors to act quickly in order that they might profit from this chance of a lifetime. Several updates ago, in the October 2007 issue of the Resource Fortunes Premium Newsletter, I outlined my expectations for the price of silver during the coming years based on the gold-silver ratio.
I made the case that silver should soon being accelerating its advance against gold if my thesis were true, and I think we have just witnessed the early stages of the declining gold-silver ratio. Lately, silver has been making huge daily swings, and the big picture is becoming clearer and clearer. If the weekly chart in this month's update is correct, we are on the verge of completing the presented head and shoulders pattern, triggering a gold-silver ratio of 12 to 14.
If the neckline is taken out, we should see the next stage in this cycle occur, i.e. another acceleration in the declining gold-silver ratio. If this transpires, silver producers and explorers could really take off, sending their share prices into orbit. Breaking this neckline would cause the price of Silver to explode, so much so that we might even begin to see the price rising dollars at a time, instead of just cents, quite similar to the price action in the late 1970s and early 1980s.
The difference is that this time the rise will be the cause of an ever growing crowd of individuals, rather than two brothers. Personally, I'm boarding this train before it leaves the station. Even if it turns out that I'm a bit early, I'm confident that the real thing is underway and would rather suffer in the short term than be left wondering whether or not I should buy a ticket as silver vaults higher and higher. Roy Martens-Read more at-http://news.silverseek.com/SilverSeek/1205273785.php
-Silver Nanoparticles Deadly to Bacteria. Read more at-http://www.physorg.com/printnews.php?newsid=124376552
PLATINUM-PALLADIUM
-Platinum jewellery roundup for February 2008. Read full story at-http://www.platinum.matthey.com/media_room/1204714817.html
-Norilsk-led palladium alliance to push jewellery usage. Palladium's lower unit price means that it continues to eat into platinum's market share in the jewellery industry. The industry overall continues to show a very healthy rate of growth, however. Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=49009&sn=Detail
COMMODITIES
-Farmers struggle to keep up with world food demand. Read more at-http://www.iht.com/articles/2008/03/09/business/crop.php
-Investors Plan to Buy More Commodities, Barclays Says. Read more at-http://www.bloomberg.com/apps/news?pid=20601082&sid=aB_d6g4UnuGE&refer=canada
OIL-GAS
-Oil, a dollar-denominated commodity that has reaped big gains from the greenback's recent tailspin, is likely to keep pushing higher as the dollar continues its slide, say analysts. Read more at-http://www.marketwatch.com/news/story/dollars-continued-drop-could-mean/story.aspx?guid=%7bEEC538E0-F5C8-4D28-9321-B076DEE21BF7%7d&dist=TNMostRead&print=true&dist=printTop
-Oil Prices Too High But Don't Look to OPEC for Help. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41146
-Oil spike to last through 2008: OPEC president. Read more at-http://biz.yahoo.com/rb/080310/opec_khelil.html?.v=1&printer=1
-Natural Gas Hits $10; Higher Utility Bills for Canadians Expected. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41107
-European Gas Sector Threatened by Shortages. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=41058
INFLATION
-Surging costs of groceries hit home. Read more at-http://www.boston.com/business/personalfinance/articles/2008/03/09/surging_costs_of_groceries_hit_home?mode=PF
-China Inflation Surges 8.7% on Blizzards, Food. Read more at-
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayx1ENtw.uK4&refer=home
-Surging Commodities May Be Signalling Stagflation, Hicks Says. Read more at-http://www.bloomberg.com/apps/news?pid=20601012&sid=anHP.rxOfFRY&refer=commodities
-Recession, GDP and Inflation: Conventional Wisdom or Data. Bud Conrad-Read full story at-http://www.321gold.com/editorials/casey/casey031208.html
U.S. FINANCIAL CRISIS CONTINUES
-Fed to Lend $200 Billion, Take on Mortgage Securities. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aXFA6cyhCF7M&refer=home
-Subprime-related losses at global financial institutions have so far totaled as much as $215 billion, with about 55 percent of that coming from the United States, the head of Japan's financial regulator said on Monday.
The estimates from Japan's Financial Services Agency (FSA) come after JPMorgan Chase & Co said in a report late on Friday Wall Street banks are facing a "systemic margin call" that could deplete them of up to $325 billion in capital. European losses totaled about 8 trillion yen ($78.5 billion), while Asia and Canada together accounted for about 1.4 trillion, FSA Chairman Takafumi Sato told reporters at a regular briefing.
Japan's financial institutions have so far avoided the massive subprime losses taken by overseas rivals, but they have not escaped unscathed. Subprime losses at Japanese banks more than doubled to 600 billion yen in the last quarter of last year, with total exposure to subprime investments hitting 1.5 trillion yen, the FSA said last month. "Compared to overseas, Japan's subprime-related losses and exposure are relatively limited," Sato said. Reuters
-Fed takes boldest action since the Depression to rescue US mortgage industry. Read more at-http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/12/cnfed112.xml
-S&P Says End in Sight for Writedowns on Subprime Debt. Standard & Poor's said the end is in sight for writedowns by the world's largest financial institutions. Writedowns from subprime-mortgage securities will probably rise to $285 billion, New York-based S&P said today in a report titled ``Subprime Write-Downs Could Reach $285 Billion, But Are Likely Past The Halfway Mark.''
The ratings company had previously estimated losses of $265 billion in January. S&P raised its estimate because of increased loss assumptions for collateralized debt obligations, the company said. ``The positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation writedowns,'' S&P credit analyst Scott Bugie said in an accompanying statement. Bloomberg
-U.S. Treasuries riskier than German debt, default swaps say. Read more at-http://www.bloomberg.com/apps/news?pid=20601103&sid=aVl4JGYmkX0M&refer=us
HEDGE FUNDS IN COLLAPSE
-Carlyle Capital Nears Collapse as Rescue Talks Fail. Carlyle Group said creditors plan to seize the assets of its mortgage-bond fund after it failed to meet more than $400 million of margin calls on mortgage backed collateral that plunged in value. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aFDtyjWMME5M&refer=home
-Drake May Shut Largest Hedge Fund; GO Capital Halts Redemptions. Drake Management LLC, the New York- based-firm started by former BlackRock Inc. money managers, may shut its largest hedge fund, while GO Capital Asset Management BV blocked clients from withdrawing cash from one of its funds. Drake told investors today that it would either liquidate its $3 billion Global Opportunities fund, continue to restrict redemptions or allow clients to shift assets to a new fund. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=aka3h3.0KKrg&refer=home
-ING New Zealand Suspends Withdrawals From Two Funds. Read more at-
http://bloomberg.com/apps/news?pid=20601208&sid=abSxJA8iOjOc&refer=finance
U.S. FISCAL-TRADE DEBT
-Federal budget deficit up more than 60%. Government spending rises to trillion-dollar range while revenue is up slightly. The federal budget deficit for the first five months of this fiscal year has risen more than 60% from the prior year after ballooning by more than expected in February, the Treasury Department said Wednesday. In its monthly finance review, the Treasury Department said the budget deficit totaled $263.3 billion for the fiscal year that began Oct. 1, up from $162.2 billion reported in the same period a year earlier.
The deficit for the month of February reached $175.6 billion. A consensus of analysts polled by Briefing.com expected a budget deficit for the month of $170 billion. Thus far, government spending has risen 10.2% to $1.2 trillion compared to the previous year, while revenue has risen only 1.3% to $967.2 billion. "In the short run, given the economy is weak, budget deficit is probably a good thing because that means the government is spending money to stimulate the economy," said Gus Faucher, an economist with Moody's Economy.com.
Faucher said that we still have yet to see the affect of the government's stimulus package. Stimulus rebate checks $600 for individuals and $1200 for couples filing jointly, plus $300 per child are expected to be mailed out to qualifying households in May. The government projected that the budget deficit for all of fiscal 2008, which includes stimulus package spending, will total $410 billion, unchanged from last month's estimate, and near 2004's record high of $413 billion.
However, "budget deficit in the long-term means that the government is essentially soaking up money that would normally be invested in the private sector to grow the economy," added Faucher. Congress began debating two rival plans Wednesday aimed at balancing the budget. One, backed by Democrats, would rely on tax hikes when President Bush's tax cuts expire in about three years. The other, backed by Republicans, would preserve the tax cuts, but slash costly entitlement programs such as Medicare and housing. Cnnmoney.com
-U.S. January Trade Deficit Rises 0.6%; Exports Gain. Read more at-
http://www.bloomberg.com/apps/news?pid=20601087&sid=aV5igqR6Ae38&refer=home
JIM ROGERS SAYS ABOLISH THE U.S. FED
-Federal Reserve Chairman Ben Bernanke should resign and the Fed should be abolished as a way to boost the falling dollar and speed up the recovery of the U.S. economy, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe Wednesday. Asked what he would do if he were in Bernanke's shoes, Rogers, who slammed the Fed for pouring liquidity in the system and accepting mortgage-backed securities as guarantees, said: "I would abolish the Federal Reserve and I would resign."
If this happened, "we don't have anybody printing money, we don't have inflation in the land, we don't have a collapsing U.S. dollar," he told "Squawk Box Europe." The Federal Reserve announced on Wednesday a rescue package that it would put around $200 billion into banks and investment houses and allow them to put up risky home-loan packages as collateral. Wall Street responded to the news with the biggest rally of the year, but Rogers reminisced of the 1970s, when the Fed printed money to avert a recession, boosting inflation and then forcing interest rates to more than 20 percent to keep a lid on price rises.
"No country in the world has ever succeeded by debasing its currency," he said. "That's what this man is trying to do. He's trying to debase the currency as a way to revive America. It has never worked in the long term or the medium term." The Fed's move to accept risky collateral is not part of the central bank's business, he added. "What is Bernanke going to do? Get in his helicopter and fly around the world and collect rents? That's absurd," Rogers said.
A recession may be a good way to clean up the economy, while trying to prevent one may cost more and actually worsen the recession, Rogers said. Also, investment banks should be allowed to fail. "Listen, investment banks have been going bankrupt since the beginning of time. If people make mistakes if you bail out every investment bank that gets in trouble, that's not capitalism, that's socialism for the rich," he said.
The weakest financial institution is Fannie Mae, in Rogers' opinion, "but all of them have problems." He said he had a short position on all investment banks and is buying agricultural commodities such as cotton, wheat, coffee and sugar and was also buying the Chinese yuan and the Japanese yen. "Buy agriculture. Agriculture is one of the few places where you're going to make a fortune in the next years," Rogers said. CNBC
DERIVATIVES THE NEW TICKING BOMB
-Derivatives the new 'ticking bomb.' Buffett and Gross warn: $516 trillion bubble is a disaster waiting to happen. "Charlie and I believe Berkshire should be a fortress of financial strength" wrote Warren Buffett. That was five years before the subprime-credit meltdown. "We try to be alert to any sort of mega-catastrophe risk, and that posture may make us unduly appreciative about the burgeoning quantities of long-term derivatives contracts and the massive amount of uncollateralized receivables that are growing alongside.
In our view, however, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." That warning was in Buffett's 2002 letter to Berkshire shareholders. He saw a future that many others chose to ignore. The Iraq war build-up was at a fever-pitch. The imagery of WMDs and a mushroom cloud fresh in his mind. Also fresh on Buffett's mind: His acquisition of General Re four years earlier, about the time the Long-Term Capital Management hedge fund almost killed the global monetary system.
How? This is crucial: LTCM nearly killed the system with a relatively small $5 billion trading loss. Peanuts compared with the hundreds of billions of dollars of subprime-credit write-offs now making Wall Street's big shots look like amateurs. Buffett tried to sell off Gen Re's derivatives group. No buyers. Unwinding it was costly, but led to his warning that derivatives are a "financial weapon of mass destruction."
That was 2002. Derivatives bubble explodes five times bigger in five years Wall Street didn't listen to Buffett. Derivatives grew into a massive bubble, from about $100 trillion to $516 trillion by 2007. The new derivatives bubble was fuelled by five key economic and political trends:
Sarbanes-Oxley increased corporate disclosures and government oversight
Federal Reserve's cheap money policies created the subprime-housing boom
War budgets burdened the U.S. Treasury and future entitlements programs
Trade deficits with China and others destroyed the value of the U.S. dollar
Oil and commodity rich nations demanding equity payments rather than debt-Read more at-http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid=%7bB9E54A5D-4796-4D0D-AC9E-D9124B59D436%7d&dist=sp_inthis&print=true&dist=printTop
U.S. DOLLAR
-Chart of the Day. Thanks in part to a large US trade deficit and a weak US economy, the US dollar continues to trend lower. For some perspective, today's chart illustrates the current trend in the US dollar (blue line) as well as that other world currency, gold (gray line). As today's chart illustrates, the performance of the US dollar has varied inversely to that of gold since October 2005. It is worth noting that the US dollar is currently testing support.
-James Turk-A New Record Low for the Dollar. The US dollar took centre stage this past week by plumbing new depths. The US Dollar Index made a record low, as we can see on the following chart.
I first presented the arrow on the above chart in my alert on November 11, 2007, and made the following observation. "When taken together, the eerie calm as the dollar collapses and the arrow in the above chart pointing to the building downside momentum suggest that the dollar is nowhere near its final low." That eerie calm remains. Few people are yet facing the facts.
For example, this past week I heard a business television reporter make the following ridiculous comment: "The dollar is at an all-time low because the European Central Bank doesn't want to cut interest rates." It is of course easy to blame others for the dollar's problems, rather than those truly culpable, namely, the spendthrifts in Washington, D.C. and the apparatchiks in the Federal Reserve who provide the politicians with all the dollars they want.
Another example of ignoring reality are the misguided media reports that state rising commodity prices are due to crop shortages. In reality, a tight supply of wheat cannot possibly explain why the prices of nearly all commodities are rising. It's not because there are too few commodities, but rather, too many dollars.
The Federal Reserve stopped reporting M3, the total quantity of dollars, in March 2006. But thanks to the work of John Williams of www.shadowstats.com we know how rapidly M3 is growing. The red line on the following chart shows the growth in M3 since the Fed stopped making that data available. The Fed obviously did not want us to know how many dollars they would be creating, which is now approaching record rates of growth.
The dollar is falling off the edge of a cliff, and for good reason. I continue to believe that the possibility of a dollar collapse is both real and imminent, and the probability of this outcome for the dollar increases with each new high in the precious metals like those achieved this past week. Ominously for the dollar, the following charts indicate that more new highs in gold and silver look probable in the weeks immediately ahead.
-Dollar still stronger than it might be, IMF says. The euro's rise has put it on the "strong side" on a medium-term basis but the U.S. dollar's value still needs to come down despite its recent decline, the International Monetary Fund said. Just a few months ago the IMF said the euro's exchange rate was broadly in line with medium-term fundamentals.
"Our view now is that after the appreciation it is now on the strong side in relation to its medium-term fundamentals in relation to its broad trading partners," IMF spokesman Masood Ahmed told a news briefing.
He said the dollar's decline had brought the U.S. currency closer to its fundamentals "but it remains within that framework still on the strong side," adding: "Our view on the dollar hasn't changed. The depreciation of the dollar in terms of its multilateral real effective exchange rate has brought it much closer to its fundamentals but it remains within that framework still on the strong side." Read full story at-http://www.gata.org/node/6074
REAL ESTATE
-Next-door foreclosures slam home values. Read full story at-http://www.businessweek.com/ap/financialnews/D8VC3T483.htm
-Misjudging The Depths Of The Real Estate Bust. Read more at-http://thehousingbubbleblog.com/?p=4263
-They Just Wanted A Little More In California. Read more at-http://thehousingbubbleblog.com/?p=4249
-Where Is The Bottom To This Housing Free Fall? Read more at-http://thehousingbubbleblog.com/?p=4251
FORECLOSURES-MORTGAGES
-Foreclosures hit all-time high. Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments. Read more at-
http://money.cnn.com/2008/03/06/real_estate/defaults_continue_climb/index.htm
-U.S. Home Defaults, Foreclosures Rise 60% in February. Read more at-http://www.bloomberg.com/apps/news?pid=20601087&sid=auB36HQoB6Uw&refer=home
-Foreclosure crisis has ripple effect. Read more at-
http://www.usatoday.com/news/nation/2008-03-11-foreclosures_N.htm
-The next shoe to drop in housing. Rising foreclosures and big losses at Fannie Mae and Freddie Mac are making it harder for people with good credit backgrounds to get a traditional mortgage. Read more at-http://money.cnn.com/2008/03/13/news/economy/conformingloans/index.htm?postversion=2008031308
-House's Frank Unveils Foreclosure-Prevention Legislation. U.S. House Financial Services Committee Chairman Barney Frank unveiled legislation to expand the federal government's role in shielding consumers from losing their homes as foreclosures reach record levels.
Frank's proposal would allow the Federal Housing Administration to insure and guarantee refinanced mortgages after lenders and loan holders reduce principal to a level borrowers can repay, according to a draft of the legislation released today by Frank's office in Washington. ``This could potentially refinance between 1 and 2 million loans and help these families stay in their homes, protect neighborhoods and help stabilize the housing market,'' according to the draft from Frank, a Massachusetts Democrat. Bloomberg
GEOPOLITICAL
-Cost of Afghanistan and Iraq operations soars. Read more at-http://www.guardian.co.uk/politics/2008/mar/10/iraq.defence/print
-Iraq war costs US$12 billion per month: study. Read more at-http://www.abcnews.go.com/International/wireStory?id=4418698
-MI5 targets four Met police officers 'working as Al Qaeda spies'. Read more at-http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=528813&in_page_id=1770
© 2008, Worldwide Precious Metals.
www.wwpmc.com
The GoldBugg Report March 18th
Posted by Worldwide Precious Metals on Tuesday, March 18, 2008
The GoldBugg Report - Precious Metals: The best performing financial assets this year.
March 11, 2008
-Gold Beats Financial Assets as Investors Seek Haven. Gold, silver, platinum and palladium may be the best-performing financial assets this year as inflation and slowing growth erode the value of the world's major currencies, bonds and stocks. Precious metals have risen at least twice as fast as the euro and yen in 2008 and returned six to 20 times as much as U.S. Treasuries. The Standard & Poor's 500 Index and all other major gauges of equities are down. Gold futures reached an all- time high this week, while silver traded at its most expensive price since 1980.
Investors are using metals to preserve their buying power as the U.S. Dollar Index falls to a record and inflation accelerates. Gold, platinum and palladium may gain at least 27 percent this year as Federal Reserve Chairman Ben S. Bernanke prioritizes cutting interest rates over controlling consumer prices, said Ron Goodis, a trader at Equidex Brokerage Group Inc. in Closter, New Jersey, who has been buying and selling gold since 1978.
"It is hard to see how the monetary environment is going to be anything but supportive of higher gold and commodity prices anytime this year," said Chip Hanlon, who holds gold as manager of $1.5 billion at Delta Global Advisors Inc. in Huntington Beach, California. "If currencies don't carry a favorable interest over metals, then why not own gold or platinum?" Read full story at-http://www.bloomberg.com/apps/news?pid=20601087&sid=a32yIjCiPM9E&refer=home
-Agflation. An increase in the price of food that occurs as a result of increased demand from human consumption and use as an alternative energy resource. While the competitive nature of retail supermarkets allows some of the effects of agflation to be absorbed, the price increases that agflation causes are largely passed on to the end consumer.
The term is derived from a combination of the words "agriculture" and "inflation." Interest in alternative energies contributes to agflation. In order to produce biofuel (such as biodiesel and ethanol), manufacturers need to use food products such soybeans and corn. This creates more demand for these products, which causes their prices to increase.
Unfortunately, these price increases spread to other non-fuel related grains (such as rice and wheat) as consumers switch to less expensive substitutes for consumption. Furthermore, agflation will also affect non-vegetative foods (eggs, meat and dairy) as the price increases for grain will make livestock feed more expensive as well. Investopedia.com
-"The natural tendency of every government is to grow steadily worse that is, to grow more satisfactory to those who constitute it and less satisfactory to those who support it.' H.L. Mencken
-"I've reluctantly discarded the notion of continuing to manage the portfolio after my death abandoning my hope to give new meaning to the term "thinking outside the box.' Warren Buffett-On the search to succeed him as investment manager of Berkshire Hathaway-Read more at-http://money.cnn.com/2008/02/29/news/newsmakers/barr_buffett_succession.fortune/index.htm
-Gold near $1,000 no panacea to falling supply. A jump in the gold price over the magical $1,000 per ounce level would not be enough to bring on a surge of new production due to uncertainty over long-term prices, logistics problems and scarcity of projects. Global gold production has slipped by six percent since 2001 and analysts say current record prices are not expected to reverse the eroding trend in the next several years. Read full story at-http://www.reuters.com/article/hotStocksNews/idUSL0475144320080304
-On an historic basis, the statement "Gold is a better buy than oil" makes sense. During the past 18 years the gold/crude oil averaged 14 times. The current ratio is 9.71 and recovering. Gold is cheap relative to crude oil. Read more at-http://money.cnn.com/2008/03/03/news/economy/bank_failures/index.htm?source=yahoo_quote
GOLD
-When gold breaks above $1,000, then what? Should the the price of gold burst through the $1,000-per-ounce barrier, which it nearly did on Wednesday, experts predict it could reach higher records and even double this year. "We could see gold spike this year and hit $1,500," said Jay Taylor, who produces an investor newsletter, Gold & Technology Stocks.
"Gold has a shot at $1,200 or even $1,500 this year and ultimately will go a lot higher," said Peter Schiff, chief executive of Euro Pacific Capital in Darien, Connecticut. Peter Spina, who runs goldseek.com, a gold investor web site, said of the surge: "It's mostly institutional investors now, but we are seeing more enthusiasm and $1,500-$2,000 gold in the next 12 months is definitely possible."
Thomas Winmill, portfolio manager of the $290-million Midas Fund in New York, said, "If gold crosses $1,000 and does not significantly jump in price, I would say that the rally has legs because we haven't gotten to the point where people are investing just because gold is going up. Read more at-http://in.reuters.com/article/businessNews/idINIndia-32321120080305
-Short term support is now at $950 below that at $930 and $915. Strong support in gold is now seen at $890 to $900. The $1000 price level remains a realistic short term price target and $1,200 remains a realistic possibility in the coming weeks. Gold.ie
-It seems that many in the financial markets and even in the precious metal markets do not fully understand the ramifications of a real short squeeze in the precious metals. A massive short squeeze could propel gold and especially silver to far higher levels in the coming weeks. As always best to focus on the medium to long term and the continuing strong fundamentals with uncertainty in equity and property markets, oil at over $100 a barrel, the dollar under continuing pressure and the credit crunch deepening.
These will likely result in any correction in gold being of a short duration prior to challenging the inflation adjusted high of some $2,400 per ounce in the coming years. It is important to focus on the long term fundamentals and not get too caught up in what might be a wave of bullishness followed by a short term correction before continuing higher. We can't say for sure if this current wave will turn into a parabolic short squeeze which will result in a significant increase in volatility and markedly higher prices.
Thus it would be wise to continue to avoid 'timing the market'. Investors nervous of buying near a top should adopt a dollar cost averaging approach and maybe buy 33% or 50% of their bullion allocation now and the balance in the coming weeks. This ensures not buying near an intermediate top and ensures getting an average intermediate price. We continue to be confident that our 2008 predictions of $1,200 in gold and $25 in silver remain more than likely. Gold.ie
-Commodity research analysts at London-based Standard Chartered wrote that gold will probably rise more than twice as fast as last year. The price will probably average $934 an ounce in 2008, they predicted, and increase to an average $1,100 an ounce in 2009. Kitco Daily Resource
-Gold, More room to run? Yes, says Mark Hulbert, editor of the Hulbert Financial Digest. Hulbert reports that despite the runup in price, "the editors of gold timing newsletters aren't becoming commensurately more bullish.' And "Therein lies a contrast that, from a contrarian point of view, bodes well for gold.' Kitco Daily Resource
-Will gold finally break $1000 this week? This month? "The answer is any day now,' said Kevin Kerr, editor of Global Resources Trader. "The talk of yet another rate cut and the dollar continuing to spiral down is all it will take.'
Kerr said he expects $1,000-an-ounce gold in the back months within a week or so and in the spot market within two or three weeks, as long as the dollar continues to slide. "Stops are also likely heavy at that level [$1,000] since it is so psychological,' he added. After breaching $1000, Kerr thinks gold will hit a wall around $1,150 to $1,200 an ounce. Kitco Daily Resource
-People's aversion to paper is not just an American phenomenon any more. From the mid-summer trough last year, gold is up about 40% against the British pound, 35% against the euro, 25% against the Japanese yen, and 35% against the renminbi. We don't know where this trend is heading, but we do know what's driving it. Paper is paper, and gold is gold. Kitco Daily Resource
-$10,000 per Ounce Gold. Shayne McGuire, an investment expert in the U.S., director of global research for the $115 billion Texas Teacher Retirement System and author of the forthcoming book 'Buy Gold Now', said that world gold mining had peaked in 2001 and fallen since, squeezing supply.
"There are strains on supply, as the mining industry struggles to increase production, and there are signs that central banks may begin to slow down their sales of gold after decades of dumping. Clearly, to this last point, there has not been a free market in gold. Perhaps we will soon discover gold's real value, and I think it's not cheap. Clearly, central banks have impeded a truly free market in gold. In the years ahead we will discover gold's true value, and I think it's several thousand dollars higher than what we see today."
He said that all the gold in the world was worth $3.4tn, yet only a small fraction of that amount was traded on financial markets. "If 1% of the global value of stocks and bonds roughly $960bn went into gold, the precious metal would sky-rocket." McGuire added: "Thinking of prices well above $10,000 per ounce would suddenly become rational. Guardian.co.uk
-Gold rises during times of uncertainty, it rises during times of inflation and easy money, it rises when the dollar is weak, and all of this is currently keeping a strong foundation under the gold price. So again, keep your gold for the long-term. It's today's best investment and it's been a great investment for years. Despite normal ups and downs, we strongly believe you'll be glad that you continued to hold onto your gold, and of course your silver too. Mary Anne & Pamela Aden-Read full story at-http://www.kitco.com/ind/Aden/aden_feb292008.html
-Higher inflation to push gold to $1000/ounce, says RBC. RBC Capital Markets says increased inflation expectations are not priced into the gold price, but it highlights risk of significant physical selling. Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=48479&sn=Detail
-Soaring cost of gold causes jewellery market pandemonium. Read more at-http://www.ft.com/cms/s/0/0b05b67c-e733-11dc-b5c3-0000779fd2ac.html
-India Consumed 715 Tonnes of Gold Last Year. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=40919
-IMF says any gold sales will only substitute for unsold central bank quotas. Read interview here-http://www.gata.org/node/6051
-Video of Richard Nixon announcing the end of the gold standard. Watch video here-http://alsblog.wordpress.com/2008/01/25/nixon-ends-gold-convertability/
SILVER
-Silver Price Trades at Record $20 an ounce. The spot price of silver reached new record levels, touching a fresh 28 year peak. The price of silver was quoted bid $20 a troy ounce in overseas trading, surpassing the $20 mark at just after 23:45 Eastern Time, Sunday March 2, 2008. This historic event is document below showing the opening of markets starting in Australia and Asia with a slight pullback to $19.73 before seeing two significant buying waves. Silverseek.com
-Silver breaks through $20 up around 35 percent this year. Read more at-http://www.mineweb.com/mineweb/view/mineweb/en/page675?oid=48478&sn=Detail
-Silver Buying Spree Pushing Prices to Record Highs. Read more at-http://www.resourceinvestor.com/pebble.asp?relid=40898
-How high can gold and silver go? David Morgan has the answer. Read more at-http://news.goldseek.com/SilverInvestor/1204614180.php
-Silver is still in the early to middle phase of the current intermediate uptrend that promises to drive the price rapidly to the long-term uptrend channel return line now at about $30, so this figure is our target for this advance, on a medium-term basis. Note that silver may considerably overshoot the $30 objective, because the uptrend could wel